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Business

Ikea posts steep jump in profits

The Swedish ready-to-assemble furniture giant has announced a record annual net profit. Ikea saw solid growth in its core markets in Europe and the US as well as in new markets such as China.

Swedish furniture retailer Ikea's full-year net profit rose 19.6 per cent to 4.2 billion euros ($4.5 billion), the group said Wednesday, citing growth in both mature and emerging markets.

Total sales measured in euros rose 7.1 per cent to 34.2 billion euros for the 2016 financial year ending in August, the unlisted Ikea Group said.

Its top five markets were Germany, the United States, France, Britain and Sweden, while China was one of its fastest-growing markets. In the past yea, Ikea has opened 12 new stores and 19 pick-up and order points worldwide, while in the coming year it's planning to open its first stores in Serbia and in Hyderabad, India.

The furniture giant registered 783 million visits to its 340 stores in 28 countries during the 12-month period but also expanded its online offers. In addition, 49 stores are operated by other franchises.

As part of its efforts to reduce its environmental footprint, the company said it aimed to invest 1 billion euros in sustainable materials. This included forestry and firms involved in recycling, renewable energy and developing biomaterials.

It said 71 percent of the energy it used in 2016 came from renewable energy sources such as solar and wind farms. Ikea plans to be energy independent by 2020.

Slammed by Green European lawmakers for its "aggressive tax planning strategy", the Ikea Group said it paid 1.2 billion euros in corporate taxes worldwide, a tax rate of 21.6 percent compared to 18.9 percent in the previous year.

Family-owned Swedish trademark with Dutch headquarters

The Dutch Ikea Group, which controls most of the brand's retail stores around the world, already reported in September that its turnover had jumped by 7.1 percent to 34.2 billion euros.

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Within 10 years, sales have almost doubled, while the number of stores has risen by just over half. In the meantime, Ikea has developed an online sales service, which now represents 4 percent of sales.

Through a complex business structure, Ikea is entirely controlled by the family of its founder, Ingvar Kamprad, a 90-year-old billionaire who started his business in 1943 in the Swedish countryside.

But the group also boasts a policy of profit sharing for its 183,000 employees.

In early December, it announced having invested an additional 108 million euros in company retirement plans for employees with five or more years of service.

In the United States, the ready-to-assemble furniture retailer has announced a groundbreaking parental leave policy for its 14,000 US employees. Regardless of their status as hourly or salaried employees, but depending on the time they have worked for the company, they will receive 6 to 8 weeks of paid time off at their full wage and another 6 to 8 weeks of paid time off at half-pay.

tko/hg (AFP, dpa)

 

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