Ikea Growth Contracts Amid Record Profit

Profit growth at Swedish home furnishing giant Ikea has contracted by nearly two-thirds, year-on-year.

Net earnings increased by 3.1% in the 2012-13 financial reporting period, reaching €3.3bn (£2.7bn).

But despite it being a record profit, the rate of growth was almost two-thirds below the previous year.

In 2011-2012 profit growth was 8.0% and in 2010-2011 it was 10.3%.

Revenue growth also slowed last year, recorded at 3.2%, or €28.5bn (£23.4bn). In 2010-2011 and 2011-2012 revenue grew by 6.9& and 9.8%, respectively.

In a statement to Sky News, Ikea said: "We continued to increase sales despite challenging conditions in many markets, and we gained market shares in almost all markets.

"It is true that the tough economical climate has put us a bit behind schedule in the financial year 2013, but our long-term growth plan remains unchanged, even if growth is slightly less this year than previous years."

The company's largest markets are in Germany, the US, France, Russia and Sweden.

"Consumer spending is improving in many countries. While the challenging economic situation may not be over, there are positive signs," president and CEO Peter Agnefjaell said.

"Important consumer markets such as the US are coming back and Europe in general is starting to recover. Even some of the challenging markets in Southern Europe are showing good signs of activity."

In early January, Ikea said it fell behind its target of doubling sales to €50bn by 2020.

The company hopes to see solid growth in coming years from the growing middle classes in emerging markets.

The sales goal had "so far proved to be too aggressive", according to Goeran Grosskopf, chairman of the Ingka Holding parent company.

But Mr Agnefjaell added: "We have a long-term focus."

"We'll keep developing better products at lower prices, improving the shopping experience and becoming more accessible to our customers, for example through an improved service offer, e-commerce and continued expansion."

Ikea currently owns more than 300 stores in 26 countries and employs 135,000 people worldwide.

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

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