Expansion into Russia has hit profits from Finland-based retailer Kesko‘s food division in the first half of the year.

Kesko, which is looking to open its first food stores in Russia, said operating profit excluding non-recurring items from its food arm was down 15.4% at EUR73.8m. Net sales increased 3.8% to EUR2.1bn. 

The retailer said costs linked to its foray into Russia put pressure on profits. Kesko plans to open four grocery stores in Russia in the next two years.

Kesko is looking to invest EUR300m in its food business in Russia by 2015, by when it wants to generate EUR500m of local sales and achieve a “positive operating result”.

The retailer, which runs non-food chains in Russia and the Baltic states, as well as the Nordic countries, also said the wider expansion of its food store network hit profits.

For Kesko as a whole, net sales increased 4.4% but profits were lower. Operating profit fell 34%.