Magnit · RUS:MGNT
Magnit — Investor Presentation (July 2020)
49 slides from Magnit's investor presentation, Jul 30, 2020
Slide 1: Investor Presentation
Investor Presentation
Slide 2: Disclaimer
Russian Market Overview — Magnit Toc lay Strate Disclaimer This presentation ("Company Presentation") comprises certain written materials/ slides prepared by Public Joint-Stock Company Magnit (the "Company"), strictly only for the purposes of discussion and feedback with investors and analysts. This
Slide 3: Russian Market Overview
Russian Market Overview
Slide 4: Russian Macro Environment
Russian Market Overview Russian Macro Environment Macro environment provides further scope for consolidation — supportive for strong players Real GDP in the 1Q 2020 was above FY 2019 average apl@. Real GDP YoY growth, % Inflationary trends are supportive for retailers int CPI, % YoY; Food CPI, % YoY
Slide 5: Russian Food Retail Market Potential
Russian Food Retail Market Potential
Slide 6: Magnit Today
DPYKTbINO Magnit Today Magnit at a Glance + Geographical Coverage * Format Summary Convenience Store Supermarket * Drogerie Store Other Small Formats and Pilots Own Production & Private Label Logistics System + Target Organizational Structure + Employees
Slide 7: Magnit at a Glance
Magnit Today Magnit at a Glance SS Key differentiation points YG Multi-format model Gg Strong regional coverage and “Best-in-local” offering Gg Own production and private label & esc Sw? #1 retailer in Russia by number of stores with unrivalled infrastructure platform Total Number Selling Space, Dis
Slide 8: Geographical Coverage
Russian Market Overview [ Magnit Today Strategy Operating and Financial Res Appendix Corporate Governance 2Q 2020 Operating and Financial Geographical Coverage North North Caucasus Southern Central —- Volga West Urals Siberian Total Cities I & Towns / Convenience f 06 2162 4158 3925 1617 1442 875 MY
Slide 9: Format Summary
Russian Market Overview | Magnit Today Strategy Operating and Financial Results Corporate Governance — 2Q 2020 Operating and Financial Results Appendix Format Summary Size of the Store Average ticket Sales density*, Sales LFL Ownership sq.m (excl. VAT), th RUB/ mix 2Q 2020** structure ling space RUB
Slide 10: Convenience Store
Russian Market Overview | Magnit Today Strategy Operating and Financial Results Corporate Governance 2Q 2020 Operating and Financial Results | Appendix Convenience Store A convenient and affordable store for everyday shopping Size of the Store. sq.m Total size, 485 Selling space, 340 Sales mix 12% N
Slide 11: Convenience Store
Magnit Today Convenience Store ° cas Key operating statistics Store openings Selling space, thousand sq.m ne Payback period Leased 3.7% 7 Increase YoY @ 18% owned ees 3-4 years CAPEX th RUB Average ticket Number of tickets Sales density*, ni sq.m of selling space (excl. VAT) 2Q 2020, RUB 2Q 2020, mi
Slide 12: Supermarket
ew [ Magnit Today Strategy Operating and Financial Re Corporate Governa 2Q 2020 Operating and Finan: Supermarket Comfortable and affordable store for everyday and major shopping Size of the Store. sq.m —— Total size, 4,259 |— Selling space, 2,000 Sales mix PP _ 17% Non-food items 83% Food items SKUs
Slide 13: Supermarket
Magnit Today Supermarket Key operating statistics Selling space, thousand sq.m nd 94 0.5% — 46% leased increase YoY Average ticket Number of tickets (excl. VAT) 2Q 2020, RUB 2Q 2020, min 643°” 78 -20% LFL2Q 2020 wi Sales density*, nh th RUB/sq.m/year 216 Ticket growth Traffic growth 26.2% -20.2% Sal
Slide 14: Drogerie Store
Magnit Today Drogerie Store Within walking distance to buy beauty and health products Size of the Store, sq. m Overview Total size, 290 g Regular shopping for personal care and household goods Sales mix 9 Location O- 100% Non-food items SKUs, average number Residential and business areas Share of ne
Slide 15: Drogerie Store
Magnit Today Drogerie Store Key operating statistics Selling space, thousand sq.m ne 1 7 3 5 ee oe Brox owned Average ticket Number of tickets (excl. VAT) 2Q 2020, RUB 2Q 2020, min 356°” 87 10% LFL2Q 2020 wi Sales density*, nh th RUB/sq.m/year Ticket growth Traffic growth 12.1% -2.5% Sales growth 9.
Slide 16: Other Small Formats and Pilots
Other Small Formats and Pilots • • • • • • • • • • • • •
Slide 17: Other Small Formats and Pilots
Other Small Formats and Pilots • • • • • • • • • • • • •
Slide 18: E-commerce
Magnit Today E-commerce (2) Russian e-commerce market remains very fragmented compared to biggest markets C1) E-commerce has considerable growth potential in Russia Share of e-commerce in total food market,2019 Share of top players, FY 2019 25% 36% ‘Amazon Mult 8% 5%. Key grocery No strana) online r
Slide 19: Private Label
Magnit Today Private Label i & Unique value offer Private Label will help us to differentiate from competition and enhance our CVP g g g @ value and honesty Best value for money combination Trust Quality assurance GaAvailabitity Always on the shelf Localization Fully adjusted to local needs Well-dev
Slide 20: Own Production
Magnit Today Own Production We develop own production facilities to increase the share and variety of private label products in our stores Agricultural enterprise Food production ‘= \s . “V0 @V@Oe Ile wp * YL) veley aP OO™ Cucumbers, Potatoes, bulb | Mushrooms Confectionary Grains, cereal Vinegar, s
Slide 21: Organizational Structure
Magnit Today Organizational Structure Target organization Convenience fy Stores G |} YZ 2 Multi-format ® Regional Heads Supermarkets fej Cosmetics Stores Decentralized operational decision-making (1) Front office decisions are now delegated to regions (CVP implementation, redesign local category man
Slide 22: Logistics System
Russian Markel Overview | Magnit Today Strategy Operating and Financial Results Corporate Governance Dperating and Financial Results Appendix Logistics System North North Centralization Ratio as Central Volga Southern Urals West Siberian Caucasus Total 2Q 2020 r an e e e e 91% Distribution $eee oeee
Slide 23: Employees
Magnit Today Employees © 316,354 unt / Employee: GT 251,349 (— In-store Other Super- Drogerie Convenience formats markets Stores Stores ase S286 180,895 35,650 Distribution 13,015 Regional branches _ 11,614 Head Office 4,726 Production & other
Slide 24: Strategy
Strategy
Slide 25: Our Goal and Strategic Principles
Our Goal and Strategic Principles
Slide 26: Key Strategic Pillars
Strategy Key Strategic Pillars 1. Execute new format CVP with excellence including assortment, promo and pricing, customer friendly in-store experiences and loyalty benefits to boost LFL 2. Fix the basics to regain margin through management focus on E2E processes improvement, IT infrastructure enhan
Slide 27: Key Differentiation Points
Strategy Key Differentiation Points —L\_ SIR [Py #1 in Russia in proximity One of the largest Best Quality Price to customers and supply chain networks in perception geographical coverage the country to evolve from historical lowest 3,710 cities 38 distribution centers price perception 20,894 stores
Slide 28: Operating and Financial Results
Operating and Financial Results
Slide 29: Operating Highlights
Operating Highlights 2015 2016 2017 2018 2019 2Q 2020
Slide 30: Summary Profit & Loss
oO; perating and Financial Results Summary Profit & Loss RUB min IAS 17 IFRS 16 2018 2019 YoY growth 2018 2019 YoY Growth Net sales 1,237,015 1,368,705 10.6% 1,237,015 1,368,705 10.6% Cost of sales -940,942 ~1,056,706 12.3% -940,942 ~1,056,706 12.3% Gross profit 296,074 311,999 5.4% 296,074 311,999
Slide 31: Revenue & Costs
Operating and Financial Results Revenue & Costs SG&A Expense Revenue YoY growth, % Structure Dynamics % RUB bin 12370 13687 RUB bln of sales ( Total 2916 213% --@p--- rolland related taxes 121,7 i — 3,9% Rent 63,2 46% Depreciation & amortization 46,e, 34% 2018 2019 Net Income YoY growth, % vowes 247
Slide 32: Gross Margin & EBITDA
Russian Market Overview Magnit Today eg Operating and Gross Margin & EBITDA asi IERS16 porate Governa ) 2020 Operating and Finar Gross Margin ' ' Bridge, As % i za- of revenue 22,8% 2018 2019 2019 10,8% EBITDA Margin Bridge, As % of revenue 2018 2019 2019
Slide 33: Balance Sheet
Operating and Financial Results Balance Sheet RUB min ASSETS Property plant and equipment Right-of-use assets Other non-current assets Cash and cash equivalents Inventories Trade and other receivables Advances paid Taxes receivable Short-term financial assets Prepaid expenses Income tax receivable T
Slide 34: Leverage Policy
Overview Magnit Today 5 Leverage Policy Low Currency Risk No loans denominated in foreign currency Low Interest Rate Risk 75% of debt is at fixed rate and 25% of debt exposed to interest rate changes Average Debt Maturity 21 months Average effective cost of debt 7.1% for the 4Q19, which is 0.6 p.p.
Slide 35: Free Cash Flow
Russian Market Overview Magnit Today t ‘nancial Results Corporate Governance 2Q 2020 Operating and Free Cash Flow 90,061 (11,230) 2018, —— RUB min (4,433) (53,759) 551 1529 (15899) 19,690 210 ‘Adjusted Change Net Taxes ocr Capex Other FCF Payment EBIDTA —inworking interest paid Cash Flow of Dividend
Slide 36: CAPEX Analysis
——_ perating and Financial Results CAPEX Analysis cp = a Total 2019 RUB min 58,607 2018 RUB min 53,759 Machinery and equipment Construction in progress and buildings 30,074 (51%) Other assets 22,869 (39%) 19 (0,0%) Land 31,414 (58%) 14,693 (27%) Y? 51 (0,1%) Land
Slide 37: Corporate Governance
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Slide 38: Corporate Governance Overview
Corporate Governance Overview
Slide 39: Best in Class Retail Management Team
Best in Class Retail Management Team
Slide 40: Appendix
pendix Russian Macro Environment * Russian Food Retail Market Potential » Top-10 Russian Food Retailers * Convenience Store * Supermarket Drogerie store * Operating Highlights Quarterly Quarterly Operating Data Summary
Slide 41: Russian Macro Environment
Appendix Russian Macro Environment Healthy inflationary trends are Real GDP in the 1Q 2020 was above FY 2019 supportive for retailers (1) average of 1.3% @ Real GOP Yor growth, 2.8% @crxvor © Foo crs. vor 1.6% 22.4% 5 03% . 162% 33% oe 3,6% 19% d ne. 6.9% ~. — 5,2% 2.9% Real disposable incomes are u
Slide 42: Russian Food Retail Market Potential
Russian Food Retail Market Potential
Slide 43: Top-10 Russian Food Retailers
Top-10 Russian Food Retailers
Slide 44: Convenience Store
Russian Market Overview — Magnit Today Strategy Convenience Store Net retail sales Selling space RUB min, thsa.m @ YoY growth, % YoY growth, % 295,796 14,5% 3,7% 2020 279,795 17,8% 6,7% 10,6% 11,4% 254,239 10,7% 16,5% 258,302 131% 16,7% 2019 237,475 10,3% 15,7% 244,523 10,0% 12,3% 229,682 8,4% 9,5%
Slide 45: Supermarket
Russian Market Overview — Magnit Today Strategy Operating and Financial Results Corporate Governance — 2Q 2020 Operating and Financial Results | Appendix Supermarket Net retail sales Selling space Sales density* LFL RUB min thsq.m th RUB/sq.m/year YoY growth, % 2018. 2019 2020 e YoY growth, % YoY gr
Slide 46: Drogerie Store
Appendix Russian Market Overview — Magnit Today Strategy Operating and Financial Results Corporate Governance — 2Q 2020 Operating and Financial Resul Drogerie Store Net retail sales Selling space Sales density* LFL RUB min thsq.m th RUB/sq.m/year YoY growth, % 2018 2019 2020 YoY growth, % YoY growth
Slide 47: Quarterly Operating Highlights
Quarterly Operating Highlights 17,6 8,3
Slide 48: Quarterly Operating Data Summary
Quarterly Operating Data Summary
Slide 49: Contact Information
Contact Information magnitIR@magnit.ru https://www.magnit.com/ru