X5 Corporate Center · RUS:X5
X5 Corporate Center — X5 Retail Group — Investor Presentation (June 2010)
32 slides from X5 Corporate Center's investor presentation, June 2010
Slide 1: Profitable Growth & Long-Term Leadership
Profitable Growth & Long-Term Leadership Investor Presentation June 2010 p. 1
Slide 2: Disclaimer
Disclaimer This presentation does not constitute or form part of and should not be construed as an advertisement of securities, an offer or invitation to sell or issue or the solicitation of an offer to buy or acquire or subscribe for securities of X5 Retail Group N.V. or any of its subsidiaries or
Slide 3: Agenda
Agenda I. Introduction & 2009 Highlights II. Q1 2010 Operational Performance III. Strategic Review IV. Q1 2010 Financial Performance V. 2010 Outlook p. 3
Slide 4: X5 - #1 Russia's Retailer
X5 - #1 Russia’s Retailer X5 R Retail t il G Group ttoday d • 2009 net sales - USD 8,717 mln; growth on 2008 of 25% on Russia’s Leading Food Retailers pro-forma basis (1) in RUR terms, 33% on consolidation # Company FY 2009 Net % % in Total basis (2) in RUR terms Retail Sales in Top Top-10 10 Market
Slide 5: X5 Multi-Format Approach
X5 Multi Multi--Format Approach X5 O Operates t StStores ffor E Every Lif Lifestyle t l and d Family F il Budget B d t Soft Discounters Net selling space: from 300 to 800 sq.m. A Average assortment: t t 3,000 3 000 SKU SKUs Pricing policy: Lowest price in the market on 100% of assortment Format stre
Slide 6: 2009 Performance Score Card
2009 Performance Score Card 2009 C Conditions diti Were W a Successful S f l Test T t off X5’s X5’ Strength St th and d Endurance E d • Strengthened position as #1 retailer in Russia • Won customers thanks to “close-to-the-customer” “ approach Strategic Progress, • Expanded selling space well in exc
Slide 7: Agenda
Agenda I. Introduction & 2009 Highlights II. Q1 2010 Operational Performance III. Strategic Review IV. Q1 2010 Financial Performance V. 2010 Outlook p. 7
Slide 8: X5's LFL Performance
X5’s LFL Performance… …Has H D Demonstrated t t d St Strong R Resilience ili Since Si Economic E i Downturn D t X5 LFL Performance Quarterly y LFL Sales Growth 25% X5 total X5 Discounters 20% 18% 17% 17% 16% 16% 15% 13% 11% 10% 8% 7% 7% 5% 0% Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 p. 8
Slide 9: Q1 2010 Progress On X5's Objectives
Q1 2010 Progress On X5’s Objectives • Strong 7% LFL sales growth • New structure to position • New store openings and Operational supported by 2% traffic supermarkets and capex on track Drivers growth hypermarkets for upturn • Low Low-2020 percent sales • Industry-leading discounters • Paterson inte
Slide 10: Q1 2010 Operational Performance
Q1 2010 Operational Performance… … Was W Solid S lid Against A i t Still W Weak kCConsumer S Spending di &D Dramatically ti ll L Lower Food Inflation • 20% net retail sales growth in RUR against a backdrop Q1 2010 Net Retail Sales of weak consumer spending…. RUR bln • …and drastically lower food inf
Slide 11: Q1 2010 LFL Results
Q1 2010 LFL Results… … Led L d by b Powerful P f l Performance P f att Discounters Di t with ith Basket B k t Significantly Si ifi tl Above Ab Internal Inflation (1.6%) Supermarkets’ Q1 2010 LFL Performance • X5’s LFL sales growth stable at 7% Based on RUR- RUR quarter-on-quarter denominated gross s
Slide 12: Selling Space Expansion in 2009 & Q1'10
Selling Space Expansion in 2009&Q1‘10 S l ti and Selective d Efficient Effi i t New N Store St Openings O i In 2009 X5 substantially exceeded its initial expansion Number Of Stores, EoP plan, while staying well within CapEx limit 1,600 58 60 •Net N 2 271 1 stores or 189 th. h sq.m. off selling lli s
Slide 13: X5's Regional Presence
X5’s Regional Presence F th Strengthened Further St th d Presence P in i the th Regions R i North-West region Moscow & the Region • Increased share of regional sales from 19% in Net Retail Sales 2009: Net Retail Sales 2009: 2008 to 21.6% in Q1 2010 with regions USD 4,460mln accounting for approx.50%
Slide 14: Paterson Integration on Track
Paterson Integration on Track As of May May, All Acquired Stores Converted Converted, Setting Stage for Improving Performance Reinforces X5 positions in supermarkets, securing high quality locations in key geographies Strategic g & Most stores fully compatible with X5’s requirements both operati
Slide 15: Agenda
Agenda I. 2009 Highlights II. FY 2009 & Q1 2010 Operational Performance III. Strategic Review IV. FY 2009 & Q1 2010 Financial Performance V. 2010 Outlook p. 15
Slide 16: X5's Strategic Priorities
X5’s Strategic Priorities • Build multi-format • Build supply chain success advantages • Cash generation • Strengthen value • Drive D i efficiency ffi i and d • Focus on returns propositions margins • Liquidity • Drive LFL and top • Ensure support for management line growth long-term growth Customer
Slide 17: Strategic Efficiency Program
Strategic Efficiency Program… …Impacts I t Every E Area A off X5’ X5’s B Business, i tto C Create t NNew C Competitive titi AdAdvantages t Support of Working g L Long-Term T Sales Cost Capital Scalable Growth Savings Project Improvement Expansion Efficient Supply Chain Management IT Systems Integrat
Slide 18: Supply Chain Efficiency
Supply Chain Efficiency … Now N W We are B Bringing i i It to t a New N Level… L l … to Create a Fully Integrated & Efficient Supply Chain Purchasing/ Optimal Warehouse Efficient Efficient Sourcing DC Network Productivity Transportation In-Store Structure Logistics Areas of Focus • Assortment • Opti
Slide 19: Distribution Infrastructure
Distribution Infrastructure Supply S l Centralization C t li ti Rate R t Rose R From F 51% tto 61% b by Y Year-End E d 2009, 2009 Well Ahead of Target Region # of DCs 000 sq. m. Dry Fruit & Veg Fresh Frozen Non-Food Central 7 128.4 v v v v DC locations as at North-West North West 5 65 1 65.1 v v v v
Slide 20: IT Systems Transformation
IT Systems Transformation O Operational ti l Excellence E ll in i Our O Business B i Management M t Platforms Pl tf 2012 IT SAP Implementation in line with initial schedule Infrastructure SAP for Retail 9 Successfully launched in a pilot region in 2009 Stores 9 X5 earned SAP’s SAP s #1 ranking for “
Slide 21: In-Store Labour Productivity
In--Store Labour Productivity… In … Can C b be S Substantially b t ti ll Enhanced E h d through th h Improving I i Efficiency Effi i off… of… In-Store and Working Workplace Store Personnel Personnel Core Processes Hours Management Education M Managementt Areas of Focus • Merchandising • Efficient pl
Slide 22: X5's Strategic Efficiency Program
X5’s Strategic Efficiency Program…. …is i a Multi- Multi M lti-Year Y Eff Effortt B Butt W We A Are Al Already d Delivering D li i Results R lt SG&A(1) as % of Sales -60 bps (1) Excluding ESOP p. 22
Slide 23: Agenda
Agenda I. 2009 Highlights II. Q1 2010 Operational Performance III. Strategic Review IV. Q1 2010 Financial Performance V. 2010 Outlook p. 23
Slide 24: Q1 2010 Financial Performance
Q1 2010 Financial Performance(1) Net Sales EBITDA & EBITDA Margin USD mln 36% 10% Gross Profit Net Profit / (Loss) 30% (82) Q1 2009 (1)All P&L numbers are provided on pro-forma basis p. 24
Slide 25: Q1 2010 P&L Highlights
Q1 2010 P&L Highlights(1) USD mln Q1 2010 Q1 2009 % change % change y-o-y, USD y-o-y, RUR Net Sales 2 542 7 2,542.7 1 866 9 1,866.9 36% 20% incl. Retail 2,534.4 1,859.3 36% 20% Gross Profit 594.1 458.2 30% 14% Gross Margin, % 23.4% 24.5% SG&A (excl. (excl ESOP) (485.5) (368.1) 32% 16% % of revenue 1
Slide 26: Key Q1 2010 P&L Developments
Key Q1 2010 P&L Developments Net sales increased 20% year-on-year in RUR terms to RUR 76,003 mln or 36% in USD terms to USD 2,543 mln; Gross profit totaled USD 594 mln mln, for a gross margin of 23 23.4%; 4%; SG&A expenses before ESOP as percent of sales decreased by 60 bp year-on-year to 19.1
Slide 27: Q1 2010 Cash Flow Highlights
Q1 2010 Cash Flow Highlights The Company Th C used d available il bl cash h to t expand d stores t selectively l ti l andd reduce d total t t l debt by net USD 133 million. % change % change USD mln Q1 2010 Q1 2009 USD S RUR Net Cash Flows from Operating Activities (129.5) (38.4) 237% 197% Net Cash
Slide 28: Debt Financing and Liquidity
Debt Financing and Liquidity Hi hli ht Highlights D bt M Debt Maturity t it Profile P fil as att 31 31.03.10 03 10 • In the first quarter X5 continued to strengthen its balance USD mln sheet and liquidity, reducing total debt by net USD 133 mln. 1,530.9 • As of end March 2010 2010, the Company Compa
Slide 29: Agenda
Agenda I. 2009 Highlights II. FY 2009 & Q1 2010 Operational Performance III. Strategic Review IV. Q1 2010 Financial Performance V. 2010 Outlook p. 29
Slide 30: 2010 Outlook
2010 Outlook 2010 Outlook • Net new store addition: -Hypermarkets: 7-10 stores; -Supermarkets: ~15 stores; Discounters: -Discounters: 200-250 200 250 stores. • Capital Expenditures of up to RUR 18 bln Due to significantly lower food inflation to date and in the official forecast rate for the year, X
Slide 31: X5 Share Capital Structure
X5 Share Capital Structure 0.1% 27.0% 1.9% 47.9% Alfa Group 23.1% Founders of Pyaterochka X5 M Managementt Free Float Total number of shares – 67,893,218 Treasury Shares q Equivalent of 271,572,872 GDRs p. 31
Slide 32: Contact information
Contact information IR Department Contact Details Anna Kareva Egor Voytenkov Anastasiya I IR Director Senior IR Manager IR Manager X5 Retail Group N.V. X5 Retail Group N.V. X5 Retail Group N.V. 28 bldg., 4, Sr. Kalitnikovskaya, 28 bldg., 4, Sr. Kalitnikovskaya, 28 bldg., 4, Sr. Kalitnikovskaya, Mosc