X5 Corporate Center · RUS:X5
X5 Corporate Center — X5 Retail Group — DB Russian One-on-One Conference 2008
20 slides from X5 Corporate Center's conference presentation, February 2008
Slide 1: Leadership In Russian Food Retail
Leadership In Russian Food Retail February 2008 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: X5 Retail Group Today: Market Leadership
X5 Retail Group Today - … …Market Leadership… FY ’06 Net • #1 food retailer in Russia in terms of sales % in Total Company Sales Top-10 • USD 5,284 million of net retail sales in 2007 USD mln • Strong international management team 1 X5 Retail 3,551 21.9% • 868 company-managed stores in Russia and Uk
Slide 4: X5 Retail Group Today: Strong Regional Presence
X5 Retail Group Today - … ...Strong Regional Presence… 2007 Retail Sales Break-Down by Region 1% 1% 4% 2% Total FY 2007 St. Petersburg 9% Net Retail Sales of Pskov USD 5,284 mln Veliky Novgorod Moscow* Cherepovez Tver’ Vologda St. Petersburg Volga Smolensk Yaroslavl 29% Urals MOSCOW Kostroma 56% Sou
Slide 5: X5 Retail Group Today: Multi-Format Exposure
X5 Retail Group Today - … ...Multi-Format Exposure Selling Area Break-Down by Format* 10% Soft Discounters At 31 Dec 2007 31% total net selling area was 609 674 Stores* 59% thousand sq.m. Hypermarkets Supermarkets Supermarkets Soft Discounters 2007 Retail Sales Break-Down by Format 7% 179 Stores* To
Slide 6: 9M 2007 P&L Highlights
X5 Retail Group Today 9M 2007 P&L Highlights % change, USD mln 9M 2007 9M 2006 y-o-y Net Sales, incl. 3,617.7 2,411.4 50.0% Retail 3,592.4 2,385.8 50.6% Gross Profit 946.3 618.3 53.0% Gross Margin, % 26.2% 25.6% EBITDA 311.1 175.2 77.5% EBITDA Margin, % 8.6% 7.3% Net Profit 54.2 36.1 50.1% Net margi
Slide 7: Uniquely Positioned To Capitalize On Double-Digit Retail Market Growth
X5 Retail Group Today… … Uniquely Positioned To Capitalize On Double-Digit Retail Market Growth Russian Food Retail Market Evolution • The total Russian food retail market is forecasted to grow at 10% CAGR Top-10 in 2007-2012 to become #1 in Europe Other modern formats USD 449 bln by 2011 The rest 3
Slide 8: Market Share Is Crucial
X5 Business Strategy … Market Share Is Crucial Revenue Growth Market Leadership Competitiveness Purchasing Power p. 8
Slide 9: Three Areas Of Focus To Retain & Grow Market Share
X5 Business Strategy Three Areas Of Focus To Retain & Grow Market Share • Further strengthening of positions in soft Multi-Format discounters and supermarkets Approach • Gaining substantial exposure into hypermarket segment • Promotions • Special Actions Strong & Balanced • Advertising & PR • Assort
Slide 10: Multi-Format Approach: Soft Discounters
X5 Business Strategy Multi-Format Approach: Soft Discounters Format Highlights 2007 LFL Performance • 56% of total retail sales + 48% Traffic Basket • Average selling area 530 sq.m. 25% • Average assortment + 26% 3,000 - 3,500 SKUs + 19% 16% • Sales per sq.m. – + 11% 23% 13% USD 11,375 1% 10% 10% •
Slide 11: Multi-Format Approach: Supermarkets
X5 Business Strategy Multi-Format Approach: Supermarkets Format Highlights 2007 LFL Performance • 37% of total retail sales + 26% Traffic Basket • Selling area + 22% 800 – 1,600 sq.m. 9% + 19% • Average assortment – 5% 8% 15,000 SKUs + 9% • Sales per sq.m. – 17% 14% 3% 14% USD 12,959 6% • Non-food –
Slide 12: Multi-Format Approach: Hypermarkets
X5 Business Strategy TBC Multi-Format Approach: Hypermarkets Format Highlights 2007 LFL Performance • 7% of total retail sales • Non-food – 20-30% Traffic Basket • Average selling area: • Private label – 8% + 21% Compact: 4,000 sq.m. • Fresh – 40%* + 17% Full-size: 5,000-10,000 sq.m. 6% + 13% • Aver
Slide 13: Strong & Balanced LFL Growth Through…
X5 Business Strategy Strong & Balanced LFL Growth Through…. Promotions Total Group 2007 LFL Performance • Price offers for a group of SKUs during a certain period Traffic Basket + 25% • In/out actions + 20% • Packaged offers 13% + 18% Advertising and PR 5% 11% + 11% • TV 12% 9% 13% • Mass media 9% 2
Slide 14: Selling Area Growth: Expansion Into The European Part Of Russia
X5 Business Strategy Selling Area Growth: Expansion Into The European Part Of Russia 1st priority 3rd priority 2nd priority Share In Total European part of Russia, Urals and Ukraine – top priority, expansion both Share In Total Market Volume, organic and through M&A Area, % % European part of Russia
Slide 15: Selling Area Growth: Successful Tactical M&A Track Record
X5 Business Strategy Selling Area Growth: Successful Tactical M&A Track Record During 2006 & 2007 X5 Retail Group successfully completed three tactical M&A transaction and one franchisee chain buy-out: EV Number of Stores Selling Area Additional Total Area Date Company Region USD mln D S H sq.m. Rea
Slide 16: Selling Area Growth: Potential Acquisition Of Karusel Hypermarket Chain
X5 Business Strategy Selling Area Growth: Potential Acquisition Of Karusel Hypermarket Chain • Karusel is a chain of hypermarkets (22 stores at 31 Dec 2007 as reported by mass-media) varying in size from 4,000 sq.m to approximately 11,000 sq.m of selling area located in St. Petersburg, Northwestern
Slide 17: Potential Acquisition Of Karusel Hypermarket Chain (cont'd)
X5 Business Strategy Selling Area Growth: Potential Acquisition Of Karusel Hypermarket Chain (cont’d) The amount payable by X5 Retail Group for the exercise of the Call Option is the aggregate of: • (a) the lesser of: • (i) 1.1 multiplied by consolidated net sales of Formata; or • (ii) 14.5 multipli
Slide 18: Logistics Infrastructure Is Vital For Efficiency & Competitiveness
X5 Business Strategy Logistics Infrastructure Is Vital For Efficiency & Competitiveness X5 Distribution Network: Current vs Planned Expected Results • Total DCs area operated by X5 currently is • Significant improvement in availability appr. 144 thousand sq.m. • Cost optimization, including • Curren
Slide 19: IT & Management Systems To Support Aggressive Growth Targets
X5 Business Strategy IT & Management Systems To Support Aggressive Growth Targets Human resources support and business-processes improvement • Creation of an efficient organizational structure • Introduction of an operating model for multi-format regional operations • Optimization of staff recruitme
Slide 20: Outlook For 2008
Outlook For 2008 2007 2008 Fact Outlook Net Sales Growth (excl. FX), % 44% ~ 36 - 38% LFL Sales Growth (excl. FX), % 20% ~ 10% Net Selling Space Addition, sq.m. 143,100 140 - 160,000 New Hypermarkets 3 8* Storage Area (DCs) Addition, sq.m. 78,100 40,000 CapEx for 2008 is estimated at USD 1.2 – 1.4 b
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