Magnit · RUS:MGNT
Magnit — Investor Presentation (November 2019)
54 slides from Magnit's investor presentation, November 2019
Slide 1: Investor Presentation
Investor Presentation November 2019
Slide 2: Disclaimer
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Disclaimer This presentation ("Company Presentation") comprises certain written materials/ slides No representation or warranty, express or implied, is
Slide 3: Russian Market Overview
Russian Market Overview Russian Macro Environment • Russian Food Retail Market Potential • Russian Food Retail Market Evolution
Slide 4: Russian Macro Environment
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Russian Macro Environment Stable economic growth will support retail market 1 Real GDP demonstrate sluggish growth Real GDP YoY growth, % 1.7% YoY in 3Q
Slide 5: Russian Food Retail Market Potential
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Russian Food Retail Market Potential Magnit is a leading company on the growing Russian food retail market 1 Russian grocery 2 There is still room 3 Mod
Slide 6: Russian Food Retail Market Evolution
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Russian Food Retail Market Evolution Grocery retail entering maturity phase, growth just above inflation Russian Food Retail Sales Early phase Growth ph
Slide 7: Magnit Today
Magnit Today Magnit at a Glance • Geographical Coverage • Format Summary Convenience Store Supermarkets • Drogerie Store Other Small Formats and Pilots Own Production & Private Label Logistics System • Target Organizational Structure • Employees
Slide 8: Magnit at a Glance
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Magnit at a Glance #1 retailer in Russia by number of stores with unrivalled infrastructure platform Key differentiation 20,497 7,143 38 5,776 Total Num
Slide 9: Geographical Coverage
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Geographical Coverage North North Caucasus Southern Central Volga West Urals Siberian Total Cities 3,694 & Towns Convenience 403 2 100 4 228 3 967 1 516
Slide 10: Format Summary
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Format Summary Size of the Store Average ticket Sales density*, Sales LFL Ownership sq.m (excl. VAT), RUB/ mix 3Q 2019 structure selling space RUB sq.m/
Slide 11: Convenience Store
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Convenience Store 01 A convenient and affordable store for everyday shopping Size of the Store. sq. m Overview Total size, 482 Routine shopping Food for
Slide 12: Convenience Store
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Convenience Store 02 Key operational statistics Store openings Selling space, thousand sq. m Payback period Leased 16.5% 4,900 Increase YoY 82% leased 1
Slide 13: Supermarket
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Supermarket 01 Comfortable and affordable store for everyday and major shopping Size of the Store. sq. m Overview Total size, 4,302 Major shopping Speci
Slide 14: Supermarket
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Supermarket 02 Key operational statistics Store openings Selling space, thousand sq. m Payback period Leased / owned 1.0% 941 Increase YoY 35% leased 65
Slide 15: Drogerie Store
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Drogerie Store 01 Within walking distance to buy beauty and health products Size of the Store, sq. m Overview Total size, 291 Regular shopping for perso
Slide 16: Drogerie Store
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Drogerie Store 02 Key operational statistics Store openings Selling space, thousand sq. m Payback period Leased 34.1% 1,280 Increase YoY 89% leased 11%
Slide 17: Other Small Formats and Pilots
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Other Small Formats and Pilots 01 Cash&Carry Pharmacy City Bulk shopping for future Pharmaceutical & health care Small store offering ready-to-go / read
Slide 18: Other Small Formats and Pilots
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Other Small Formats and Pilots 02 Evening Russian Post Petrol Stations Modern and convenient alcoholic beverages store Basic assortment in Russian Post
Slide 19: E-commerce
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results E-commerce 1 E-commerce has 2 Russian e-commerce 3 FMCG categories particularly considerable growth market under-penetrated in Russia potential in Russi
Slide 20: Private Label
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Private Label Well-developed Unique value offer Private Label will help us to differentiate from competition infrastructure We have what it takes to lau
Slide 21: Own Production
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Own Production We develop own production facilities to increase the share and variety of private label products in our stores Agricultural enterprise Fo
Slide 22: Organizational Structure
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Organizational Structure Decentralized Target operational organization decision-making Convenience 1 Front office decisions are now delegated Head Store
Slide 23: Logistics System
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Logistics System North North Central Volga Southern Urals West Siberian Caucasus Total Centralization Ratio 9M 2019 91 Distribution Delivered from DC %
Slide 24: Employees
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Employees 300,102 Headcount of Employees 35,980 Distribution 235,452 12,768 Regional In-store branches 11,797 Head Office Other Super- Drogerie Convenie
Slide 25: Strategy
Strategy Our Goal and Strategic Priorities Key Strategy Drivers • Key Differentiation Points • What We Keep Doing What We Change What We Stop Doing
Slide 26: Our Goal and Strategic Priorities
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Our Goal and Strategic Priorities Our goal: to increase shareholder return through share price growth and capital return Customers Build on our Create p
Slide 27: Key Strategy Drivers
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Key Strategy Drivers 1. 2. 3. 4. 5. Execute new CVP with Regain margin through Fix inherited problems Build core differentiating Profitable growth excel
Slide 28: Key Differentiation Points
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results Key Differentiation Points #1 in Russia in proximity Largest supply chain Lowest price Multi-format offering Unmatched own to customers and network in t
Slide 29: What We Keep Doing
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results What We Keep Doing 1. 2. 3. 4. 5. 6. Multi- New CVP and functional Build capabilities Enhance and Develop own format formats strategies and develop peop
Slide 30: What We Change
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results What We Change 1. 2. 3. 4. Store openings Enhance format Cross Capital program expertise both company allocation More focus on higher in HQ and regions
Slide 31: What We Stop Doing
Russian Market Overview Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Today Results Governance Results What We Stop Doing 1. 2. 3. Small and Expansion into new Expansion beyond unprofitable regions where core business projects significant CAPEX Finance Se
Slide 32: Operating and Financial Results
Operating and Financial Results Operational Highlights • Summary Profit & Loss Revenue & Costs • Gross Margin & EBITDA Free Cash Flow Balance Sheet CAPEX Analysis • Leverage Policy
Slide 33: Operating Highlights
Russian Market Overview Magnit Strategy Operating and Financial Results Corporate 3Q 2019 Operating and Financial Appendix Today Governance Results Operating Highlights 1 Net retail sales, RUB bln 2 Number of stores, EOP 3 Selling space, th. sq. m Net retail sales YoY growth, % Selling space YoY gro
Slide 34: Summary Profit & Loss
Russian Market Overview Magnit Strategy Operating and Financial Results Corporate 3Q 2019 Operating and Financial Appendix Today Governance Results Summary Profit & Loss RUB mln IAS 17 IFRS 16 1H 2018 1H 2019 YoY growth 1H 2018 1H 2019 YoY Growth Net sales 595,263 657,917 10.5% 595,263 657,917 10.5%
Slide 35: Revenue & Costs
Russian Market Magnit Strategy Operating and Financial Results Corporate 3Q 2019 Operating and Financial Appendix Overview Today Governance Results Revenue & Costs Revenue YoY growth, % SG&A Expense Dynamics 10.5% Structure % % 7.2% 657,9 RUB bln 595,3 RUB bln of sales of SG&A 555,0 Total 142.6 21,7
Slide 36: Gross Margin & EBITDA
Russian Market Magnit Strategy Operating and Financial Results Corporate 3Q 2019 Operating and Financial Appendix Overview Today Governance Results Gross Margin & EBITDA IAS 17 IFRS 16 Gross -106 b.p. Margin 26,8% Bridge, 24,7% -1,33% 0,28% 23,7% 23,7% As % of revenue Trading Transport YoY growth ma
Slide 37: Balance Sheet
Russian Market Overview Magnit Strategy Operating and Financial Results Corporate 3Q 2019 Operating and Financial Appendix Today Governance Results Balance Sheet RUB mln ASSETS 2018 1H 2019 EQUITY AND LIABILITIES 2018 1H 2019 Property plant and equipment 346,013 343,647 Equity 217,137 201,041 Right-
Slide 38: Leverage Policy
Russian Market Magnit Strategy Operating and Financial Results Corporate 3Q 2019 Operating and Financial Appendix Overview Today Governance Results Leverage Policy Low Currency Risk Debt Level Dynamics, Debt portfolio maturity No loans denominated in foreign currency RUB bln RUB bln 198,3 100% 198.3
Slide 39: Free Cash Flow
Russian Market Magnit Strategy Operating and Financial Results Corporate 3Q 2019 Operating and Financial Appendix Overview Today Governance Results Free Cash Flow 1H 2018, Working RUB mln 45,004 (16,443) Capital Analysis (4,892) (888) 22,780 (21,88 3) (1,540) 2,437 (10,24 1) 41 Average Days (7,804)
Slide 40: CAPEX Analysis
Russian Market Magnit Strategy Operating and Financial Results Corporate 3Q 2019 Operating and Financial Appendix Overview Today Governance Results CAPEX Analysis 1H 2019 1H 2018 RUB mln RUB mln Total 22,314 21,883 Machinery and equipment 11,271 (51%) 6,689 (31%) Construction in progress 10,723 (49%
Slide 41: Corporate Governance
Corporate Governance Corporate Governance Overview • Best in Class Retail Management Team • Guidance for FY 2019
Slide 42: Corporate Governance Overview
Russian Market Magnit Strategy Operating and Financial Results Corporate Governance 3Q 2019 Operating and Financial Appendix Overview Today Results Corporate Governance Overview Board Committees Overview Status Independent Non-Executive CEO Non-Executive Director Director Charles Pat James Jan Janse
Slide 43: Best in Class Retail Management Team
Russian Market Magnit Strategy Operating and Financial Results Corporate Governance 3Q 2019 Operating and Financial Appendix Overview Today Results Best in Class Retail Management Team Highly experienced retail leadership team — long on local Russian expertise Jan Elena Jyrki Elena Maria Evgeny Vlad
Slide 44: Guidance for FY 2019
Russian Market Magnit Strategy Operating and Financial Results Corporate Governance 3Q 2019 Operating and Financial Appendix Overview Today Results Guidance for FY 2019 Number of Store 1,200 1,200 1,200 Openings (net) Convenience Stores Cosmetics Stores Pharmacy Stores Refurbished Stores 2,300 CAPEX
Slide 45: Appendix
Appendix Russian Macro Environment • Russian Food Retail Market Potential • Top-10 Russian Food Retailers • Convenience Store • Supermarkets Drogerie store • Operating Highlights Quarterly Quarterly Operating Data Summary
Slide 46: Russian Macro Environment
Russian Market Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Overview Today Results Governance Results Russian Macro Environment Return to parent slide 1 Real GDP demonstrate sluggish growth 2 Inflation is healthy 3 Record low unemployment level Real GDP
Slide 47: Russian Food Retail Market Potential
Russian Market Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Overview Today Results Governance Results Russian Food Retail Market Potential Return to parent slide 1 Grocery retail market, 2 Modern VS Traditional 3 Market Share, 4 Share of TOP-5 retail cha
Slide 48: Top-10 Russian Food Retailers
Russian Market Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Overview Today Results Governance Results Top-10 Russian Food Retailers Return to parent slide X5 11,6% Magnit 9,4% Lenta 3,1% 35.3% Auchan 2,3% Share of TOP-10 Red & White 2,3% 28.7% Dixy 2,2%
Slide 49: Convenience Store
Russian Market Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Overview Today Results Governance Results Convenience Store Return to parent slide Net retail sales Selling space Sales density* LFL RUB mln th sq. m th RUB/sq.m/year YoY growth, % 201 201 201 Y
Slide 50: Supermarket
Russian Market Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Overview Today Results Governance Results Supermarket Return to parent slide Net retail sales Selling space Sales density* LFL RUB mln th sq. m th RUB/sq.m/year YoY growth, % 201 201 201 YoY gro
Slide 51: Drogerie Store
Russian Market Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Overview Today Results Governance Results Drogerie Store Return to parent slide Net retail sales Selling space Sales density* LFL RUB mln th sq. m th RUB/sq.m/year YoY growth, % 201 201 201 YoY
Slide 52: Quarterly Operating Highlights
Russian Market Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Overview Today Results Governance Results Quarterly Operating Highlights Return to parent slide 1 Net retail sales, RUB bln 2 Number of visits, mln 3 Selling space, th. sq. m 4 Sales density*, t
Slide 53: Quarterly Operating Data Summary
Russian Market Magnit Strategy Operating and Financial Corporate 3Q 2019 Operating and Financial Appendix Overview Today Results Governance Results Quarterly Operating Data Summary RUB bln 1Q 2018 2Q 2018 3Q 2018 4Q 2018 FY 2018 1Q 2019 2Q 2019 3Q 2019 SALES TOTAL 288.6 306.7 310.1 331.6 1,237.0 317
Slide 54: Contact Information
Contact Information Albert Avetikov Chief Investor Relations Officer avetikov_am@magnit.ru http://ir.magnit.com 15/2 Solnechnaya Street Krasnodar, 350072 Russian Federation 54