M.video · RUS:MVID
M.video — M.Video-Eldorado Group — H1 2019 Earnings Presentation
40 slides from M.video's earnings presentation, Aug 26, 2019
Slide 1: ONE RETAIL – Next Step to Retail Evolution
ONE RETAIL – NEXT STEP TO RETAIL EVOLUTION M.VIDEO – ELDORADO GROUP H1 2019 Interim IFRS Results August 26, 2019
Slide 2: Content & liability disclaimer
Content & liability disclaimer The information contained in this presentation presentation is provided on an «as is» basis. M. Video or enclosed herewith is provided and intended for believes and has done everything within its power informational purposes only and should not be relied to ensure the
Slide 3: Content
CONTENT 1 /3 Market trends and Group’s operational highlights in H1 2019 Group’s financial results in H1 2019 and guidance for FY2019 Group’s strategy 2022 update and forecast
Slide 4: H1 2019 main events and highlights
H12019 main events and highlights The Company demonstrated sound results in H1 2019 on the back of improved efficiency and successful integration Consolidation Completion Eldorado Group’s Vision and of M.Video and of MediaMarkt stores business model Mission formed: Eldorado in one legal rebranding r
Slide 5: Russian retail market slowed down in H1 2019 following real disposable income decline
Russian retail market slowed down in H1 2019 following real disposable income decline Real disposable income YoY, % 2.00% 1.50% 1.4% 1.1% 01 Starting from Q4’ 18 real disposable income is declining 0.2% 1.00% Purchasing power of population is affected by 0.50% 02 0.00% declining disposable income an
Slide 6: Key Market Highlights in H1 2019
Group continued to outperform the market in H1 2019 26.3% Key Market Market Share, % 25.6% Highlights in H1 2019 Sales Growth, YoY, % FY’2018 1H’19 The Group outperformed 19.6% 11.7% 01 the market and took +0.7 pp market share with growth of sales +10.4% YoY 14.1% 8.0% 17.7% 10.4% Both M.Video and 0
Slide 7: Eldorado strengthens Digital categories 3 times outpacing the market
Eldorado strengthens Digital categories 3 times outpacing the market 55% x 2 29% x 3 Digital amounted to Group grew twice M.Video increased Eldorado grew 55% of the total CE faster than the Digital share in its sales 3 times faster than market in Russia Digital market to 29% the market H1’19 / H1’18
Slide 8: Group's Sales and OBS showed double-digit growth in H1 2019
Group’s Sales and OBS showed double-digit growth in H1 2019 Double-digit growth + 17.4 % Group demonstrated double-digit sales growth Group delivered double-digit online sales growth with flattish LFL sales, driven by expansion and online of +17.4% YoY. Pick-up rate was 75% of the Group’s OBS H1 Gro
Slide 9: Eldorado business model re-start
Eldorado business model re-start Business model 30% 01 Omni for web/store assortment, prices, services 02 Assortment + 03 Private Label (TVs) “HI” launched Sales of digital 04 Digital categories 3x outpaced the market 05 Credit broker rolled-out: 19% of credit sales Stores 01 02 Restyling inline wit
Slide 10: The Group is already the largest public e-commerce retailer in Russia
The Group is already the largest public e-commerce retailer in Russia and transforming to online driven business Top-5 online retailers in Russia in 2018 RUB bn (with VAT) Group’s Online 111.2 performance in H1 2019 77.3 73.2 24.5% market share RUB 38 bn classic OBS 41.8 38.8 66% of M.Video sales we
Slide 11: 977 Stores in 220 Cities
Group increased its footprint by 36 stores in H1 2019, 80+ stores planned in H2 Group substantially 977Stores in 220 Cities Key Success Factor for Online-driven Business strengthened its position in North 1H’19 180 HIGHLIGHTS Moscow (+12) +4 (3 MM) Siberia North (+6) 176 +2 (2 MM) Net Sales Center (
Slide 12: Content
CONTENT 2 /3 Market trends and Group’s operational highlights in H1 2019 Group’s financial results in H1 2019 and guidance for FY 2019 Group’s strategy 2022 update and forecast
Slide 13: H1 2019 IAS 17 Group Revenue and Gross profit
H1 2019 “IAS 17” Group Revenue and Gross profit Revenue grew by Gross profit improved by + 7.9 % +8.4% Group Revenue (net of VAT), rub bln Group gross profit, rub bln 7.9% 149,600 161,475 8.4% 38,420 41,650 1 H'18 "IAS 17" 1 H'19 "IAS 17" 1 H'18 "IAS 17" 1 H'19 "IAS 17" Gross margin 25.7% 25.8% Note
Slide 14: H1 2019 Group interim results: EBITDA and Net Income
H1 2019 Group interim results: EBITDA and Net Income + 10.6 % 6.2% +2.2% EBITDA grew +10.6% YoY EBITDA Margin improved Net income stood almost flat by 0.2 pp YoY to 6.2% YoY at RUB 2.9 bn Group EBITDA, rub bln Group Net Income, rub bln 19,740 10.6% 2.2% 10,008 9,049 2,867 2,931 1,365 1 H'18 (IAS 17)
Slide 15: Group EBITDA Margin improved by 0.2 pp YoY
Group EBITDA Margin (“IAS 17”) improved by 0.2 pp YoY mainly due to personnel cost savings, partly offset by growth of lease 0.1% 0.56% 0.1% 6.2% EBITDA Margin 6.0% gained +0.2 pp YoY 0.1% 0.46% Gross Margin grew +0.1 pp YoY due to efficient procurement and commercial function Rent increased b
Slide 16: Group Net Income stood at RUB 2.9 bn in H1 2019
Group Net Income (“IAS 17”) stood at RUB 2.9 bn in H1 2019, due to finance costs + 7.9 % 1.5 х RUB 2.9 bn Net Income before finance Finance cost grew 154.6% Net Income stood flat YoY cost improved YoY YoY to RUB 2.5 bn in H1‘19 at RUB 2.9 bn H1‘19 959 119 5 462 5 062 677 2 931 2 531 Net income befor
Slide 17: IFRS 16 vs IAS 17 EBITDA for H1 2019
“IFRS 16” vs “IAS 17” EBITDA for H1 2019 is higher due to long-term lease contracts expenses recognition changes Lease contracts related expenses EBITDA “IFRS 16” was EBITDA margin “IFRS of RUB 9.7 bn were excluded RUB 19.7 bn 16” was 12.2%, from EBITDA “IFRS 16” RUB 9.7 bn higher vs “IAS 17” vs. 6.
Slide 18: IFRS 16 vs. IAS 17 Net Income for H1'19
“IFRS 16” vs. “IAS 17” Net Income for H1’19 lower mainly due to changes in Finance loss (net) and SG&A RUB 1.4 bn Operating expenses Additional finance loss RUB 1.4 bn Net Income net of D&A were excluded form of RUB 3.6 bn was added under “IFRS 16” was P&L under “IFRS 16” to P&L under “IFRS 16” reco
Slide 19: M.Video-Eldorado Group forecast for FY 2019
M.Video-Eldorado Group forecast for FY 2019 RUB 380 bn > 6% 120 + The Group confirms Revenue EBITDA margin stores forecast in 2019 (RUB bn) is projected Revenue (net of VAT) EBITDA (“IAS 17”) RUB bn RUB bn 1060+ 6% + 941 6% 353 380 21 2018A 2019E 2018A 2019E The information provided is based on M.Vi
Slide 20: Content
CONTENT 3 /3 Market trends and Group’s operational highlights in H1 2019 Group’s financial results in H1 2019 and guidance for FY 2019 Group’s strategy 2022 update and forecast
Slide 21: Digital Transformation of M.Video-Eldorado Group to ONE RETAIL
Digital Transformation of M.Video-Eldorado Group to ONE RETAIL OMNI WAS YESTERDAY, ONE RETAIL — FOR TOMORROW Mobile phone Store Internet MULTI CHANNEL OMNI ONE RETAIL ECO-SYSTEMS • Shopping for emotions Customer • The end of channels • Mobile Independent Overlapping • Without any effort journey • On
Slide 22: How the Group creates ONE RETAIL unified customer journey
How M.Video-Eldorado Group creates ONE RETAIL for the most efficient unified customer journey based on technologies and data WEB One space Stage 2 Stage 1 Web, App and RTD Web & App work No channels work on omni-basket on omni-basket (back&front) One audience no channels = no longer online or offlin
Slide 23: ONE RETAIL and DUAL BRAND strategy meets current market trends
M.Video-Eldorado Group ONE RETAIL and DUAL BRAND strategy perfectly meets current market trends Market landscape trends 2022 summary Russian CE market projected Tighter banks' requirements Chaotic customer journey, Digital products — to slowdown to c.5% a.g.r. for borrowers result in looking for “4E
Slide 24: M.Video-Eldorado Group is online business with stores advantages
M.Video-Eldorado Group is online business with stores advantages “Endless” shelf 30 min delivery Best price guarantee Fast delivery Easy and cost-efficient return/exchange Loyalty program Online Stores Credit platform Feel & Touch Competitive 65% 95% web + app Data-driven offers Fun Personal cabinet
Slide 25: Modern retail has moved from Ps to Es
Modern retail has moved from 4 Ps to 4 Es Engagement Product Price Emotion Built Building transactional THEN NOW engaging long- relationships term relationships Place Exclusivity Promotion Experience 25
Slide 26: How the Group builds customer relationships on 4E's
How M.Video-Eldorado Group builds customer relationships on 4E’s Game zone: customers can test the assortment SoundCafe: customers can test the headphones and play new games before purchase and buy the ones they like Smart home projects: complex solutions AR in-store navigation for smart home zones
Slide 27: Clients appreciate our efforts
Clients appreciate our efforts 25 mln loyal customers 33 mln loyal customers 2-6 purchases per year 2-4 purchases per year 88 NPS by clients 72 NPS by clients Source: Company info 27
Slide 28: Unique customer proposition in consumer credits
Unique customer proposition in consumer credits BEFORE NOW 11 banks 5 available in online 20 mins Client has Client has a demand a demand transaction time (3 times down) 2+ mln Platform selects Client selects appropriate banks on his banks own: probability customers in 2018 of success falls with eve
Slide 29: m_mobile: aiming to digital market leadership
m_mobile: aiming to digital market leadership NEW 9 stores +15 Pilot project five in Moscow and one for Saint Stores in 2H 2019 With MTS Petersburg, Samara, Gelendzhik and Ekaterinburg Unique retail format for Russian market: 200-300 sq. m Coffee-zone 8% 2% 75% 15% More than 2 000 Fun zones: VR, dig
Slide 30: M_RTD as a core platform for ONE RETAIL
M_RTD as a core platform for ONE RETAIL Online experience in stores/ no borders between online/offline. Instant access to the whole assortment and product information • Best experience • Personal offers 439 • Transparent prices / discounts / Customer cashbacks stores connected to m_RTD • Real time a
Slide 31: M.Video-Eldorado Group adheres to its 2022 strategy
M.Video-Eldorado Group adheres to its 2022 strategy ONE COMPANY 2022 ONE OPERATING BUSINESS MODEL TWO BRANDS (DUAL BRAND) ONE RETAIL Strategy 2018 2019 2022 BUSINESS EBITDA MARKET MODEL MARGIN >6% SHARE Centralization of operations Sustainable EBITDA CE market and Dual-brand strategy margin >6% shar
Slide 32: M.Video-Eldorado Group financial forecast 2022
M.Video-Eldorado Group financial forecast 2022 500+ 6% The Group expects the combined Net The combined EBITDA margin Revenue to be 500+ RUB bn by 2022 is to exceed 6% starting from 2019 Revenue (net of VAT), RUB bn EBITDA / EBITDA margin 1400 1 200+ 45 > 6% 10% annually 9% 1200 1 060+ 40 35+ 941 8%
Slide 33: Group's debt portfolio forecast 2022
Group’s debt portfolio forecast 2022 0.7x 0.4x Total Debt/EBITDA is expected to stay Net Debt/EBITDA is to reach at robust 0.7x level in 2022 minimum 0.4x level in 2022 Total Debt & Total Debt / EBITDA Net Debt & Net Debt / EBITDA 60 2.8 3 1.5 45 1.3 40 50 2.5 35 33 1.1 40 0.7 2 30 0.9 1.6 26 25 30
Slide 34: Developing as a sustainable and socially responsible business
M.Video-Eldorado Group is developing as a sustainable and socially responsible business Activate the future Partnership within the team Responsibility for the future Openness to change We do care Courage to innovate Bringing technology into lives, we give people the gifts of time and inspiration We
Slide 35: Appendix
APPENDIX M.Video – Eldorado Group Interim Condensed Consolidated Financial Statements for H12019
Slide 36: Group Profit & Loss key highlights
Group Profit & Loss key highlights In millions of Russian rubles (VAT excl.) H1’19 H1’18 Change YoY H1’19 “IAS 17” “IAS 17” “IFRS 16" Revenue 161 475 149 600 +7.9% 161 475 Gross Profit 41 650 38 420 +8.4% 41 650 Gross margin, % 25.8% 25.7% +0.1pp 25.8% Selling general and administrative expenses 37
Slide 37: Group SG&A expense breakdown
Group SG&A expense breakdown In millions of Russian rubles (VAT excl.) H1’19 H1’18 H1’19 “IAS 17” “IAS 17” “IFRS 16" Payroll and related taxes 11 139 11 162 11 139 As % of revenue 6,9% 7,5% 6,9% Lease expenses 9 062 7 711 655 As % of revenue 5,6% 5,2% 0,4% Advertising & promotional expenses 3 416 2
Slide 38: Group interim condensed Statement of Financial Position
Group interim condensed Statement of Financial Position 30.06.2019 31.12.2018 RUBmn RUBmn ”IFRS 16” “IAS 17” Assets Non-current Assets 160 626 98 481 Fixed assets 20 310 20 734 Intangible assets 19 442 68 767 Other non-current 120 874 9 980 Current Assets 152 658 186 953 Inventory 97 146 113 145 Acc
Slide 39: Group Interim Statement of Cash Flow
Group Interim Statement of Cash Flow 30.06.2019 30.06.2018 RUBmn RUBmn ”IFRS 16” “IAS 17” Operating CF Operating cash flows before movements in WC 19 132 9 729 Inventory change 16 539 (570) Trade payables (33 884) (12 212) Others (6 649) (5 604) Interest paid (5 890) (375) Income tax paid (2 946) (1
Slide 40: PJSC M.VIDEO Contact information
Contact information PJSC “M.VIDEO” Address 105066, Russia, Moscow For investors’ requests, Nizhnaya Krasnoselskaya Str., please, contact: 40/12 bld 20 Natalya Belyavskaya (IR) Web-site +7 495 644 28 48 ir@mvideo.ru ext. 1425 invest.mvideo.ru For media requests, Listing please, contact: The Moscow St
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