X5 Corporate Center · RUS:X5

X5 Corporate Center — X5 Retail Group — Q2 2017 Earnings Presentation

37 slides from X5 Corporate Center's earnings presentation, Aug 2, 2017

  1. Slide 1: Q2 and H1 2017 Financial Results

    CLIMB HIGHER! X5 Capital Markets Day 2016 Moscow, 27 October 2016 Q2 AND H1 2017 FINANCIAL RESULTS MOSCOW, RUSSIAN FEDERATION 2 AUGUST 2017

  2. Slide 2: Disclaimer

    02 DISCLAIMER T his presentation does not constitute or form part of and should not be construed as an advertisement of securities, an offer or This presentation includes statements that are, or may be deemed to be, “forward- looking statements”, with respect to the financial the Securities on the t

  3. Slide 3: I. Highlights

    I. HIGHLIGHTS

  4. Slide 4: Strategic Highlights

    04 STRATEGIC HIGHLIGHTS  X5 is a true multi-format retailer with unique decentralised model that allows development autonomy for three banners, with support of Corporate Centre enhancing efficiency and sharing best-practices  X5 achieved its strategic milestone of market leadership in Russian food

  5. Slide 5: Key Achievements in 12M 2016

    05 KEY ACHIEVEMENTS IN 12M 2016  The Company added a record  Revenue increased by 2,167 new stores in 2016, 27.8% y-o-y the fastest pace vs. 1,537 stores in 2015. since 2011  1,254 stores refurbished  Adj. EBITDA margin up by  >94% of Pyaterochka stores and 35 b.p. y-o-y to 7.7%, >52% of Perekr

  6. Slide 6: Operational Highlights

    06 OPERATIONAL HIGHLIGHTS Net retail sales dynamics, Rub bn Customer visits, mln 27.5% 24.5% CAGR 2012-2016: 20.3% CAGR 2012-2016: 14.4% CAGR 2014-2016: 27.4% 1 025.6 CAGR 2014-2016: 20.5% 3 072 804.1 2 468 2 114 631.9 1 793 1 918 532.7 490.1 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Selling

  7. Slide 7: Financial Highlights

    07 FINANCIAL HIGHLIGHTS Revenue dynamics, Rub bn Gross profit & gross margin CAGR 2012-2016: 20.4% 27.8% CAGR 2012-2016: 21.2% CAGR 2014-2016: 27.7% CAGR 2014-2016: 27.0% 1 033.7 ,400.0 23.6% 24.4% 24.5% 24.5% 24.2% 25.0% 808.8 26.0% ,300.0 633.9 250.0 20.0% 491.1 534.6 198.4 ,200.0 155.0 115.8 130.

  8. Slide 8: II. Market Overview

    II. MARKET OVERVIEW

  9. Slide 9: Weak Consumer & Macro Environment

    09 WEAK CONSUMER & MACRO ENVIRONMENT Inflation and real wage growth Consumer confidence index 8 0 7 -5 6 5 -10 4 -15 3 -20 2 1 -25 0 -30 -1 -2 -35 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Nov 16 Dec 16 May 16 May 17 Apr 16 Jun 16 Jul 16 Aug 16 Sep 16 Apr 17 Jun 17 Oct 16 Jan 17 Feb 17 Mar 1

  10. Slide 10: Recent Market Trends…

    10 RECENT MARKET TRENDS… KEY TRENDS DESCRIPTION CONCLUSIONS  Growth of price-sensitive  Growth of 60+ age population consumer segment Changing by 2-3% p.a. vs. reduction of demographics  Growth of proximity format 20-29 year group by 6% p.a. popularity  Growth in attractiveness  Increased price

  11. Slide 11: …and X5's Response

    11 …AND X5’S RESPONSE KEY TRENDS X5 RESPONSE  Continued expansion of proximity segment (>75% of X5 revenues) Changing  5-10% discounts for pensioners from 9:00 until 13:00 demographics  Focus on mothers with children Declining  Constant adaptation of value proposition to customers’ needs populat

  12. Slide 12: X5 vs. Russian Food Retail in Top-Line Growth

    12 X5 VS. RUSSIAN FOOD RETAIL IN TOP-LINE GROWTH  Strategic transformation of X5 35% 33%  X5 is delivering on growth strategy while others are slowing down 30% 27.6% 27.8% 27.0% 30% 24% 25% 23% 21% 20% 21% 18% 17%* 20% 14% 19% 15% 12% 11% 9% 9% 9% 8% 10% 8% 5% 5% 3% 0% 2010 2011 2012 2013 2014 201

  13. Slide 13: Retail Market Snapshot

    13 RETAIL MARKET SNAPSHOT Top 10 Russian Food retailers % in total market % in total market # Company name 2015 2016 1 Х5 6.3% 8.0% 2 Magnit 6.8% 7.4% 3 Auchan 2.8% 2.9% 4 Dixy 2.2% 2.4% 5 Lenta 1.8% 2.1% 6 Metro 1.6% 1.6% 7 SPS Holding 0.7% 1.2% 8 O‘Key 1.2% 1.2% 9 Monetka 0.6% 0.6% 10 Globus 0.5%

  14. Slide 14: III. Operational Results Q2 2017

    III. OPERATIONAL RESULTS Q2 2017

  15. Slide 15: Q2 2017 Results: Operational Highlights

    15 Q2 2017 RESULTS: OPERATIONAL HIGHLIGHTS Net retail sales Traffic, mln customers Net selling space (eop), th. sq. m 961 31.8% 30.7% 29.1% 29.5% 30.2% 28.7% 27.5% 26.4% 27.7% 831 848 25.7% 768 799 4 302 4 550 4 821 319 4 025 291 291 3 747 250 254 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q2 2016 Q3 2

  16. Slide 16: Q2 2017 Results: Net Retail Sales Summary

    16 Q2 2017 RESULTS: NET RETAIL SALES SUMMARY Net retail sales breakdown by retail format, RUB mln 249,905 44,930 318,867 21,575 2,456 249,722 Q2 2016 Q2 2017 Source: X5 data KEY DRIVERS  Pyaterochka, which continues to meet customers’ needs in a challenging macro environment, was the key driver for

  17. Slide 17: Q2 2017 Results: Expansion Summary

    17 Q2 2017 RESULTS: EXPANSION SUMMARY Net selling space, th. sq. m. Net selling space added in Q2 2017, th. sq. m.  Total store base increased to 10,506 stores as of 4,821 30 June 2017 30 June 2017 (3.1)  Continued investments into 13 existing stores, with 90 refurbishments in Q2 2017 3,747 30 Jun

  18. Slide 18: IV. Financial Results Q2 2017

    IV. FINANCIAL RESULTS Q2 2017

  19. Slide 19: Q2 2017 Results: Financial Highlights

    19 Q2 2017 RESULTS: FINANCIAL HIGHLIGHTS [1] Revenue Gross profit & gross margin SG&A (excl. D&A&I&LTI), Rub bn 30.7% 27.8% 27.5% 17.4% 400.0 25.9% 26.5% 30.0% 16.5% 17.1% 17.0% 350.0 23.8% 24.4% 24.3% 24.1% 23.9% 15.4% 294.2 293.1 320.8 25.0% 300.0 251.6 256.2 50.3 49.8 20.0% 76.6 49.6 250.0 71.4 7

  20. Slide 20: Q2 2017 Results: Capital Expenditure Overview

    20 Q2 2017 RESULTS: CAPITAL EXPENDITURE OVERVIEW Capex breakdown for Q2 2017 Capex breakdown by quarter, RUB mln 742 stores opened Total Capex in Q2 2017: 19,885 RUB mln (gross) 27 147 16% New store openings 20 614 19 885 18 601 7% Refurbishments 14 403 Logistics 11% 90 stores 66% IT, Maintenance an

  21. Slide 21: Q2 2017 Results: Debt Structure

    21 Q2 2017 RESULTS: DEBT STRUCTURE Debt profile Debt portfolio maturity 100% 14% 34% Rub mln 30 Jun 2017 30 Jun 2016 Total Debt 170,635 156,000 34% Short-Term Debt 46,389 43,063 % of total debt 27,2% 27.6% Long-Term Debt 124,246 112,937 18% % of total debt 72.8% 72,4% Net Debt 163,856 150,569 30 Jun

  22. Slide 22: Q2 2017 Results: Adjusted SG&A Expenses Analysis

    22 Q2 2017 RESULTS: ADJUSTED SG&A [1] EXPENSES ANALYSIS Q2 2017 analysis H1 2017 analysis as percent of revenue as percent of revenue 15.4% (104) b.p. 16.5% 16.2% (95) b.p. 17.1% Third party services (5) b.p. 0.8 1 b.p. 0.7 0.7 1.0 (40) b.p. 0.9 Other expenses 0.8 (19) b.p. 0.7 1.5 0.5 1.4 1.1 (31)

  23. Slide 23: Financial Statements (1/3): Profit and Loss Statement

    FINANCIAL STATEMENTS (1/3) 23 PROFIT AND LOSS STATEMENT +/ ( - ), +/ ( - ), RUB mln Q2 2017 Q2 2016 +/( - ) H1 2017 H1 2016 +/( - ) % % Revenue 320,801 251,633 69,168 27,5 613,879 483,244 130,635 27,0 Net retail sales 318,867 249,722 69,145 27,7 610,351 480,323 130,028 27,1 COGS (244,180) (191,826)

  24. Slide 24: Financial Statements (2/3): Balance Sheet

    FINANCIAL STATEMENTS (2/3) 24 BALANCE SHEET RUB mln 30 Jun 2017 30 Jun 2016 +/( - ) +/( - )% Total current assets 114,153 101,986 12,167 11,9 Cash & cash equivalents 6,779 5,431 1,348 24,8 Inventories 82,767 62,970 19,797 31,4 Total non-current assets 360,137 315,098 45,039 14,3 Net PP&E 246,994 208

  25. Slide 25: Financial Statements (3/3): Cash Flow

    FINANCIAL STATEMENTS (3/3) 25 CASH FLOW RUB mln Q2 2017 Q2 2016 +/( - ) +/( - )% H1 2017 H1 2016 +/( - ) +/( - )% Net cash generated from operating 11,323 12,555 (1,232) (9,8) 10,905 18,281 (7,376) (40,3) activities Net cash from operating activities before changes in 27,994 20,122 7,872 39,1 50,281

  26. Slide 26: X5 Regional Presence

    26 X5 REGIONAL PRESENSE X5 today  Multi-format presence in seven Federal Districts  Total stores – 10,506, including: ― 9,688 Pyaterochka ― 557 Perekrestok ― 90 Karusel ― 171 Express stores North North Format Unit Southern Central Volga Ural Siberian Total Caucasus Western 152 681 4,016 2,717 1,16

  27. Slide 27: X5 Distribution Capabilities

    27 X5 DISTRIBUTION CAPABILITIES Warehouse space as of 30 June 2017 Space, Federal district # of DCs 4 th. sq. m. Central 499 15 North-Western 123 4 15 Volga 143 7 Ural 149 7 Southern 77 3 7 7 Total 991 36 3 Centralisation levels 91% 88% 85% 78% 78% 76% 75% Highlights for Q2 2017  In Q2 2017, X5 ope

  28. Slide 28: Appendices I. Performance Summary of Key Formats

    APPENDICIES I. PERFORMANCE SUMMARY OF KEY FORMATS

  29. Slide 29: Pyaterochka Summary (1/3): Highlights

    PYATEROCHKA SUMMARY (1/3) 29 HIGHLIGHTS 9,688 stores as of 3,844 th. sq. m. of selling space 30 June 2017, as of 30 June 2017, 35.2% increase y-o-y 36.1% increase y-o-y Q2 2017 net retail sales – 817 mln of customers for Q2 2017, RUB 249.9 bn, 28.7% increase y-o-y 31.9% increase y-o-y Q2 2017 LFL Re

  30. Slide 30: Pyaterochka Summary (2/3): Building on a Successful Track Record

    PYATEROCHKA SUMMARY (2/3) 30 BUILDING ON A SUCCESSFUL TRACK RECORD Q2 2017 net retail sales growth: Q2 2017 selling space growth: Q2 2017 sales densities: 31.9% increase y-o-y 36.1% increase y-o-y 4.4% decline y-o-y Net Sales Growth (% y-o-y) Net Selling Space Growth (% y-o-y) Sales Densities Net (t

  31. Slide 31: Pyaterochka Summary (3/3): Strategy Overview

    PYATEROCHKA SUMMARY (3/3) 31 STRATEGY OVERVIEW  Maximise the share of customers, and maximise share of these customers’ wallet: − Continue applying the current value proposition, enhancing it through implementation of new initiatives − Support rapid, sustainable growth with development in new regio

  32. Slide 32: Perekrestok Summary (1/3): Russia's #1 Supermarket

    PEREKRESTOK SUMMARY (1/3) 32 RUSSIA’S #1 SUPERMARKET 557 stores as of 565 th. sq. m. of selling space 30 June 2017, as of 30 June 2017, 13.0% increase y-o-y 12.6% increase y-o-y Q2 2017 net retail sales of 99.8 mln customers for Q2 2017, RUB 44.9 bn, 14.3% increase y-o-y 20.4% increase y-o-y Q2 2017

  33. Slide 33: Perekrestok Summary (2/3): Improving Operations

    PEREKRESTOK SUMMARY (2/3) 33 IMPROVING OPERATIONS: GROWING LFL AND SELLING SPACE Q2 2017 net retail sales growth: Q2 2017 selling space growth: Q2 2017 sales densities: 20.4% increase y-o-y 12.6% increase y-o-y 6.8% increase y-o-y Net Sales Growth (% y-o-y) Net Selling Space Growth (% y-o-y) Sales D

  34. Slide 34: Perekrestok Summary (3/3): Strategy Overview

    PEREKRESTOK SUMMARY (3/3) 34 STRATEGY OVERVIEW  Fine-tuning value proposition and adapting to customer needs: − Maintaining the pace of organic growth and refurbishments − Roll out the regional model to support the future growth − Further adaptation of assortment to meet customer needs − Increase l

  35. Slide 35: Karusel Summary (1/3): Highlights

    KARUSEL SUMMARY (1/3) 35 HIGHLIGHTS 90 stores as of 380 th. sq. m. of selling space 30 June 2017: as of 30 June 2017, 1.1% increase y-o-y down 1.2% y-o-y Q2 2017 net retail sales: 33.4 mln customers in Q2 2017, RUB 21.6 bn, down 2.3% y-o-y 7.2% increase y-o-y Q2 2017 LFL Results Share of X5's Q2 201

  36. Slide 36: Karusel Summary (2/3): The Right Time for Relaunch

    KARUSEL SUMMARY (2/3) 36 THE RIGHT TIME FOR RELAUNCH Q2 2017 sales densities Q2 2017 net retail sales Q2 2017 selling space growth: 8.5% increase y-o-y growth: 7.2% increase y-o-y growth: 1.2% decline y-o-y Net Sales Growth (% y-o-y) Net Selling Space Growth (% y-o-y) Sales Densities Net (th. RUB/sq

  37. Slide 37: Karusel Summary (3/3): Strategy Overview

    KARUSEL SUMMARY (3/3) 37 KARUSEL STRATEGY OVERVIEW Good results at model hypers Development plan  Upgrade operating model for new  Key achievements: hypermarkets with all best practices taken − Positive LFL traffic in model hypers from “Model Hypermarkets” pilots − Increase of average check  Furt

X5 Retail Group — Q2 2017 Earnings Presentation on 6ix