X5 Corporate Center · RUS:X5

X5 Corporate Center — X5 Retail Group — Q4 2019 Earnings Presentation

35 slides from X5 Corporate Center's earnings presentation, 2020

  1. Slide 1: Q4 2019 Financial Results

    resutts = Q4 2019 Financ >X5 RETAIL GROUP

  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 information and opi

  3. Slide 3: I. Highlights

    I. HIGHLIGHTS

  4. Slide 4: Strategic Highlights

    04 STRATEGIC HIGHLIGHTS  Market leader in Russian food retail, 11.5% market share in 2019  Strategy is aimed at maintaining leadership  X5 is a multi-format retailer with focus on two largest segments of the Russian food retail - proximity and supermarkets  Balanced approach to expansion (up to

  5. Slide 5: Key Achievements in Q4 2019

    05 KEY ACHIEVEMENTS IN Q4 2019  Revenue growth at 10.9%  +12.0% YoY selling space in Q4 2019 growth in Q4 2019 (545 net new stores, 231 th. sq.m added)  Adjusted EBITDA margin  In September 2019 6.7% in Q4 2019 Pyaterochka launched first store in new CVP  Net debt / EBITDA at 1.71x  40.6 mln a

  6. Slide 6: Operational Highlights

    06 OPERATIONAL HIGHLIGHTS Net retail sales dynamics, RUB bn LFL sales, % y-o-y growth CAGR 2015-2019: 21.1% CAGR 2017-2019: 15.9% 13.3% 13.7% 1,728 1,525 1,287 7.7% 1,026 804 5.4% 4.0% 1.5% 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Selling space, th. sq. m Number of stores, end of period CAG

  7. Slide 7: Financial Highlights

    07 FINANCIAL HIGHLIGHTS Revenue dynamics, RUB bn Gross profit & gross margin CAGR 2015-2019: 21.0% CAGR 2015-2019: 21.0% CAGR 2017-2019: 15.7% CAGR 2017-2019: 17.4% 13.2% 24.5% 24.2% 23.9% 24.1% 24.6% 1,734 15.2% 1,533 1,295 426 1,034 370 809 309 198 250 2015 2016 2017 2018 2019 2015 2016 2017 2018

  8. Slide 8: Quality of New Openings

    08 QUALITY OF NEW OPENINGS Cash return on new store opened >30% +5 p.p. y-o-y Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Note: Opened 12-36 months ago Share of stores in ‘clinic’ 16,297 15,752 15,260 14,779 14,431 5.8% 6.4% 6.1% 5.3% 6.0% Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Number of stores, eop Sh

  9. Slide 9: Sales Density Stabilisation, Impact of Regional Mix

    SALES DENSITY STABILISATION 09 IMPACT OF REGIONAL MIX Unit: ‘000 RUB/m2 (annualised) Overall 256 256 256 255 253 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Moscow & St Petersburg Rest of Russia Moscow region & Leningrad region 333 330 203 203 202 202 372 371 327 202 371 370 370 322 319 Q4 Q1 Q2 Q3 Q4 Q

  10. Slide 10: III. Macro and Market Overview

    III. MACRO AND MARKET OVERVIEW 10

  11. Slide 11: Macro Environment (1/2)

    11 MACRO ENVIRONMENT (1/2) Real food retail trade continued its Real wages showed a marked acceleration moderate recovery in 2019 despite CPI in H1 2019 with the new record lows of the food acceleration unemployment rate. However, real disposable income continued to fall 7 Y-o-y growth rates, % Y-o-

  12. Slide 12: Macro Environment (2/2)

    12 MACRO ENVIRONMENT (2/2) Consumer confidence slightly improved Positive growth in industrial production is in 2019 relative to the end of 2018. still largely based on mining sector Trading down continued declining acceleration – with significant improvement in the manufacturing sector 0 59.0 6 (5)

  13. Slide 13: X5 vs. Russian Food Retail in Top-Line Growth

    13 X5 VS. RUSSIAN FOOD RETAIL IN TOP-LINE GROWTH 33% 28% 28% 30% 25% 23% 21% 21% 20% 19% 18% 18% 14% 13% 12% 11% 9% 10% 10% 9% 8% 7% 9% 5% 8% 4% 2% 2011 2012 2013 2014 2015 2016 2017 2018 2019 X5 y-o-y revenue growth Top-10 Market Source: Infoline, X5 analysis Starting from 2015, X5 has constantly o

  14. Slide 14: Russian Retail Market Snapshot

    14 RUSSIAN RETAIL MARKET SNAPSHOT Top 10 Russian food retailers % market share % market share # Company name 2018 2019 1 Х5 10.7% 11.5% 2 Magnit 7.7% 7.6% 3 DKBR 5.1% 5.7% 4 Lenta 2.8% 2.5% 5 Auchan 1.9% 1.5% 6 Metro 1.3% 1.1% 7 O’key 1.1% 1.0% 8 Monetka 0.6% 0.7% 9 Svetofor 0.6% 0.7% 10 Globus 0.6%

  15. Slide 15: III. Operational Results Q4 2019

    III. OPERATIONAL RESULTS Q4 2019

  16. Slide 16: X5 Operational Summary

    16 X5 OPERATIONAL SUMMARY Net retail sales Traffic, mln customers Net selling space (eop) 1,336 1,359 1,315 18.0% 15.1% 14.1% 13.9% 1,212 12.0% 17.1% 15.3% 1,162 14.4% 13.4% 11.0% 7,239 6,786 7,009 6,464 6,599 436 467 421 404 421 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q4 2018 Q1 2019 Q2 2019 Q3 201

  17. Slide 17: Q4 2019 Results: X5 Net Retail Sales Summary

    17 Q4 2019 RESULTS: X5 NET RETAIL SALES SUMMARY Net retail sales breakdown by retail format, RUB mln Hypermarkets Hypermarkets 26,096 24,296 67,215 78,793 Supermarkets Supermarkets +11.0% 420,883 420,712 364,210 326,513 Proximity stores Q4 2018 Q4 2019 KEY DRIVERS  Pyaterochka, which continues to m

  18. Slide 18: Q4 2019 Results: Expansion Summary

    18 Q4 2019 RESULTS: EXPANSION SUMMARY Net selling space, th. sq. m Net selling space added in 12.0% Q4 2019, th. sq. m  Total store base increased to 16,297 stores as of 7,239 31 December 2019 6,464 Hypermarkets Supermarkets (2)  Pyaterochka was the main driver 46 for the store base increase with

  19. Slide 19: X5 Regional Presence

    19 X5 REGIONAL PRESENSE X5 today  Multi-format presence in seven Federal Districts  Total stores – 16,297, including: ― 15,354 Pyaterochka stores ― 852 Perekrestok supermarkets ― 91 Karusel hypermarkets (before transformation) North North Format Unit Southern Central Volga Ural Siberian Total Cauc

  20. Slide 20: X5 Distribution Capabilities

    20 X5 DISTRIBUTION CAPABILITIES Warehouse space as of 31 December 2019 Space, Federal district # of DCs th. sq. m Central 587 16 6 North-Western 150 6 Volga 200 8 16 Ural 139 6 8 6 Southern 96 4 4 Siberian 29 2 2 Total 1,202 42 Centralisation levels Highlights for Q4 2019  X5 continued the implemen

  21. Slide 21: IV. Financial Results Q4 2019

    IV. FINANCIAL RESULTS Q4 2019

  22. Slide 22: X5 Quarterly Financial Highlights

    22 X5 QUARTERLY FINANCIAL HIGHLIGHTS Revenue Gross profit & gross margin SG&A (excl. D&A&I&LTI)[1] 24.8% 25.0% 18.0% 18.3% 18.2% 17.9% 24.5% 17.3% 16.9% 15.5% 24.3% 14.3% 12.4% 24.1% 10.9% 23.9% 83.9 13.6% 76.0 74.4 75.6 76.8 469.2 109.5 112.2 114.0 62.9 423.0 437.3 423.0 101.8 100.6 103.5 405.9 Q4

  23. Slide 23: X5 Capital Expenditures

    23 X5 CAPITAL EXPENDITURES Capex breakdown, 2019 Capex dynamics by quarter, RUB mln 28,037 25,889 21,818 21,006 12,414 13% New store openings Refurbishments 11% Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 RUB Logistics IT 81 bn Expected change in Capex structure 6% 54% Maintenance -3.0% y-o-y Other 3% 4

  24. Slide 24: X5 Debt Structure

    24 X5 DEBT STRUCTURE Debt profile Debt portfolio maturity 100% 33% RUB mln 31 Dec 2019 31 Dec 2018 Total Debt 227,933 207,764 40% Short-Term Debt 74,755 60,435 % of total debt 32.8% 29.1% Long-Term Debt 153,178 147,329 27% % of total debt 67.2% 70.9% Net Debt 209,331 183,396 31 Dec 2019 2020 2021 20

  25. Slide 25: Q4 2019: Adjusted SG&A Expenses Analysis

    25 Q4 2019: ADJUSTED SG&A [1] EXPENSES ANALYSIS Q4 2019 analysis as percentage of revenue 18.0% (9) b.p. 17.9% 0.9% (6) b.p. 0.9% 1.6% (45) b.p. 1.1% (1) b.p. 1.1% 1.1% 3 b.p. 2.1% 13.4% Third party services 2.1% 0.9% 1.0% Other expenses 1.0% 8 b.p. 4.8% Other store costs 4.7% 2.1% Utilities 0.4% Le

  26. Slide 26: X5 Profit and Loss Statement

    26 X5 PROFIT AND LOSS STATEMENT IAS 17 IFRS 16 RUB mln Q4 2019 Q4 2018 +/( - ) +/ ( - ), % Q4 2019 Revenue 469,217 422,955 46,262 10.9% 469,217 Net retail sales 467,299 420,883 46,416 11.0% 467,299 COGS (356,976) (321,175) (35,801) 11.1% (355,232) Gross profit 112,241 101,780 10,461 10.3% 113,985 Gr

  27. Slide 27: X5 Balance Sheet (IFRS 16)

    X5 BALANCE SHEET 27 (IFRS 16) RUB mln 31 Dec 2019 31 Dec 2018* Total current assets 179,754 170,840 Cash & cash equivalents 18,602 24,368 Inventories 127,462 115,990 Total non-current assets 894,576 439,959 Right-of-use assets 428,166 - Net PP&E 315,257 303,802 Goodwill 101,927 94,627 Total assets 1

  28. Slide 28: X5 Cash Flow Statement

    28 X5 CASH FLOW STATEMENT IAS 17 IFRS 16 RUB mln Q4 2019 Q4 2018 +/( - ) +/ ( - ), % Q4 2019 Net cash generated from 28,935 42,255 (13,320) (31.5)% 42,735 operating activities Net cash from operating activities before 29,740 30,101 (361) (1.2)% 52,541 changes in working capital Change in Working Cap

  29. Slide 29: Appendix: Performance Summary of Key Formats

    APPENDIX PERFORMANCE SUMMARY OF KEY FORMATS

  30. Slide 30: Pyaterochka Summary (1/3)

    PYATEROCHKA SUMMARY (1/3) 30 RUSSIA’S #1 PROXIMITY NETWORK BY REVENUE 15,354 stores as of 5,975 th. sq. m of selling space 31 December 2019, as of 31 December 2019, 13.5% increase y-o-y 12.9% increase y-o-y Q4 2019 net retail sales – 1,167 mln of customer visits in RUB 364.2 bn, Q4 2019, 13.1% incre

  31. Slide 31: Pyaterochka Proximity Stores Summary (2/3)

    31 PYATEROCHKA PROXIMITY STORES SUMMARY (2/3) Q4 2019 net retail sales: Q4 2019 selling space: Q4 2019 sales densities: 11.5% increase y-o-y 12.9% increase y-o-y 1.6% decline y-o-y Net sales growth (% y-o-y) Net selling space growth (% y-o-y) Net sales densities (th. RUB/sq. m[1]) 28.8% 34.1% 33.0%

  32. Slide 32: Pyaterochka Format Strategy Highlights (3/3)

    32 PYATEROCHKA PROXIMITY STORES SUMMARY (3/3) FORMAT STRATEGY HIGHLIGHTS  Increase number of loyal customers and maximise share of their wallet: − New CVP and further adaptation of assortment − Leadership in NPS and service level − Better personnel turnover and engagement − Focus on operational eff

  33. Slide 33: Perekrestok Supermarkets Summary (1/3)

    PEREKRESTOK SUPERMARKETS SUMMARY (1/3) 33 RUSSIA’S #1 SUPERMARKET 852 stores as of 900 th. sq. m. of selling space 31 December 2019, as of 31 December 2019, 12.1% increase y-o-y 15.1% increase y-o-y Q4 2019 net retail sales of 161 mln customers in Q4 2019, RUB 78.8 bn, 14.8% increase y-o-y 17.2% inc

  34. Slide 34: Perekrestok Supermarkets Summary (2/3)

    34 PEREKRESTOK SUPERMARKETS SUMMARY (2/3) Q4 2019 net retail sales: Q4 2019 selling space: Q4 2019 sales densities: 17.2% increase y-o-y 15.1% increase y-o-y 1.0% increase y-o-y Net sales growth (% y-o-y) Net selling space growth (% y-o-y) Net sales densities (th. RUB/sq. m[1]) 25.5% 327 328 329 329

  35. Slide 35: Perekrestok Summary (3/3) Format Strategy Highlights

    PEREKRESTOK SUMMARY (3/3) 35 FORMAT STRATEGY HIGHLIGHTS  Value proposition and adapting to customer needs: − Further adaptation of assortment with focus on fresh, F&V, ready-to-eat − Omni-channel development − Targeted loyalty system and personalised promo − Best-in-class service, further increase

X5 Retail Group — Q4 2019 Earnings Presentation on 6ix