X5 Corporate Center · RUS:X5
X5 Corporate Center — X5 Retail Group — UBS One-on-One Conference, New York, March 2008
21 slides from X5 Corporate Center's conference presentation, March 2008
Slide 1: Leadership In Russian Food Retail
Leadership In Russian Food Retail March 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… • #1 food retailer in Russia in terms of sales • USD 5,320 million of net sales in 2007 FY '07 Sales % in Company USD mln Top-10 • Strong international management team • 868 company-managed stores in Russia and Ukraine* 1 X5 Retail Group 5 320** 22.4% •
Slide 4: 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 5: X5 Retail Group Today - Strong Regional Presence
X5 Retail Group Today - … ...Strong Regional Presence… 2007 Retail Sales Break-Down by Region 2007 EOP Store Locations Total FY 2007 Soft Super- Hyper- Net Retail Sales of USD 5,284 mln Discounters markets markets 1% 1% 4% 2% Moscow & 9% Moscow region 309 105 4 St. Petersburg & North-West 244 19 0 C
Slide 6: Full Year 2007 Financial Highlights
X5 Retail Group Today Full Year 2007 Financial Highlights* % change, USD mln FY 2007 FY 2006 y-o-y Net Sales, incl. 5,320.4 3,485.4 53% Retail 5,284.3 3,460.4 53% Gross Profit 1,403.7 928.9 51% Gross Margin, % 26.4% 26.7% EBITDA 479.2 296.7 62% EBITDA Margin, % 9.0% 8.5% EBIT 337.5 210.3 60% EBIT Ma
Slide 7: Russian Food Retail Market Is Very Immature
Russian Food Retail Market… … Is Very Immature… Retail Sales per Capita # of Hypermarkets per 100,000 Inhabitants USD 8 000 6 000 3,0 4 000 2,0 1,4 2 000 0,7 0,5 0,02 0 USA France UK Canada Ger- Austria Italy Russia Germany France Czech Hungary Poland Russia many Republic # of Discounters per 100,00
Slide 8: Russian Food Retail Market Offering Huge Growth Potential
Russian Food Retail Market… … Offering Huge Growth Potential 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 30% Total Russian food retail • Curr
Slide 9: X5 Business Strategy: Market Share Is Crucial
X5 Business Strategy … Market Share Is Crucial Revenue Growth Market Leadership Competitiveness Purchasing Power p. 9
Slide 10: 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 • Being better than our • Smart pricing competitors are • Balanced Strong &
Slide 11: 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 12: Multi-Format Approach: Supermarkets
X5 Business Strategy Multi-Format Approach: Supermarkets Format Highlights 2007 LFL Performance • 37% of total retail sales Traffic Basket + 26% • 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 13: Multi-Format Approach: Hypermarkets
X5 Business Strategy 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% • Average
Slide 14: Delivering Strong & Balanced LFL Growth
X5 Business Strategy Delivering Strong & Balanced LFL Growth …. …by being better than our competitors are… Total Group 2007 LFL Performance Smart Pricing & Active Promos Traffic Basket + 25% • Price offers for a group of SKUs during a + 18% + 20% certain period 13% 5% 11% • In/out actions + 11% • Pa
Slide 15: Selling Area Growth: Expansion Into European Russia & Urals
X5 Business Strategy Selling Area Growth: Expansion Into The European Part Of Russia & Urals Key priority area for expansion St. Petersburg Pskov Veliky Novgorod Cherepovez Tver’ Share In Share In Total Vologda Yaroslavl Total Area, % Market, % Smolensk MOSCOW Kostroma European part of Bryansk Kalug
Slide 16: 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 17: 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 18: 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 19: 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 20: 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 21: Outlook For 2008
Outlook For 2008 FY 2007A FY 2008E Sales Growth (excl. FX) 44% 36-38% LFL Sales Growth (excl. FX) 20% ~10% Net Selling Space Growth 143,100 sq.m. 140 – 160,000 sq.m. New Hypermarkets 3 8* Storage Area (DC) Growth 78,100 sq.m. 40,000 sq.m. Capital Expenditure USD 0.87 bln USD 1.2– 1.4 bln Gross Margi
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