X5 Corporate Center · RUS:X5

X5 Corporate Center — X5 Retail Group — FY2017 Earnings Presentation

37 slides from X5 Corporate Center's earnings presentation, Mar 29, 2018

  1. Slide 1: Q4 and 12M 2017 Financial Results

    CLIMB HIGHER! X5 Capital Markets Day 2016 Moscow, 27 October 2016 Q4 AND 12M 2017 FINANCIAL RESULTS MOSCOW, RUSSIAN FEDERATION 29 MARCH 2018

  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 reinforced its market leadership in Russian food retail, with market

  5. Slide 5: Key Achievements in 12M 2017

    05 KEY ACHIEVEMENTS IN 12M 2017  The Company added a record  Revenue growth remained 2,934 new stores in 12M 2017, strong at 25.3% vs. 2,167 stores in 12M 2016.  350 stores refurbished  All of Pyaterochka stores and  EBITDA margin constant at ~73% of Perekrestok stores 7.4% operating under new

  6. Slide 6: Operational Highlights

    06 OPERATIONAL HIGHLIGHTS Net retail sales dynamics, RUB bn Customer visits, mln 25.5% 25.3% CAGR 2013-2017: 24.7% CAGR 2013-2017: 19.0% CAGR 2015-2017: 26.5% 1,286.9 CAGR 2015-2017: 24.9% 3,849 1,025.6 3,072 804.1 2,468 631.9 1,918 2,114 532.7 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Selli

  7. Slide 7: Financial Highlights

    07 FINANCIAL HIGHLIGHTS Revenue dynamics, RUB bn Gross profit & gross margin CAGR 2013-2017: 24.8% CAGR 2013-2017: 24.1% 25.3% CAGR 2015-2017: 26.5% CAGR 2015-2017: 24.8% 1,295.0 24.5% 700 24.4% 24.5% 24.2% 0.25 1,033.7 600 23.9% 0.24 808.8 500 23.6% 633.9 400 0.23 534.6 308.9 300 250.0 0.22 200 198

  8. Slide 8: II. Market Overview

    II. MARKET OVERVIEW

  9. Slide 9: Macro Environment

    09 MACRO ENVIRONMENT Real food retail market showed gradual recovery, Real wage growth remained high, real disposable inflation resumed its decline triggered by income continued to decline, consumer confidence seasonal factors and relatively tight monetary stopped its recovery in Q4 2017 remaining n

  10. Slide 10: Recent Market Trends…

    10 RECENT MARKET TRENDS… KEY TRENDS DESCRIPTION CONCLUSIONS  Growth of over working age  Growth of price-sensitive Changing population by 2% p.a. vs. consumer segment demographics reduction of working age group  Growth of proximity format by 1% p.a. popularity  Growth in attractiveness  Increas

  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% 28% 28% 30% 25% 24% 25% 20% 23% 23% 21% 21% 20% 14% 19% 15% 13% 18% 12% 11% 9% 9% 10% 8% 8% 9% 4% 5% 3% 0% 2010 2011 2012 2013 2014 2015 2

  13. Slide 13: Retail Market Snapshot

    13 RETAIL MARKET SNAPSHOT Top 10 Russian food retailers % market share % market share # Company name 2016 2017 1 Х5 8.0% 9.5% 2 Magnit 7.4% 7.5% 3 Lenta 2.1% 2.5% 4 Auchan 2.9% 2.2% 5 Dixy 2.4% 2.1% 6 SPS Holding 1.2% 1.8% 7 Metro 1.6% 1.4% 8 O‘Key 1.2% 1.2% 9 Monetka 0.6% 0.6% 10 Globus 0.6% 0.6% T

  14. Slide 14: III. Operational Results Q4 2017

    III. OPERATIONAL RESULTS Q4 2017

  15. Slide 15: Q4 2017 Results: Operational Highlights

    15 Q4 2017 RESULTS: OPERATIONAL HIGHLIGHTS Net retail sales Traffic, mln customers Net selling space (eop), th. sq. m 1,041 29.1% 29.5% 28.7% 27.5% 26.4% 27.7% 961 999 27.8% 27.4% 24.9% 848 23.4% 831 5,145 5,480 4,550 4,821 359 4,302 291 291 319 317 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q4 2016 Q1

  16. Slide 16: Q4 2017 Results: Net Retail Sales Summary

    16 Q4 2017 RESULTS: NET RETAIL SALES SUMMARY Net retail sales breakdown by retail format, RUB mln 276,364 359,388 291,289 54,624 25,967 2,433 Q4 2016 Q4 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: Q4 2017 Results: Expansion Summary

    17 Q4 2017 RESULTS: EXPANSION SUMMARY Net selling space, th. sq. m. Net selling space added in Q4 2017, th. sq. m.  Total store base increased to 12,121 stores as of 5,480 31 December 2017 31 December 2017  Continued investments into 52 [1] 4 existing stores, with 49 refurbishments in Q4 2017 4,30

  18. Slide 18: IV. Financial Results Q4 2017

    IV. FINANCIAL RESULTS Q4 2017

  19. Slide 19: Q4 2017 Results: Financial Highlights

    19 Q4 2017 RESULTS: FINANCIAL HIGHLIGHTS [1] Revenue Gross profit & gross margin SG&A (excl. D&A&I&LTI), RUB bn 600 27.8% 26.5% 27.5% 0.3 24.7% 24.3% 24.1% 17.1% 17.0% 17.1% 17.7% 500 23.9% 23.7% 23.8% 23.0% 0.25 15.4% 400 85.9 64.0 361.7 0.2 76.6 75.8 320.8 319.4 71.4 70.6 54.6 294.2 293.1 50.3 49.

  20. Slide 20: Q4 2017 Results: Capital Expenditure Overview

    20 Q4 2017 RESULTS: CAPITAL EXPENDITURE OVERVIEW Capex breakdown for Q4 2017 Capex breakdown by quarter, RUB mln 837 stores opened Total Capex in Q4 2017: RUB 38,131 mln (gross) 38,131 19% New store openings 27,147 26,222 Refurbishments 12% 19,885 Logistics 64% 14,403 5% IT, Maintenance and other 49

  21. Slide 21: Q4 2017 Results: Debt Structure

    21 Q4 2017 RESULTS: DEBT STRUCTURE Debt profile Debt portfolio maturity RUB mln 31 Dec 2017 31 Dec 2016 100% 30% Total Debt 194,296 156,033 41% Short-Term Debt 58,674 45,168 % of total debt 30.2% 28.9% Long-Term Debt 135,622 110,865 29% % of total debt 69.8% 71.1% Net Debt 166,691 137,843 31 Dec 201

  22. Slide 22: Q4 2017 Results: Adjusted SG&A Expenses Analysis

    22 Q4 2017 RESULTS: ADJUSTED SG&A [1] EXPENSES ANALYSIS Q4 2017 analysis 12M 2017 analysis as percent of revenue as percent of revenue 17.7% 62 b.p. 17.1% 16.8% (33) b.p. 17.2% 1 14 b.p. 5 b.p. 0.8 0.9 Third party services 0.8 1.1 (2) b.p. 1.1 (16) b.p. 1.1 Other expenses 0.9 1.2 (1) b.p. 1.2 1.2 (1

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

    FINANCIAL STATEMENTS (1/3) 23 PROFIT AND LOSS STATEMENT RUB mln Q4 2017 Q4 2016 +/( - ) +/ ( - ), % 12M 2017 12M 2016 +/( - ) +/ ( - ), % Revenue 361,705 294,176 67,529 23.0% 1,295,008 1,033,667 261,341 25.3% Net retail sales 359,467 291,289 68,178 23.4% 1,286,949 1,025,589 261,360 25.5% COGS (275,7

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

    FINANCIAL STATEMENTS (2/3) 24 BALANCE SHEET RUB mln 31 Dec 2017 31 Dec 2016 +/( - ) +/( - )% Total current assets 159,273 130,076 29,197 22.4% Cash & cash equivalents 27,605 18,190 9,415 51.8% Inventories 99,300 73,801 25,499 34.6% Total non-current assets 405,985 343,409 62,576 18.2% Net PP&E 278,9

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

    FINANCIAL STATEMENTS (3/3) 24 CASH FLOW RUB mln Q4 2017 Q4 2016 +/( - ) +/( - )% 12M 2017 12M 2016 +/( - ) +/( - )% Net cash generated from 21,060 36,499 (15,439) (42.3)% 58,658 74,915 (16,257) (21.7)% operating activities Net cash from operating activities before changes in 24,268 18,885 5,383 28.5

  26. Slide 26: X5 Regional Presence

    26 X5 REGIONAL PRESENSE X5 today  Multi-format presence in seven Federal Districts  Total stores – 12,121, including: ― 11,225 Pyaterochka ― 638 Perekrestok ― 93 Karusel ― 165 Express stores North North Format Unit Southern Central Volga Ural Siberian Total Caucasus Western 178 841 4,607 3,038 1,3

  27. Slide 27: X5 Distribution Capabilities

    27 X5 DISTRIBUTION CAPABILITIES Warehouse space as of 31 December 2017 Space, Federal district # of DCs th. sq. m. Central 542 16 4 North-Western 114 4 16 Volga 194 9 Ural 145 6 9 6 Southern 77 3 3 Siberian 18 1 1 Total 1,089 39 Centralisation levels 93% 88% 85% Highlights for Q4 2017 78% 78%  New

  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 11,225 stores as of 4,427 th. sq. m. of selling space 31 December 2017, as of 31 December 2017, 34.2% increase y-o-y 33.0% increase y-o-y Q4 2017 net retail sales – 882 mln of customers in Q4 2017, RUB 276.4 bn, 28.0% increase y-o-y 26.0% increase y-o-y Q4 201

  30. Slide 30: Pyaterochka Summary (2/3)

    30 PYATEROCHKA SUMMARY (2/3) Q4 2017 net retail sales growth: Q4 2017 selling space growth: Q4 2017 sales densities: 26.0% increase y-o-y 33.0% increase y-o-y 4.8% decline y-o-y Net Sales Growth (% y-o-y) Net Selling Space Growth (% y-o-y) Sales Densities Net (th. RUB/sq. m[1]) 40.6% 41.1% 34.8% 36.

  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 638 stores[1] as of 637 th. sq. m. of selling space 31 December 2017, as of 31 December 2017, 18.4% increase y-o-y 16.2% increase y-o-y Q4 2017 net retail sales of 113.1 mln customers in Q4 2017, RUB 54.6 bn, 19.7% increase y-o-y 22.4% increase y-

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

    33 PEREKRESTOK SUMMARY (2/3) Q4 2017 net retail sales growth: Q4 2017 selling space growth: Q4 2017 sales densities: 22.4% increase y-o-y 16.2% increase y-o-y 5.9% increase y-o-y Net Sales Growth (% y-o-y) Net Selling Space Growth (% y-o-y) Sales Densities Net (th. RUB/sq. m[1]) 22.4% 17.7% 324 20.5

  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 93 stores as of 385 th. sq. m. of selling space 31 December 2017: as of 31 December 2017, 2.2% increase y-o-y down 0.4% y-o-y Q4 2017 net retail sales: 35.9 mln customers in Q4 2017, RUB 26.0 bn, up 0.1% y-o-y 6.1% increase y-o-y Q4 2017 LFL Results Share of X5's

  36. Slide 36: Karusel Summary (2/3)

    36 KARUSEL SUMMARY (2/3) Q4 2017 net retail sales Q4 2017 selling space: Q4 2017 sales densities growth: 6.1% increase y-o-y 0.4% decline y-o-y growth: 8.4% increase y-o-y Net Sales Growth (% y-o-y) Net Selling Space Growth (% y-o-y) Sales Densities Net (th. RUB/sq. m[1]) 8.8% 9.1% 233 15.4% 229 14.

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

    KARUSEL SUMMARY (3/3) 37 STRATEGY OVERVIEW  Implementing new CVP and increasing customer loyalty: − Gradually rebrand the stores using new branding, giving priority to older stores or stores in one particular region − Expand omni-channel offering − Increase loyalty card penetration and implement pe

X5 Retail Group — FY2017 Earnings Presentation on 6ix