X5 Corporate Center · RUS:X5

X5 Corporate Center — X5 Retail Group — Q1 2017 Earnings Presentation

36 slides from X5 Corporate Center's earnings presentation, Mar 27, 2017

  1. Slide 1: Q1 2017 Financial Results

    CLIMB HIGHER! X5 Capital Markets Day 2016 Moscow, 27 October 2016 Q1 2017 FINANCIAL RESULTS MOSCOW, RUSSIAN FEDERATION 27 MARCH 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: Key Achievements in Q1 2017

    04 KEY ACHIEVEMENTS IN Q1 2017  The Company added  Revenue increased by 630 new stores in Q1 2017, 26.5% y-o-y vs. 377 stores in Q1 2016.  111 stores refurbished  EBITDA margin up by  >96% of Pyaterochka stores and 44 b.p. y-o-y to 7.6% >56% of Perekrestok stores operating under new concept  C

  5. Slide 5: Operational Highlights

    05 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

  6. Slide 6: Financial Highlights

    06 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.

  7. Slide 7: II. Market Overview

    II. MARKET OVERVIEW

  8. Slide 8: Macro Environment

    08 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 Sep 16 Nov 16 Dec 16 May 16 Jul 16 Aug 16 Jan 17 Apr 16 Jun 16 Mar 17 Oct 16 Feb 17 CPI CPI food Real wage growth CCI Sou

  9. Slide 9: Recent Market Trends…

    09 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

  10. Slide 10: …and X5's Response

    10 …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

  11. Slide 11: X5 vs. Russian Food Retail in Top-Line Growth

    11 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% 30% 25% 24% 25% 23% 20% 21% 23% 19% 20% 18% 21% 14% 15% 13% 12% 11% 9% 9% 10% 8% 8% 9% 5% 2% 0% 2009 2010 2011 2012 2013 2014

  12. Slide 12: Retail Market Snapshot

    12 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%

  13. Slide 13: III. Operational Results Q1 2017

    III. OPERATIONAL RESULTS Q1 2017

  14. Slide 14: Q1 2017 Results: Operational Highlights

    14 Q1 2017 RESULTS: OPERATIONAL HIGHLIGHTS Net retail sales Traffic, mln customers Net selling space (eop), th. sq. m 831 848 768 799 31.0% 31.8% 30.7% 29.1% 29.5% 30.2% 26.7% 25.7% 27.5% 26.4% 675 4,302 4,550 3,747 4,025 291 291 3,514 231 250 254 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q1 2016 Q2 2

  15. Slide 15: Q1 2017 Results: Net Retail Sales Summary

    15 Q1 2017 RESULTS: NET RETAIL SALES SUMMARY Net retail sales breakdown by retail format, RUB mln 222,941 44,964 291,484 21,055 2,523 230,601 Q1 2016 Q1 2017 Source: X5 data KEY DRIVERS  Pyaterochka, which continues to meet customers’ needs in a challenging macro environment, was the key driver for

  16. Slide 16: Q1 2017 Results: Expansion Summary

    16 Q1 2017 RESULTS: EXPANSION SUMMARY Net selling space, th. sq. m. Net selling space added in Q1 2017, th. sq. m.  Total store base increased to 9,817 stores as of 4,550 31 March 2017 31 March 2017  Continued investments into 3.5 -4.1 existing stores, with 111 refurbishments in Q1 2017 3,514 31 M

  17. Slide 17: IV. Financial Results Q1 2017

    IV. FINANCIAL RESULTS Q1 2017

  18. Slide 18: Q1 2017 Results: Financial Highlights

    18 Q1 2017 RESULTS: FINANCIAL HIGHLIGHTS Revenue Gross profit & gross margin SG&A (excl. D&A&I), Rub bn 30.7% 26.8% 25.9% 27.8% 17.8% 17.4% ,400.0 26.5% 30.0% 16.5% 17.1% 17.2% ,350.0 25.0% 294.2 293.1 50.3 50.3 ,300.0 24.3% 24.4% 24.3% 251.6 256.2 24.1% 44.5 231.6 20.0% 23.8% 41.3 41.5 ,250.0 15.0%

  19. Slide 19: Q1 2017 Results: Capital Expenditure Overview

    19 Q1 2017 RESULTS: CAPITAL EXPENDITURE OVERVIEW Capex breakdown for Q1 2017 Capex breakdown by quarter, RUB mln 678 stores opened Total Capex in Q1 2017: 14,403 RUB mln (gross) 27,147 5% 14% 20,614 New store openings 18,601 Refurbishments 14,316 14,403 16% Logistics 65% IT, Maintenance and other Q1

  20. Slide 20: Q1 2017 Results: Debt Structure

    20 Q1 2017 RESULTS: DEBT STRUCTURE Debt profile Debt maturity schedule RUB 162,156 mln 30% Rub mln 31 Mar 2017 31 Mar 2016 Total Debt 162,156 148,991 34% Short-Term Debt 49,280 46,059 % of total debt 30.4% 30.9% 36% Long-Term Debt 112,876 102,932 % of total debt 69.6% 69.1% Net Debt 155,924 144,492

  21. Slide 21: Q1 2017 Results: Adjusted SG&A Expenses Analysis

    21 Q1 2017 RESULTS: ADJUSTED SG&A EXPENSES ANALYSIS (68) b.p. 17.8% 17.2% (13) b.p. 0.8 0.7 1.0 Third party services 1.0 3 b.p. 1.5 Other expenses 1.1 (34) b.p. Other store costs 2.1 (2) b.p. 2.2 Utilities 4.6 4 b.p. 4.6 Lease expenses 7.6 (24) b.p. 7.8 Staff costs Q1 2017 Q1 2016 Source: X5 data

  22. Slide 22: Financial Statements (1/3): Profit and Loss Statement

    FINANCIAL STATEMENTS (1/3) 22 PROFIT AND LOSS STATEMENT RUB mln Q1 2017 Q1 2016 +/( - ) +/ ( - ), % Revenue 293,078 231,611 61,467 26.5 Net retail sales 291,484 230,601 60,883 26.4 COGS (222,466) (175,420) (47,046) 26.8 Gross profit 70,612 56,191 14,421 25.7 Gross profit margin 24.1 24.3 (17) b.p. S

  23. Slide 23: Financial Statements (2/3): Balance Sheet

    FINANCIAL STATEMENTS (2/3) 23 BALANCE SHEET RUB mln 31 Mar 2017 31 Mar 2016 +/( - ) +/( - )% Total current assets 110,322 104,841 5,481 5.2 Cash & cash equivalents 6,232 4,499 1,733 38.5 Inventories 81,879 62,920 18,959 30.1 Total non-current assets 350,143 302,212 47,931 15.9 Net PP&E 237,757 197,3

  24. Slide 24: Financial Statements (3/3): Cash Flow

    FINANCIAL STATEMENTS (3/3) 24 CASH FLOW RUB mln Q1 2017 Q1 2016 +/( - ) +/( - )% Net cash generated from/ (418) 5,726 (6,144) n/a (used in) operating activities Net cash from operating activities 22,287 16,688 5,599 33.6 before changes in working capital Change in Working Capital, incl.: (13,914) (6

  25. Slide 25: X5 Regional Presence

    25 X5 REGIONAL PRESENSE X5 today  Multi-format presence in seven Federal Districts  Total stores – 9,817, including: ― 9,002 Pyaterochka ― 544 Perekrestok ― 90 Karusel ― 181 Express stores North North Format Unit Southern Central Volga Ural Siberian Total Caucasus Western 140 618 3,760 2,547 1,095

  26. Slide 26: X5 Distribution Capabilities

    26 X5 DISTRIBUTION CAPABILITIES Warehouse space as of 31 March 2017 Space, Federal district # of DCs 5 th. sq. m. Central 499 15 North-Western 131 5 15 Volga 143 7 Ural 101 6 Southern 77 3 7 6 Total 951 36 3 Centralisation levels 90% 88% 85% 78% 78% 76% 75% Highlights  In Q1 2017, X5 opened a new 1

  27. Slide 27: Appendices I. Performance Summary of Key Formats

    APPENDICIES I. PERFORMANCE SUMMARY OF KEY FORMATS

  28. Slide 28: Pyaterochka Summary (1/3): Highlights

    PYATEROCHKA SUMMARY (1/3) 28 HIGHLIGHTS 9,002 stores as of 3,581 th. sq. m. of selling space 31 March 2017, as of 31 March 2017, 35.7% increase y-o-y 38.3% increase y-o-y Q1 2017 net retail sales – 710 mln of customers for Q1 2017, RUB 222.9 bn, 28.8% increase y-o-y 30.1% increase y-o-y Q1 2017 LFL

  29. Slide 29: Pyaterochka Summary (2/3): Building on a Successful Track Record

    PYATEROCHKA SUMMARY (2/3) 29 BUILDING ON A SUCCESSFUL TRACK RECORD Q1 2017 net retail sales growth: Q1 2017 selling space growth: Q1 2017 sales densities: 30.1% increase y-o-y 38.3% increase y-o-y 5.1% decline y-o-y Net Sales Growth (% y-o-y) Net Selling Space Growth (% y-o-y) Sales Densities Net (t

  30. Slide 30: Pyaterochka Summary (3/3): Strategy Overview

    PYATEROCHKA SUMMARY (3/3) 30 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

  31. Slide 31: Perekrestok Summary (1/5): Russia's #1 Supermarket

    PEREKRESTOK SUMMARY (1/5) 31 RUSSIA’S #1 SUPERMARKET 544 stores as of 552 th. sq. m. of selling space 31 March 2017, as of 31 March 2017, 11.9% increase y-o-y 11.7% increase y-o-y Q1 2017 net retail sales of 94.8 mln customers for Q1 2017, RUB 45.0 bn, 15.7% increase y-o-y 19.8% increase y-o-y Q1 20

  32. Slide 32: Perekrestok Summary (2/3): Improving Operations

    PEREKRESTOK SUMMARY (2/3) 32 IMPROVING OPERATIONS: GROWING LFL AND SELLING SPACE Q1 2017 net retail sales growth: Q1 2017 selling space growth: Q1 2017 sales densities: 19.8% increase y-o-y 11.7% increase y-o-y 5.6% increase y-o-y Net Sales Growth (% y-o-y) Net Selling Space Growth (% y-o-y) Sales D

  33. Slide 33: Perekrestok Summary (3/3): Strategy Overview

    PEREKRESTOK SUMMARY (3/3) 33 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

  34. Slide 34: Karusel Summary (1/3): Highlights

    KARUSEL SUMMARY (1/3) 34 HIGHLIGHTS 90 stores as of 383 th. sq. m. of selling space 31 March 2017: as of 31 March 2017, 1.1% decrease y-o-y down 3.0% y-o-y Q1 2017 net retail sales: 33 mln customers in Q1 2017, RUB 21.1 bn, 5.9% increase y-o-y 10.7% increase y-o-y Q1 2017 LFL Results Share of X5's Q

  35. Slide 35: Karusel Summary (2/3): The Right Time for Relaunch

    KARUSEL SUMMARY (2/3) 35 THE RIGHT TIME FOR RELAUNCH Q1 2017 sales densities Q1 2017 net retail sales Q1 2017 selling space increase: 5.3% growth: 10.7% increase y-o-y growth: 3.0% 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]) 15.

  36. Slide 36: Karusel Summary (3/3): Karusel Strategy Overview

    KARUSEL SUMMARY (3/3) 36 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

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