M.video · RUS:MVID
M.video — Eldorado Group — H1 2018 Earnings Presentation
38 slides from M.video's earnings presentation, Aug 27, 2018
Slide 1: M.Video – Eldorado Group H1 2018 Results
M.Video – Eldorado Group H1 2018 Results August 27, 2018
Slide 2: Content & liability disclaimer
Content & liability disclaimer The information contained in this presentation or enclosed herewith is provided and intended for informational purposes only and should not be relied on for any investment decisions. The information provided in the presentation includes assumptions and financial inform
Slide 3: H1 2018 key highlights
H1 2018 key highlights Eldorado acquisition completed; 1 Integration in progress Group delivers profound combined 2 trading & financial results for H1 2018 MediaMarkt Russian business acquisition 3 deal to be closed in Q3 2018 33
Slide 4: Eldorado acquisition and integration timeline
Eldorado acquisition and integration timeline 2018 March April May - June September By Q1’19 March 18 April 26 Dual brand strategy Eldorado re- Single legal Eldorado Deal closed, developed, concept to be entity created acquisition following EGSM Eldorado is shifting launched announcement approval to
Slide 5: Consistency in leadership and the best corporate governance
Consistency in leadership and the best corporate governance – the joint Group’s team effective from May 2018 AGM SAID GUTSERIEV Board of Directors Chairman ALEXANDER TYNKOVAN P.BREEV VP Founder, President Management Board Chairman MANAGEMENT B.UZHAKHOV BOARD VP ENRIQUE FERNANDEZ CEO E.SOKOLOVA CFO 5
Slide 6: Single back-office created keeping the two competing brands
Single back-office created keeping the two competing brands ENRIQUE FERNANDEZ Group CEO Management Board Member Front-functions remain Back-office separate for each brand functions merged STEVEN LEWIS SERGEY LEE Finance HR Managing Director Managing Director Commerce Logistics 8 years with M.Video 1
Slide 7: M.Video efficient model roll-out on Eldorado business – in progress
M.Video efficient model roll-out on Eldorado business – in progress Efficient Operating OMNI One Retail Model Commercial power Mobile Assortment Stores Working Capital Internet 77
Slide 8: Dual brand strategy developed
Dual brand strategy developed Willingness Center of competence of CE technologies to pay State-of-art technologies ‘A’ Level brands Full specter of services Place of bargains Strategically Best deals in the Russian CE market efficient Simple & convenient positioning Willingness to save 88
Slide 9: Group and M.Video outpaced the market with 19.0% sales growth
Group and M.Video outpaced the market with 19.0% sales growth, Eldorado showed double-digit increase in H1 2018 Market Share, % Total CE Market 26.3% M.Video-Eldorado Group 26.0% 25.9% Sales Growth YoY, % M.Video +1.8% +7.7% +19.0% Eldorado -7.1% -3.1% +10.5% Group -1.5% +3.7% +16.0% Market +2.0% +5
Slide 10: M.Video outpaced online market by 3 times
M.Video outpaced online market by 3 times, Eldorado is transitioning to OMNI-model Market Share, % Online CE Market 24.0% 22.7% 21.0% M.Video-Eldorado Group Sales Growth YoY, % M.Video +16.2% +42.5% +72.8% Eldorado +6.2% -1.8% -1.6% Group +11.5% +21.3% +39.6% Market +9.3% +12.0% +23.8% 6M FY 6M 2017
Slide 11: Group progress in Digital category growing twice faster than the market
The Group showed fantastic progress in Digital category growing twice faster than the market H1’18 / H1’17 Digital sales growth, % Digital in sales/market structure, % Digital share H1’17 1 year uplift, pp Pro-forma Rest categories share H1’18 Pro-forma 53% Market +17.8% Market 25% 14% M.Video +35.9
Slide 12: M.Video leads, Eldorado sales metrics improved showing double-digit growth
M.Video leads, Eldorado sales metrics improved showing double-digit growth first time for the last 2 years H1 2018 Group Sales (w. VAT), RUB bn H1 2018 Group Like-for-Like Sales +x% - YoY +x% - LFL Growth +x% - YoY +14.3% +12.8% +13.8% +3.9% +9.5% +13.8 % +16.0% 152.2 175 +19.0% 151 117 22.3 98 +10.
Slide 13: M.Video keeps winning online, Eldorado is transferring to Omni-model
M.Video keeps winning online, Eldorado is transferring to Omni- model H1 2018 Group Online Sales (w. VAT), RUB bn +x% - YoY Share in total sales 1. Fantastic M.Video internet 19% 19% 18% performance over 70% growth 17% 13% 15% 2. We saw temporary drop in +39.6% Eldorado OBS: 32.3 • Eldorado is switc
Slide 14: The group became a profound leader in Russian consumer electronics market
The group became a profound leader in Russian consumer electronics market 840 Stores in 200 Cities H1 2018 HIGHLIGHTS NORTH Net Sales (w.VAT), RUB bn 72 117 175 59 MOSCOW Market Share 180 CENTER FAR EAST 17.5% 26.3% 8.8% 120 URAL 98 22 Online Market Share 16.1% 24.0% 7.9% SIBERIA 131 # of Stores VOL
Slide 15: H1 2018 Group consolidated IFRS Results: Revenue and Gross Profit
H1 2018 Group consolidated IFRS Results: Revenue and Gross Profit Revenue (net of VAT), RUB bn Group Gross Profit, RUB bn Consolidated IFRS Results Consolidated IFRS Results 26.0% +41.7 % 25.1% 118.1 +47.2 % 30.8 83.4 20.9 M.Video-Eldorado Group M.Video-Eldorado Group H1'17 H1'18 H1'17 H1'18 Gross M
Slide 16: H1 2018 Group consolidated IFRS Results: EBITDA and Net Income
H1 2018 Group consolidated IFRS Results: EBITDA and Net Income Group EBITDA, RUB bn Group Net Income, RUB bn Consolidated IFRS Results Consolidated IFRS Results 7.6% 4.0% 5.5% 3.0% +97.8 % + 88.0 % 9.0 4.7 4.6 2.5 M.Video-Eldorado Group M.Video-Eldorado Group H1'17 H1'18 H1'17 H1'18 EBITDA Margin, %
Slide 17: H1 2018 Group Revenue & Gross Profit growth (pro-forma)
H1 2018 Group impressive Revenue & Gross Profit growth (pro-forma) Revenue (net of VAT), RUB bn Group Gross Profit, RUB bn Pro-forma Pro-forma 25.7% +16.5% 24.0% 150 +24.4% +19.8% 128 38.4 100 83 30.9 +10.3% 45 50 M.Video Eldorado M.Video-Eldorado Group M.Video-Eldorado Group H1'17 H1'18 H1'17 H1'18
Slide 18: Group EBITDA almost tripled, EBITDA Margin improved (pro-forma)
The Group EBITDA almost tripled, EBITDA Margin improved by 3.5pp in H1 2018 (pro-forma) +2.0pp +1.5pp 6.0% 9.0 +0.1pp +0.5pp +0.2pp -0.3pp +1.3pp +0.2pp 2.5% 3.2 Group EBITDA Gross Margin Personnel Lease Advertising Other OPEX Other Eldorado Group EBITDA Margin H1 2017 Operating impact Margin H1 201
Slide 19: Unified processes already bearing fruits
Unified processes already bearing fruits: >RUB 2 bn positive effect on Group’s EBITDA in H1 2018 Single procurement, • Purchasing power 1 stock management, and supply chain • Efficient stock relocation • Single logistics infrastructure • Economy of scale 2 Combined SG&A procurement, rent • Efficient
Slide 20: Group's synergies and EBITDA Margin are as planned for 2018
Group’s synergies and EBITDA Margin are as planned for 2018 Group’s synergies in H1 2018, RUB mln SG&A 850 Procurement 1 400 Total H1 2018 2 250 Synergies effect on Group’s EBITDA, RUB bn 6%+ 5%+ 5.0% 7 Synergies, RUB bn 4 7 15 EBITDA, RUB bn EBITDA Margin, % 2017A 2018E 2019E 2020E The information
Slide 21: Achievements and headwinds
The group took the right set of strategic decisions and delivered great results Achievements Headwinds Increased market share to 26.3% Record online market 24.0% Russian CE market is maturing and consolidating Online sales grew +40% YoY Share of OBS in Sales is 18% Single-digit organic g
Slide 22: MediaMarkt Russia acquisition timeline
MediaMarkt Russia acquisition timeline Jun 2018 Aug 2018 Early Sept 2018 Q4’18-Q1’19 Q4’19 June 20th August 9th Deal to be MediaMarkt One legal Deal FAS Approval closed stores entity announcement received rebranding Acquisition cost: MediaMarkt Euro 146 mln Russian Financing sources: business Ca
Slide 23: Top-5 players accounting c.75% of the Russian CE market
The market is consolidating, and M.Video leads the process 25.9 15.0 12.9 6.0 5.5 2.0- 3.0 Top-5 players accounting c.75% of the Russian CE market Source: M.Video and Eldorado market Shares – GFK 2017, competitors’ market share are based on M.Video’s internal estimates, Market Value - GFK 2017 2323
Slide 24: M.Video acquires premium locations to open new stores
M.Video acquires premium locations to open up to 60 new stores as an integral part of its expansion strategy Premium locations, 42 # of locations acquired strong presence in Moscow & St.-Pete # of stores, 1H 2018 840 # of new stores to re-open +/-60 2%+ 60 new stores after rebranding +10 +14 Rebrand
Slide 25: MediaMarkt stores profitability to increase under M.Video and Eldorado model
MediaMarkt stores profitability to increase 10 times under M.Video and Eldorado business model and brands EBITDA Margin in 2017A (42 MM Stores – store level) Gross Margin Advertising expenses, % of sales Rent, % of sales Other operating expenses & income, net, % of sales Rebranded 60 stores EBITDA M
Slide 26: M.Video-Eldorado Group adheres to its announced strategy
M.Video-Eldorado Group adheres to its announced strategy 2020+ 17.1% ONE COMPANY ONE OPERATING BUSINESS MODEL TWO BRANDS Business EBITDA Market 1 Model 2 Margin 6% 3 Share 2018 2019 2020+ Centralization of Sustainable EBITDA CE market share 30+% operations keeping 2 margin 6%+ brands The information
Slide 27: M.Video-Eldorado Group financial forecasts including MM
M.Video-Eldorado Group financial forecasts including MM Revenue (net of VAT), RUB bn EBITDA, RUB bn CAGR’17-22F 10%+ Pro-forma CAGR’17-22F 15%+ Pro-forma 1100+ 6%+ 35+ 839 889 5%+ 500+ 5.0% 304 340 19 15 2017A 2018E 2019E 2020E 2021E 2022E 2017A 2018E 2019E 2020E 2021E 2022E Revenue, RUB bn № of sto
Slide 28: Group debt portfolio 2018E-2020E
Group debt portfolio 2018E-2020E Total Debt & Total Debt/EBITDA Net Debt & Net Debt/EBITDA 2.9 2.3 56 44 0.6 0.7 5 27 -11 21 22 0.1 12 9 -0.7 2017A 2018E 2019E 2020E 2021E 2022E 2017A 2018E 2019E 2020E 2021E 2022E Total Debt, RUB bn Cash (eop) Total Debt/EBITDA Net Debt, RUB bn Net Debt/EBITDA The i
Slide 29: Combined company to have best-in-class EBITDA Margin by 2019+
Combined company to have best-in-class EBITDA Margin by 2019+ 2017 2019 №4 №2 7.0% 6.0% 6%+ 5.4% 5.0% 5.0% 4.5% 3.6% 3.7% 1.5% 1.7% Ceconomy Gome Bic Camera Edion Yamada FNAC Darty Dixons Best Buy K's Denki Carphone Source: companies data as reported for 2017, Thompson Reuters 2929
Slide 30: Board of Directors
Adhering to best corporate governance standards M.Video сapital upon AGM MediaMarktSaturn deal 3 independent Board of directors SAFMAR Group Free-Float Directors 38.2% 46.8% 14 members MMS 15% MediaMarktSaturn to enter M.Video’s Board Note: PJSC M.Video capital structure is provided upon potential M
Slide 31: Appendix I. 1H 2018 IFRS Interim Condensed Consolidated Reporting
Appendix I. M.Video-Eldorado Group 1H 2018 IFRS Interim Condensed Consolidated Reporting 31
Slide 32: Appendix I. Group IFRS Consolidated Statement of Profit & Loss
Appendix I. Group IFRS Consolidated Statement of Profit & Loss in millions of Russian Rubles (VAT excl.) 6m 2018 6m 2017 Change YoY Revenue 118 118 83 364 +41.7% Gross profit 30 753 20 885 +47.2% Gross margin, % 26.0% 25.1% +1.0pp Selling, general & adminsitrative expenses 25 828 18 720 +38.0% Other
Slide 33: Appendix I. Group IFRS Consolidated SG&A Expenses Breakdown
Appendix I. Group IFRS Consolidated SG&A Expenses Breakdown in millions of Russian Rubles (VAT excl.) 6m 2018 6m 2017 Payroll and related taxes 8 110 5 937 as % of revenue 6.9% 7.1% Lease expenses 5 664 4 284 as % of revenue 4.8% 5.1% Advertising & promotional expenses 2 077 1 601 as % of revenue 1.
Slide 34: Appendix I. Group IFRS Consolidated Statement of Financial Position
Appendix I. Group IFRS Consolidated Statement of Financial Position 30.06.2018 31.12.2017 Change RUBm RUBm RUBm % Assets Non-current Assets 79 820 23 663 56 157 237.3% Fixed assets 18 613 7 936 10 677 134.5% Intangible assets 54 176 7 999 46 177 >500% Other non-current 7 031 7 728 (697) -9.0% Curren
Slide 35: Appendix I. Group IFRS Consolidated Statement of Cash Flow
Appendix I. Group IFRS Consolidated Statement of Cash Flow 6m 2018 6m 2017 Change YoY RUBm RUBm RUBm % Operating CF Operating cash flows before movements in WC 9 729 4 604 5 125 111.3% Inventory change (570) 5 471 (6 041) -110.4% Trade payables (12 212) (18 201) 5 989 32.9% Others (5 604) (1 116) (4
Slide 36: Appendix II. 1H 2018 Pro-forma Combined Reporting
Appendix II. M.Video-Eldorado Group 1H 2018 Pro-forma Combined Reporting (based on management accounts) 36
Slide 37: Appendix II. Group Pro-Forma Statement of Profit & Loss
Appendix II. Group Pro-Forma Statement of Profit & Loss in millions of Russian Rubles (VAT excl.) 6m 2018 6m 2017 Change YoY Net Sales (with VAT) 175,304 151,098 +16.0% Net Revenue 149,600 128,433 +16.5% Gross profit 38,420 30,876 +24.4% Gross Margin, % 25.7% 24.0% +1.6pp EBITDA 9,049 3,187 +184.0%
Slide 38: Appendix II. Group Pro-Forma SG&A Expenses Breakdown
Appendix II. Group Pro-Forma SG&A Expenses Breakdown in millions of Russian Rubles (VAT excl.) 6m 2018 6m 2017 Payroll and related taxes 11 162 10 142 as % of revenue 7.5% 7.9% Lease expenses 7 711 7 062 as % of revenue 5.2% 5.5% Advertising & promotional expenses 2 995 3 124 as % of revenue 2.0% 2.
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