X5 Corporate Center · RUS:X5

X5 Corporate Center — X5 Retail Group — Q1 2020 Earnings Presentation

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

  1. Slide 1: Q1 2020 Financial Results

    | Results >X5 RETAIL GROUP inancia Q1 2020 F

  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  Fast

  5. Slide 5: Key Achievements in Q1 2020

    05 KEY ACHIEVEMENTS IN Q1 2020  Revenue growth at 15.6%  +11.0% YoY selling space in Q1 2020 growth in Q1 2020 (361 net new stores, 88 th. sq.m added)  Adjusted EBITDA margin  In September 2019 7.0% in Q1 2020 Pyaterochka launched first store in new CVP  Net debt / EBITDA at 1.48x  43.1 mln ac

  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 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Moscow & St Petersburg Rest of Russia Moscow region & Leningrad region 342 204 375 203 203 202 202 372 371 333 371 370 330 327 322 Q1 Q2 Q3 Q4 Q1 Q

  10. Slide 10: II. Market Overview

    II. MARKET OVERVIEW

  11. Slide 11: Macro Environment (2/3)

    11 MACRO ENVIRONMENT (2/3) 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 (3/3)

    12 MACRO ENVIRONMENT (3/3) 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 Q1 2020

    III. OPERATIONAL RESULTS Q1 2020

  16. Slide 16: Q1 2020 Results: Operational Highlights

    16 Q1 2020 RESULTS: OPERATIONAL HIGHLIGHTS Net retail sales Traffic, mln customers Net selling space (eop) 1,336 1,359 1,327 1,315 15.1% 14.1% 13.9% 12.0% 11.0% 15.9% 1,162 15.3% 14.4% 13.4% 11.0% 7,009 7,239 7,327 6,599 6,786 436 467 468 404 421 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q1 2019 Q2 20

  17. Slide 17: Q1 2020 Results: X5 Net Retail Sales Summary

    17 Q1 2020 RESULTS: X5 NET RETAIL SALES SUMMARY Net retail sales breakdown by retail format, RUB mln Hypermarkets Hypermarkets 21,917 17,800 66,445 80,614 Supermarkets Supermarkets +15.9% 404,116 468,461 370,047 315,274 Proximity stores Q1 2019 Q1 2020 KEY DRIVERS  Pyaterochka, which continues to m

  18. Slide 18: Q1 2020 Results: Expansion Summary

    18 Q1 2020 RESULTS: EXPANSION SUMMARY Net selling space, th. sq. m Net selling space added in 11.0% Q1 2020, th. sq. m  Total store base increased to 7,327 16,658 stores as of 6,599 Hypermarkets 31 March 2020 Supermarkets  Pyaterochka was the main driver for the store base increase with a (69) 161

  19. Slide 19: X5 Regional Presence

    19 X5 REGIONAL PRESENSE X5 today  Multi-format presence in seven Federal Districts  Total stores – 16,658, including: ― 15,739 Pyaterochka stores ― 846 Perekrestok supermarkets ― 73 Karusel hypermarkets North North Format Unit Southern Central Volga Ural Siberian Total Caucasus Western 287 1,488 5

  20. Slide 20: X5 Distribution Capabilities

    20 X5 DISTRIBUTION CAPABILITIES Warehouse space as of 31 March 2019 Space, Federal district # of DCs th. sq. m Central 587 16 6 North-Western 149 6 Volga 213 8 16 Ural 144 6 8 6 Southern 95 4 4 Siberian 29 2 2 Total 1,218 42 Centralisation levels Highlights for Q1 2020  X5 continued the implementat

  21. Slide 21: IV. Financial Results Q1 2020

    IV. FINANCIAL RESULTS Q1 2020

  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% 18.3% 18.2% 17.9% 18.1% 24.5% 24.7% 17.3% 15.5% 14.3% 15.6% 24.3% 12.4% 10.9% 23.9% 83.9 84.7 13.4% 74.4 75.6 76.8 469.2 469.0 109.5 112.2 114.2 115.9 62.8 437.3 423.0 100.6 103.5 405.9 Q1

  23. Slide 23: X5 Capital Expenditures

    23 X5 CAPITAL EXPENDITURES Capex breakdown, Q1 2020 Capex dynamics by quarter, RUB mln 25,889 21,818 21,006 17,542 12,414 10% New store openings 8% Refurbishments Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 2% RUB Logistics 1% 44% IT 18 bn Expected change in Capex structure Maintenance 41.3% y-o-y Other

  24. Slide 24: X5 Debt Structure

    24 X5 DEBT STRUCTURE Debt profile Debt portfolio maturity 100% 33% RUB mln 31 Mar 2020 31 Mar 2019 Total Debt 198,632 201,941 40% Short-Term Debt 66,410 60,291 % of total debt 33.4% 29.9% Long-Term Debt 132,222 141,650 27% % of total debt 66.6% 70.1% Net Debt 186,760 183,660 31 Dec 2019 2020 2021 20

  25. Slide 25: Q1 2020: Adjusted SG&A Expenses Analysis

    Q1 2020: ADJUSTED SG&A [1] EXPENSES ANALYSIS Q1 2020 analysis as percentage of revenue 18.3% (27) b.p. 18.1% 0.7% (4) b.p. 0.6% 0.9% 17 b.p. 1.1% 1.1% 1.0% (5) b.p. 2.4% 2.2% 13.4% (20) b.p. Third party services 0.6% 1.0% Other expenses 1.0% 5.1% (12) b.p. 5.0% Other store costs 2.2% 0.5% Utilities

  26. Slide 26: Financial Statements (1/3) Profit and Loss Statement

    FINANCIAL STATEMENTS (1/3) 26 PROFIT AND LOSS STATEMENT IAS 17 IFRS 16 RUB mln Q1 2020 Q1 2019 +/( - ) +/ ( - ), % Q1 2020 Revenue 468,994 405,864 63,130 15.6% 468,994 Net retail sales 468,461 404,116 64,345 15.9% 468,461 COGS (354,794) (305,300) (49,494) 16.2% (353,058) Gross profit 114,200 100,564

  27. Slide 27: Financial Statements (2/3) Balance Sheet (IFRS 16)

    FINANCIAL STATEMENTS (2/3) 27 BALANCE SHEET (IFRS 16) RUB mln 31 Mar 2020 31 Mar 2019 Total current assets 158,303 149,905 Cash & cash equivalents 11,872 18,281 Inventories 119,589 101,997 Total non-current assets 902,245 830,566 Right-of-use assets 433,345 387,986 Net PP&E 315,486 303,628 Goodwill

  28. Slide 28: Financial Statements (3/3) Cash Flow Statement

    FINANCIAL STATEMENTS (3/3) 28 CASH FLOW STATEMENT (IAS 17 AND IFRS 16) IAS 17 IFRS 16 RUB mln Q1 2020 Q1 2019 +/( - ) +/ ( - ), % Q1 2020 Net cash generated from 40,041 17,223 22,818 132.5% 54,212 operating activities Net cash from operating activities before 31,786 28,802 2,943 10.4% 55,383 changes

  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 15,739 stores as of 6,137 th. sq. m of selling space 31 March 2020, as of 31 March 2020, 13.1% increase y-o-y 12.9% increase y-o-y Q1 2020 net retail sales – 1,148 mln of customer visits in RUB 370.0 bn, Q1 2020, 15.6% increase y-

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

    31 PYATEROCHKA PROXIMITY STORES SUMMARY (2/3) Q1 2020 net retail sales: Q1 2020 selling space: Q1 2020 sales densities: 17.4% increase y-o-y 12.9% increase y-o-y 0.2% 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]) 26.0% 33.0% 259 29

  32. Slide 32: Pyaterochka Format Strategy Highlights

    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 (1/4)

    PEREKRESTOK SUPERMARKETS SUMMARY (1/4) 33 RUSSIA’S #1 SUPERMARKET 846 stores as of 895 th. sq. m. of selling space 31 March 2020, as of 31 March 2020, 9.7% increase y-o-y 12.7% increase y-o-y Q1 2020 net retail sales of 155 mln customers in Q1 2020, RUB 80.6 bn, 13.5% increase y-o-y 21.3% increase y

  34. Slide 34: Perekrestok Supermarkets Summary (2/4)

    34 PEREKRESTOK SUPERMARKETS SUMMARY (2/4) Q1 2020 net retail sales: Q1 2020 selling space: Q1 2020 sales densities: 21.3% increase y-o-y 12.7% increase y-o-y 3.0% 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]) 337 25.5% 328 329 329

  35. Slide 35: Perekrestok Summary (3/4) Format Strategy Highlights

    PEREKRESTOK SUMMARY (3/4) 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

  36. Slide 36: Perekrestok Summary (4/4): Online

    PEREKRESTOK SUMMARY (4/4): 36 ONLINE: ON TRACK TO BECOMING #1 IN RUSSIAN E-GROCERY Net sales, RUB mln Average customer spending per 2,096 month, RUB ths 1,630 11.6 891 867 922 6.7 x1.6 6.0 636 276 51 124 174 204 5.6 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Before Online launch After Online launch 2017 2017

X5 Retail Group — Q1 2020 Earnings Presentation on 6ix