X5 Corporate Center · RUS:X5

X5 Corporate Center — X5 Retail Group — Q2 2020 Earnings Presentation

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

  1. Slide 1: Q2 2020 Financial Results

    | Results >X5 RETAIL GROUP inancia Q2 2020 F

  2. Slide 2: Disclaimer

    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 opinio

  3. Slide 3: I. Highlights

    I. HIGHLIGHTS

  4. Slide 4: Strategic Highlights

    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 gro

  5. Slide 5: Key Achievements in Q2 2020

    KEY ACHIEVEMENTS IN Q2 2020  Revenue growth at 12.9%  +10.7% YoY selling space in Q2 2020 growth in Q2 2020 (367 net new stores, 183.3 th. sq.m added)  EBITDA margin 8.4% in Q2  In September 2019 2020 Pyaterochka launched first store in new CVP  Net debt / EBITDA at 1.68x  41.1 mln active loya

  6. Slide 6: Operational Highlights

    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 CAGR 2

  7. Slide 7: Financial Highlights

    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 201

  8. Slide 8: Quality of New Openings

    QUALITY OF NEW OPENINGS Cash return on new store opened >30% +60 b.p. y-o-y Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Note: Opened 12-36 months ago Share of stores in ‘clinic’ 17 025 16 658 16 297 15 752 15 260 6,4% 6,3% 5,3% 5,3% 5,8% Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Number of stores, eop Shar

  9. Slide 9: Sales Density Stabilisation

    SALES DENSITY STABILISATION IMPACT OF REGIONAL MIX Unit: ‘000 RUB/m2 (annualised) Overall 258 256 256 255 253 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Moscow & St Petersburg Rest of Russia Moscow region & Leningrad region 347 342 207 375 374 372 371 204 370 333 203 203 202 330 327 Q2 Q3 Q4 Q1 Q2 Q2 Q

  10. Slide 10: II. Market Overview

    II. MARKET OVERVIEW

  11. Slide 11: Macro Environment (1/2)

    MACRO ENVIRONMENT (1/2) The main factor of the decline in real food The decrease in real wages in H1 2020 was retail trade in H1 2020 was the self-isolation due to the transition to part-time regime amid the spread of COVID-19, as well employment and the placement of as the seasonal factor of vacati

  12. Slide 12: Macro Environment (2/2)

    MACRO ENVIRONMENT (2/2) Consumer sentiment deteriorated in Q2 The main factor behind the decline in 2020 driven by the situation with COVID-19 industrial production was the reduction in domestic and foreign demand, which began in late March, as well as restrictions on the work of enterprises in vari

  13. Slide 13: X5 vs. Russian Food Retail in Top-Line Growth

    X5 VS. RUSSIAN FOOD RETAIL IN TOP-LINE GROWTH 33% 28% 28% 30% 25% 23% 21% 21% 20% 19% 18% 18% 14% 14% 13% 12% 11% 11% 9% 10% 10% 9% 8% 7% 9% 5% 8% 4% 2% 1% 2011 2012 2013 2014 2015 2016 2017 2018 2019 H1 2020 X5 y-o-y revenue growth Top-10 Market Source: Infoline, X5 analysis Starting from 2015, X5

  14. Slide 14: Russian Retail Market Snapshot

    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% 0.

  15. Slide 15: III. Operational Results Q2 2020

    III. OPERATIONAL RESULTS Q2 2020

  16. Slide 16: X5 Operational Summary

    X5 OPERATIONAL SUMMARY Net retail sales Traffic, mln customers Net selling space (eop) 1 336 1 359 1 327 1 315 1 205 14,1% 13,9% 12,0% 11,0% 10,7% 14,4% 13,4% 15,9% 13,2% 7 510 11,0% 7 009 7 239 7 327 6 786 467 468 493 436 421 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q

  17. Slide 17: Q2 2020 Results: X5 Net Retail Sales Summary

    Q2 2020 RESULTS: X5 NET RETAIL SALES SUMMARY Net retail sales breakdown by retail format, RUB mln Hypermarkets Hypermarkets 21 067 13 837 73 346 65 125 Supermarkets Supermarkets +13.2% 435,587 492,975 405 792 349 395 Proximity stores Proximity stores Q2 2019 Q2 2020 KEY DRIVERS  Pyaterochka, which

  18. Slide 18: Q2 2020 Results: Expansion Summary

    Q2 2020 RESULTS: EXPANSION SUMMARY Net selling space, th. sq. m Net selling space added in 10.7% Q2 2020, th. sq. m  Total store base increased to 17,025 stores as of 7 510 6 786 30 June 2020 Hypermarkets  Pyaterochka was the main driver (48) for the store base increase with a 153 th. sq. m sellin

  19. Slide 19: X5 Regional Presence

    X5 REGIONAL PRESENSE X5 today  Multi-format presence in seven Federal Districts  Total stores – 17,025, including: ― 16,096 Pyaterochka stores ― 867 Perekrestok supermarkets ― 62 Karusel hypermarkets North North Format Unit Southern Central Volga Ural Siberian Total Caucasus Western 299 1 542 6 00

  20. Slide 20: X5 Distribution Capabilities

    X5 DISTRIBUTION CAPABILITIES Warehouse space as of 31 March 2019 Space, Federal district # of DCs th. sq. m Central 615 17 6 North-Western 149 6 Volga 213 8 17 Ural 144 6 8 6 Southern 114 4 4 Siberian 26 1 1 Total 1,261 42 Centralisation levels Highlights for Q2 2020  X5 continued the implementatio

  21. Slide 21: IV. Financial Results Q2 2020

    IV. FINANCIAL RESULTS Q2 2020

  22. Slide 22: X5 Quarterly Financial Highlights

    X5 QUARTERLY FINANCIAL HIGHLIGHTS Revenue Gross profit & gross margin SG&A (excl. D&A&I&LTI)[1] 25.6% 25,0% 25,3% 18,2% 17,9% 18,1% 17,3% 17,5% 15,6% 24,5% 24,3% 14,3% 12,4% 12,9% 10,9% 23,9% 83,9 84,7 86,4 75,6 76,8 13.1% 124,7 126,6 469,2 469,0 493,6 109,5 112,2 114,2 64,6 437,3 423,0 103,5 Q2 201

  23. Slide 23: X5 Capital Expenditures

    X5 CAPITAL EXPENDITURES Capex breakdown, Q2 2020 Capex dynamics by quarter, RUB mln 25 889 21 818 21 006 21 785 17 542 16% New store openings Refurbishments Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 RUB Logistics 14% IT 22 bn 53% Expected change in Capex structure Maintenance -0.2% y-o-y 1% Other 3% 4

  24. Slide 24: X5 Debt Structure

    X5 DEBT STRUCTURE Debt profile Debt portfolio maturity 100% 12% RUB mln 30 Jun 2020 30 Jun 2019 37% Total Debt 231,778 212,055 Short-Term Debt 73,622 59,852 35% % of total debt 31.8% 28.2% Long-Term Debt 158,156 152,203 16% % of total debt 68.2% 71.8% Net Debt 220,476 195,112 30 Jun 2020 2020 2021 2

  25. Slide 25: Q2 2020: Adjusted SG&A Expenses Analysis

    Q2 2020: ADJUSTED SG&A [1] EXPENSES ANALYSIS Q2 2020 analysis as percentage of revenue 17,3% 21 b.p. 17,5% 0,7% (5) b.p. 0,7% 1,0% 12 b.p. 1,1% 1,1% 14 b.p. 1,2% 1,9% (10) b.p. 1,8% 13,1% Third party services 0,7% 1,0% Other expenses 1,2% 4,8% (0) b.p. 4,8% Other store costs 1,8% Utilities 0,6% Leas

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

    FINANCIAL STATEMENTS (1/3) PROFIT AND LOSS STATEMENT IAS 17 IFRS 16 RUB mln Q2 2020 Q2 2019 +/( - ) +/ ( - ), % Q2 2020 Revenue 493,631 437,311 56,320 12,9 493,631 Net retail sales 492,975 435,588 57,387 13,2 492,975 COGS (368,904) (327,811) (41,093) 12.5% (367,052) Gross profit 124,727 109,500 15,2

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

    FINANCIAL STATEMENTS (2/3) BALANCE SHEET (IFRS 16) RUB mln 30 Jun 2020 30 Jun 2019 Total current assets 166,432 148,226 Cash & cash equivalents 11,302 16,943 Inventories 128,466 103,686 Total non-current assets 930,177 849,136 Right-of-use assets 455,047 397,369 Net PP&E 318,612 309,555 Goodwill 102

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

    FINANCIAL STATEMENTS (3/3) CASH FLOW STATEMENT (IAS 17 AND IFRS 16) IAS 17 IFRS 16 RUB mln Q2 2020 Q2 2019 +/( - ) +/ ( - ), % Q2 2020 Net cash generated from 17,061 31,819 (14,758) (46.4)% 29,726 operating activities Net cash from operating activities before 41,563 36,292 5,271 14.5% 65,211 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) RUSSIA’S #1 PROXIMITY NETWORK BY REVENUE 16,096 stores as of 6,290 th. sq. m of selling space 30 June 2020, as of 30 June 2020, 4.8% increase y-o-y 5.3% increase y-o-y Q2 2020 net retail sales – 1,082 mln of customer visits in RUB 405.8 bn, Q2 2020, 6.6% decrease y-o-y 16.1

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

    PYATEROCHKA PROXIMITY STORES SUMMARY (2/3) Q2 2020 net retail sales: Q2 2020 selling space: Q2 2020 sales densities: 16.1% increase y-o-y 12.2% increase y-o-y 0.8% 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]) 29,7% 254 21,6% 251

  32. Slide 32: Pyaterochka Format Strategy Highlights

    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 effici

  33. Slide 33: Perekrestok Supermarkets Summary (1/4)

    PEREKRESTOK SUPERMARKETS SUMMARY (1/4) RUSSIA’S #1 SUPERMARKET 867 stores as of 973 th. sq. m. of selling space 30 June 2020, as of 30 June 2020, 1.8% increase y-o-y 8.1% increase y-o-y Q2 2020 net retail sales of 109 mln customers in Q2 2020, RUB 73.3 bn, 26.1% decrease y-o-y 12.6% increase y-o-y Q

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

    PEREKRESTOK SUPERMARKETS SUMMARY (2/4) Q2 2020 net retail sales: Q2 2020 selling space: Q2 2020 sales densities: 12.6% increase y-o-y 19.4% increase y-o-y 1.1% 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]) 25,5% 337 333 328 329 32

  35. Slide 35: Perekrestok Format Strategy Highlights

    PEREKRESTOK SUMMARY (3/4) 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 of

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

    PEREKRESTOK SUMMARY (4/4) ONLINE: ON TRACK TO BECOMING #1 IN RUSSIAN E-GROCERY Net sales, RUB mln Average customer spending per 3 592 month, RUB ths 11,6 2 096 1 630 6,7 x1.6 6,0 891 867 922 636 124 174 204 276 5,6 51 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Before Online launch After Online launch 2017

X5 Retail Group — Q2 2020 Earnings Presentation on 6ix