X5 Corporate Center · RUS:X5

X5 Corporate Center — X5 Retail Group — FY2015 Earnings Presentation

37 slides from X5 Corporate Center's earnings presentation, Mar 21, 2016

  1. Slide 1: Q4 and FY2015 Financial Results

    Q4 AND FY2015 FINANCIAL RESULTS MOSCOW, RUSSIAN FEDERATION 21 MARCH 2016 1

  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 Securities on the terr

  3. Slide 3: I. Highlights

    I. HIGHLIGHTS runepmapxer 6 Tlamépouxa cfeNep=kpecrox KAPYCEAb X5RETALGROUP | 3

  4. Slide 4: Strategic Highlights

    STRATEGIC HIGHLIGHTS  Turnaround completed: all formats operating and growing as distinct value propositions and banners supported by the X5 corporate centre  X5 grew faster than the food retail market average, and narrowed the gap to the No 1 spot in 2015  Renewed value proposition adapted to Ru

  5. Slide 5: Key Achievements in 2015

    KEY ACHIVEMENTS IN 2015  Revenue increased by 27.6%  The Company added a record y-o-y, the Company’s fastest 1,537 new stores in 2015, vs. pace of growth since 2011 939 stores in 2014  1,467 stores refurbished  70% of Pyaterochka stores  Gross margin increased by operating under new concept 8 b

  6. Slide 6: Operational Highlights

    OPERATIONAL HIGHLIGHTS Net retail sales dynamics, Rub bn Customer visits, mln CAGR 2011-2015: 15.5% CAGR 2011-2015: 10.8% CAGR 2013-2015: 22.9% 804.1 CAGR 2013-2015: 13.4% 2 468 631.9 2 114 532.7 1 793 1 918 452.5 490.1 1 639 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Selling space, ths. sq.

  7. Slide 7: Accelerating Growth in 2015

    ACCELERATING GROWTH IN 2015 Net Sales Growth, y-o-y Total LFL Sales Growth, y-o-y 28.1% 28.3% 26.5% 26.3% 23.1% 17.1% 15.6% 20.8% 13.3% 11.6% 13.1% 16.6% 8.1% 9.8% 13.9% 10.4% 8.1% 11.9% 6.3% 3.9% 10.0% 7.8% 8.6% 6.6% 4.4% 0.0%0.5% -0.7% -0.4% -1.1% -1.7% -3.9% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

  8. Slide 8: Financial Highlights

    FINANCIAL HIGHLIGHTS Revenue dynamics, Rub bn Gross profit & gross margin CAGR 2011-2015: 15.5% CAGR 2011-2015: 16.4% CAGR 2013-2015: 23.0% CAGR 2013-2015: 23.4% 808.8 300.0 24.4% 24.5% 24.5% 25.0% 633.9 23.8% 250.0 23.6% 24.0% 534.6 198.4 454.2 491.1 200.0 155.0 23.0% 150.0 130.3 108.1 115.8 22.0%

  9. Slide 9: II. Market Overview

    II. MARKET OVERVIEW runepmapxer X5RETALGROUP | 9

  10. Slide 10: Challenging Consumer & Macro Environment

    CHALLENGING CONSUMER & MACRO ENVIRONMENT Inflation and real wage growth Changing consumer attitudes: Percentage of consumers, which cut spending on different categories for the past month 25 65.0 20 60.0 15 55.0 50.0 10 45.0 5 40.0 0 35.0 -5 30.0 -10 25.0 Jun Jul Nov Aug Feb Sep Mar Apr Oct Jan May

  11. Slide 11: X5 Is Responding to the Challenge

    X5 IS RESPONDING TO THE CHALLENGE Drivers for Macro and consumer X5 response pressure  Increase in prices for locally produced products  Declining/negative real wage growth  Decline of food expenditures as a percentage of the customers budget Assortment Price strategy Supplier relations/ cooperat

  12. Slide 12: X5 vs. Russian Food Retail in Top-Line Growth

    X5 VS. RUSSIAN FOOD RETAIL IN TOP-LINE GROWTH 32% 27% 30% 24% 23% 21% 20% 21% 23% 19% 13% 14% 12% 11% 9% 8% 9% 8% 2010 2011 2012 2013 2014 2015 X5 Market TOP-10 Source: Infoline, X5 analysis In 2015, X5 top-line growth exceeded the market as well as Top 10 retailers growth 12

  13. Slide 13: Retail Market Snapshot

    RETAIL MARKET SNAPSHOT Top 10 Russian Food retailers % in total market % in total market # Company name 2014 2015 1 Magnit [1] 6.2% 6.9% 2 Х5 5.2% 6.2% 3 Auchan 2.5% 2.5% 4 Dixy 1.9% 2.1% 5 Lenta 1.5% 1.8% 6 Metro 1.6% 1.5% 7 O‘Key 1.2% 1.2% 8 SPS Holding 0.4% 0.7% 9 Globus 0.4% 0.5% 10 Monetka 0.5%

  14. Slide 14: III. Operational Results

    III. OPERATIONAL RESULTS runepmapxer © Tlamépouxa SeNep=npecton 32 KAPYCEAD X5RETALGROUP | 14

  15. Slide 15: Operational Highlights

    OPERATIONAL HIGHLIGHTS Net retail sales Traffic, mln customers Net selling space (eop), th. sq. m 26.5% 28.1% 28.3% 672 29.6% 29.6% 26.3% 633 615 228 23.9% 199 548 182 195 20.1% 3 333 3 080 2 844 2 682 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Ne

  16. Slide 16: Net Retail Sales Summary

    NET RETAIL SALES SUMMARY Net retail sales breakdown by formats, RUB mln 585,402 130,144 804,132 77,443 11,143 631,930 2014 2015 KEY Pyaterochka, which continues to meet customers’ needs in a challenging macro DRIVERS environment, was the key driver for X5’s growth thanks to:  Ambitious expansion pr

  17. Slide 17: Expansion Summary

    EXPANSION SUMMARY Net selling space, th. sq. m. Net selling space added, th. sq. m.  Total store base increased to 7,020 stores by the end of 3,333 2015 31 Dec 2015  Continued investments into 32 68 existing stores resulted in 1,467 refurbishments in 2015 2,572 31 Dec 2014  Pyaterochka was the ma

  18. Slide 18: IV. Financial Results

    IV. FINANCIAL RESULTS runepmapxer 6 Tlamépouxa c&oNep=kpectox Bt KAPYCEAD X5RETAILGROUP | 18

  19. Slide 19: Financial Highlights

    FINANCIAL HIGHLIGHTS Revenue Gross profit & gross margin SG&A (excl. D&A&I), Rub bn 28.5% 28.6% 24.6% 24.1% 25.0% 24.5% 26.7% 26.7% 230.1 199.9 196.1 56.4 182.7 48.1 49.0 44.6 44.9 33.4 35.2 36.1 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Revenue,

  20. Slide 20: Capital Expenditures Overview

    CAPITAL EXPENDITURES OVERVIEW Capex breakdown for 2015 Capex breakdown by quarters in 2015, Rub mln Total Capex in 2015: 71,062 Rub mln 25 604 1,672 stores opened 20 691 17.8% New store openings 16 826 2.6% Refurbishments 55.3% 7 942 Logistics 24.2% IT, Maintenance and other Q1 2015 Q2 2015 Q3 2015

  21. Slide 21: Debt Structure

    DEBT STRUCTURE Debt profile Debt portfolio maturity 100% 30% Rub mln 31 Dec 2015 31 Dec 2014 Total Debt 144,215 130,986 39% Short-Term Debt 42,670 15,834 % of total debt 29.6% 12.1% 28% Long-Term Debt 101,545 115,152 % of total debt 70.4% 87.9% 3% Net Debt 135,257 105,363 31 Dec 2015 2016 2017 2018

  22. Slide 22: SG&A Expenses Analysis

    SG&A EXPENSES ANALYSIS Rub mln Q4 2015 Q4 2014 +/ ( - ), % 2015 2014 +/ ( - ), % Adj. SG&A (excl. D&A&I&LTI), incl.: 40,598 32,727 24.1 145,101 115,396 25.7 Staff costs 17,795 14,425 23.4 63,052 50,593 24.6 Lease expenses 10,017 7,796 28.5 36,365 28,150 29.2 Utilities 4,281 3,480 23.0 15,449 13,105

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

    FINANCIAL STATEMENT (1/3) PROFIT AND LOSS STATEMENT Rub mln 2015 2014 +/( - ) +/ ( - ), % Revenue 808,818 633,873 174,945 27.6 Net retail sales 804,132 631,930 172,201 27.3 COGS (610,428) (478,891) (131,537) 27.5 Gross profit 198,390 154,982 43,408 28.0 Gross profit margin 24.5% 24.5% 8 b.p. SG&A (1

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

    FINANCIAL STATEMENT (2/3) BALANCE SHEET Rub mln 31 December 2015 31 December 2014 +/( - ) +/( - )% Total current assets 108,705 110,509 (1,804) (1.6) Cash & cash equivalents 8,958 25,623 (16,665) (65.0) Inventories 57,887 47,084 10,803 22.9 Total non-current assets 293,410 240,411 52,999 22.0 Net PP

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

    FINANCIAL STATEMENT (3/3) CASH FLOW Rub mln 2015 2014 +/( - ) +/( - )% Net cash generated from operating activities 35,487 28,567 6,920 24.2 Net cash from operating activities before changes in 56,678 45,766 10,912 23.8 working capital Change in Working Capital, incl.: (1,406) (2,212) 0,806 (36.4) D

  26. Slide 26: X5 Regional Presence

    X5 REGIONAL PRESENCE X5 today  Multi-format presence in 9 regions North-West region  Total stores – 7,020, including: Pyaterochka: 635 (+54) North region Volgo - Vyatsky region Perekrestok: 47 (+8) ― 6,265 Pyaterochka Pyaterochka: 146 (+62) Pyaterochka: 467 (+104) Karusel: 17 (+1) DC: 6 (In 2015:

  27. Slide 27: X5 Distribution Capabilities

    X5 DISTRIBUTION CAPABILITIES Warehouse space as of December 2015 Space, Region # of DCs th. sq. m. Central 364 12 North-West 117 6 6 Volgo-Vyatsky 42 2 Ural 65 6 Central-Chernozemny 59 3 12 Povolzhsky 85 4 South 41 2 Total 773 35 2 3 6 4 Centralization level dynamics 2 85% 78% 78% 76% 75% 70% 2010 2

  28. Slide 28: Appendices I. Performance Summary of Key Formats

    APPENDICIES I. PERFORMANCE SUMMARY OF KEY FORMATS 28

  29. Slide 29: Pyaterochka Summary (1/2)

    PYATEROCHKA SUMMARY (1/2) 6,265 stores at 31 Dec 2015, 2,422 th. sq. m. of selling space 31% increase y-o-y (at 31 Dec 2015), 38% increase y-o-y 12M 2015 net sales – Q4 2015 net retail sales - RUB 585.4 bn, 34% increase y-o-y RUB 167.2 bn, 33% increase y-o-y Q4 2015 LFL Results Share of X5's Q4 2015

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

    PYATEROCHKA SUMMARY (2/2) Q4 2015 net retail sales growth: Q4 2015 selling space growth: Q4 2015 sales densities: 32.8% increase y-o-y 38.1% increase y-o-y 0.7% 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]) 291 35.3% 289 34.8% 40

  31. Slide 31: Summary of Pyaterochka Strategy

    SUMMARY OF PYATEROCHKA STRATEGY Pyaterochka is a key growth engine for X5 thanks to its customer value proposition, which has already proved its efficiency and is especially sustainable in crisis  Focus on maximum growth rate, entry and development in new regions with full coverage of all location

  32. Slide 32: Perekrestok Summary (1/2)

    PEREKRESTOK SUMMARY (1/2) 478 stores at 31 Dec 2015, 484 th. sq. m. of selling space 19% increase y-o-y (at 31 Dec 2015), 16% increase y-o-y 12M 2015 net sales – Q4 2015 net retail sales - RUB 130.1 bn, 13% increase y-o-y RUB 37.0 bn, 14% increase y-o-y Q4 2015 LFL Results Share of X5's Q4 2015 sale

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

    PEREKRESTOK SUMMARY (2/2) Q4 2015 net retail sales growth: Q4 2015 selling space growth: Q4 2015 sales densities: 12.5% increase y-o-y 16.4% increase y-o-y 1.3% 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]) 12.9% 11.9% 12.5% 10.7

  34. Slide 34: Summary of Perekrestok Strategy

    SUMMARY OF PEREKRESTOK STRATEGY Perekrestok has made significant progress fine-tuning its value proposition in 2015, including an updated product range, rebranding and refurbishment programme  Development in Moscow and St. Petersburg is a priority, critical mass growth in regional cities with >1 ml

  35. Slide 35: Karusel Summary (1/2)

    KARUSEL SUMMARY (1/2) 90 stores as of 31Dec 2015: 390.1 th. sq. m. of selling space 10% increase y-o-y (as of 31 Dec 2015), up 8.8% y-o-y 12M 2015 net sales: Q4 2015 net retail sales - RUB 77.4 bn 12% increase y-o-y RUB 21.4 bn, 8.8% increase y-o-y Q4 2015 LFL Results Share of X5's Q4 2015 sales: ~9

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

    KARUSEL SUMMARY (2/2) Q4 2015 net retail sales Q4 2015 selling space Q4 2015 sales densities: growth: 8.8% increase y-o-y growth: 8.8% increase y-o-y 10% 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% 15.4% 204 210 211 14.2%

  37. Slide 37: Summary of Karusel Strategy

    SUMMARY OF KARUSEL STRATEGY Development and testing of value proposition is at the core of Karusel's strategic agenda, as well as a focus on operations and efficiencies  Gradual finalisation and testing of compact city hypermarket model with focus on price perception  Transition to active growth a

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