Slide 1: Fourth Quarter and Full Year 2014 Financial Results Conference Call
Fourth Quarter and Full Year 2014 Financial Results Conference Call Stephan DuCharme, X5 CEO Elena Milinova, X5 CFO Moscow, Russian Federation 23 March 2015 X5 RETAIL GROUP
Slide 2: Delivering Growth
DELIVERING GROWTH )X5RETAILGROUP % Tepexpectox
Slide 3: Summary Highlights for 2014
SUMMARY HIGHLIGHTS FOR 2014 Total revenue increased by 18.6%, year-on-year (y-o-y), to RUB 634 billion X5’s best annual like-for-like (LFL) sales results in the past five years – total LFL sales increased by 9.8% in 2014 (11.6% in Q4 2014) EBITDA grew by 19.6%, y-o-y, and adjusted profit margi
Slide 4: Delivering Growth
DELIVERING GROWTH 2014 Metric Covenants FY 2012 FY 2013 FY 2014 guidance Net Retail Sales Growth, % na 8.3% 8.7% 18.6% 17.0%-19.0% EBITDA Margin, % na 7.1% 7.2% 7.2% 7.2%-7.5% Selling Space Growth, % na 14.0% 12.9% 15.7% 15.0%+ CAPEX, RUB billion na 29 23 34 ~34 Net Debt / EBITDA, eop, x < 4.00x 3.1
Slide 5: Established Platform
ESTABLISHED PLATFORM NET SALES DYNAMICS (RUB MLN) CUSTOMER VISITS (MLN) 5yr CAGR – 18.0% 5yr CAGR – 16.3% 633,873 2,114 1,918 534,560 1,793 491,122 1,639 454,185 1,218 342,580 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 SELLING SPACE (TH. SQ. M.) # OF STORES (END OF PERIOD) 5yr CAGR – 19.3% 5y
Slide 6: Accelerating Growth
ACCELERATING GROWTH NET SALES GROWTH, % Y-O-Y TOTAL LFL SALES GROWTH, % Y-O-Y 25.9% 25.5% 16.8%16.8% 23.1% 20.8% 13.3% 11.6% 16.6% 8.1% 13.9% 6.3% 11.9% 10.0%10.4% 3.9% 8.6% 8.1% 7.8% 6.6% 0.0% 0.5% 4.4% -1.1%-0.7% -0.4% -1.7% -3.9% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Jan Feb Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 7: Market Overview
MARKET OVERVIEW )X5RETAILGROUP % Tepexpectox
Slide 8: Challenging Consumer & Macro Environment
CHALLENGING CONSUMER & MACRO ENVIRONMENT CHANGING CONSUMER ATTITUDES INFLATION & REAL WAGE GROWTH Response in line with deterioration in wage growth & Question: Are you worried about the economic crisis? increase in inflation 100 25% 90 20% 80 70 15% 60 10% 50 5% 40 30 0% 20 -5% 10 0 -10% Q4 Q1 Q2 Q
Slide 9: X5 Is Responding to the Challenge
X5 IS RESPONDING TO THE CHALLENGE DRIVERS FOR MACRO & CONSUMER PRESSURE KEY X5 RESPONSE Assortment High share of imported products in assortment – price sensitive to currency devaluation Ensure adequate representation/share of value products in assortments Impact of sanctions and food import b
Slide 10: Russian Retail Market Dynamics
RUSSIAN RETAIL MARKET DYNAMICS TOP-10 RUSSIAN FOOD RETAILERS & TURNOVER GROWTH, RUB Y-O-Y FOOD RETAIL MARKET SHARE GDP growth not a Net retail sales, % in % in total major majordriver driverfor forfederal food # Company name (1) 32% RUB mln Top-10 market food retail retail turnover growth 1 Magnit 7
Slide 11: Top-5 Share of Grocery Retail Globally in 2014
TOP-5 SHARE OF GROCERY RETAIL GLOBALLY IN 2014 THE RUSSIAN MARKET IS HIGHLY FRAGMENTED COMPARED TO DEVELOPED MARKETS 69% Metro Group 3.8% 61% 61% Rewe Group Co-operative Group 11.7% Auchan Group 4.5% 8.7% Morrison Casino 8.7% 47% Aldi 45% 8.8% Eurocash 13.4% Royal Ahold Wal-Mart 5.0% 3.0% 12.5% Auch
Slide 12: Challenging Environment Brings Opportunities
CHALLENGING ENVIRONMENT BRINGS OPPORTUNITIES THE POWER SHIFT FROM TRADITIONAL TO MODERN TRADE WILL ACCELERATE 3.9 T 6.5 T 8.0 T 10.0 T 12.3 T 16.6 T CAGR CAGR RUB RUB RUB RUB RUB RUB 06-14 14-20 -6% -12% Traditional trade share 3% 0% Regional modern trade share Federal Chains will grow by +4T RUB in
Slide 13: Financial Results Review
FINANCIAL RESULTS REVIEW )X5RETAILGROUP © Tamépouxa fone
Slide 14: Financial Highlights
FINANCIAL HIGHLIGHTS RUB mln(1) FY 2014 FY 2013 +/( - ) +/( - )% (where applicable) Total revenues 633,873 534,560 99,313 18.6% COGS 478,891 404,212 74,679 18.5% Gross profit 154,982 130,348 24,634 18.9% Gross profit margin 24.5% 24.4% - EBITDA 45,860 38,350 7,510 19.6% EBITDA margin 7.2% 7.2% - Pro
Slide 15: Net Retail Sales Summary
NET RETAIL SALES SUMMARY 2014 NET RETAIL SALES BREAKDOWN, RUB MLN KEY DRIVERS Y-o-Y Growth 25.1% 4.5% 7.9% 28.3% n/a 18.6% Net retail sales grew by 18.6% 2 233 631 930 primarily due to an increase in new 5 070 4 986 selling space and improved LFL sales 87 430 (481) Pyaterochka’s strong results r
Slide 16: Expansion Summary - 2014
EXPANSION SUMMARY - 2014 NET SELLING SPACE GROWTH DYNAMICS IN 2014 KEY DRIVERS 2 572 Strong organic opening programs at 340 18 8 Pyaterochka and Perekrestok (17) 2 223 Tactical acquisition of 116 proximity stores in Samara region 31 December Pyaterochka Perekrestok Karusel Express 31 December
Slide 17: Improving LFL Results
IMPROVING LFL RESULTS X5 2014 LFL RESULTS X5 LFL SALES GROWTH 9.8% 13.3% 11.6% 9.2% 8.1% 6.3% 3.9% 0.5% -0.4% -1.7% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 X5 LFL TRAFFIC GROWTH 0.6% 4.0% Total Traffic Basket 0.7% 0.1% X5 2013 LFL RESULTS -1.2% -0.4% -2.1% -4.0% 3.7% -6.2% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 201
Slide 18: EBITDA Breakdown
EBITDA BREAKDOWN 38,350 +19.6% 45,860 mln RUB mln RUB 7.2% 1 bp 7.2% 2bp (1bp) (2bp) 2013 EBITDA Gross margin Staff costs Lease expenses Other 2014 EBITDA Slight improvement in gross margin due to lower logistics costs Staff costs remained in line due to ongoing optimization of Company and out-s
Slide 19: Debt Structure
DEBT STRUCTURE DEBT PROFILE DEBT PORTFOLIO MATURITY RUB mln 31 Dec 2013 31 Dec 2014 45% 42% Total Debt 110,523 130,986 Short-Term Debt 30,680 15,834 % of total debt 27.8% 12.1% Long-Term Debt 79,843 115,152 12% % of total debt 72.2% 87.9% 1% Net Debt 102,912 105,363 2015 2016 2017 2018 Short-term de
Slide 20: Cash Flow Highlights
CASH FLOW HIGHLIGHTS RUB MLN FY 2014 FY 2013 +/( - ) +/ ( - ), % Net cash generated from operating activities 28,567 28,387 180.4 0.6% Net cash from operating activities before changes in working 45,766 38,817 6,949 17.9% capital Change in Working Capital (2,212) 2,319 (4,531) n/a (Increase) in trad
Slide 21: Capital Expenditures Overview
CAPITAL EXPENDITURES OVERVIEW 2014 CAPITAL EXPENDITURES – 34,433 RUB MLN 2014 CASH USED INVESTING - 29,737 RUB MLN 907 stores Q1 2014 Q2 2014 Q3 2014 Q4 2014 New Store 523 stores Openings 59% Refurbishments 24% (4 289) (4 911) (6 590) Logistics 2% Maintenance, IT & Other 15% (13 947) In 2014, Capex
Slide 22: Condensed Balance Sheet
CONDENSED BALANCE SHEET RUB MLN 31 DECEMBER 2013 31 DECEMBER 2014 +/( - ) +/( - )% Total current assets 76,682 110,509 33,827 44.1% Cash & cash equivalents 7,611 25,623 18,012 236.7% Inventories 37,465 47,084 9,619 25.7% Total non-current assets 225,415 240,411 14,996 6.7 % Net PP&E 134,998 150,328
Slide 23: Quarterly Financial Highlights
QUARTERLY FINANCIAL HIGHLIGHTS Y-o-Y RUB million FY 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 +/( - )% Revenue 534,560 144,167 155,579 152,539 181,588 633,873 18.6% Net retail sales 532,692 143,898 155,109 152,028 180,894 631,930 18.6% COGS (404,212) (109,521) (117,469) (114,950) (136,951) (478,8
Slide 24: Operational Review
OPERATIONAL REVIEW )X5RETAILGROUP % Tepexpectox
Slide 25: X5 Regional Presence
X5 REGIONAL PRESENCE NUMBER OF STORES BY REGION 2014 (1) OVERVIEW • Multi-format presence in 62 cities of European Russia, the Urals and Western North region Siberia with population > 200,000 (2) Pyaterochka: 85 • Total stores – 5,483, including: North-West region Petrozavodsk ― 4,789 Pyaterochkas P
Slide 26: X5 Distribution Capabilities
X5 DISTRIBUTION CAPABILITIES DISTRIBUTION CENTER (DC) LOCATIONS WAREHOUSE SPACE (1) Space, Region # of DCs th. sq. m. Central 359.7 13 5 North-West 82.8 5 St. Petersburg Volgo-Vyatsky 41.9 2 Ural 58.9 6 MOSCOW Central-Chernozemny 34.2 3 Povolzhsky 71.7 3 13 South 41.3 2 Total 690.5 34 2 N. Novgorod
Slide 27: Employees – Our Most Valuable Asset
EMPLOYEES – OUR MOST VALUABLE ASSET PERSONNEL OVERVIEW X5 HEADCOUNT DYNAMICS Average number of X5 and outsourced (O/S) employees per store 117 400 2014 2013 100 000 100 700 102 100 Chain X5 O/S Total X5 O/S Total 75 500 Pyaterochka 13 3 16 13 4 17 Perekrestok 52 3 55 48 29 77 Karusel 140 56 196 143
Slide 28: Key Formats
KEY FORMATS )XSRETAILGROUP % Mepexpecrox
Slide 29: Pyaterochka Summary
PYATEROCHKA SUMMARY “YOUR NEIGHBORHOOD STORE FOR DAILY SHOPPING NEEDS” 4,789 stores at 31 December 2014, 23 % increase y-o-y 1,754 thousand sq. m. of selling space (at 31 December 2014), 24% increase y-o-y 2014 Net sales – RUB 436 billion, 25% increase y-o-y Share in X5’s sales: ~70% 2014
Slide 30: Establishing a Track Record - Pyaterochka
ESTABLISHING A TRACK RECORD - PYATEROCHKA Net Sales Growth, % y-o-y Total LFL Sales Growth, % y-o-y 33.4% 34.2% 21.2% 21.6% 30.3% 29.1% 17.7% 15.7% 22.6% 11.1% 17.7% 8.2% 15.9% 15.9% 14.1% 5.2% 10.4%9.1% 2.1% 2.6% 7.6% 7.7% 7.2% (0.1%)(0.2%) (1.7%) (2.6%) (2.4%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 J
Slide 31: Perekrestok Summary
PEREKRESTOK SUMMARY “RUSSIA’S FAVORITE, HIGH QUALITY FRESH SUPERMARKET” 403 stores at 31 December 2014, 3.3% increase y-o-y 416 thousand sq. m. of selling space (at 31 December 2014), 4.5% increase y-o-y 2014 Net sales – RUB 116 billion; 4.5% increase y-o-y Share in X5’s sales - ~18% 2014
Slide 32: Establishing a Track Record - Perekrestok
ESTABLISHING A TRACK RECORD - PEREKRESTOK Net Sales Growth, % y-o-y Total LFL Sales Growth, % y-o-y 10.2% 10.6% 8.3% 8.1% 8.4% 8.1% 4.3% 5.6% 5.9% 6.2% 5.6% 5.5% 2.5% 2.9% 4.4% 4.3% 1.1% 0.3% 0.4% 0.6% 2.9% 2.0% 1.6% (0.0%) (2.0%)(2.7%) (2.8%) (3.4%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Jan Feb Q1 Q2
Slide 33: Karusel Summary
KARUSEL SUMMARY “YOUR DESTINATION STORE FOR ALL FOOD & HOUSEHOLD NEEDS” 82 stores at 31 December 2014, (1.2%) decrease y-o-y 359 thousand sq. m. of selling space (at 31 December 2014), (4.6%) decrease y-o-y 2014 Net sales – RUB 69 billion, 7.9% increase y-o-y Share in X5’s sales - ~11% 201
Slide 34: Establishing a Track Record - Karusel
ESTABLISHING A TRACK RECORD - KARUSEL Net Sales Growth, % y-o-y Total LFL Sales Growth, % y-o-y 7.1% 8.7% 7.4% 8.6% 7.0% 8.4% 6.5% 8.5% 5.4% 5.6% 4.3% 4.1% 3.4% 6.3% 5.0% 4.5% 4.8% 5.4% 0.6% (0.1%) (3.6%) (4.2%) (11.4%) (12.0%) (7.3%) (13.0%) (9.9%) (9.9%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Jan Feb
Slide 35: Strategic Focus
STRATEGIC FOCUS Creating shareholder value by improving customer value propositions Creating Stakeholder Focus on customers and stores Value Increase sales densities Focus on operating efficiencies Improve profitability and returns Increase employee engagement and develop corporate cultu
Slide 36: Disclaimer
DISCLAIMER This presentation does not constitute or form part of and should not be construed as an advertisement of securities, an offer or invitation to sell or issue or the solicitation of an offer to buy or acquire or subscribe for securities of X5 Retail Group N.V. or any of its subsidiaries or