X5 Corporate Center · RUS:X5
X5 Corporate Center — X5 Retail Group — Investor Day (October 2021)
42 slides from X5 Corporate Center's investor day presentation, Oct 27, 2021
Slide 1: X5 Capital Markets Day
X5 Capital Markets Day 27 October 2021
Slide 2: Disclaimer
2 Disclaimer This presentation does not constitute or form part of and This presentation includes statements that are, or may be The information and opinions contained in this document are should not be construed as an advertisement of securities, an deemed to be, “forward- looking statements”, with
Slide 3: Agenda
3 Agenda 5 4 Q&A session 9M 2021 results 3 and guidance Overview by format: 2 Strategy implementation 1 27 October Performance update 27 October 2021
Slide 4: X5 Capital Markets Day - Igor Shekhterman, CEO
X5 Capital Markets Day Igor Shekhterman Chief Executive Officer 27 October 2021
Slide 5: Delivering on Strategy 2023
5 Delivering on Strategy 2023 STRATEGIC GOALS TODAY (9М 2021) 2023 TARGETS Leadership 13 % +170 % in the food market share of grocery growth in digital sales market in H1 2021 Leader in grocery 61.7 mln 267 RUB ths/sqm 15% market share active loyalty card sales density LTM users +1.0% y-o-y +2.3% y-
Slide 6: Key macro indicators
6 Key macro indicators Real GDP growth Nominal wage growth Real disposable income growth 4.3% 2.3% 8.4% 7.3% 2.1% 6.7% 1.0% −3.0% −2.8% 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E Food retail market growth Food CPI Unemployment rate 9.4% 8.0% 7.0% 5.8% 5.5% 4.9% 4.7% 3.7% 2.9% 2020 2021E 2022
Slide 7: Russian food retail market trends
7 Russian food retail market trends 1 2 3 Macroeconomics and government’s role Increasing cost Increasing government A “new normal” of supply and resources regulation of pricing in COVID-19 pandemic environment 1 2 3 Market Consolidation Accelerated development Ecosystems and of market players of ha
Slide 8: Converting challenges into opportunities
8 Converting challenges into opportunities Growing competition in offline segment triggered by a decline CVP rationalisation Rollout of a hard in disposable household incomes across our formats discounter Increasing cost Scaling up digital products Optimising supply chain Leveraging purchasing power
Slide 9: X5's readiness to respond to challenges
9 X5's readiness to respond to challenges DNA of organic UPSIDE POTENTIAL growth Strong team Strong brands experienced managers X5 brands are among and entrepreneurs top Russian brands ¹ in 2021, with Pyaterochka in 1 st place Adapting CVP to customer needs to increase presence in mass segment Stron
Slide 10: ESG: 2020 progress against strategic goals
Gecroup ESG: 2020 progress against strategic goals Health Employees 10 (AG w Communities 2023 GOAL ~9 x GHG emissions (Scope 1 + Scope 2) per sqm of selling space 2020 vs 2019 85. of recyclable waste from XS operations was sent for recycling? 48 .. of private label goods in sustainable packaging * 1
Slide 11: 2022 guidance
11 2022 guidance Annual revenue New openings Capex growth rate growth >10% at 1,700–2,000 lower than revenue stores (gross) growth rate Maintaining level Dividend payments of profitability in line not less than in 2021 with 2020–2021
Slide 12: X5 Capital Markets Day - Vladimir Salakhutdinov
X5 Capital Markets Day Vladimir Salakhutdinov Director of Strategy and Business Development 27 October 2021
Slide 13: Market forecast
13 Market forecast Total food market RUB 18,196 bln RUB 22,100 bln RUB 24,750 bln CAGR 2021–26E Goal +8% 31.1% LEADER Goal 30.6% CAGR 2021–26E Market segments +10% market 64.2% LEADER 46.8% growth Proximity stores 29.1% in X5 segments 0% 14.1% Supermarkets 16.2% +29% 8.9% Hard discounters 19.3% 6.7%
Slide 14: Converting challenges into opportunities
14 Converting challenges into opportunities Growing competition in offline segment triggered by a decline CVP rationalisation Rollout of a hard in disposable household incomes across our formats discounter Increasing cost Scaling up digital products Optimising supply chain Leveraging purchasing powe
Slide 15: Presence at all stages of customer journey
15 Presence at all stages of customer journey In 2021, we launched services covering Planning Search / selection Realisation Related services all stages of the customer journey. They will enable the core business of the retail chains to: Media platform Online hypermarket Pyaterochka Х5 Bank Food.ru
Slide 16: X5 digital services impact
16 X5 digital services impact Customer Increasing X5 business acquisition customer retention Revenue X5 Express Delivery > 40mln MAUs in 2024E Vprok.Ru 200RUB bln 5Post > Total revenue impact / Mnogo lososya GMV in 2024E Х5 Media X5 Bank Impact on core businesses
Slide 17: X5 Capital Markets Day - Sergei Goncharov
X5 Capital Markets Day Sergei Goncharov General Director of Pyaterochka 27 October 2021
Slide 18: Pyaterochka offline
18 Pyaterochka offline 17,600 8.4 % +6.4 % stores as of EBITDA margin in H1 2021 increase in labour 30 September 2021 +7 b.p. y-o-y productivity in 9M 2021 7.3% increase y-o-y vs 9M 2020 1.3 RUB trn +44 RUB bln 46.4 mln sales in 9M 2021 growth of EBITDA active loyalty card users +10.8% y-o-y in regi
Slide 19: Pyaterochka express delivery
19 Pyaterochka express delivery 10.6 RUB bln 8.6 mln >23 mln GMV in 9M 2021 mobile app MAUs customers covered per 3.9× growth y-o-y month via CVM personal +36.5% y-o-y offers 7.2 mln >392 mln >7 number of express delivery product ratings received CVM communication orders for 9M 2021 in 9M 2021 chann
Slide 20: New concept
2 20 New concept Double > 4,000 digit stores (23% of store base) LFL growth Key results 1.4× Capex reduction per sqm amount by which the NPS in the new concept exceeds Pyaterochka average Source: X5 data
Slide 21: Key challenges
Uxscroup Key challenges LFL sales growth Need to increase logistics capacity Capex reduction Labour shortage Reduction in operating costs Decrease in customers’ purchasing power 21
Slide 22: Key focus
22 Focus on LFL sales growth Key focus Optimisation of capex Operating efficiency for new openings and and increase in labour refurbishments productivity
Slide 23: X5 Capital Markets Day - Vladislav Kurbatov
X5 Capital Markets Day Vladislav Kurbatov General Director of Perekrestok 27 October 2021
Slide 24: Perekrestok offline
24 Perekrestok offline 980 6.1 % 189 supermarkets EBITDA margin stores in new concept +75 stores y-o-y in H1 2021 (19% of store base) 251 RUB bln 1.8 mln NPS 28 net retail sales in 9M 2021 customers daily points +14.0% y-o-y +11.3% y-o-y +1 point y-o-y 2.9 % 14 mln 15 % LFL sales growth active¹ loya
Slide 25: Perekrestok express delivery
25 Perekrestok express delivery 8.3 RUB bln 576 16 ths GMV in 9M 2021 stores with express delivery SKUs rated 19.4× growth y-o-y service (59% of store base) 4.7 mln 2.6 mln 4.8 number of express delivery mobile app MAUs average product rating orders in 9M 2021 +42.6% y-o-y +0.05 points y-o-y 20.1× g
Slide 26: Differentiation points to drive loyalty
6 22 Differentiation points to drive loyalty Private labels Healthy lifestyle Ready-to-eat Vision: top of mind in each category Key target: to improve customers’ perception of Extensive offer: covering maximum share Perekrestok as a leader in the healthy lifestyle of customer needs Differentiation f
Slide 27: Key challenges
Gescroup Key challenges a Reduction in capex and operating costs Slow recovery of traffic Decreasing real disposable especially in shopping malls household incomes 27 Growing popularity of smaller-size proximity stores Increasing competition with e-grocery players
Slide 28: Key focus
28 Key focus Focus on LFL sales growth Focus on operational Become No. 1 in ready-to-eat, efficiency and healthy assortment and digitalisation private labels
Slide 29: X5 Capital Markets Day - Ilya Yakubson
X5 Capital Markets Day Ilya Yakubson Director of Chizhik 27 October 2021
Slide 30: Chizhik key format highlights
302 Key format highlights 250–300 sqm 750–800 SKUs 75 % of store selling space in the assortment target share of private label assortment 7–9 RUB mln UP TO 50 % sales density > 50 % net capex per store (excl. VAT) higher return on investments compared sales density higher than market leaders to aver
Slide 31: Key differentiation factors – CVP
31 Key differentiation factors – CVP EDLP positioning Price Savings of up to 20%–25% compared with peers Close proximity to households Convenience Narrow assortment – saving time on product choice Basic assortment covering 50%–60% of customer needs Assortment High quality of private labels in line w
Slide 32: Private labels
32 Private labels Our aim is to make private labels market leaders Product Packaging Market leader quality Development of packaging Customer tests Development of SRP boxes Proper ingredients Working with mix boxes Price EDLP strategy 20%–30% gap to brand names 10%–15% gap to private labels
Slide 33: Key focus
33 Key focus Development of logistics infrastructure Further increase the share of Opening of several hundred private labels in the assortment stores in 2022 and up to 3,000 to target level of 75% within the next three years
Slide 34: X5 Capital Markets Day - Vsevolod Starukhin, CFO
X5 Capital Markets Day Vsevolod Starukhin Chief Financial Officer 27 October 2021
Slide 35: 9M 2021 results overview
35 9M 2021 results overview Q3 profitability in line with 2020, outlook for FY 2021 EBITDA margin solid 1,597 RUB bln 25.4 % 65.1 RUB bln Revenue Gross margin Capex +10.2% y-o-y +49 b.p. y-o-y +5.2% y-o-y 3.7 % 7.6 % 1.50× LFL sales EBITDA margin Net debt / EBITDA −19 b.p. y-o-y
Slide 36: Revenue growth drivers
36 Revenue growth drivers Offline to lead growth, online contribution to grow Revenue structure, % Revenue growth structure 2021–24Е, % 1.0% 2.0% 4.9% 3% 3% 2.8% (3%) 1.6% 0.9% 15.6% 15.3% 9.5% 15.3% 10% 35% 13.6% 2021–24E CAGR: >12% Pyaterochka 25% Perekrestok 80.6% 81.0% 71.1% Karusel Chizhik 27%
Slide 37: Focus on operational efficiency of the core business
37 Focus on operational efficiency of the core business Key elements Initiatives Speed and efficiency Automation and improvement of core processes: Big data of decision-making Promo: automated personalised Pricing: automated pricing customer offers, reducing system increasing the front the share of
Slide 38: Margin improvement opportunities via regional growth
38 Margin improvement opportunities via regional growth k Larger mar et share driving higher profitability Pyaterochka EBITDA margin growth y-o-y in 9M 2021 +0.1 p.p +0.8 p.p +1.4 p.p EBITDA margin, % Above 10% 5%–10% 7% or less Sales density, RUB ths / sqm Above 350 200–260 230 or less 28.0% 17.5%
Slide 39: EBITDA margin drivers
39 EBITDA margin drivers Efficiency gains of core businesses to fuel new growth opportunities Key drivers EBITDA margin 2021–24E dynamics, % >8% >7% >7% Private labels and direct Operating costs import share growth optimisation driven to drive gross margin by digital transformation initiatives and l
Slide 40: Capex efficiency in focus
Capex efficiency in focus 40 Capex reduction as % of revenue Continue ambitious Increasing efficiency Сapex structure development space expansion: of refurbishments: 4,000+ proximity store based on stores traffic Сapex as of revenue % 4.7% <4.5 % openings, 200+ supermarkets intensity, equipment rene
Slide 41: Increasing dividend coverage by free cash flow
41 Increasing dividend coverage by free cash flow Dividend dynamics, RUB bln Coverage of dividends by free cash flow c. 8% ² >70% Dividends, RUB bln dividend coverage Dividend yield ¹, % 7.0% 50 50 <50% 5.5% dividend coverage 5.2% 3.6% 30 25 22 2017 2018 2019 2020 2021E 2020 2024E Source: X5 data 1
Slide 42: 2024 financial goals
42 2024 financial goals IAS 17 basis 2021–24E revenue Market share 2024 EBITDA CAGR: >12% above 15% in 2024 margin of >7% (>8% for mature businesses) Full dividend Net financial debt / ROIC (NOPAT-based) coverage by net EBITDA <1.8× increase of at least income by 2024 3 p.p. by 2024