X5 Corporate Center · RUS:X5
X5 Corporate Center — X5 Retail Group — Q1 2011 Earnings Presentation
33 slides from X5 Corporate Center's earnings presentation, May 2011
Slide 1: Investor Presentation
1 Investor Presentation May 2011
Slide 2: Disclaimer
Disclaimer 2 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 o
Slide 3: Agenda
Agenda 3 I. Introduction II. Q1 2011 Operational & Financial Results III. 2011 Strategic Priorities and Long-Term Vision IV. Kopeyka Integration Update
Slide 4: X5 - #1 Russia's Retailer
X5 - #1 Russia’s Retailer 4 Russia’s Leading Food Retailers • X5‟s FY 2010 pro-forma net sales reached USD 13 billion Company FY 2010 Net % % Retail Sales in Top-10 in Total • The Company reported consolidated net sales of (USD mln)(1) Market(2) USD 3.8 billion for Q1 2011 X5 Retail Group(3) 11,280
Slide 5: X5 Multi-Format Approach
X5 Multi-Format Approach 5 X5 Operates Stores for Every Lifestyle and Family Budget As at 31 March 2011 Soft Net selling space: from 300 to 800 sq.m. Discounters Average assortment: 3,000 SKUs Pricing policy: Lowest price in the market on 100% of assortment Value proposition: Price and convenience S
Slide 6: Benefits of X5 Multi-Format Strategy
Benefits of X5 Multi-Format Strategy 6 X5’s Multi-Format Approach Enables the Company to: • Appeal to diverse customer segments and regional demographics • Ensure a balance between growth and profitability • Scale efficiencies in purchasing power, IT and supply chain logistics • Respond effectively
Slide 7: Regional Presence
Regional Presence 7 North-West region As at 31 March 2011, X5: Central region X5 discounters: 370 X5 discounters : 577 • Multi-format presence in 52 cities of European X5 supermarkets: 34 X5 supermarkets: 173 Russia, the Urals and Ukraine X5 hypermarkets: 17 X5 hypermarkets: 14 St. Petersburg Conven
Slide 8: Distribution Infrastructure
Distribution Infrastructure 8 DC locations as at Fruit & Region # of DCs 000 sq. m. Dry Veg Veg. Fresh Frozen Non-Food 31 March 2011(1) Central 9 217.7 v v v v v North-West 5 70.4 v v v v Volgo-Vyatsky 1 17.5 v v v Urals 5 34.7 v v v St. Petersburg Centralno- Chernozemny 1 23.5 v v v v Pskov Veliky
Slide 9: Agenda
Agenda 9 I. Introduction II. Q1 2011 Operational & Financial Results III. 2011 Strategic Priorities and Long-Term Vision IV. Kopeyka Integration Update
Slide 10: Q1 2011 Operational Results
Q1 2011 Operational Results 10 • Q1 2011 consolidated net sales increased 48% year-on-year in Q1 2011 Net Sales (1) RUR terms to RUR 112,554 mln or 51% in USD terms to USD RUR billion USD million 3,845 mln on the back of Trading up trends +51% Strong recovery in supermarkets +48% & sustained per
Slide 11: Q1 2011 LFL Results
Q1 2011 LFL Results 11 • Discounters continued to deliver solid performance Supermarkets’ Q1 2011 LFL Performance(1) against last year‟s high comparable base, when the Based on RUR-denominated format‟s LFL sales growth totalled 17% gross sales + 36% Basket Traffic • Supermarkets demonstrated outstan
Slide 12: Q1 2011 Selling Space Expansion
Q1 2011 Selling Space Expansion 12 Record Organic Store Openings and Kopeyka(1) Acquisition Added Nearly 1,100 Stores for 2010 Selling Area by Format • In Q1 2011 X5 added net 76 stores or 16 th. sq.m. of selling space 1% 18% 22% – 80 soft discounters – two supermarkets 20% – two convenience stores
Slide 13: Q1 2011 P&L Highlights
Q1 2011 P&L Highlights(1) 13 USD mln Q1 2011 Q1 2010 % change y-o-y Net Sales 3,845.4 2,542.7 51% incl. Retail 3,826.1 2,534.4 51% Gross Profit 913.6 594.1 54% Gross Margin, % 23.8% 23.4% SG&A (783.9) (510.8) 53% % of revenue 20.4% 20.1% ESOP Expense 4.5 (25.4) n/a % of revenue (0.1%) 1.0% EBITDA 28
Slide 14: Q1 2011 Key P&L Developments
Q1 2011 Key P&L Developments(1) 14 Net sales increased 48% year-on-year in RUR terms to RUR 112,554 mln or 51% in USD terms to USD 3,845 mln Gross profit totaled USD 914 mln, for a gross margin of 23.8% EBITDA amounted to USD 281 mln, for an EBITDA margin of 7.3% Q1 2011 SG&A expenses totale
Slide 15: Q1 2011 Cash Flow Highlights
Q1 2011 Cash Flow Highlights 15 % change USD mln Q1 2011 Q1 2010 y-o-y Net Cash Flows generated from/(used in) 74.9 (129.5) n/a Operating Activities Net Cash from Operating Activities 41% 297.4 210.3 before Changes in Working Capital Change in Working Capital (119.9) (272.0) (56%) Net Interest and I
Slide 16: Liquidity Update
Liquidity Update 16 • As of the end of March 2011, the Company‟s total debt amounted to USD 3,795 mln (at RUR exchange rate of 28.43), out of which 16% was short-term (USD 593 mln) and 84% long-term (USD 3,202 mln). Ruble-denominated borrowings accounted for 90% of X5 net debt at March 31, 2011. • A
Slide 17: 2011 Outlook
2011 Outlook 17 Gross sales to exceed RUR 500 billion (inclusive of VAT) representing top-line growth of over 40%. Net new store addition: ~ 540 stores Discounters: over 500, Supermarkets: 20-25, Hypermarkets: 5-10. Capital Expenditures of up to RUR 35 bln (exclusive VAT) New store openings: 55%
Slide 18: Retail Law and Its Implications
18 Retail Law and Its Implications New Retail Law Came into Effect as of 1 February 2010. Provisions Related to Relationships with Suppliers Became Effective as of 1 August 2010 2010 Implications for Key Restrictions 2010 Implications EstimatedEstimated 2011 Impact Effect on X5 forRetailers Retailer
Slide 19: Agenda
Agenda 19 I. Introduction II. Q1 2011 Operational & Financial Results III. 2011 Strategic Priorities and Long-Term Vision IV. Kopeyka Integration Update
Slide 20: 2011 Strategic Priorities
20 2011 Strategic Priorities Customer Focus on formats‟ value propositions Focus Further assortment improvements: local sourcing, private label, non-food Organic Step-up in new store openings Expansion Special focus on discounters, selective openings of supermarkets and hypermarkets Moscow
Slide 21: 2011 - Healthy Cash Flow
21 2011 - Healthy Cash Flow illustrative Investing Cash Flow - organic Investing Cash Flow - M&A Operating Cash Flow One-off Retail Law effect USD mln 629 734 427 378 (245) (458) (189) (899) (997) (1,090) (659) 2007 2008 2009 2010 2011F (1) 2011F cash flows – not according to scale. (2) not includin
Slide 22: Long-Term Vision National Champion in Retail
22 Long-Term Vision • Successful Implementation of Multi-Format Strategy Creating National Retail [Champion] Leader? • Low Cost, Best-in-Class Retail Operations • Moscow and St. Petersburg as Cash Generators Supporting Growth of Regional Operations National Champion in Retail
Slide 23: Russian Macro Trends
Russian Macro Trends 23 State Duma Elections in December 2011 and Presidential Elections in April 2012 are Expected to Be Supportive for Russian Consumer Market Environment Unemployment Real Wages Growth vs Real Retail Sales Growth 8 12% 30% 20% 6 9% 10% 4 6% 0% 2 3% -10% 0 0% -20% Apr-09 Oct-09 Apr
Slide 24: Russian Macro Trends
Russian Macro Trends 24 Favourable Trends in Consumer Sentiment Expected in H2 2011 Inflation Dynamics, y-o-y Consumer Confidence Index in Russia 20% 5% 20% - 15% 15% (5%) (10%) 10% (15%) 10% 5% (20%) (25%) 0% 5% (30%) -5% (35%) (40%) -10% 0% 1Q05 1Q06 1Q07 3Q07 3Q08 3Q09 1Q10 1Q11 3Q05 3Q06 1Q08 1Q
Slide 25: Agenda
Agenda 25 I. Introduction II. Q1 2011 Operational & Financial Results III. 2011 Strategic Priorities and Long-Term Vision IV. Kopeyka Integration Update
Slide 26: Kopeyka Integration… Fast-Tracked to One Year
Kopeyka Integration… 26 … Fast-Tracked to One Year Purchasing • As Russia‟s largest retailer, X5 has better purchasing terms than Kopeyka, and we have moved swiftly to capture synergies from enhanced purchasing power. Full benefits from integration of the purchasing function are expected to be reape
Slide 27: Kopeyka Stores Rebranding Schedule
Kopeyka Stores Rebranding Schedule 27 11 11 11 11 11 11
Slide 28: Kopeyka Stores under Pyaterochka Banners
Kopeyka Stores under 28 Pyaterochka Banners EXTERIOR EXTERIOR BEFORE AFTER INTERIOR INTERIOR
Slide 29: Kopeyka Stores under Pyaterochka Banners (cont'd)
Kopeyka Stores under 29 Pyaterochka Banners (cont’d) SHELVES SHELVES BEFORE AFTER SELLING SPACE SELLING SPACE
Slide 30: Kopeyka Store Personnel Training
Kopeyka Store Personnel Training 30 Staff trained Training Total staff to Branch centres as of be trained • Store management staff is trained in X5‟s training 11.04.2011 centres (3 to 5 people from each store) Volgo-Vyatsky 2 349 349 Centralno- • Basic staff are trained in stores 2 217 292 Chernozem
Slide 31: Agenda - Appendices
Agenda 31 I. Introduction II. Q1 2011 Operational & Financial Results III. 2011 Strategic Priorities and Long-Term Vision IV. Kopeyka Integration Update Appendices
Slide 32: X5 Share Capital Structure
X5 Share Capital Structure 32 0.1% 30.3% Alfa Group Founders of Pyaterochka 1.8% 47.9% X5 Management Free Float Treasury Shares 19.9% Total number of shares – 67,893,218 Equivalent of 271,572,872 GDRs
Slide 33: Contact Information
Contact Information 33 IR Department Contact Details Anastasiya Kvon Egor Voytenkov IR Director Senior IR Manager X5 Retail Group N.V. X5 Retail Group N.V. 28 bldg., 4, Sr. Kalitnikovskaya, 28 bldg., 4, Sr. Kalitnikovskaya, Moscow, Russia Moscow, Russia Tel.: +7 (495) 662 8888 ext. 22-452 Tel.: +7 (