X5 Corporate Center · RUS:X5
X5 Corporate Center — X5 Retail Group — Investor Presentation (April 2010)
33 slides from X5 Corporate Center's investor presentation, April 2010
Slide 1: Profitable Growth & Long-Term Leadership
Profitable Growth & Long-Term Leadership Investor Presentation April 2010 p. 1
Slide 2: 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
Slide 3: Agenda
Agenda I. Introduction & 2009 Highlights II. Strategic Review III. FY 2009 & Q1 2010 Operational Performance IV. FY 2009 Financial Performance V. 2010 Outlook p. 3
Slide 4: X5 - #1 Russia's Retailer
X5 - #1 Russia’s Retailer X5 Retail Group today • 2009 net sales - USD 8,717 mln; growth on 2008 of 25% on Russia’s Leading Food Retailers pro-forma basis (1) in RUR terms, 33% on consolidation # Company FY 2009 Net % % in Total basis (2) in RUR terms Retail Sales in Top-10 Market (5) • Q1 2010 net
Slide 5: X5 Multi-Format Approach
X5 Multi-Format Approach X5 Operates Stores for Every Lifestyle and Family Budget Soft Discounters Net selling space: from 300 to 800 sq.m. Average assortment: 3,000 SKUs Pricing policy: Lowest price in the market on 100% of assortment res , 0 63 s to e s Format strengths: Price and convenience 1 l
Slide 6: 2009 Highlights
2009 Highlights … 2009 Conditions Were a Successful Test of X5’s Strength and Endurance • Strengthened position as #1 retailer in Russia • Won customers thanks to “close-to-the-customer” approach Strategic Strategic Progress, Progress, • Expanded selling space well in excess of plan, while staying w
Slide 7: Agenda
Agenda I. Introduction & 2009 Highlights II. FY 2009 & Q1 2010 Operational Performance III. Strategic Review IV. FY 2009 Financial Performance V. 2010 Outlook p. 7
Slide 8: Throughout 2009 X5 Delivered…
Throughout 2009 X5 Delivered… … Industry-Beating Operational Performance Despite Trading Down Trends • Pro-forma sales growth of 25% in RUR terms, 2009 LFL Performance by Format consolidated sales growth of 33% in RUR terms Traffic Basket Based on RUR- +17% denominated gross sales • Phenomenal succe
Slide 9: Q1 2010 Operational Performance…
Q1 2010 Operational Performance… … Was Solid Against Still Weak Consumer Spending & Dramatically Lower Food Inflation • 20% net retail sales growth in RUR against a backdrop Q1 2010 Net Retail Sales of weak consumer spending…. RUR bln • …and drastically lower food inflation in Russia: 4.8% in +20% M
Slide 10: Q1 2010 LFL Results…
Q1 2010 LFL Results… … Led by Powerful Performance at Discounters with Basket Significantly Above Internal Inflation (1.6%) Supermarkets’ Q1 2010 LFL Performance • X5’s LFL sales growth stable at 7% Based on RUR- quarter-on-quarter denominated gross sales Traffic Basket • Soft discounters continued
Slide 11: X5's LFL Performance…
X5’s LFL Performance… …Has Demonstrated Strong Resilience Since Economic Downturn X5 LFL Performance Quarterly LFL Sales Growth 25% X5 total X5 Discounters 20% 18% 17% 17% 16% 16% 15% 13% 11% 10% 8% 7% 7% 5% 0% Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 p. 11
Slide 12: Selling Space Expansion in 2009 & Q1'10
Selling Space Expansion in 2009&Q1‘10 Selective and Efficient New Store Openings In 2009 X5 substantially exceeded its initial expansion Number Of Stores, EoP plan, while staying well within CapEx limit 1,600 58 60 •Net 271 stores or 189 th. sq.m. of selling space added : 1,400 46 –Organically X5 ad
Slide 13: X5's Regional Presence
X5’s Regional Presence Further Strengthened Presence in the Regions North-West region Moscow & the Region • Increased share of regional sales from 19% in Net Retail Sales 2009: Net Retail Sales 2009: 2008 to 21.6% in Q1 2010 with regions USD 4,460mln accounting for approx.50% of new sq.m. added USD
Slide 14: Paterson Acquisition
Paterson Acquisition Excellent Value & Fit Reinforces X5 positions in supermarkets, securing high quality locations in key geographies Strategic & Most stores fully compatible with X5’s requirements both operationally and geographically… Operational Fit …offering opportunity of leverage X5’s o
Slide 15: Agenda
Agenda I. 2009 Highlights II. FY 2009 & Q1 2010 Operational Performance III. Strategic Review IV. FY 2009 Financial Performance V. 2010 Outlook p. 15
Slide 16: X5's Strategic Priorities
X5’s Strategic Priorities • Build multi-format • Build supply chain success advantages • Cash generation • Strengthen value • Drive efficiency and • Focus on returns propositions margins • Liquidity • Drive LFL and top • Ensure support for management line growth long-term growth Customer Operational
Slide 17: Strategic Efficiency Program…
Strategic Efficiency Program… …Impacts Every Area of X5’s Business, to Create New Competitive Advantages Support of Working Long-Term Sales Cost Capital Scalable Growth Savings Project Improvement Expansion Efficient Supply Chain Management IT Systems Integration Business Processes Improvement Labou
Slide 18: Supply Chain Efficiency
Supply Chain Efficiency … Now We are Bringing It to a New Level… … to Create a Fully Integrated & Efficient Supply Chain Purchasing/ Optimal Warehouse Efficient Efficient Sourcing DC Network Productivity Transportation In-Store Structure Logistics Areas of Focus • Assortment • Optimization of DC • W
Slide 19: Distribution Infrastructure
Distribution Infrastructure Supply Centralization Rate Rose From 51% to 61% by Year-End 2009, Well Ahead of Target Region # of DCs 000 sq. m. Dry Fruit & Veg Fresh Frozen Non-Food Central 7 128.4 v v v v DC locations as at North-West 5 65.1 v v v v 31 March 2010 Volgo-Vyatsky 1 17.5 v v v Urals 4 21
Slide 20: IT Systems Transformation
IT Systems Transformation Operational Excellence in Our Business Management Platforms 2012 IT SAP Implementation in line with initial schedule Infrastructure SAP for Retail 9 Successfully launched in a pilot region Stores in 2009 9 X5 earned SAP’s #1 ranking for “Highest Own HR Management Quality SA
Slide 21: In-Store Labour Productivity…
In-Store Labour Productivity… … Can be Substantially Enhanced through Improving Efficiency of… In-Store and Working Workplace Store Personnel Personnel Core Processes Hours Management Education Management Areas of Focus • Merchandising • Efficient planning of • Optimization of • Performance • Educat
Slide 22: X5's Strategic Efficiency Program…
X5’s Strategic Efficiency Program…. …is a Multi-Year Effort But We Are Already Delivering Results SG&A(1) as % of Sales 18.3% 18.1% 18.0% 18.0% 17.2% 17.2% 17.0% 17.0% 16.4% Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 (1) Excluding Depreciation and Amortization and one-off non-cash items p
Slide 23: Agenda
Agenda I. 2009 Highlights II. FY 2009 & Q1 2010 Operational Performance III. Strategic Review IV. FY 2009 Financial Performance V. 2010 Outlook p. 23
Slide 24: FY 2009 Financial Performance
FY 2009 Financial Performance(1) Net Sales EBITDA & EBITDA Margin USD mln EBITDA, USD mln - 2% EBITDA Margin, % 8,892 8,717 9.0% 8.4% 803 736 -8% FY 2008 FY 2009 FY 2008 FY 2009 Gross Profit Net Profit / (Loss)(2) Gross Profit, USD mln Net Profit, USD mln 1.9% Gross Margin, % Net Margin, % 25.6% 165
Slide 25: FY 2009 P&L Highlights
FY 2009 P&L Highlights(1) USD mln FY 2009 FY 2008 % change % change y-o-y, USD y-o-y, RUR Net Sales 8,717.4 8,892.4 (2%) 25% incl. Retail 8,674.5 8,843.8 (2%) 25% Gross Profit 2,107.9 2,278.5 (7%) 18% Gross Margin, % 24.2% 25.6% SG&A (excl. D&A) (1,472.4) (1,578.0) (7%) 19% % of revenue 16.9% 17.8%
Slide 26: Key 2009 P&L Developments
Key 2009 P&L Developments Full year 2009 gross margin totaled 24.2% compared to 25.6% in 2008 - a year-on-year gross margin investment of 140 bp in line with management's expectations. Full year 2009 SG&A expenses decreased as a percentage of revenue by 60 bp year-on-year to 20.0% SG&A expense
Slide 27: FY 2009 Cash Flow Highlights
FY 2009 Cash Flow Highlights USD 734 mln in Operating Cash Flow Thanks to Strong Operational Results, Cost Controls and Efficient Working Capital Management % change % change USD mln FY 2009 FY 2008 USD RUR Net Cash Flows from Operating Activities 733.7 629.3 17% 48% Net Cash from Operating Activiti
Slide 28: Debt Financing and Liquidity
Debt Financing and Liquidity Highlights Debt Maturity Profile as at 31.12.09 At 31-Dec-09, total debt amounted to USD 1,944 mln, net debt USD mln totaled USD 1,532 mln - a yoy reduction of USD 250 mln or 14%. X5's short-term debt increased from USD 578 mln as at 31 1,656.6 December 2008 to USD 1
Slide 29: Agenda
Agenda I. 2009 Highlights II. FY 2009 & Q1 2010 Operational Performance III. Strategic Review IV. FY 2009 Financial Performance V. 2010 Outlook p. 29
Slide 30: 2010 – Stepped Up New Store Openings
2010 – Stepped Up New Store Openings 2010 Outlook • Net new store addition: -Hypermarkets: 7-10 stores; -Supermarkets: ~15 stores; -Discounters: 200-250 stores. • Capital Expenditures of up to RUR 18 bln • Assuming stabilisation of the macro-economic environment, in 2010 X5 expects to deliver net sa
Slide 31: Agenda
Agenda I. 2009 Highlights II. FY 2009 & Q1 2010 Operational Performance III. Strategic Review IV. FY 2009 Financial Performance V. 2010 Outlook Appendices p. 31
Slide 32: X5 Share Capital Structure
X5 Share Capital Structure 0.1% 27.0% 1.9% 47.9% Alfa Group 23.1% Founders of Pyaterochka X5 Management Free Float Total number of shares – 67,893,218 Treasury Shares Equivalent of 271,572,872 GDRs p. 32
Slide 33: Contact information
Contact information IR Department Contact Details Anna Kareva Egor Voytenkov Anastasiya I IR Director Senior IR Manager IR Manager X5 Retail Group N.V. X5 Retail Group N.V. X5 Retail Group N.V. 28 bldg., 4, Sr. Kalitnikovskaya, 28 bldg., 4, Sr. Kalitnikovskaya, 28 bldg., 4, Sr. Kalitnikovskaya, Mosc