X5 Corporate Center · RUS:X5
X5 Corporate Center — X5 Retail Group — Investor Presentation (July 2009)
25 slides from X5 Corporate Center's investor presentation, July 2009
Slide 1: Winning Customers With The Power Of 5
X5 Winning Customers With The Power Of 5 Investor Presentation July 2009 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. X5 Retail Group - Unrivalled Leadership in Russian Retail II. 2008 – Strong Growth Ahead of Expectations • Best-in-Industry Operational Performance • Financial Review III. 2009 & Beyond – Source of Strength in Russian Retail • 2009 Priorities Support X5’s Long-Term Leadership & Growth • Wi
Slide 4: Unrivalled Leadership in Russian Retail
Unrivalled Leadership in Russian Retail • 2008 pro-forma(1) net sales - USD 8,892 mln # Company FY 2008 % in % in Total Net Retail Top-10 Market (4) • H1 2009 net retails sales – USD 3,959 mln Sales (USD mln) • 1,164 company-managed stores in Russia and 1. X5(1) 8,844 26.1% 4.0% Ukraine(2) 2. Magnit
Slide 5: Multi-Format Operations
Multi-Format Operations Soft Discount H1’09 Retail Sales Break Down by Format Stores 19% As at 30 June 2009 Hypermarkets • 900 stores Soft • Total net selling space – 442,090 sq. m. Discounters • Sales per sq.m. – USD 14,328 (1) Supermarkets 53% 28% Supermarkets As at 30 June 2009 Total net retail s
Slide 6: Strong Regional Positions
Strong Regional Positions North-West region Moscow & the region Sales breakdown: Sales breakdown: 10% Hypermarkets 28% Hypermarkets 51% Discounters • As at 30 June, X5 was present in 42 cities 64% Discounters 8% Supermarkets 39% Supermarkets of European Russia and the Urals Volgo-Vyatsky region Sale
Slide 7: Agenda
Agenda I. X5 Retail Group - Unrivalled Leadership in Russian Retail II. 2008 – Strong Growth Ahead of Expectations • Best-in-Industry Operational Performance • Financial Review III. 2009 & Beyond – Source of Strength in Russian Retail • 2009 Priorities Support X5’s Long-Term Leadership & Growth • Wi
Slide 8: Best-in-Industry Operational Performance
Best-in-Industry Operational Performance Soft Discounters Store Count & Sales Supermarkets Store Count & Sales Net Retail Sales, USD mln Net Retail Sales, USD mln # of Stores + 51% 4 464 # of Stores 2 702 + 39% 1 945 2 947 674 848 179 207 FY 2007 FY 2008 FY 2007 FY 2008 Hypermarkets Store Count & Sa
Slide 9: 2008 P&L Highlights
2008 P&L Highlights % change USD mln (1) FY 2008 FY 2007 y-o-y Net Sales 8,892.4 6,151.5 45% incl. Retail 8,843.8 6,109.6 45% Gross Profit 2,278.5 1,610.7 41% Gross Margin, % 25.6% 26.2% EBITDA 803.2 547.6 47% EBITDA Margin, % 9.0% 8.9% Adjusted Operating Profit (2) 552.5 370.7 49% Adjusted Operatin
Slide 10: Key 2008 P&L Developments
Key 2008 P&L Developments • FY 2008 gross margin declined 60 bp year-on-year – in line with X5’s decision to invest in its value propositions and consistently pursue “close-to-the-customer” pricing strategy • SG&A declined as % of revenue (from 21.4% in 2007 to 20.6% in 2008) as a result of tighter
Slide 11: 2008 Cash Flow & Debt Position
2008 Cash Flow & Debt Position % change USD mln (1) FY 2008 FY 2007 y-o-y Net Cash from Operating Activities 629.3 427.5 47% Net Cash from Operating Activities before Changes in Working Capital 774.3 491.3 58% Change in Working Capital 243.9 139.8 75% Net Interest and Income Tax Paid (388.9) (203.6)
Slide 12: Agenda
Agenda I. X5 Retail Group - Unrivalled Leadership in Russian Retail II. 2008 – Strong Growth Ahead of Expectations • Best-in-Industry Operational Performance • Financial Review III. 2009 & Beyond – Source of Strength in Russian Retail • 2009 Priorities Support X5’s Long-Term Leadership & Growth • Wi
Slide 13: 2009 Priorities Support X5's Long-Term Leadership & Growth
2009 Priorities… …Support X5’s Long-Term Leadership & Growth • Multi-Format Approach More Value for • Price Leadership Customers • Assortment • Priority given to: • New hypermarkets & supermarkets from existing pipeline or Selective – Soft discounters new projects with extremely attractive economics
Slide 14: Winning Customers with the Power of 5
Winning Customers with the Power of 5 Multi-Format Price Leadership Stores X5 Winning Customers With The Power of 5! Supply Chain Focus on Assortment, Management Fresh & Private Label Purchasing Power p. 14
Slide 15: H1 2009 Operational Performance
H1 2009 Operational Performance … Was Solid Despite Tougher Macro-Economic Environment Net Retail Sales, consolidation (1) Net Retail Sales, consolidation (1) RUR mln USD mln 3 959 130,914 3 743 89,627 + 46% + 6% H1 2008 H1 2009 H1 2008 H1 2009 Net Retail Sales, pro-forma (2) Net Retail Sales, pro-f
Slide 16: H1 LFL Results
H1 LFL Results… … Varied from Region to Region & Format to Format • Soft Discounters - clear winners in the trading H1 LFL Performance by Format down conditions: Based on RUR- denominated gross sales Traffic Basket • 12% traffic inflow in Moscow + 18% • 3% traffic inflow in St. Petersburg 9% + 12% +
Slide 17: Selling Space Expansion in H1 2009
Selling Space Expansion in H1 2009… … was Focused and Selective • 62 th.sq. m. or 63 stores added on a net basis: Number Of Stores 1,400 – 52 soft-discounters (including 21 stores 53 1,200 46 acquired in Agrotorg-Rostov transaction in 1,000 15 211 207 December 2008) 800 12 179 600 – 4 supermarkets 1
Slide 18: Logistics & IT Infrastructure Development
Logistics & IT Infrastructure Development… … is One of Our Top Priorities for 2009 Fruit & Region # of DCs 000 sq. m. Dry Veg Fresh Frozen Central 7 112.1 v v v v DC locations as at North-West 4 44.5 v v v v 30 June 2009 Volgo-Vyatsky 1 17.5 v v v Urals 5 18.2 v v v Centralno-Chernozemny 2 10.7 v v
Slide 19: Q1 2009 Financial Review
Q1 2009 Financial Review Stable EBITDA Margin on the Back of Top Line Performance and Cost Controls Net Sales EBITDA & EBITDA Margin EBITDA, USD mln Net Sales, USD mln - 8% EBITDA Margin, % 8.7% -8% 8.7% 2,039 1,867 177 163 Q1 2008 Q1 2009 Q1 2008 Q1 2009 Gross Profit Net (Loss)/Profit Gross Profit,
Slide 20: Q1 2009 P&L Highlights
Q1 2009 P&L Highlights % change % change USD mln(1) Q1 2009 Q1 2008 USD RUR Net Sales 1,866.9 2,038.6 (8%) 28% incl. Retail 1,859.3 2,027.5 (8%) 28% Gross Profit 458.2 518.9 (12%) 23% Gross Margin, % 24.5% 25.5% SG&A (excl. D&A) (320.2) (366.0) (13%) 22% % of revenue 17.2% 18.0% EBITDA 162.7 176.7 (
Slide 21: Key Q1 2009 P&L Developments
Key Q1 2009 P&L Developments • Q1 2009 gross margin declined 100 bp year-on-year to 24.5%. The decline is attributable to planned investment in prices across formats, a managed reduction in Karusel’s gross margin, and the impact of trading down trends (change of product mix in favour of staples) • S
Slide 22: Q1 2009 Cash Flow Highlights
Q1 2009 Cash Flow Highlights Strong Cash Generation from Operations Offset by Working Capital Seasonality % change % change USD mln Q1 2009 Q1 2008 USD RUR Net Cash Flows (used in)/from Operating Activities (38.4) 34.3 n/a n/a Net Cash from Operating Activities before Changes in Working Capital 169.
Slide 23: Liquidity Update
Liquidity Update In Q1 2009 X5: Debt Maturity Profile as at 30.06.09 • Continued its deleveraging efforts, decreasing absolute levels of debt by USD 70 mln (excluding FX revaluation effects) USD mln • Completely eliminated its short-term FX exposure by repaying Denominated in RUR Denominated in USD
Slide 24: 2009 Sales Growth & CapEx Outlook
2009 Sales Growth & CapEx Outlook 2008 2009E Sales Growth (in RUR) 41% >25% Capital Expenditures ~USD 1,000 Up to RUR 14 bln mln 2009 Approximate CapEx Breakdown Margins: Focus on Customers and Efficiency 18% • Continued gross margin investment in customer 69% value proposition 13% • Cost control re
Slide 25: Long-Term View
Long-Term View We Should Not Forget that… • Russian retail market remains very fragmented and immature… • …offering unique opportunities to strongest players… • …on the back of… – long-term potential for income and spending growth… –…organic expansion… –…and market consolidation p. 25