X5 Corporate Center · RUS:X5

X5 Corporate Center — X5 Retail Group — Q1 2019 Earnings Presentation

38 slides from X5 Corporate Center's earnings presentation, Apr 25, 2019

  1. Slide 1: Q1 2019 Financial Results

    CLIMB HIGHER! X5 Capital Markets Day 2016 Moscow, 27 October 2016 Q1 2019 FINANCIAL RESULTS MOSCOW, RUSSIAN FEDERATION 25 APRIL 2019

  2. Slide 2: Disclaimer

    02 DISCLAIMER T his presentation does not constitute or form part of and should not be construed as an advertisement of securities, an offer or This presentation includes statements that are, or may be deemed to be, “forward- looking statements”, with respect to the financial The information and opi

  3. Slide 3: I. Highlights

    I. HIGHLIGHTS

  4. Slide 4: Strategic Highlights

    04 STRATEGIC HIGHLIGHTS  X5 is a true multi-format retailer with focus on the three largest segments of Russian food retail market and primarily on proximity stores and supermarkets  According to the new strategy X5 uses smart and balanced approach to expansion  X5 reinforced its market leadershi

  5. Slide 5: Key Achievements in Q1 2019

    05 KEY ACHIEVEMENTS IN Q1 2019  The Company added 348 net  Revenue growth remained new stores in Q1 2019 adding strong at 15.5% in Q1 2019 net 135 th. sq. m of selling space, 82% of which was organic growth  All of Pyaterochka stores and  Adjusted EBITDA margin at 87% of Perekrestok stores solid

  6. Slide 6: Operational Highlights

    06 OPERATIONAL HIGHLIGHTS Net retail sales dynamics, RUB bn LFL sales, % y-o-y growth CAGR 2014-2018: 24.6% CAGR 2016-2018: 21.9% 18.5% 13.7% 1,525 1,287 9.8% 1,026 7.7% 804 5.4% 632 1.5% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Selling space, th. sq. m Number of stores, end of period CAGR

  7. Slide 7: Financial Highlights

    07 FINANCIAL HIGHLIGHTS Revenue dynamics, RUB bn Gross profit & gross margin CAGR 2014-2018: 24.7% CAGR 2014-2018: 24.3% CAGR 2016-2018: 21.8% CAGR 2016-2018: 21.6% 18.3% 24.5% 24.5% 24.2% 23.9% 24.1% 1,533 19.7% 1,295 1,034 370 809 309 634 250 155 198 2014 2015 2016 2017 2018 2014 2015 2016 2017 20

  8. Slide 8: II. Market Overview

    II. MARKET OVERVIEW

  9. Slide 9: Macro Environment (1/2)

    09 MACRO ENVIRONMENT (1/2) Real food retail trade continued its Real wage growth slowed down and real moderate recovery in Q1 2019 with a income showed a significant drop in Q1 slight slowdown because of CPI food 2019 on the back of accelerating inflation acceleration 7 Y-o-y growth rates, % 11 Y-o-

  10. Slide 10: Macro Environment (1/2)

    10 MACRO ENVIRONMENT (1/2) Consumer confidence slightly improved Positive growth in industrial production is in Q1 2019 relative to Q4 2018. Trading largely based on mining sector acceleration down continued declining but remained – without significant improvement in the high manufacturing sector 0

  11. Slide 11: Recent Food Retail Market Trends…

    11 RECENT FOOD RETAIL MARKET TRENDS… KEY TRENDS DESCRIPTION CONCLUSIONS  Consumers are raising the bar on  Opportunity to improve Changing consumer product quality and costumer competitiveness through service behavior experience and personalisation  Consumer preferences shift towards Increasing p

  12. Slide 12: …and X5's Response

    12 …AND X5’S RESPONSE KEY TRENDS X5 RESPONSE  Constant adaptation of CVPs to customers’ needs leveraging extensive Changing consumer knowledge from our loyalty programs across all formats behavior  Personalised offers based on the loyalty programmes Increasing popularity of  Improving the quality

  13. Slide 13: X5 vs. Russian Food Retail in Top-Line Growth

    13 X5 VS. RUSSIAN FOOD RETAIL IN TOP-LINE GROWTH 33% 28% 28% 30% 25% 23% 21% 21% 20% 19% 18% 18% 15% 14% 12% 11% 9% 10% 10%* 9% 8% 7% 9% 5% 8% 4% 2% 2011 2012 2013 2014 2015 2016 2017 2018 Q1 2019 X5 y-o-y revenue growth Top-10 Market Source: Infoline, X5 analysis * X5 estimates Starting from 2015,

  14. Slide 14: Russian Retail Market Snapshot

    14 RUSSIAN RETAIL MARKET SNAPSHOT Top 10 Russian food retailers % market share % market share # Company name 2017 2018 1 Х5 9.5% 10.7% 2 Magnit 7.5% 7.7% 3 Lenta 2.5% 2.8% 4 SPS Holding (Red and White) 1.8% 2.4% 5 Dixy 2.1% 2.1% 6 Auchan 2.2% 1.9% 7 Metro 1.4% 1.3% 8 O‘Key 1.2% 1.1% 9 Monetka 0.6% 0

  15. Slide 15: III. Operational Results Q1 2019

    III. OPERATIONAL RESULTS Q1 2019

  16. Slide 16: Q1 2019 Results: Operational Highlights

    16 Q1 2019 RESULTS: OPERATIONAL HIGHLIGHTS Net retail sales Traffic, mln customers Net selling space (eop) 1,184 1,212 26.0% 23.3% 19.6% 20.2% 19.4% 1,168 1,162 18.0% 15.1% 17.6% 17.1% 15.3% 1,011 6,464 6,599 421 404 5,946 6,155 381 5,733 350 373 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q1 2018 Q2 20

  17. Slide 17: Q1 2019 Results: Net Retail Sales Summary

    17 Q1 2019 RESULTS: NET RETAIL SALES SUMMARY Net retail sales breakdown by retail format, RUB mln Hypermarkets Hypermarkets 22,218 21,917 55,250 66,445 Supermarkets +15.3% 350,346 404,116 271,048 Proximity stores 315,274 Proximity stores Q1 2018 Q1 2019 KEY DRIVERS  Pyaterochka, which continues to

  18. Slide 18: Q1 2019 Results: Expansion Summary

    18 Q1 2019 RESULTS: EXPANSION SUMMARY Net selling space, th. sq. m Net selling space added in 15.1% Q1 2019, th. sq. m  Total store base increased to 6,599 14,779 stores as of 31 March 2019 5,733 Hypermarkets Supermarkets  Pyaterochka was the main driver (13) 13 for the store base increase with a

  19. Slide 19: X5 Regional Presence

    19 X5 REGIONAL PRESENSE X5 today  Multi-format presence in seven Federal Districts  Total stores – 14,779, including: ― 13,917 Pyaterochka stores ― 771 Perekrestok supermarkets ― 91 Karusel hypermarkets North North Format Unit Southern Central Volga Ural Siberian Total Caucasus Western 249 1,220 5

  20. Slide 20: X5 Distribution Capabilities

    20 X5 DISTRIBUTION CAPABILITIES Warehouse space as of 31 March 2019 Space, Federal district # of DCs th. sq. m Central 587 16 5 North-Western 131 5 Volga 195 9 16 Ural 139 6 9 6 Southern 96 4 4 Siberian 18 1 1 Total 1,167 41 Centralisation levels Highlights for Q1 2019  X5 continued the implementat

  21. Slide 21: IV. Financial Results Q1 2019

    IV. FINANCIAL RESULTS Q1 2019

  22. Slide 22: Q1 2019 Results: Financial Highlights

    22 Q1 2019 RESULTS: FINANCIAL HIGHLIGHTS Revenue Gross profit & gross margin SG&A (excl. D&A&I&LTI) 24.6% 24.8% 25.2% 18.2% 17.9% 18.0% 18.3% 16.9% 19.9% 19.3% 17.6% 24.1% 16.9% 15.5% 23.8% 24.0% 76.0 74.4 13.5% 63.9 64.8 67.0 101.8 100.6 102.2 423.0 405.9 91.8 92.5 54.7 382.6 375.5 83.7 351.5 Q1 20

  23. Slide 23: Q1 2019 Results: Capital Expenditure

    23 Q1 2019 RESULTS: CAPITAL EXPENDITURE Capex breakdown, % Capex dynamics by quarter, RUB mln 28,037 20,440 13% 18,757 New store openings 16,433 Refurbishments 13% 12,414 Logistics 1% Q1 2019 6% Maintenance 67% IT and other Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Source: X5 data (prepared under IAS

  24. Slide 24: Q1 2019 Results: Debt Structure

    24 Q1 2019 RESULTS: DEBT STRUCTURE Debt profile Debt portfolio maturity 100% 22% RUB mln 31 Mar 2019 31 Mar 2018 32% Total Debt 201,941 191,642 Short-Term Debt 60,291 57,427 43% % of total debt 29.9% 30.0% Long-Term Debt 141,650 134,215 % of total debt 70.1% 70.0% 3% Net Debt 183,660 178,707 31 Mar

  25. Slide 25: Q1 2019 Results: Adjusted SG&A Expenses Analysis

    25 Q1 2019 RESULTS: ADJUSTED SG&A [1] EXPENSES ANALYSIS Q1 2019 analysis as percentage of revenue 18.2% 18 b.p. 18.3% 0.7% (4) b.p. 0.7% 1.0% 0.9% (8) b.p. 1.2% (8) b.p. 1.1% 2.3% 8 b.p. 2.4% 13.5% Third party services 0.7% 0.9% Other expenses 1.0% 5.1% 5.1% 5 b.p. Other store costs 2.4% 0.3% Utilit

  26. Slide 26: Financial Statements (1/3): Profit and Loss Statement

    FINANCIAL STATEMENTS (1/3) 26 PROFIT AND LOSS STATEMENT IAS 17 IFRS 16 RUB mln Q1 2019 Q1 2018 +/( - ) +/ ( - ), % Q1 2019 Revenue 405,864 351,518 54,346 15.5% 405,864 Net retail sales 404,116 350,346 53,770 15.3% 404,116 COGS (305,300) (267,848) (37,452) 14.0% (303,699) Gross profit 100,564 83,670

  27. Slide 27: Financial Statements (2/3): Balance Sheet

    FINANCIAL STATEMENTS (2/3) 27 BALANCE SHEET RUB mln 31 Mar 2019 (IFRS 16) 31 Dec 2018 (restated)* Total current assets 149,905 169,812 Cash & cash equivalents 18,281 24,368 Inventories 101,997 115,990 Total non-current assets 830,566 829,698 Right-of-use assets 387,986 387,364 Net PP&E 305,628 307,7

  28. Slide 28: Financial Statements (3/3): Cash Flow Statement

    FINANCIAL STATEMENTS (3/3) 28 CASH FLOW STATEMENT IAS 17 IFRS 16 RUB mln Q1 2019 Q1 2018 +/( - ) +/ ( - ), % Q1 2019 Net cash generated from 17,212 13,704 3,508 25.6% 29,345 operating activities Net cash from operating activities before 28,791 21,318 7,473 35.1% 50,070 changes in working capital Cha

  29. Slide 29: Appendix: Performance Summary of Key Formats

    APPENDIX PERFORMANCE SUMMARY OF KEY FORMATS

  30. Slide 30: Pyaterochka Summary (1/3)

    PYATEROCHKA SUMMARY (1/3) 30 RUSSIA’S #1 PROXIMITY NETWORK BY REVENUE 13,917 stores as of 5,435 th. sq. m of selling space 31 March 2019, as of 31 March 2019, 18.0% increase y-o-y 17.1% increase y-o-y Q1 2019 net retail sales – 992 mln of customer visits in RUB 315.3 bn, Q1 2019, 15.7% increase y-o-

  31. Slide 31: Pyaterochka Summary (2/3)

    31 PYATEROCHKA SUMMARY (2/3) Q1 2019 net retail sales: Q1 2019 selling space: Q1 2019 sales densities: 16.3% increase y-o-y 17.1% increase y-o-y 3.2% decline y-o-y Net sales growth (% y-o-y) Net selling space growth (% y-o-y) Net sales densities (th. RUB/sq. m[1]) 38.3% 272 37.4% 268 266 262 259 31.

  32. Slide 32: Pyaterochka Summary (3/3): Strategy Overview

    PYATEROCHKA SUMMARY (3/3) 32 STRATEGY OVERVIEW  Maximise the share of customers, and maximise share of these customers’ wallet: − Further adaptation of CVP and assortment − Leadership in NPS and service level − Decrease personnel turnover; improve loyalty − Improvement in operational efficiency, in

  33. Slide 33: Perekrestok Summary (1/3)

    PEREKRESTOK SUMMARY (1/3) 33 RUSSIA’S #1 SUPERMARKET 771 stores as of 794 th. sq. m. of selling space 31 March 2019, as of 31 March 2019, 14.4% increase y-o-y 15.9% increase y-o-y Q1 2019 net retail sales of 137 mln customers in Q1 2019, RUB 66.4 bn, 20.7% increase y-o-y 20.3% increase y-o-y Q1 2019

  34. Slide 34: Perekrestok Summary (2/3)

    34 PEREKRESTOK SUMMARY (2/3) Q1 2019 net retail sales: Q1 2019 selling space: Q1 2019 sales densities: 20.3% increase y-o-y 15.9% increase y-o-y 0.5% increase y-o-y Net sales growth (% y-o-y) Net selling space growth (% y-o-y) Net sales densities (th. RUB/sq. m[1]) 25.5% 324 326 326 327 326 328 24.9

  35. Slide 35: Perekrestok Summary (3/3): Strategy Overview

    PEREKRESTOK SUMMARY (3/3) 35 STRATEGY OVERVIEW  Fine-tuning value proposition and adapting to customer needs: − Further adaptation of assortment with focus on fresh, F&V, ready-to-eat − Omni-channel development − Targeted loyalty system and personalised promo − Best-in-class service, further increa

  36. Slide 36: Karusel Summary (1/3): Highlights

    KARUSEL SUMMARY (1/3) 36 HIGHLIGHTS 91 stores as of 369 th. sq. m. of selling space 31 March 2019: as of 31 March 2019, 1.1% decrease y-o-y 3.3% decrease y-o-y Q1 2019 net retail sales: 31 mln customer visits in Q1 2019, RUB 21.9 bn, 5.6% decrease y-o-y 1.4% decrease y-o-y Q1 2019 LFL Results Share

  37. Slide 37: Karusel Summary (2/3)

    37 KARUSEL SUMMARY (2/3) Q1 2019 net retail sales: Q1 2019 selling space: Q1 2019 sales densities: 1.4% decrease y-o-y 3.3% decrease y-o-y 0.5% increase y-o-y Net sales growth (% y-o-y) Net selling space growth (% y-o-y) Net sales densities (th. RUB/sq. m[1]) 14.5% 233 237 237 237 237 238 1.7% 10.7%

  38. Slide 38: Karusel Summary (3/3): Strategy Overview

    KARUSEL SUMMARY (3/3) 38 STRATEGY OVERVIEW  Increasing sales density and increasing customer loyalty: − Further adapt assortment − Improve price perception − Increase share of private label − Expand omni-channel offering & digital innovations − Improve personnel engagement − Reduce lease costs, shr

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