Magnit · RUS:MGNT
Magnit — Q1 2020 Earnings Presentation
52 slides from Magnit's earnings presentation, Apr 29, 2020
Slide 1: Investor Presentation 1Q 2020 Results
Investor Presentation 1Q 2020 RESULTS
Slide 2: Disclaimer
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Disclaimer This presentation ("Company Presentation") comprises certain written materials/ slides No representation or warranty, express or implied, is
Slide 3: Russian Market Overview
Russian Market Overview Russian Macro Environment • Russian Food Retail Market Potential • Russian Food Retail Market Evolution
Slide 4: Russian Macro Environment
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Russian Macro Environment Stable economic growth will support retail market 1 Real GDP demonstrates sluggish growth 2.1% YoY in 4Q 2019 4 Food retail sa
Slide 5: Russian Food Retail Market Potential
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Russian Food Retail Market Potential Magnit is a leading company on the growing Russian food retail market 1 Russian grocery 2 There is still room 3 Mod
Slide 6: Russian Food Retail Market Evolution
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Russian Food Retail Market Evolution Grocery retail entering maturity phase, growth just above inflation Russian Food Retail Sales Early phase Growth ph
Slide 7: Magnit Today
Magnit Today Magnit at a Glance • Geographical Coverage • Format Summary Convenience Store Supermarket • Drogerie Store Other Small Formats and Pilots Own Production & Private Label Logistics System • Target Organizational Structure • Employees
Slide 8: Magnit at a Glance
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Magnit at a Glance #1 retailer in Russia by number of stores with unrivalled infrastructure platform Key differentiation points 20,860 7,277 38 5,458 To
Slide 9: Geographical Coverage
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Geographical Coverage North North Caucasus Southern Central Volga West Urals Siberian Total 3,718 Cities & Towns Convenience 403 2 149 4 192 3 946 1 591
Slide 10: Format Summary
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Format Summary Size of the Store Average ticket Sales density*, Sales LFL Ownership sq.m (excl. VAT), th RUB/ mix 1Q 2020** structure selling space RUB
Slide 11: Convenience Store
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Convenience Store 01 A convenient and affordable store for everyday shopping Size of the Store. sq. m Overview Total size, 484 Routine shopping Food for
Slide 12: Convenience Store
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Convenience Store 02 Key operating statistics Store openings Selling space, thousand sq. m Payback period Leased 6.7% 4,951 Increase YoY 82% leased 18%
Slide 13: Supermarket
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Supermarket 01 Comfortable and affordable store for everyday and major shopping Size of the Store. sq. m Overview Total size, 4,258 Major shopping Speci
Slide 14: Supermarket
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Supermarket 02 Key operating statistics Store openings Selling space, thousand sq. m Payback period 0.7% Leased 947 Increase YoY 46% leased 54% owned 6-
Slide 15: Drogerie Store
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Drogerie Store 01 Within walking distance to buy beauty and health products Size of the Store, sq. m Overview Total size, 290 Regular shopping for perso
Slide 16: Drogerie Store
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Drogerie Store 02 Key operating statistics Store openings Selling space, thousand sq. m Payback period 18.5% Leased 1,339 Increase YoY 90% leased 10% ow
Slide 17: Other Small Formats and Pilots
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Other Small Formats and Pilots 01 Cash&Carry Pharmacy City Bulk shopping for future Pharmaceutical & health care Small store offering ready-to-go / read
Slide 18: Other Small Formats and Pilots
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Other Small Formats and Pilots 02 Evening Russian Post Petrol Stations Modern and convenient alcoholic beverages store Basic assortment in Russian Post
Slide 19: E-commerce
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix E-commerce 1 E-commerce has 2 Russian e-commerce market 3 FMCG categories particularly considerable growth remains very fragmented under-penetrated in R
Slide 20: Private Label
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Private Label Well-developed Unique value offer Private Label will help us to differentiate from competition infrastructure We have what it takes to lau
Slide 21: Own Production
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Own Production We develop own production facilities to increase the share and variety of private label products in our stores Agricultural enterprise Fo
Slide 22: Organizational Structure
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Organizational Structure Decentralized Target operational organization decision-making Convenience 1 Front office decisions are now delegated Head Store
Slide 23: Logistics System
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Logistics System North North Central Volga Southern Urals West Siberian Caucasus Total Centralization Ratio 1Q 2020 90% Distribution Delivered from DC C
Slide 24: Employees
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Employees 310,539 Headcount of Employees 35,595 Distribution 246,802 12,145 Regional In-store branches 11,422 Head Office Other Super- Drogerie Convenie
Slide 25: Strategy
Strategy Our Goal and Strategic Principles Key Strategic Pillars • Key Differentiation Points • What We Keep Doing What We Change
Slide 26: Our Goal and Strategic Principles
Russian Market Overview Magnit Strategy Operating and Financial Corporate 1Q 2020 Operating and Financial Results Appendix Today Results Governance Our Goal and Strategic Principles Our goal: to become a store of choice for all Russian families Customers Fixing the basics Create platform first for f
Slide 27: Key Strategic Pillars
Russian Market Overview Magnit Strategy Operating and Financial Corporate 1Q 2020 Operating and Financial Appendix Today Results Governance Results Key Strategic Pillars 1. 2. 3. 4. 5. Execute new format CVP Fix the basics to regain margin Invest in human capital via Build core differentiating Profi
Slide 28: Key Differentiation Points
Russian Market Overview Magnit Strategy Operating and Financial Corporate 1Q 2020 Operating and Financial Appendix Today Results Governance Results Key Differentiation Points #1 in Russia in proximity One of the largest supply Best Quality Price Multi-format offering Assortment tailored to to custom
Slide 29: What We Keep Doing
Russian Market Overview Magnit Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Today What We Keep Doing 1. 2. 3. 4. 5. 6. CVP and functional Multi-format Build capabilities Review and Strengthen our Enhance and upgrade strategies approac
Slide 30: What We Change
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix What We Change 1. 2. 3. Investment process Enhance format Capital expertise both allocation Focus on quality to in HQ and regions Maintain a healthy ens
Slide 31: Operating and Financial Results
Operating and Financial Results Operating Highlights • Summary Profit & Loss Revenue & Costs • Gross Margin & EBITDA Free Cash Flow Balance Sheet CAPEX Analysis • Leverage Policy
Slide 32: Operating Highlights
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Operating Highlights 1 Net retail sales, RUB bln 2 Number of stores, EOP 3 Selling space, th. sq. m Net retail sales YoY growth, % Selling space YoY gro
Slide 33: Summary Profit & Loss
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Summary Profit & Loss RUB mln IAS 17 IFRS 16 2018 2019 YoY growth 2018 2019 YoY Growth Net sales 1,237,015 1,368,705 10.6% 1,237,015 1,368,705 10.6% Cos
Slide 34: Revenue & Costs
Russian Market Magnit Strategy Operating and Financial Results Corporate 1Q 2020 Operating and Financial Appendix Overview Today Governance Results Revenue & Costs Revenue SG&A Expense YoY growth, % Structure Dynamics % % 1 368,7 RUB bln of sales of SG&A RUB bln 1 237,0 Total 291,6 21,3% 100% 10.6%
Slide 35: Gross Margin & EBITDA
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Gross Margin & EBITDA IAS 17 IFRS 16 Gross -114 b.p. Margin 23,9% Bridge, -1,4% 0,2% 22,8% 22,8% As % Trading Transport of revenue margin 2018 2019 2019
Slide 36: Balance Sheet
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Balance Sheet RUB mln ASSETS 2018 2019 EQUITY AND LIABILITIES 2018 2019 Property plant and equipment 344,837 352,986 Equity 212,442 188,533 Right-of-use
Slide 37: Leverage Policy
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Leverage Policy Low Currency Risk Debt Level Dynamics, Debt portfolio maturity* No loans denominated in foreign currency RUB bln RUB bln Short-term debt
Slide 38: Free Cash Flow
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Free Cash Flow (11,230) 90,061 2018, (9,660) Working Capital (4,433) (53,759) RUB mln 64,737 Analysis 551 11,529 (13,809) 10,690 8,410 45 Average Days A
Slide 39: CAPEX Analysis
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix CAPEX Analysis 2019 2018 RUB mln RUB mln Total 58,607 53,759 Machinery and equipment 22,869 (39%) 14,693 (27%) Construction 30,074 (51%) 31,414 (58%) in
Slide 40: Corporate Governance
Corporate Governance Corporate Governance Overview • Best in Class Retail Management Team
Slide 41: Corporate Governance Overview
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Corporate Governance Overview Board Committees Overview Status Independent Non-Executive CEO Non-Executive Director Director Charles Pat James Jan Janse
Slide 42: Best in Class Retail Management Team
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Best in Class Retail Management Team Highly experienced retail leadership team — long on local Russian expertise Jan Elena Maxim Elena Maria Evgeny Vlad
Slide 43: Appendix
Appendix Russian Macro Environment • Russian Food Retail Market Potential • Top-10 Russian Food Retailers • Convenience Store • Supermarket Drogerie store • Operating Highlights Quarterly Quarterly Operating Data Summary
Slide 44: Russian Macro Environment
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Russian Macro Environment Return to parent slide 1 Real GDP demonstrates sluggish growth 2 Inflation is healthy 3 Low unemployment level in combination
Slide 45: Russian Food Retail Market Potential
Russian Market Overview Magnit Today Magnit Today Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Russian Food Retail Market Potential Return to parent slide 1 Grocery retail market, 2 Modern VS Traditional 3 Market Share, % 4 Share of TOP-5 reta
Slide 46: Top-10 Russian Food Retailers
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Top-10 Russian Food Retailers Return to parent slide X5 11,5% Magnit 9,6% DKBR 5,7% 34.9% Lenta 2,5% 30.8% Share of TOP-10 Auchan 1,5% Metro 1,1% Share
Slide 47: Convenience Store
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Convenience Store Return to parent slide Net retail sales Selling space Sales density* LFL RUB mln th sq. m th RUB/sq.m/year YoY growth, % 2018 2019 202
Slide 48: Supermarket
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Supermarket Return to parent slide Net retail sales Selling space Sales density* LFL RUB mln th sq. m th RUB/sq.m/year YoY growth, % 2018 2019 2020 Q Yo
Slide 49: Drogerie Store
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Drogerie Store Return to parent slide Net retail sales Selling space Sales density* LFL RUB mln th sq. m th RUB/sq.m/year YoY growth, % 2018 2019 2020 Q
Slide 50: Quarterly Operating Highlights
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Quarterly Operating Highlights Return to parent slide 1 Net retail sales, RUB bln 2 Number of visits, mln 3 Selling space, th. sq. m 4 Sales density*, t
Slide 51: Quarterly Operating Data Summary
Russian Market Overview Magnit Today Strategy Operating and Financial Results Corporate Governance 1Q 2020 Operating and Financial Results Appendix Quarterly Operating Data Summary RUB bln 1Q 2018 2Q 2018 3Q 2018 4Q 2018 FY 2018 1Q 2019 2Q 2019 3Q 2019 4Q 2019 FY 2019 1Q 2020 SALES TOTAL 288.6 306.7
Slide 52: Contact Information
Contact Information Albert Avetikov Chief Investor Relations Officer avetikov_am@magnit.ru http://ir.magnit.com 15/2 Solnechnaya Street Krasnodar, 350072 Russian Federation 52