Download to read offline
Uploaded byMagnit IR Team
Magnit 1 h2016_reviewed
Magnit presented its 1H 2016 financial results on August 24, 2016. Key metrics included revenue growth of 14.7% year-over-year to RUB 522 billion, EBITDA margin of 9.89%, and net income growth of 3.3% to RUB 26.1 billion. Magnit operates 12,888 stores across 2,397 cities and towns in Russia, utilizing a multi-format model including convenience stores, hypermarkets, Magnit Family stores, and drogerie stores. The presentation provided an overview of Magnit's operations, formats, logistics, employees, strategy, and financial performance for 1H 2016.
Magnit 1 h2016_reviewed
- 1. INVESTOR PRESENTATION 1H 2016FINANCIAL RESULTS published on August 24, 2016
- 2. Magnit at aGlance Magnit at a Glance Source: Company, Thomson Reuters, Company’s calculations based on IFRS accounts for 1H2016 2 2 397Cities & Towns №1 Russian Food Retail Chain by Revenue and Number of Stores 12 888Total Number of Stores 4 677thous.sq.m. Selling Space 34DCs 5 836Trucks Multi-format Business Model Comprising Convenience, Hypermarkets, “Magnit Family” & Drogerie Stores №3 Retailer in Europe in Market Capitalization $16bnMarket Capitalization >7%Share in Russian Grocery Sector (As of FY 2015) Shareholder Structure as of 1H 2016 61,4% Free-float 35,1% Sergey Galitskiy, CEO 0,8% Lavreno Ltd. (Cyprus) 0,1% As of June 30, 2016 As of June 30, 2016 2,7% Other
- 3. Magnit at aGlance Key Metrics 3 Source: Company’s estimates and calculations 522bn 14,7 % 5,01% Net Margin 9,89% EBITDA Margin 1,1 Net debt/ LTM EBITDA 1000-1100 80 1200 P= Revenue growth Y-o-Y Guidance for FY2016 Figures for 1H 2016 14-16% Sales Growth Rub 10-10,5% EBITDA Margin 67bn Capex Rub New Convenience Stores New Hypermarkets New Drogerie Stores
- 4. Magnit at aGlance Strategy 4 Growth Value Efficiency Multi-format Organic Store Growth Geographic Scope Density of Store Coverage Low Prices High Quality Assortment Cost Management Vertical Integration Centralization
- 5. 65 Magnit at aGlance Russian Food Retail Market 5 Market Composition by Format RUB 13 410bn Market Size FY 2015 % Modern Retail Penetration Non-Modern Modern Source: INFOLine, as of December 31, 2015 65%35% Top-7 Retail Chains 22,5% Modern Non-Chain Stores 16,5% Other chains 26% Traditional Trade 28% Open Markets 7%
- 6. Magnit at aGlance Magnit vs Peers 6Source: Companies, INFOLine, Thomson Reuters, Magnit’s Estimates Number of Stores, eop 2015 Selling Space thous. sq.m., eop 2015 Revenue RUB bn, eop 2015 Market Cap US$ bn, eop 2015 Market Share %, eop 2015 7 6 2 2 1 3 2 Not public Not public 950.6 808.8 272.3 252,8 162.5 415,6 225,0 12089 7,020 2,708 172 146 96 87 Magnit X5 Dixy Lenta Okey Auchan Metro 4,414 3,333 908 882 593 836 661 19.0 5.1 0.5 3.3 0,5
- 7. 2 588Drogerie Stores92 511 658 745 237 238 107 9 902Convenience Stores 228Hypermarkets 170Magnit Family 34Distribution Centers 6 44 33 52 12 12 11 8 63 38 64 15 30 10 358 1684 2667 2961 972 895 365 Operational Overview Geographical Coverage 7 Source: Company, as of June 30, 2016 2 397 Cities & Towns 7 Federal Regions North Caucasus Southern Volga North West Urals SiberiaCentral 1 8 10 8 2 3 2
- 8. Operational Overview Logistics System 8 Source:Company, as of June 30, 2016 12 888Total Number of Stores 1 351thous.sq.m. Warehousing Space 34DCs 5 836Trucks 10 8 8 3 1 2 2 Central Volga Southern Urals North Caucasus North West Siberia 3684 3957 2293 1179 462 826 487 464.141 283,871 310,387 142,533 40.799 73.601 35.438 Centralization Ratio % 90 10 92 8 Convenience Stores 1H2016 Future Targets 73 27 80 20 Hypermarkets Delivered from DC Delivered from supplier Delivered from DC Delivered from supplier
- 9. Operational Overview Suppliers 9 Source: Company, asof June 30, 2016 5 800 Domestic Suppliers 4 600Local Suppliers 1 200Federal Suppliers Assortment 55% 45%
- 10. Operational Overview Direct Import 10 Source:Company, Direct Import – as of December 31, 2015; Private Label – as of June 30, 2016 11%Share of Revenue 611 PL SKUs M 84%Food Items Private Label 9% International Direct Import 757 Open Contracts
- 11. Operational Overview Employees 11 Source: Company, asof June 30, 2016 259 389 Employees 31 650 Average Monthly Salary 11% Wage Rate Increase P= 190 420In-store Personnel 36 592 People Engaged in Distribution 19 923People in Regional Branches 10 031People Employed by Head Office 1000 employees 2 423Other
- 12. Operational Overview Competitive Attributes 12 43-45%of Family Budget Spent on Food Location Quality (of Products) Assortment Reliability AtmospherePrices 5 000 People — Minimum Population (1 500–1 600 Families) 4 000-9 500 Monthly Family Food Budget P= Overlap “Good” Cannibalization Magnit #1 Magnit #2 500m Competitor #1 Competitor #2 Competitor #3 500m Sales Catchment Area Source: Company’s Estimates
- 13.
- 14. Operational Overview Convenience Store 14 Source:Company, as of June 30, 2016 457 sq.m. Total 327 sq.m. Selling Space 89% Food 11% Non-food 25% Owned 75% Leased Format Description Key Operational Statistics Opening Size of the Store Average Ticket Payback Store Ownership Structure Sales Mix Traffic tickets/sq.m./day Sales Density sales/sq.m./year LFL 1H2016 –1H2015,% 243,80P= $3,47 245 306P= $4 024 -0,36 Average Ticket, RUB 2,21 Traffic 1,85 Sales 2,7 3 years If Leased If Owned Cost of New Store per sq.m. of Total Space, thousand RUB Time to Maturity 6 months 4-6 years Owned 35-105 Leased 10-19
- 15.
- 16. Operational Overview Hypermarket 16 Source: Company, asof June 30, 2016 80% Food 20% Non-food 73% Owned 27% Leased Format Description Key Operational Statistics Size of the Store Average Ticket Store Ownership Structure Sales Mix Traffic tickets/sq.m./day Sales Density sales/sq.m./year LFL 1H2016 – 1H2015,% 596,91P= $8,5 272 278P= $4 467 1,1 6 503 sq.m. Total 2 897 sq.m. Selling Space -2,48 Average Ticket, RUB -7,86 Traffic -10,15 Sales Opening Payback 6-9 years Cost of New Store per sq.m. of Total Space, thousand RUB Owned 56-98 Leased 31-41 8-15 months Time to Maturity S: up to 3 000 M: 3 000-6 000 L: over 6 000
- 17.
- 18. Operational Overview Magnit Family 18 Source:Company, as of June 30, 2016 2 148 sq.m. Total 1 100 sq.m. Selling Space 84% Food 16% Non-food 37% Owned 63% Leased Format Description Key Operational Statistics Opening Size of the Store Average Ticket Payback Store Ownership Structure Sales Mix Traffic tickets/sq.m./day Sales Density sales/sq.m./year LFL 1H2016 – 1H2015,% 447,9P= $6,4 349 703P= $5 737 1,9 6-9 years Cost of New Store per sq.m. of Total Space, thousand RUB Owned 71-112 Leased 31-54 8-15 months -2,31 Average Ticket, RUB -4,03 Traffic -6,25 Sales Time to Maturity
- 19.
- 20. Operational Overview Drogerie Store 20 Source: Company,as of June 30, 2016 290 sq.m. Total 229 sq.m. Selling Space 100% Non-food 13% Owned 87% Leased Format Description Key Operational Statistics Opening Size of the Store Average Ticket Payback Store Ownership Structure Sales Mix Traffic tickets/sq.m./day Sales Density sales/sq.m./year LFL 1H2016 – 1H2015,% 305,3P= $4,4 114 924P= $1 885 10,86 Average Ticket, RUB -4,00 Traffic 6,42 Sales 0,9 3 years If Leased If Owned Cost of New Store per sq.m. of Total Space, thousand RUB Time to Maturity 6 months Owned 20-70 Leased 9-16 4-6 years
- 21. 80% 20% Size of the Store sq.m. Average Ticket Traffic Tickets/ sq.m./day Density Sales/ sq.m./year Sales Mix LFL1H2016- 1H2015 % Store Owner- ship Structure Payback Years Cost of New Store per sq.m. of Total Space Time to Maturity Months • Total • Selling Space • Food • Non-food • Av.ticket • Traffic/ Sales • Owned • Leased 13% 87% 37% 63% 73% 27% 25% 75% Operational Overview Format Summary 21Source: Company, as of June 30, 2016; * Excludes selling space designated for leases Hypermarket Drogerie Store Magnit Family 457 6 503 290 2,148 327 2897* 229 1,100 Owned RUB 35-105k Leased RUB 10-19k 2,7 1.1 0,9 1,9 P.243,8 $3,5 P.596,9 $8,5 P.305,3 $4,4 P.447,9 $6,4 P.245 306 $4 024 P.272 278 $4 467 P. 114 924 $1 885 P.349 703 $5 737 89% 11% Convenience store 6 8-15 6 8-15 3 (if leased) 6-9 3 (if leased) 6-9 4-6 (if owned) 4-6 (if owned) Owned RUB 56-98k Leased RUB 31-41k Owned RUB 20-70k Leased RUB 9-16k Owned RUB 71-112k Leased RUB 31-54k 84% 16% 100% -0.36 -2.48 10.86 -2.31 2.21 -7.86 -4.00 -4.03 1.85 -10.15 6.42 -6.25
- 22. Financial Overview Summary P&L SG&Ais presented net of Depreciation & Amortization (except for Depreciation of production fixed assets which was included in the Cost of sales) Source: Company’s calculations based on IFRS accounts for 1H2015 – 1H2016 Please note: there may be small variations in calculation of totals, subtotals, and/or percentage change due to rounding of decimals 22 RUB MN 1H2015 1H2016 1H2015 / 1H2016 Y-o-Y Growth Net sales 454,808.63 521,527.57 14.7% Cost of sales (327,748.22) (379,464.58) 15.8% Gross profit 127,060.41 142,062.99 11.8% Gross margin, % 27.94% 27.24% SG&A (79,406.25) (92,661.97) 16.7% Other income, net 937.45 2,138.69 128.1% EBITDA 48,627.66 51,599.85 6.1% EBITDA margin,% 10.69% 9.89% Depreciation & Amortization (10,033.63) (12,101.38) 20.6% EBIT 38,594.03 39,498.47 2.3% Net finance costs (5,865.82) (6,853.38) 16.8% Profit before tax 32,728.21 32,645.09 -0.3% Taxes (7,462.55) (6,537.85) -12.4% Effective tax rate 22.80% 20.03% Net income 25,265.66 26,107.24 3.3% Net margin, % 5.56% 5.01%
- 23. 20 25 26 1H2014 1H20151H2016 349 455 522 1H2014 1H2015 1H2016 Financial Overview Revenue & Costs 23Source: Company’s calculations based on IFRS accounts for 1H2014-1H2016 27.8 27.9 27.2 10.5 10.7 9.9 5.6 5.6 5.0 0 5 10 15 20 25 30 1H2014 1H2015 1H2016 Revenue Dynamics RUB bn Net Income Dynamics RUB bn Margin DynamicsSG&A Expense Structure Revenue — 522 RUB bn Gross Margin EBITDA Margin Net Margin % +30,3% 11,5% -0,5% +14,7% +29,0% +3,3% LFLLFL Sales Growth, RUB Sales Growth, RUB 2,07 (0,42) ― Packaging & Raw Materials 1,84 (0,37) ― Repair & Maintenance 50,08 (10,05) ― Payroll & Related Taxes 1,56 (0,31) ― Taxes, Other than Income Tax 11,50 (2,31) ― Deprecation & Amortization 25,81 (5,18) ― Rent & Utilities 3,00 (0,60) ― Other in SG&A,% in Revenue, % 2,51 (0,50) ― Advertising 1,63 (0,33) ― Bank Services 20% 104 703 RUB mn
- 24. 27.83 27.94 27.24-0.42-0.11 -0.60 -0.160.64 0.06 15 17 19 21 23 25 27 29 31 33 GM 1H2014 Trading Margin Transport Losses GM 1H2015 Trading Margin Transport Losses GM 1H2016 Financial Overview Gross Margin Bridge 24Source: Company’s calculations EBITDA Margin Bridge % of Sales % of Sales +11 b.p. -70 b.p. +22 b.p. -80 b.p. 10.47 10.69 9.89 -0.29 -0.22 -0.06 -0.70 -0.75 -0.04 -0.04 0.11 0.59 0.09 0.43 0.09 0.21 0 2 4 6 8 10 12 EBITDA 1H2014 Gross Margin Payroll & Taxes Rent & Utilites Advertising Taxes other than income tax Other EBITDA 1H2015 Gross Margin Payroll & Taxes Rent & Utilites Advertising Repair & Maintenance Packaging & Raw Materials Other EBITDA 1H2016
- 25. 49,065 36,336 11,551 -5,777 -2,239 -5,735 -4,755 -24 434 -351 -19299 1 972 Financial Overview Free Cash Flow 25Source: Company’s calculations based on IFRS accounts for 1H2015-1H2016 Working Capital Analysis The Average Days Payable to Suppliers is 38 Days. Inventory Management Days is 57 Days Working Capital: RUB 34 258 mn as of 30.06.2016 RUB mn 1H 2015 1H 2016 Adjusted for loss from disposal of PPE, provision for doubtful receivables, foreign exchange loss, gain on disposal of subsidiary Calculated as additions + transfers of PP&E during the respective period Does not include cash flow from financing activities 51,182 23,519 2,374 -3,505 -16,964 -6,796 -3,903 -21 018 -127 -20 982 15 102 Adjusted EBITDA Change in Working capital Net Interest Expense Taxes Paid OCF Capex Other Cash Flow from Investing Activities FCF Payment of Dividents Other Cash Flow from Financing Activities CF
- 26. Financial Overview Balance Sheet Source:Company’s calculations based on IFRS accounts for FY2014 - 1H2016 Please note: there may be small variations in calculation of totals, subtotals, and/or percentage change due to rounding of decimals 26 RUB MN 2014 2015 1H2016 ASSETS Property plant and equipment 232,968.80 265,995.94 275,088.83 Other non-current assets 6,043.82 6,380.79 6,102.59 Cash and cash equivalents 17,691.54 8,390.90 4,885.52 Inventories 81,475.66 116,471.59 123,665.09 Trade and other receivables 813.26 993.67 672.00 Advances paid 4,849.30 5,295.73 4 147.20 Taxes receivable 69.38 96.67 376.07 Short-term financial assets 475.18 246.78 268.87 Prepaid expenses 242.53 320.91 350.42 Income tax receivable 131.86 - - TOTAL ASSETS 344,761.33 404,192.98 415,556.59 EQUITY AND LIABILITIES Equity 143,651.62 165,140.60 186,475.82 Long-term debt 44,410.14 59,411.19 34,959.71 Other long-term liabilities 10,617.70 12,998.59 14,024.63 Trade and other payables 66,794.61 88,372.22 73,498.37 Short-term debt 51,256.67 44,817.12 85,207.60 Dividends payable 14,372.03 16,993.86 7.10 Other current liabilities 13,658.56 16,459.40 21,383.36 TOTAL EQUITY AND LIABILITIES 344,761.33 404,192.98 415,556.59
- 27. Financial Overview Capex Analysis 27 1CAPEX for 1H2016 amounts to RUB 21,018 mn 2 Source: Company’s calculations based on IFRS accounts for FY2015, Company’s Estimates for FY2016 Buildings: Complete & under Construction Machinery & Equipment Other Assets Land 36 231 15 750 541 1 753 FY 2015 (Actual) 1 RUB 54 bn FY 2016 (Estimates) 2 RUB 67 bn RUB 500 mn Buildings: Complete & under Construction Machinery & Equipment Other Assets Land 41 000 23 000 1 000 2 000 RUB 500 mn
- 28. 95,667 104,228 120,167 77,975 95,837 115,282 51,257 44,817 85,208 44,410 59,411 34,960 2014 2015 1H2016 NetDebt Short-term Debt Long-term Debt % Financial Overview Debt Burden 28Source: Company’s calculations based on IFRS accounts for FY2014-1H2016 12.9 8.7 7.5 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 2014 2015 1H2016 0.9 0.9 1.1 0 0.5 1 1.5 2 2014 2015 1H2016 Debt Level Dynamics RUB mn Credit Metrics Credit Profile EBITDA / Finance Expenses Net Debt / LTM EBITDA The Company Has an Impeccable Credit History Collaboration with the Largest Banks Low Debt Burden: Net Debt / LTM EBITDA Ratio of 1,1 No Currency Risk: 100% of Debt is Rub Denominated Matching Revenue Structure Insignificant Interest Rate Risk: Interest Payments are Made at Fixed Rates Primarily 53,6% 43,0% 70,9% 29% of Debt is Long-term Approximately 59% of LT Debt is Rub Bonds
- 29. Contact Information Contact Information 29 TimothyPost Head of Investor Relations +7 (961) 511-7678 post@ir.magnit.com http://ir.magnit.com 15/2 Solnechnaya Street Krasnodar, 350072 Russian Federation