Magnit 1H2015 Operating Results
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Transcript of Magnit 1H2015 Operating Results
Magnit at a Glance
Magnit at a Glance
As of June 30, 2015Source: ⃰ as of FY2014, Company, Bloomberg, IFRS accounts for FY2014 2
2 233Cities & Towns
№1Russian Food RetailChain by Revenueand Number of Stores
10 728Total Numberof Stores
3 928thous.sq.m.Selling Space
29DCs
5 926Trucks
Multi-format Business ModelComprising Convenience, Hypermarkets,“Magnit Family” & Drogerie Stores
№2Retailer in Europein MarketCapitalization $26bn Market
Capitalization >6% Share in RussianGrocery Sector ⃰
Shareholder Structure as of FY2014
54,6%Free-float
37,6%Sergey Galitskiy, CEO
3,3%Other
4,5%Lavreno Ltd. (Cyprus)0,1%
Magnit at a Glance
Key Metrics
3Source: IFRS accounts for FY2014, Company’s Estimates
Guidance for 2015New Stores
764bn ($20bn)RevenueFY2014
6,25%
NetMargin
11,25%
EBITDAMargin
0,9
Net debt/LTM EBITDA
1 200 ConvenienceStores 90 Hyper-
markets 800 DrogerieStores
28-32%
RUB SalesGrowth
9,5-11,0%
EBITDAMargin
RUB 80bn
Capex
P=
Magnit at a Glance
Strategy
4
Growth
Value Efficiency
Multi-format OrganicStore Growth
GeographicScope
Density of StoreCoverage
LowPrices
HighQuality
Assortment CostManagement
VerticalIntegration
Centralization
53
53%47%
Discounters
25%
Supermarkets
15%
Hypermarkets
13%
Traditional Stores
31%
Kiosks, Pavilions
6%
Open Markets
10%
Magnit at a Glance
Russian Food Retail Market
5
Market Composition by Format
$320bn MarketSizeFY 2014
% ModernRetailPenetration
Non-Modern Modern
Source: Sberbank CIB Estimates for FY2014
Magnit at a Glance
Magnit vs Peers
6Source: As of FY 2014; Companies, Infoline, Bloomberg, Magnit’s Estimates
Numberof Stores
Selling Spacethous. sq.m.
RevenueRUB bn
Market CapUS$ bn
Market Share%
9 711
5 483
2 195
108
132
85
80
Magnit
X5
Dixy
Okey
Lenta
Auchan
Metro
3 591
2 572
747
552
701
789
619
763,5
633,9
229,0
152,0
194,0
338,0
210,0
21,5
3,3
0,8
1,2
2,9
6
5
2
1
2
3
2
Not public
Not public
1 527Drogerie Stores 70 335 365 436 153 130
38
8 890Convenience Stores
201Hypermarkets
110Magnit Family
29Distribution Centers
4 29 20 38 6 9 4
7 57 34 59 12 27
5
337
1 573 2 336 2 734 843 797
270
Operational Overview
Geographical Coverage
7Source: Company, as of June 30, 2015
2 233 Cities& Towns
7 FederalRegions
North Caucasus
Southern Volga North West
Urals SiberiaCentral
1 6 9 7 2 2 2
Operational Overview
Logistics System
8Source: Company, as of June 30, 2015
10 728Total Numberof Stores
1 078thous.sq.m.Warehousing Space
29DCs
5 926Trucks
9
7
6
2
1
2
2
Central
Volga
Southern
Urals
North Caucasus
North West
Siberia
3375
2904
2104
1105
358
588
294
405,002
221,236
207,195
94,357
40,799
73,601
35,438
Centralization Ratio%
Magnit
Outsourced
90
10
92
8
Convenience Stores
1H2015 Future Targets
Magnit
Outsourced
73
27
80
20
Hypermarkets
Operational Overview
Suppliers
9Source: Company, as of December 31, 2014
5000DomesticSuppliers
4000Local Suppliers
1000Federal Suppliers
Assortment
55-60% 40-45%
Operational Overview
Direct Import
10
Source: Company, Direct Import - as of FY2014; Private Label – as of June 30, 2015
11% Shareof Revenue587
PLSKUsM 85% Food
Items
Private Label
10% InternationalDirect Import 860
OpenContracts
Operational Overview
Employees
11Source: Company, as of June 30, 2015
*as of FY2014
259 766 Employees
28 143AverageMonthlySalary ⃰ 9% Wage Rate
Increase ⃰P=
187 273In-storePersonnel
41 115People Engagedin Distribution
20 706People in RegionalBranches
8 617People Employedby Head Office
1000 employees
Average Weighted Number of Employees – 230 928
2 055Other
Operational Overview
Competitive Attributes
12
40% of FamilyBudgetSpent on Food
Location Quality(of Products)
Assortment Reliability AtmospherePrices
5 000 People —MinimumPopulation
(1 500–1 600 Families)
4 000-9 500MonthlyFamily FoodBudget
P=Overlap “Good”Cannibalization
Magnit #1
Magnit #2
500m
Competitor #1 Competitor #2
Competitor #3
500m
Sales Catchment Area
Source: Company’s Estimates
Convenience Store
Operational Overview
Convenience Store
14Source: Company, as of June 30, 2015
454 sq.m.Total
322 sq.m.Selling Space
90% Food
10% Non-food
27% Owned
73% Leased
Format Description Key Operational Statistics OpeningSize of the Store Average Ticket Payback
Store Ownership Structure
Sales Mix
Traffictickets/sq.m./day
Sales Densitysales/sq.m./year
LFL 1H2015 – 1H2014,%
244,0P=$4,3
238 077P=$6 196
12,06 AverageTicket, RUB
-0,15 Traffic
11,89 Sales
2,8
3 years
If Leased
If Owned
Cost of New Storeper sq.m. of Total Space, thousand RUB
Time to Maturity
6 months
4-6 years
Owned 42-108Leased 10-19
Hypermarket
Operational Overview
Hypermarket
16Source: Company, as of June 30, 2015
80% Food
20% Non-food
79% Owned
21% Leased
Format Description Key Operational StatisticsSize of the Store Average Ticket
Store Ownership Structure
Sales Mix
Traffictickets/sq.m./day
Sales Densitysales/sq.m./year
LFL 1H2015 – 1H2014,%
620,5P=$10,8
275 073P=$7 159
1,2
6 770 sq.m.Total
2 934 sq.m.Selling Space
10,16 AverageTicket, RUB
-1,36 Traffic
8,66 Sales
OpeningPayback
6-9 years
Cost of New Storeper sq.m. of Total Space, thousand RUB
Owned 65-111Leased 31-35
8-15 months
Time to Maturity
S: up to 3 000
M: 3 000-6 000
L: over 6 000
Magnit Family
Operational Overview
Magnit Family
18Source: Company, as of June 30, 2015
2 230 sq.m.Total
1 116 sq.m.Selling Space
85% Food
15% Non-food
37% Owned
63% Leased
Format Description Key Operational Statistics OpeningSize of the Store Average Ticket Payback
Store Ownership Structure
Sales Mix
Traffictickets/sq.m./day
Sales Densitysales/sq.m./year
LFL 1H2015 – 1H2014,%
448,7P=$7,8
371 659P=$9 673
2,2
6-9 years
Cost of New Storeper sq.m. of Total Space, thousand RUB
Owned 81-108Leased 31-54
8-15 months
9,82 AverageTicket, RUB
-0,91 Traffic
8,82 Sales
Time to Maturity
Drogerie Store
Operational Overview
Drogerie Store
20Source: Company, as of June 30, 2015
300 sq.m.Total
229 sq.m.Selling Space
100% Non-food
17% Owned
83% Leased
Format Description Key Operational Statistics OpeningSize of the Store Average Ticket Payback
Store Ownership Structure
Sales Mix
Traffictickets/sq.m./day
Sales Densitysales/sq.m./year
LFL 1H2015 – 1H2014,%
272,1P=$4,7
104 643P=$2 724
12,21 AverageTicket, RUB
11,32 Traffic
24,92 Sales
1,1
3 years
If Leased
If Owned
Cost of New Storeper sq.m. of Total Space, thousand RUB
Time to Maturity
6 months
Owned 31-96Leased 12-19
4-6 years
Sizeof the Store
sq.m.
AverageTicket
TrafficTickets/sq.m./day
DensitySales/
sq.m./year
SalesMix
LFL 1H2015-1H2014
%
Store Owner-ship Structure
PaybackYears
Cost of New Store
per sq.m.of Total Space
Timeto Maturity
Months
• Total• Selling Space
• Food• Non-food
• Av.ticket• Traffic/ Sales
• Owned• Leased
17%
83%
37%63%
79%
21%
27%
73%
Operational Overview
Format Summary
21Source: Company, as of June 30, 2015; * Excludes selling space designated for leases
Hypermarket
DrogerieStore
MagnitFamily
454
6 770
300
2 230
322
2934*
229
1 116
Owned RUB 42-108k
Leased RUB 10-19k
2,8
1,2
1,1
2,2
P.244,0$4,3
P.620,5$10,8
P.272,1$4,7
P.448,7$7,8
P.238 077$6 196
P.275 073$7 159
P.104 643$2 724
P.371 659$9 673
80%
20%
100%
85%15%
90%10%
Conveniencestore
6
8-15
6
8-15
3 (if leased)
6-9
3 (if leased)
6-9
4-6 (if owned)
4-6 (if owned)
12,06
10,16
12,21
9,82
-0,15
-1,36
11,32
-0,91
11,89
8,66
24,92
8,82
OwnedRUB 65-111k
LeasedRUB 31-35k
OwnedRUB 31-96k
LeasedRUB 12-19k
OwnedRUB 81-108k
LeasedRUB 31-54k
Financial Overview
Summary P&L
SG&A is presented net of Depreciation & Amortization (except for Depreciation of production fixed assets which was included in the Cost of sales)Source: Audited IFRS accounts for 2013 – 2014Please note: there may be small variations in calculation of totals, subtotals, and/or percentage change due to rounding of decimals 22
RUB MMRUB MMRUB MMRUB MM 2013201320132013 20142014201420142014 / 20132014 / 20132014 / 20132014 / 2013
YYYY----oooo----Y GrowthY GrowthY GrowthY Growth
Net salesNet salesNet salesNet sales 579,694.88579,694.88579,694.88579,694.88 763,527.25763,527.25763,527.25763,527.25 31.7%
Cost of sales (414,431.89) (543,006.69) 31.0%
Gross profitGross profitGross profitGross profit 165,262.99165,262.99165,262.99165,262.99 220,520.56220,520.56220,520.56220,520.56 33.4%
Gross margin, % 28.51% 28.88%
SG&A (101,729.77) (134,169.75) 31.9%
Other income/(expense) 1,178.76 (501.27) -142.5%
EBITDAEBITDAEBITDAEBITDA 64,721.2364,721.2364,721.2364,721.23 85,909.6785,909.6785,909.6785,909.67 32.7%
EBITDA margin,% 11.16% 11.25%
Depreciation & Amortization (14,184.35) (17,609.67) 24.1%
EBITEBITEBITEBIT 50,536.8850,536.8850,536.8850,536.88 68,300.0068,300.0068,300.0068,300.00 35.1%
Net finance costs (4,782.83) (6,273.47) 31.2%
Profit before tax 45,754.05 62,026.53 35.6%
Taxes (10,133.67) (14,340.69) 41.5%
Effective tax rate 22.15% 23.12%
Net incomeNet incomeNet incomeNet income 35,620.3835,620.3835,620.3835,620.38 47,685.8447,685.8447,685.8447,685.84 33.9%
Net margin, % 6.14% 6.25%
Financial Overview
Revenue & Costs
23Source: IFRS accounts for FY2012–2014
26,5
28,5 28,9
10,6 11,2 11,3
5,6 6,1 6,3
0
5
10
15
20
25
30
35
2012 2013 2014
Revenue DynamicsRUB bn
Net Income DynamicsRUB bn
Margin DynamicsSG&A Expense Structure
Revenue — 764 RUB bnGrossMargin
EBIDTAMargin
NetMargin
%
+29,2%
7,5% 14,5%
+31,7%+41,8%
+33,9%
LFLLFL
Sales Growth, RUB
Sales Growth, RUB
449580
764
2012 2013 2014
25
36
48
2012 2013 2014
1,84 (0,37) ― Packaging & Raw Materials
2,23 (0,44) ― Repair & Maintenance
55,01 (10,93) ― Payroll & Related Taxes
1,93 (0,38)― Taxes, Other than Income Tax
11,57 (2,30) ― Deprecation & Amortization
20,62 (4,10) ― Rent & Utilities
4,51 (0,90) ― Other
in SG&A,% in Revenue, %
2,29 (0,46) ― Advertising
20%
151 719 RUB mn
26,53
28,51 28,88-0,081,85 0,08 0,05 0,13 0,32
15
17
19
21
23
25
27
29
31
33
GM2012
Trading Margin Transport Losses GM2013
Trading Margin Transport Losses GM2014
Financial Overview
Gross Margin Bridge
24Source: IFRS accounts for FY2012 – 2014
EBITDA Margin Bridge
% of Sales
% of Sales
+198 b.p.+37 b.p.
+60 b.p. +9 b.p.
10,5611,16 11,25
-1,01-0,35 -0,01
-0,11 -0,28 -0,181,97
0,37 0,29
0
2
4
6
8
10
12
14
EBIDTA2012
GrossMargin
Salaries Rent & Utilites Other EBIDTA2013
GrossMargin
Salaries Rent & Utilites Advertising Other EBIDTA2014
Financial Overview
Free Cash Flow
25Source: IFRS accounts for FY2013–2014
Working Capital Analysis
The Average Days Payable to Suppliers is 38 Days.
Inventory Management Days is 46 Days
Working Capital: RUB 6 927 mn as of 31.12.2014
RUB mn
2013
2014
Adjusted for loss from disposal of PPE, provision for doubtful receivables, foreign exchange gain, finance costs, gain on disposal of subsidiary and investment income
Calculated as additions + transfers of PP&E during the respective period
Does not include cash flow from financing activities
88 999
60 711
5 617
11 760
-9 330-6 433
-12 525
-55 936
-15 82521 968
842
AdjustedEBIDTA
Change inWorking capital
Net InterestPaid
TaxesPaid
OCF Capex Other CashFlow
from InvestingActivities
FCF Payment ofDividents
Other CashFlow
from FinancingActivities
CF
65 358
44 624
-7 608 -6 521
-8 163-4 550
-8 021
-52 488 256-9 545 10 632
Financial Overview
Balance Sheet
Source: Audited IFRS accounts for FY2012 - 2014Please note: there may be small variations in calculation of totals, subtotals, and/or percentage change due to rounding of decimals 26
RUB MMRUB MMRUB MMRUB MM 2012201220122012 2013201320132013 2014201420142014
ASSETS ASSETS ASSETS ASSETS
Property plant and equipment 158,752.58 195,158.25 232,968.80
Other non-current assets 3,948.69 5,762.40 6,043.82
Cash and cash equivalents 12,452.61 5,931.13 17,691.54
Inventories 41,025.62 56,095.41 81,475.66
Trade and other receivables 584.02 631.53 813.26
Advances paid 2,677.20 3,171.05 4,849.30
Taxes receivable 28.94 27.99 69.38
Short-term financial assets 876.66 1,150.64 475.18
Prepaid expenses 181.94 252.15 242.53
Income tax recoverable – – 131.86
TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS 220220220220,,,,528.26528.26528.26528.26 268268268268,,,,180.55180.55180.55180.55 344,761.33344,761.33344,761.33344,761.33
EQUITY AND LIABILITIES EQUITY AND LIABILITIES EQUITY AND LIABILITIES EQUITY AND LIABILITIES
Equity 99,235.71 126,162.14 143,651.62
Long-term debt 38,246.72 37,441.50 44,410.14
Other long-term liabilities 6,159.09 8,462.32 10,617.70
Trade and other payables 42,920.57 48,170.71 66,794.61
Short-term debt 25,121.90 36,319.76 51,256.67
Dividends payable 0.54 0.03 14,372.03
Other current liabilities 8,843.73 11,624.09 13,658.56
TOTAL EQUITY AND LIABILITIESTOTAL EQUITY AND LIABILITIESTOTAL EQUITY AND LIABILITIESTOTAL EQUITY AND LIABILITIES 220220220220,,,,528.26528.26528.26528.26 268268268268,,,,180.55180.55180.55180.55 344,761.33344,761.33344,761.33344,761.33
Hypermarkets Distribution Centres
Convenience Stores
Acquisition & Construction of Conv.Stores
Buy-out of Leased Conv.Stores
Greenhouses Land for HyperMarkets
Store Renovation
Maintenance Drogerie Stores
90 5 1 200 800
32 000 11 000 10 000 6 000 3 000 4 000 6 000 2 000 1 000 5 000
Financial Overview
Capex Analysis
27Source: Company, as of December 31, 2014; Company’s Estimates
Construction in Progress & Buildings
Machinery & Equipment
Other Assets Land
36 297 11 553 5 156 2 930
FY 2014
₽ 56 bn
FY 2015 (plan)
₽ 80 bn
RUB 500 mn
63 369
73 761
95 667
50 916
67 830
77 975
25 122
36 320
51 257
38 247
37 441
44 410
2012 2013 2014
Net DebtShort-term DebtLong-term Debt%
Financial Overview
Debt Burden
28Source: IFRS accounts for FY 2012 - 2014
11,7
13,0 12,9
0
2
4
6
8
10
12
14
2012 2013 2014
1,11
0,9
0
0,5
1
1,5
2
2012 2013 2014
Debt Level DynamicsRUB mn
Credit Metrics Credit Profile
EBIDTA / Finance Expenses
Net Debt / LTM EBITDA
The Company Hasan Impeccable Credit History
Collaboration with
the Largest Banks
Low Debt Burden:Net Debt / EBITDA Ratio of 0,9
No Currency Risk: No Currency Risk: No Currency Risk: No Currency Risk: 100%of Debt is Rub DenominatedMatching Revenue Structure
No Interest Rate Risk:No Interest Rate Risk:No Interest Rate Risk:No Interest Rate Risk:Interest Payments are Madeat Fixed Rates
39,6%49,2%
53,6%
46% 46% 46% 46% of Debt is Long-term
Approximately 35%35%35%35%of LT Debt is Rub Bonds
Contact Information
Contact Information
29
Timothy PostHead of Investor Relations
+7 (961) [email protected]://ir.magnit.com
15/2 Solnechnaya StreetKrasnodar, 350072Russian Federation