Page 141 - RusRPTMar21

shareholders.
Magnit conducted a CMD and Q&A session, presenting strategic and financial guidance for 2021-2025. Management discussed growth plans, digital transformation, financial forecasts, long-term targets. Most of the financial initiatives are used for management motivation program, including LfLs, EBITDA dynamics; further improvement in working capital.
Key Strategic Guidance for 2021-2025:
o CVP initiatives to enhance consumer perception and experience and potentially to increase sales densities
o Growth plans (gross openings): 1,000-1,500 convenience stores, 750-1,000 drogerie stores, 5-15 supermarkets & superstores. Min 25% IRR is set for investments. M&As are possible
o Build a leading e-grocery platform capable of handling 5%+ of Magnit turnover with integration into an omni-channel consumer experience
Key Financial Guidance for 2021-2025
o EBITDA margin may steadily move to the direction of 8% within 2021-2025 on the back of higher sales densities, improving gross margin, efficient cost control, an increase of penetration of private labels, loyalty program integration
o Net Debt/EBITDA at 1.5x with a self-imposed ceiling of 2.0x
o Improvement of working capital with a focus on stock days optimization by 3-5 days in grocery, 10-15 days in drogerie, which will result in further cash release in working capital
o Focus on high returns and value accretion for shareholders leading to continuous strong dividend payments
o LfL performance in 2021 can be a good addition to 2020, driven by continued ‘eat at home’ practice in 1H21, neutral dynamics of RDI, stronger ruble, etc. Some volatility can be seen q/q
Russian tax authorities have launched a criminal investigation into H&M, alleging the Swedish clothes retailer avoided $42mn in customs duties, Bloomberg reported. The clothing giant —, which has more than 150 stores across Russia — paid the Federal Customs Service 3.1bn ($42mn) in December 2019 after an audit revealed the customs discrepancy, which relates to license fees paid from H&M Russia to its Swedish parent on goods imported between 2016 and 2019, Bloomberg reported, citing documents it had seen and sources familiar with the matter. However, the company is still open to criminal prosecution and authorities opened a criminal case against the company in December 2020. Possible punishments include jail sentences for senior company figures or a fine of up to twice the disputed amount. H&M’s head office confirmed to Bloomberg a Russian investigation was ongoing, but did not provide specific details.
Supermarket chain Lenta posted a RUB16.541bn ($225mn) net profit in
141 RUSSIA Country Report March 2021 www.intellinews.com