Page 107 - RPTRusFeb17

pre-sold 154,000sqm, down 12% y/y from the strong comparison base of 4Q15. LSR disappointed with a 25% y/y decline for the quarter: it experienced difficulties in obtaining construction permits for new buildings at ZILART and deferred the new Luchi sales launches through the quarter.
Moscow in greater focus . In 2016, LSR and Etalon gained greater exposure to the Moscow residential market, with the share of the latter in their total sales rising to 28% and 43%, respectively (from 20% and 41% last year).
9.2.5 Retail corporate news
Russian children's goods retailer Detsky Mir (Children's World) almost quadrupled y/y its net IFRS profit to RUB3.82bn (€62mn) in 2016, the company said on March 2. The revenues of the retailer in 2016 were RUB79.55bn, up from RUB60.54bn in 2015. On February 10, Detsky Mir closed Russia's second-largest IPO in three years, selling one third of its shares for RUB21.1bn on Russia's Moscow Exchange (Moex). According to Vedomosti daily , citing Moex data, the company's shares after the IPO were the third most liquid after shares of the country's largest bank Sberbank and gas giant Gazprom. The IPO values the company at RUB62.8bn (€991mn), also making it the biggest IPO in the Europe, Middle East and Africa (EMEA) region so far this year.
Lenta has signed agreements covering 36 locations for future Lenta supermarkets in Moscow shopping and entertainment centres w hich are currently under construction. All the centres are to be reconstructed on the sites of former Moscow cinemas. A total of around 47,000 square meters is to be leased by Lenta under ruble-denominated, 15-year contracts. All the rented areas conform to the specifications of Lenta’s supermarket format, with each store’s total space varying from 740-1,800sqm. The first supermarkets are scheduled to start operations at the end of 2018, with the remainder opening in 2019. CEO Jan Dunning estimates that there is capacity for Lenta to have 500-700 supermarkets on the medium-term horizon, and also sees the possibility to expand outside Moscow. It is positive that Lenta is putting more focus on developing the supermarket business, given the strength of its key format, hypermarkets. Analysts currently factor in 25 supermarket openings annually, which now looks conservative given management’s comments and the aforementioned agreement.
Lenta posted net income of RUB8.8bn (€144mn) for the first half of 2016, the bottom line missing the consensus expectations of the analysts by 9%, the company said on February 16. Ebitda came in at RUB17.7bn (3% below the consensus) at a margin of 10.8%. VTB Capital wrote earlier that underperforming profit is caused by "higher interest payments and greater indebtedness (net debt of RUB 89.2bn vs. VTB forecast of RUB 75.3bn as of YE16)". The bank attributes the increase in leverage partially attributed to the recent purchase of Kesko's business in Russia, with the net debt/Ebitda ratio rising to 2.8x. Lenta's sales in the first half of 2016 gained 21% to RUB166bn, seeing an uplift from the higher share of relatively immature stores and the record high rollout during the period, that negatively impacted the operating and earnings margins.
Dixy revenues fall in December, the first time any large supermarket has seen negative revenues . Dixy reported a weak December trading update, with
107 RUSSIA Country Report February 2017 www.intellinews.com