Page 161 - RusRPTApr21

9.2.5 Retail corporate news
The net profit of Russia’s largest retailer by revenue X5 Retail Group jumped by 45.3% on the year to 28.344 billion rubles in 2020, as calculated under International Financial Reporting Standards (IFRS), the company said in a statement on Friday. Revenue went up 14.1% on the year to 1.978 trillion rubles in 2020, and earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 15.2% to 243.622 billion rubles.
Magnit 2020 IFRS results that shows strong cash flow The results were close to the previously reported unaudited results under IAS 17. Revenue rose 13.5% y/y. Gross profit margin increased 74bps to 23.5% on improved commercial terms, lower promo activity in combination with better promo coverage and higher promo margin, lower shrinkage and supply chain costs partially offset by ongoing cost of the loyalty program EBITDA rose 31.6% y/y with EBITDA margin up to 7% (+97bps y/y) driven by higher gross margin and lower SG&A costs – cash SG&A decreased by 36bps y/y Net profit was up 121% y/y driven by increased EBITDA, decreased D&A by 46bps to 3% of sales and lower net finance costs by 10.6% y/y. Net margin increased 118bps to 2.4% as a result Net Operating CF increased 105% y/y to RUB114.4bn Net cash used in investing activities dropped 48% y/y to RUB29.5bn Net debt amounted to RUB121.4bn (-31% y/y). Net Debt/ EBITDA was 1.1x vs 2.1x as of December 2019. Profits were close to the previously reported numbers. Other numbers were strong – operating CF up 105%, investing CF down 48% and net debt down 31% y/y. Strong cash flow implies higher chances for solid dividends for 4Q20 – analysts are expecting c5% DY.
Magnit is going to start a pilot DIY format under the Magnit Master brand that is to be registered by the company.
Magnit has been actively piloting new formats lately, with a number of initiatives, including drogeries, hard discounters, alcomarket and kiosks. The DIY market in Russia is estimated at RUB 1.7tn by Infoline (5.1% of total retail), compared with RUB 16.4tn for food retail last year and around RUB 2tn in the drogerie segment where Magnit is already present. The roll out of the convenience DIY format could be similar to the pharmacy format which, at the time of its launch (2010), lacked a federal leader and consolidation, allowing Magnit to gain sector leadership by 2018.
In our model, we see revenues increasing at a CAGR of 6% in 2021- 25F for Magnit, reflecting the large comparison base and slowing rollout in the core formats. The rapid development of the new formats and e-grocery could represent new growth pillars for Magnit and upside risks to our forecasts. Among the tailwinds for new formats are its existing logistics infrastructure, large scale, established retail and development practice, and its relationships with prospective clients via loyalty programmes, while future returns and efficiency are yet to
161 RUSSIA Country Report April 2021 www.intellinews.com