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INVESTOR PRESENTATION
1H 2016 OPERATIONAL RESULTS published on July 25, 2016
2
Magnit at a GlanceMagnit at a Glance
Source: Company, Thomson Reuters, IFRS accounts for FY2015
2 397Cities & Towns
№1Russian Food RetailChain by Revenueand Number of Stores
12 888Total Numberof Stores
4 677thous.sq.m.Selling Space
34DCs
5 836Trucks
Multi-format Business ModelComprising Convenience, Hypermarkets,“Magnit Family” & Drogerie Stores
№3Retailer in Europein MarketCapitalization $16bnMarket
Capitalization >7%Share in RussianGrocery Sector (As of 31.12.2016)
Shareholder Structure as of FY2015
57,70%Free-float
38,67%Sergey Galitskiy, CEO
2,98%Other
0,65%Lavreno Ltd. (Cyprus)
0,1%
As of June 30, 2016
As of June 30, 2016
Magnit at a GlanceKey Metrics
3
522bn 14,7 %5,01%
NetMargin
9,89%
EBITDAMargin
0,9*Net debt/LTM EBITDA
1000-1100 80 1200
P= Revenue growth Y-o-Y
Guidance for FY2016
Figures for 1H 2016
*as of FY2015
14-16%Sales Growth Rub
10-10,5%EBITDA Margin
67bnCapex Rub
New Convenience Stores
New Hypermarkets
New Drogerie Stores
4
Magnit at a GlanceStrategy
Growth
Value Efficiency
Multi-format OrganicStore Growth
GeographicScope
Density of StoreCoverage
LowPrices
HighQuality
Assortment CostManagement
VerticalIntegration
Centralization
5
65
Magnit at a GlanceRussian Food Retail Market
Market Composition by FormatRUB 13 410bn Market
SizeFY 2015 % Modern
RetailPenetration
Non-Modern Modern
Source: INFOLine, as of December 31, 2015
65%
35%
Top-7 Retail Chains
22,5%
Modern Non-ChainStores
16,5%
Other chains26%
Traditional Trade28%
Open Markets7%
6
Magnit at a GlanceMagnit vs Peers
* As of FY 2014; Source: Companies, INFOLine, Thomson Reuters, Magnit’s Estimates
Numberof Stores, eop 2015
Selling Spacethous. sq.m., eop 2015
RevenueRUB bn, eop 2015
Market CapUS$ 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
314,8*
209,5*
Magnit
X5
Dixy
Lenta
Okey
Auchan
Metro
12098
7,020
2,708
172
146
96
87
4,414
3,333
908
882
593
836
661
19.0
5.1
0.5
3.3
0,5
7
2 588Drogerie Stores 92 511 658 745 237 238107
9 902Convenience Stores
228Hypermarkets
170Magnit Family
34Distribution Centers
6 44 33 52 12 11
8 63 38 64 15 3010
3581684 2667 2961 972 895
365
Operational OverviewGeographical Coverage
Source: Company, as of June 30, 2016
2 397Cities& Towns
7 FederalRegions
North Caucasu
sSouthern Volga North
WestUrals SiberiaCentral
8 10 8 3
8
Operational OverviewLogistics System
Source: Company, as of June 30, 2016
12 888Total Numberof Stores
1 351thous.sq.m.Warehousing Space
34DCs
5 836Trucks
Central
Volga
Southern
Urals
North Caucasus
North West
Siberia
10
8
8
3
1
2
2
3684
3957
2293
1179
462
826
487
283,871
310,387
142,533
Centralization Ratio%
90
10
92
8
Convenience Stores
1H2016
73
27
80
20
HypermarketsDelivered from DC
Delivered from supplier
Delivered from DC
Delivered from supplier
9
Operational OverviewSuppliers
Source: Company, as of June 30, 2016
5 800DomesticSuppliers
4 600Local Suppliers
1 200Federal Suppliers
Assortment55% 45%
10
Operational OverviewDirect Import
Source: Company, Direct Import – as of December 31, 2015; Private Label – as of June 30, 2016
11
% Shareof Revenue611PL
SKUsM 84% FoodItems
Private Label
9 % InternationalDirect Import 757Open
Contracts
11
Operational OverviewEmployees
Source: Company, * as of June 30, 2016* * as of December 31, 2015
259 389Employees *
29 636AverageMonthlySalary * * 5% Wage Rate
Increase * *P=
190 420In-storePersonnel
36 592People Engagedin Distribution
19 923People in RegionalBranches
10 031People Employedby Head Office
1000 employees
2 423Other
12
Operational OverviewCompetitive Attributes
43-45 % of FamilyBudgetSpent on Food
Location Quality(of Products)
Assortment Reliability AtmospherePrices
5 000 People —MinimumPopulation
(1 500–1 600 Families)
4 000-9 500 MonthlyFamily FoodBudgetP=
Overlap “Good”Cannibalization
Magnit #1
Magnit #2500m
Competitor #1 Competitor #2
Competitor #3
500m
Sales Catchment Area
Source: Company’s Estimates
Convenience Store
14
Operational OverviewConvenience Store
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 OpeningSize of the Store Average Ticket Payback
Store Ownership Structure
Sales MixTraffictickets/sq.m./day
Sales Densitysales/sq.m./year
LFL 1H2016 –1H2015,%
243,80P=$3,47
245 306P=$4 024
-0,36 AverageTicket, RUB
2,21 Traffic
1,85 Sales
2,7
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 35-105Leased 10-19
Hypermarket
16
Operational OverviewHypermarket
Source: Company, as of June 30, 2016
80% Food
20% Non-food
73% Owned
27% 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 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 AverageTicket, RUB
-7,86 Traffic
-10,15
Sales
OpeningPayback
6-9 years
Cost of New Storeper sq.m. of Total Space, thousand RUB
Owned 56-98Leased 31-41
8-15 months
Time to Maturity
S: up to 3 000M:
3 000-6 000
L: over 6 000
Magnit Family
18
Operational OverviewMagnit Family
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 OpeningSize of the Store Average Ticket Payback
Store Ownership Structure
Sales MixTraffictickets/sq.m./day
Sales Densitysales/sq.m./year
LFL 1H2016 – 1H2015,%
447,9P=$6,4
349 703P=$5 737
1,9
6-9 years
Cost of New Storeper sq.m. of Total Space, thousand RUB
Owned 71-112Leased 31-54
8-15 months
-2,31
AverageTicket, RUB
-4,03
Traffic
-6,25
Sales
Time to Maturity
Drogerie Store
20
Operational OverviewDrogerie Store
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 OpeningSize of the Store Average Ticket Payback
Store Ownership Structure
Sales MixTraffictickets/sq.m./day
Sales Densitysales/sq.m./year
LFL 1H2016 – 1H2015,%
305,3P=$4,4
114 924P=$1 885
10,86
AverageTicket, RUB
-4,00 Traffic
6,42 Sales
0,9
3 years
If Leased
If Owned
Cost of New Storeper sq.m. of Total Space, thousand RUB
Time to Maturity
6 months
Owned 20-70Leased 9-16
4-6 years
21
80%20%
Sizeof the Store
sq.m.
AverageTicket
TrafficTickets/
sq.m./day
DensitySales/
sq.m./year
SalesMix
LFL 1H2016-1H2015
%
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
13%
87%
37%
63%
73%27%
25%75%
Operational OverviewFormat Summary
Source: Company, as of June 30, 2016; * Excludes selling space designated for leases
Hypermarket
DrogerieStore
MagnitFamily
327
2897*6 503
290
Owned RUB 35-
105kLeased
RUB 10-19k2,7
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%
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)
OwnedRUB 56-98k
LeasedRUB 31-41k
OwnedRUB 20-70k
LeasedRUB 9-16k
OwnedRUB 71-112k
LeasedRUB 31-54k8
4%16%
1
-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 OverviewSummary 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: Company’ s calculations based on IFRS accounts for 2014 - 2015Please note: there may be small variations in calculation of totals , subtotals, and/ or percentage change due to rounding of decimals
RUB MN 2014 2015 2014 / 2015Y-o-Y Growth
Net sales 763,527.25 950,613.34 24.5%
Cost of sales (543,006.69) (679,792.53) 25.2%
Gross profit 220,520.56 270,820.81 22.8%
Gross margin, % 28.88% 28.49%
SG&A (134,169.75) (167,420.12) 24.8%
Other income, net (501.27) 483.77 -196.5%
EBITDA 85,909.67 103,972.94 21.0%
EBITDA margin,% 11.25% 10.94%
Depreciation & Amortization (17,609.67) (21,116.73) 19.9%
EBIT 68,300.00 82,856.21 21.3%
Net finance costs (6,273.47) (11,660.29) 85.9%
Profit before tax 62,026.53 71,195.92 14.8%
Taxes (14,340.69) (12,134.72) -15.4%
Effective tax rate 23.12% 17.04%
Net income 47,685.84 59,061.20 23.9%
Net margin, % 6.25% 6.21%
23
20%
188 448 RUB mn
2013 2014 2015
3648
59
2013 2014 2015
580764
951
Financial OverviewRevenue & Costs
Source: Company’s calculations based on IFRS accounts for FY2013-20152013 2014 2015
0
5
10
15
20
25
30
35
28.5 28.9 28.5
11.2 11.3 10.9
6.1 6.3 6.2
Revenue DynamicsRUB bn
Net Income DynamicsRUB bn
Margin DynamicsSG&A Expense StructureRevenue — 951 RUB bn
GrossMargin
EBITDAMargin
NetMargin
%
+31,7%
14,5% 6,2%
+24,5%+33,9%
+23,9%
LFLLFL
Sales Growth, RUB
Sales Growth, RUB
1,97 (0,39) ― Packaging & Raw Materials
1,77 (0,35) ― Repair & Maintenance
52,40 (10,39) ― Payroll & Related Taxes1,62 (0,32) ― Taxes, Other than Income Tax
11,16 (2,21) ― Deprecation & Amortization
23,35 (4,64) ― Rent & Utilities
4,66 (0,92) ― Other
in SG&A,% in Revenue, %
3,06 (0,61) ― Advertising
24
GM2013
Trading Margin Transport Losses GM2014
Trading Margin Transport Losses GM2015
15171921232527293133
28.51 28.88 28.490.13 0.32 0.430.08 0.68 0.14
Financial OverviewGross Margin Bridge
Source: Company’s calculations based on IFRS accounts for FY2013-2015
EBITDA Margin Bridge
% of Sales
% of Sales
+37 b.p. -39 b.p.
+9 b.p. -31 b.p.
02468
101214
11.16 11.25 10.940.37 0.29 0.54 0.09 0.06 0.070.11 0.28 0.18 0.39 0.53 0.15
25
88,999
60,711
5,617
11,760
-9,330-6,433
-12,525-55 936
-15 825 21 968842
Financial OverviewFree Cash Flow
Source: Company’s calculations based on IFRS accounts for FY2014-2015
Working Capital AnalysisThe Average Days Payable to Suppliers is 41 Days.
Inventory Management Days is 52 Days
Working Capital: RUB 18 233 mn as of 31.12.2015
RUB mn2014
2015
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
107,237
72,782
18,004
-9,300
-14,848-10,743 -8,864
-54 276
-502 -35 253
7 949
26
Financial OverviewBalance Sheet
Source: Audited IFRS accounts for FY2013 – 2015Please note: there may be small variations in calculation of totals , subtotals, and/or percentage change due to rounding of decimals
RUB MN 2013 2014 2015 ASSETS Property plant and equipment 195,158.25 232,968.80 265,995.94Other non-current assets 5,762.40 6,043.82 6,380.79Cash and cash equivalents 5,931.13 17,691.54 8,390.90Inventories 56,095.41 81,475.66 116,471.59Trade and other receivables 631.53 813.26 993.67Advances paid 3,171.05 4,849.30 5,295.73Taxes receivable 27.99 69.38 96.67Short-term financial assets 1,150.64 475.18 246.78Prepaid expenses 252.15 242.53 320.91Income tax receivable – 131.86 -TOTAL ASSETS 268,180.55 344,761.33 404,192.98EQUITY AND LIABILITIES Equity 126,162.14 143,651.62 165,140.60Long-term debt 37,441.50 44,410.14 59,411.19Other long-term liabilities 8,462.32 10,617.70 12,998.59Trade and other payables 48,170.71 66,794.61 88,372.22Short-term debt 36,319.76 51,256.67 44,817.12Dividends payable 0.03 14,372.03 16,993.86Other current liabilities 11,624.09 13,658.56 16,459.40TOTAL EQUITY AND LIABILITIES 268,180.55 344,761.33 404,192.98
27
Financial OverviewCapex Analysis
1 Source: 2015 IFRS Audited Financials2 Source: Company’s Estimates
Buildings: Complete & under Construction
Machinery & Equipment Other Assets Land
36 231 15 750 541 1 753FY 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
2013 2014 2015
73,761
95,667104,228
67,830
77,975
95,83737,441 44,410 59,411
Net DebtLong-term Debt%
Financial OverviewDebt Burden
Source: Company’s calculations based on IFRS accounts for FY2013-2015
2013 2014 20150.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0 13.0 12.9
8.7
2013 2014 20150
0.5
1
1.5
2
1.0 0.9 0.9
Debt Level Dynamics RUB mn
Credit Metrics Credit ProfileEBITDA / Finance Expenses
Net Debt / LTM EBITDA
The Company Hasan Impeccable Credit HistoryCollaboration withthe Largest BanksLow Debt Burden:Net Debt / LTM EBITDA Ratio of 0,9
No Currency Risk: 100%of Debt is Rub DenominatedMatching Revenue StructureInsignificant Interest Rate Risk:Interest Payments are Madeat Fixed Rates Primarily
49,2%53,6%
43,0%
57% of Debt is Long-termApproximately 51%of LT Debt is Rub Bonds
29
Contact InformationContact InformationTimothy PostHead of Investor Relations
+7 (961) [email protected]://ir.magnit.com
15/2 Solnechnaya StreetKrasnodar, 350072Russian Federation