X5 Retail Group N.V. announces Q1 2007 results
29 May 2007
Amsterdam, 29 May 2007 – X5 Retail Group N.V., Russia's largest food retailer in terms of sales (LSE ticker: “FIVE”), announced today its preliminary unaudited financial results for the 1st quarter of 2007.
Net sales increased by 45.1% in comparison with Q1 2006 and reached US $ 1,106 million.
Gross profit increased by 50.2% to US $ 302 million
Gross profit margin increased from 26.3% to 27.3%
EBITDA increased by 53.3% to US$ 107 million
EBITDA margin increased from 9.2% to 9.7%
Operational highlights
A new leased distributional center “Sholokhovo” was opened in the Moscow region with additional capacity of approx. 20,000 sq. meters.
The Group has successfully completed integration of Merkado stores acquired in November 2006: 10 of the stores are currently operating under Perekrestok brand and 7 stores – under Pyaterochka brand.
The Group continued its regional expansion by gaining control over 40 Pyaterochka ex-franchising stores with total net selling space of 13,811 sq. meters in Chelyabinsk region. In total during Q1 2007, the Group gained additional net selling space of 32,363 sq. meters.
During Q1 2007, the Group further strengthened positive like-for-like sales trends to reach +21% in US Dollar terms (composed of traffic +8% and basket +13%) or +13% in Rouble terms (composed of traffic +8% and basket +5%), with first over the last few years positive traffic results for Pyaterochka stores in Russia’s most competitive market of St. Petersburg.
In March 2007, the Group announced its new employee stock option program (ESOP) designed to efficiently motivate around 100 key executives and employees. The total number of share options is planned to be capped at 10,824,008 GDRs. The program based on the market value of the shares will run through to 18 November 2010 and options will be granted in 4 tranches, subject to AGM approval on 15th of June 2007.
In March 2007, the Group has finalised its 5-year strategy with clear identification of key formats, geography and logistics strategic goals.
Former Merkado Distribution Centre is designated to become a new HQ of the Company and consolidate three leased office locations in Moscow which will result in savings on rental costs and facilitate better communication and corporate management.
Quotes
Lev Khasis, Group CEO:
“The financial results for the first three months, supported by important operational measures and improvements, are in line with our expectations. Our net sales increased by 45.1% on the back of the successful store opening results of the previous periods and the continuous improvement of LfL sales trends in the key operating regions across both chains. Also, despite of a big portion of new store openings during last few months of 2006, we enjoyed an increase in gross margins across both chains due to continued effort of our purchasing team, upgraded logistics capacity in the core Moscow region and a progress in introduction of private labels.
We especially pleased with ahead-of-schedule and efficient integration of “Merkado” chain which shows that the Company’s has a well established mechanism of quickly integrating acquired chains. The opening of a new distribution centre provides an important support to our store opening program and will allow us to further improve our operations. I look with optimism into 1H 2007 and over.”
Q1 2007 Financial Highlights
Starting from Q1 2007, the Group will report financial results for the whole Group with only disclosing of Net Sales, Gross Profit and LfL sales for single formats operations.
|
$ Million |
Q1 2007 |
Q1 2006 |
Change
(+/-, %) |
|
|
|
|
|
|
Net Sales |
1,106.2 |
762.3 |
45.1% |
|
Gross Profit |
301.5 |
200.7 |
50.2% |
|
Gross Margin |
27.3% |
26.3% |
|
|
|
|
|
|
|
OPEX |
165.3 |
107.0 |
54.4% |
|
% of Sales |
14.9% |
14.0% |
|
|
|
|
|
|
|
EBITDAR |
136.1 |
93.6 |
45.5% |
|
EBITDAR Margin |
12.3% |
12.3% |
|
|
|
|
|
|
|
Net Rental Expense |
29.1 |
18.2 |
60.2% |
|
EBITDA before options |
107.1 |
75.4 |
42.0% |
|
EBITDA before options Margin |
9.7% |
9.9% |
|
|
|
|
|
|
|
Options |
- |
5.6 |
-100.0% |
|
% of Sales |
0.0% |
0.7% |
|
|
|
|
|
|
|
EBITDA |
107.1 |
69.8 |
53.3% |
|
EBITDA Margin |
9.7% |
9.2% |
|
Pyaterochka chain stand-alone
• Net Sales of US $620 million; up 41.3% vs. Q1 2006
• Gross profit of US $161 million, up 48.3% vs. Q1 2006; Gross margin of 26.0% vs. 24.8% Q1 2006
Perekrestok chain stand-alone
• Net Sales of US $486 million; up 50.3% vs. Q1 2006
• Gross profit of US $140 million, up 52.5% vs. Q1 2006; Gross margin of 28.9% vs. 28.4% Q1 2006
Quotes
Vitaliy Podolskiy, Group CFO:
«In line with our strategy focusing on growth, in Q1 2007 we raised our OPEX from 14.0% of net sales in Q1 2006 to 14.9% by increasing payroll costs as necessary action to improve staff availability and the marketing budget. This allowed us to achieve an impressive 45.1% sales growth. Also, the consolidation of our regional chain in Yekaterinburg and Chelyabinsk contributed to an increase in OPEX. As a result, EBITDA before options grew slower than net sales on a pro-forma basis, in line with management expectations.»
Forward looking statements:
This announcement includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the fact that they do not only relate to historical or current events. Forward-looking statements often use words such as” anticipate”, “target”, “expect”, “estimate”, “intend”, “expected”, “plan”, “goal” believe”, or other words of similar meaning.
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, a number of which are beyond X5 Retail Group N.V.'s control. As a result, actual future results may differ materially from the plans, goals and expectations set out in these forward-looking statements.
Any forward-looking statements made by or on behalf of X5 Retail Group N.V. speak only as at the date of this announcement. Save as required by any applicable laws or regulations, X5 Retail Group N.V. undertakes no obligation publicly to release the results of any revisions to any forward-looking statements in this document that may occur due to any change in its expectations or to reflect events or circumstances after the date of this document.
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