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X5 Reports 2016 Adjusted EBITDA up 33.8% on the back of 27.8% Revenue Growth

March 27, 2017. TAG: Retail Trade

Amsterdam, 27 March 2017 - X5 Retail Group N.V., (“X5” or the “Company”), a leading Russian food retailer (LSE ticker: “FIVE”), today released its 2016 Annual Report, including audited consolidated financial statements prepared in accordance with International Financial Reporting Standards, as adopted in the European Union.

•    X5 delivered revenue growth of 27.8% year-on-year (y-o-y), the fastest pace since 2011

•    X5 achieved a strategic milestone of market leadership in Russian food retail, with market share increasing to 8.0%, up from 6.3% in 2015

•    LFL sales increased by 7.7% y-o-y. LFL sales improved across all three of the Company’s major formats

•    The Company added a record 2,167 new stores in 2016, vs. 1,537 new stores in 2015

•    Pyaterochka was the main driver of growth: net retail sales rose by 32.5% y-o-y (9.1% growth in LFL sales and 23.4% growth from a 37.4% y-o-y increase in selling space)

•    Gross margin decreased by 34 b.p. y-o-y to 24.2% due to changes in the breakdown of revenue by format, as the contribution from Pyaterochka continued to rise. The increasing share of stores in ramp-up phase also affected X5’s gross margin

•    Adjusted SG&A expenses(1) as a percentage of revenue declined year-on-year by 78 b.p. to 17.2%, primarily due to the positive impact of ongoing projects to improve operational efficiency and as a result of operating leverage

•    EBITDA for 2016, adjusted for the LTI bonus, share-based payments, and other oneoff remuneration payments expenses, increased by 33.8% and the adjusted EBITDA margin improved by 35 b.p. to 7.7%

•    X5’s debt levels continued to improve in 2016, with net debt/EBITDA as of 31 December 2016 falling to 1.81x, the lowest level in X5’s history.

X5’s Chief Executive Officer Igor Shekhterman said:

“We have achieved all of the targets set out by the Supervisory Board and Company management in 2016. We are creating value for stakeholders as the fastest-growing public player in Russia’s food retail market, building a stable and sustainable business that aims to benefit consumers, employees, partners and investors over the long term.

“As of Q4 2016, X5 is Russia’s #1 food retailer, with a market share of 8.0% for 2016. Revenue grew by 27.8% year-on-year and exceeded RUR 1 trillion, driven by a 7.7% increase in like-for-like (LFL) sales and a 20.1% contribution from a 29.1% rise in selling space. In 2016, we also demonstrated our ability to deliver efficient and sustainable expansion, with the adjusted EBITDA margin improving to 7.7%, up from 7.3% in 2015.

“Looking ahead to 2017, while we do not expect meaningful positive macroeconomic developments in Russia in the medium term, significant growth opportunities still exist in the food retail sector. We remain confident about X5’s potential to deliver sustainable growth as Russia’s leading food retailer, driven by market expansion and market penetration. We are now focussed on achieving our target market share of 15% by the end of 2020, which will require continued strong performance during the coming years. Our focus will remain on organic growth while maintaining margins as we develop all three of our major formats.”

(1) Adjusted SG&A is SG&A before depreciation, amortisation and impairment costs as well as costs related to the LTI
programme, share-based payments and other one-off remuneration payments expense.

For more detailed information please refer to the following link

X5 Retail Group

X5 Retail Group is the leading food retailer in Russia. X5 shares are listed on London Stock Echange (LSE) in the form of Global Depositary Receipts. The Company operates several retail formats, including the chain of conveniently located proximity stores under the Pyaterochka brand, the supermarket chain under the Perekrestok brand, the hypermarket chain under the Karusel brand and Express convenience stores.