12 Aug 2021 08:00
X5 REPORTS 10.7% REVENUE GROWTH IN Q2 20218.3% ADJ. EBITDA MARGIN PRE-IFRS 16
ü In Q2 2021, X5 delivered revenue growth of 10.7% year-on-year (y-o-y) driven by a 9.6% rise in offline sales and a 1.1 p.p. contribution from growing digital business sales, which comprised 2% of consolidated revenue.
ü Adjusted EBITDA(1) margin reached 13.1% (8.3% pre-IFRS 16(2)), supported by the stable gross margin and solid financial performance of Pyaterochka.
ü Gross margin remained flat at 25.6% (25.3% pre-IFRS 16) in Q2 2021. Higher logistics costs and slightly higher shrinkages y-o-y were offset by improvement in commercial margin and stable share of promo.
ü SG&A expenses increased as a percentage of revenue by 44 b.p. (up 39 b.p. pre-IFRS 16), driven by higher staff costs, utilities and expenses related to digital business.
ü Net profit margin totalled 2.7% in Q2 2021 (3.0% pre-IFRS 16) and net profit was almost flat y-o-y.
ü The net debt/EBITDA ratio was 3.24x (1.68x pre-IFRS 16) as of 30 June 2021.
Amsterdam, 12 August 2021 - X5 Retail Group N.V. ("X5" or the "Company", LSE and MOEX ticker: "FIVE"), a leading Russian food retailer that operates the Pyaterochka, Perekrestok, and Karusel retail chains, today released its interim report for the three months (Q2) and six months (H1) ended 30 June 2021, in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union. The interim report has been reviewed by the independent auditor but has not been audited.
X5 Chief Executive Officer Igor Shekhterman said:
"I am very pleased with X5's continued robust performance, delivering margins comfortably above our strategic targets while continuing to grow our online and offline businesses. X5 posted 10.7% revenue growth in the second quarter, driven by strong LFL(3) sales, which rose by 4.0% y-o-y, continued expansion of our network and its refurbishment, as well as our digital sales.
"Online business sales continued to grow at a robust pace, demonstrating that the trend that began in Q2 2020 is sustainable and represents a long-term shift in Russian consumer behaviour and supports our strategic ambitions. Offline sales performance was supported by the accelerating pace of the rollout of our new Pyaterochka and Perekrestok store concepts: in H1 2021 we completed 805 refurbishments, compared to 385 in H1 2020.
"Our strategic projects remain on track: in addition to growing the geographic footprints of Vprok.ru Perekrestok, express delivery services and 5Post, in the first half of 2021 we completed the acquisition of Mnogo Lososya dark kitchens and launched food.ru, a media platform that will enable us to begin to interact with consumers at the start of the customer journey, when they are discovering food ideas and planning meals. As we develop this platform, it will be further integrated into X5's core businesses. By the end of the year, we plan to launch the first products of X5 Bank, our fintech service for X5 customers.
"Looking ahead, we are confident that we will deliver on our margin targets: despite rising logistics and labour costs in the first half of the year, we were able to deliver a pre-IFRS 16 EBITDA margin of over 8.0% in Q2 2021. We are also on track to achieve our growth and market share goals for our offline and online businesses. At the same time, we are making good progress on our ESG strategy, having published sustainable packaging guidelines for suppliers and increasing the share of renewable energy that is used in our operations. By the end of this year, we will have implemented a comprehensive emissions monitoring system, which will enable us to carefully track our progress against our climate-related goals."
Profit and loss statement highlights(4)
Russian Rouble (RUB), million (mln) | IFRS 16 | Pre-IFRS 16 | |||||
Q2 2021 | Q2 2020 | change, | Q2 2021 | Q2 2020 | change, | ||
y-o-y, % | y-o-y, % | ||||||
Revenue | 546,512 | 493,631 | 10.7 | 546,512 | 493,631 | 10.7 | |
incl. net retail sales(5) | 544,409 | 492,975 | 10.4 | 544,409 | 492,975 | 10.4 | |
Pyaterochka (incl. express delivery) | 447,612 | 405,792 | 10.3 | 447,612 | 405,792 | 10.3 | |
Perekrestok (incl. Vprok.ru Perekrestok and express delivery) | 87,865 | 73,346 | 19.8 | 87,865 | 73,346 | 19.8 | |
Karusel | 8,454 | 13,837 | (38.9) | 8,454 | 13,837 | (38.9) | |
Gross profit | 140,096 | 126,579 | 10.7 | 138,090 | 124,727 | 10.7 | |
Gross profit margin, % | 25.6 | 25.6 | (1) b.p. | 25.3 | 25.3 | 0 b.p. | |
Adj. EBITDA(1) | 71,728 | 66,094 | 8.5 | 45,424 | 41,854 | 8.5 | |
Adj. EBITDA margin, % | 13.1 | 13.4 | (26) b.p. | 8.3 | 8.5 | (17) b.p. | |
EBITDA | 70,333 | 65,567 | 7.3 | 44,029 | 41,327 | 6.5 | |
EBITDA margin, % | 12.9 | 13.3 | (41) b.p. | 8.1 | 8.4 | (32) b.p. | |
Operating profit | 33,303 | 32,954 | 1.1 | 25,371 | 25,932 | (2.2) | |
Operating profit margin, % | 6.1 | 6.7 | (58) b.p. | 4.6 | 5.3 | (61) b.p. | |
Net profit | 14,920 | 14,772 | 1.0 | 16,133 | 16,275 | (0.9) | |
Net profit margin, % | 2.7 | 3.0 | (26) b.p. | 3.0 | 3.3 | (35) b.p. | |
Russian Rouble (RUB), million (mln) | IFRS 16 | Pre-IFRS 16 | |||||
H1 2021 | H1 2020 | change, | H1 2021 | H1 2020 | change, | ||
y-o-y, % | y-o-y, % | ||||||
Revenue | 1,053,703 | 962,625 | 9.5 | 1,053,703 | 962,625 | 9.5 | |
incl. net retail sales(5) | 1,050,192 | 961,435 | 9.2 | 1,050,192 | 961,435 | 9.2 | |
Pyaterochka (incl. express delivery) | 854,322 | 775,839 | 10.1 | 854,322 | 775,839 | 10.1 | |
Perekrestok (incl. Vprok.ru Perekrestok and express delivery) | 177,003 | 153,960 | 15.0 | 177,003 | 153,960 | 15.0 | |
Karusel | 18,203 | 31,636 | (42.5) | 18,203 | 31,636 | (42.5) | |
Gross profit | 269,637 | 242,515 | 11.2 | 265,715 | 238,927 | 11.2 | |
Gross profit margin, % | 25.6 | 25.2 | 40 b.p. | 25.2 | 24.8 | 40 b.p. | |
Adj. EBITDA(1) | 133,384 | 122,861 | 8.6 | 80,899 | 74,834 | 8.1 | |
Adj. EBITDA margin, % | 12.7 | 12.8 | (10) b.p. | 7.7 | 7.8 | (10) b.p. | |
EBITDA | 131,560 | 121,839 | 8.0 | 79,075 | 73,812 | 7.1 | |
EBITDA margin, % | 12.5 | 12.7 | (17) b.p. | 7.5 | 7.7 | (16) b.p. | |
Operating profit | 57,803 | 56,941 | 1.5 | 42,239 | 42,457 | (0.5) | |
Operating profit margin, % | 5.5 | 5.9 | (43) b.p. | 4.0 | 4.4 | (40) b.p. | |
Net profit | 22,558 | 18,773 | 20.2 | 25,296 | 24,450 | 3.5 | |
Net profit margin, % | 2.1 | 2.0 | 19 b.p. | 2.4 | 2.5 | (14) b.p. | |
Revenue
Revenue growth reached 10.7% year-on-year in Q2 2021, driven by positive like-for-like (LFL) sales, selling space expansion and 105.7% revenue growth in X5's digital businesses. The latter reflected higher demand from customers for online services, an incremental increase in the number of new online customers, expansion of express delivery operations to new geographies, expansion of Vprok.ru Perekrestok's assortment, expansion of the 5Post delivery network and additional new e-commerce partners for 5Post.
Selling space by format, square meters (sq. m)
| As of 30-Jun-21 | As of 31-Dec-20 | change vs 31-Dec-20, % | As of 30-Jun-20 | change vs 30-Jun-20, % |
Selling Space, square meters (sq. m.) | |||||
Pyaterochka | 6,782,960 | 6,541,622 | 3.7 | 6,289,962 | 7.8 |
Perekrestok | 1,058,533 | 1,013,860 | 4.4 | 911,634 | 16.1 |
Karusel | 160,923 | 222,119 | (27.6) | 247,191 | (34.9) |
X5 Group(6) | 8,062,903 | 7,840,055 | 2.8 | 7,510,261 | 7.4 |
Q2 & H1 2021 LFL store performance by format, % change y-o-y
In Q2 and H1 2021, LFL sales performance remained strong with figures up 4.0% and 3.1% y-o-y respectively.
LFL traffic became the main driver of LFL sales in Q2 2021 due to a reversal in the previous trend: customers began making more frequent visits to stores and had a normalised basket size compared to 2020.
| Q2 2021 | H1 2021 | ||||
| Sales | Traffic | Basket | Sales | Traffic | Basket |
Pyaterochka | 3.7 | 13.0 | (8.3) | 3.6 | 2.0 | 1.5 |
Perekrestok | 7.3 | 31.9 | (18.6) | 2.1 | 5.4 | (3.1) |
Karusel | (7.4) | 8.9 | (15.0) | (10.1) | (7.7) | (2.6) |
X5 Group | 4.0 | 14.7 | (9.3) | 3.1 | 2.3 | 0.8 |
For more details on net retail sales performance please refer to X5's Q2 2021 Trading Update.
Gross profit margin
The gross profit margin under IFRS 16 remained flat y-o-y at 25.6% in Q2 2021 (25.3% pre-IFRS 16). An improvement in the commercial margin, which was supported by the product mix reflecting abnormally hot weather in the Central part of Russia and stable promo levels vs Q2 2020, was offset by higher logistics costs on the back of rising market competition for logistics staff due to higher COVID cases and low migrant labor supply, as well as slightly higher shrinkages y-o-y due to higher than usual temperatures in core regions of our
Selling, general and administrative (SG&A) expenses (excl. D&A&I and the impact of the Karusel transformation)
RUB mln | IFRS 16 | Pre-IFRS 16 | |||||
Q2 2021 | Q2 2020 | change, | Q2 2021 | Q2 2020 | change, | ||
y-o-y, % | y-o-y, % | ||||||
Staff costs | (44,499) | (39,247) | 13.4 | (44,499) | (39,247) | 13.4 | |
% of Revenue | 8.1 | 8.0 | 19 b.p. | 8.1 | 8.0 | 19 b.p. | |
incl. LTI and share-based payments | (1,184) | (527) | 124.7 | (1,184) | (527) | 124.7 | |
staff costs excl. LTI and share-based payments as % of Revenue | 7.9 | 7.8 | 8 b.p. | 7.9 | 7.8 | 8 b.p. | |
Lease expenses | (3,505) | (3,099) | 13.1 | (26,182) | (23,904) | 9.5 | |
% of Revenue | 0.6 | 0.6 | 1 b.p. | 4.8 | 4.8 | (5) b.p. | |
Utilities | (10,213) | (8,840) | 15.5 | (10,213) | (8,840) | 15.5 | |
% of Revenue | 1.9 | 1.8 | 8 b.p. | 1.9 | 1.8 | 8 b.p. | |
Other store costs | (5,642) | (5,760) | (2.0) | (5,860) | (6,013) | (2.5) | |
% of Revenue | 1.0 | 1.2 | (13) b.p. | 1.1 | 1.2 | (15) b.p. | |
Third party services | (4,775) | (3,369) | 41.7 | (4,640) | (3,271) | 41.9 | |
% of Revenue | 0.9 | 0.7 | 19 b.p. | 0.8 | 0.7 | 19 b.p. | |
Other expenses | (6,414) | (4,779) | 34.2 | (7,559) | (5,614) | 34.6 | |
% of Revenue | 1.2 | 1.0 | 21 b.p. | 1.4 | 1.1 | 25 b.p. | |
SG&A (excl. D&A&I and impact from Karusel transformation) | (75,048) | (65,094) | 15.3 | (98,953) | (86,889) | 13.9 | |
% of Revenue | 13.7 | 13.2 | 55 b.p. | 18.1 | 17.6 | 50 b.p. | |
SG&A (excl. D&A&I, LTI, share-based payments and impact from Karusel transformation) | (73,864) | (64,567) | 14.4 | (97,769) | (86,362) | 13.2 | |
% of Revenue | 13.5 | 13.1 | 44 b.p. | 17.9 | 17.5 | 39 b.p. | |
RUB mln | IFRS 16 | Pre-IFRS 16 | |||||
H1 2021 | H1 2020 | change, | H1 2021 | H1 2020 | change, | ||
y-o-y, % | y-o-y, % | ||||||
Staff costs | (87,983) | (77,531) | 13.5 | (87,983) | (77,531) | 13.5 | |
% of Revenue | 8.3 | 8.1 | 30 b.p. | 8.3 | 8.1 | 30 b.p. | |
incl. LTI and share-based payments | (1,606) | (1,022) | 57.1 | (1,606) | (1,022) | 57.1 | |
staff costs excl. LTI and share-based payments as % of Revenue | 8.2 | 7.9 | 25 b.p. | 8.2 | 7.9 | 25 b.p. | |
Lease expenses | (6,407) | (5,503) | 16.4 | (51,470) | (47,343) | 8.7 | |
% of Revenue | 0.6 | 0.6 | 4 b.p. | 4.9 | 4.9 | (3) b.p. | |
Utilities | (22,160) | (19,269) | 15.0 | (22,160) | (19,269) | 15.0 | |
% of Revenue | 2.1 | 2.0 | 10 b.p. | 2.1 | 2.0 | 10 b.p. | |
Other store costs | (10,812) | (10,413) | 3.8 | (11,245) | (10,908) | 3.1 | |
% of Revenue | 1.0 | 1.1 | (6) b.p. | 1.1 | 1.1 | (7) b.p. | |
Third party services | (9,027) | (6,331) | 42.6 | (8,862) | (6,155) | 44.0 | |
% of Revenue | 0.9 | 0.7 | 20 b.p. | 0.8 | 0.6 | 20 b.p. | |
Other expenses | (12,762) | (9,381) | 36.0 | (14,804) | (10,879) | 36.1 | |
% of Revenue | 1.2 | 1.0 | 24 b.p. | 1.4 | 1.1 | 27 b.p. | |
SG&A (excl. D&A&I and the impact of the Karusel transformation) | (149,151) | (128,428) | 16.1 | (196,524) | (172,085) | 14.2 | |
% of Revenue | 14.2 | 13.3 | 81 b.p. | 18.7 | 17.9 | 77 b.p. | |
SG&A (excl. D&A&I, LTI, share-based payments and the impact of the Karusel transformation) | (147,545) | (127,406) | 15.8 | (194,918) | (171,063) | 13.9 | |
% of Revenue | 14.0 | 13.2 | 77 b.p. | 18.5 | 17.8 | 73 b.p. | |
In Q2 2021, SG&A expenses excluding D&A&I, LTI, share-based payments and the impact of the Karusel transformation under IFRS 16 as a percentage of revenue increased by 44 b.p. to 13.5% (increased by 39 b.p. to 17.9% pre-IFRS 16), of which 21 b.p. under IFRS 16 (25 b.p. pre-IFRS 16) was contributed by growth in courier costs in our fast-expanding online sales, followed by higher staff costs and third party services. Smaller impacts were also seen from utility costs, while store rents and lower expenses related to COVID helped to partially offset the factors pushing up operating costs.
Other expenses (excluding the impact of the Karusel transformation) under IFRS 16 as a percentage of revenue in Q2 2021 increased by 21 b.p. y-o-y to 1.2% (up 25 b.p. to 1.4% pre-IFRS 16) mainly due to higher share of courier services costs for express delivery given the number of orders increased by 4.7 times y-o-y.
Staff costs (excluding LTI, share-based payments and the impact of the Karusel transformation) as a percentage of revenue increased by 8 b.p. y-o-y in Q2 2021 to 7.9%, mainly due to an increased headcount in the central office engaged in digital transformation projects.
LTI and share-based payment expenses amounted to RUB 1,184 mln in Q2 2021. The Company continued to accrue a liability for the deferred conditional payout related to the LTI programme 2018-2020, and started accruals related to the new LTI programme 2021-2023 alongside the new LTI programme for new businesses (accruals for both Q1 and Q2 2021) (5Post, Chizhik and Okolo). The accruals in the following quarters will be lower compared to Q2 2021.
Utility costs as a percentage of revenue in Q2 2021 increased by 8 b.p. y-o-y to 1.9% driven by a larger number of new openings and refurbishments, as well as the hot weather in some regions of our operations.
Third party service expenses under IFRS 16 as a percentage of revenue in Q2 2021 increased by 19 b.p. y-o-y to 0.9% (growing by 19 b.p. to 0.8% pre-IFRS 16) mainly due to the normalisation of marketing expenses following the lower marketing budgets during the COVID-19 pandemic last year.
Other store costs under IFRS 16 as a percentage of revenue in Q2 2021 decreased by 13 b.p.y-o-y (falling by 15 b.p. pre-IFRS 16) mainly due to lower expenses associated with additional measures related to the COVID-19 pandemic, such as masks and disposable gloves for personnel as well as additional disinfection procedures in stores.
Lease/sublease and other income(7)
As a percentage of revenue, the Company's income from leases, subleases and other operations (excl. the impact of the Karusel transformation) under IFRS 16 totalled 1.0%, an increase of 15 b.p. y-o-y in Q2 2021 (an increase of 20 b.p. to 0.9% pre-IFRS 16), due to the recovery of sublease operations and sales of recyclable materials after the pandemic.
EBITDA and EBITDA margin
RUB mln | IFRS 16 | Pre-IFRS 16 | |||||
Q2 2021 | Q2 2020 | change, | Q2 2021 | Q2 2020 | change, | ||
y-o-y, % | y-o-y, % | ||||||
Gross profit | 140,096 | 126,579 | 10.7 | 138,090 | 124,727 | 10.7 | |
Gross profit margin, % | 25.6 | 25.6 | (1) b.p. | 25.3 | 25.3 | 0 b.p. | |
SG&A (excl. D&A&I, LTI, share-based payments and the effect of the Karusel transformation) | (73,864) | (64,567) | 14.4 | (97,769) | (86,362) | 13.2 | |
% of Revenue | 13.5 | 13.1 | 44 b.p. | 17.9 | 17.5 | 39 b.p. | |
Net impairment losses on financial assets | (9) | (130) | (93.1) | (9) | (130) | (93.1) | |
% of Revenue | 0.002 | 0.026 | (2) b.p. | 0.002 | 0.026 | (2) b.p. | |
Lease/sublease and other income (excl. the effect of the Karusel transformation) | 5,505 | 4,212 | 30.7 | 5,112 | 3,619 | 41.3 | |
% of Revenue | 1.0 | 0.9 | 15 b.p. | 0.9 | 0.7 | 20 b.p. | |
Adj. EBITDA | 71,728 | 66,094 | 8.5 | 45,424 | 41,854 | 8.5 | |
Adj. EBITDA margin, % | 13.1 | 13.4 | (26) b.p. | 8.3 | 8.5 | (17) b.p. | |
LTI, share-based payments and other one-off remuneration payment expenses and SSC | (1,184) | (527) | 124.7 | (1,184) | (527) | 124.7 | |
% of Revenue | (0.2) | (0.1) | (11) b.p. | (0.2) | (0.1) | (11) b.p. | |
Effect of the Karusel transformation | (211) | - | - | (211) | - | - | |
% of Revenue | (0.0) | - | (4) b.p. | (0.0) | - | (4) b.p. | |
EBITDA | 70,333 | 65,567 | 7.3 | 44,029 | 41,327 | 6.5 | |
EBITDA margin, % | 12.9 | 13.3 | (41) b.p. | 8.1 | 8.4 | (32) b.p. | |
RUB mln | IFRS 16 | Pre-IFRS 16 | |||||
H1 2021 | H1 2020 | change, | H1 2021 | H1 2020 | change, | ||
y-o-y, % | y-o-y, % | ||||||
Gross profit | 269,637 | 242,515 | 11.2 | 265,715 | 238,927 | 11.2 | |
Gross profit margin, % | 25.6 | 25.2 | 40 b.p. | 25.2 | 24.8 | 40 b.p. | |
SG&A (excl. D&A&I, LTI, share-based payments and the effect of the Karusel transformation) | (147,545) | (127,406) | 15.8 | (194,918) | (171,063) | 13.9 | |
% of Revenue | 14.0 | 13.2 | 77 b.p. | 18.5 | 17.8 | 73 b.p. | |
Net impairment losses on financial assets | (130) | (199) | (34.7) | (130) | (199) | (34.7) | |
% of Revenue | 0.012 | 0.021 | (1) b.p. | 0.012 | 0.021 | (1) b.p. | |
Lease/sublease and other income (excl. the effect of the Karusel transformation) | 11,422 | 7,951 | 43.7 | 10,232 | 7,169 | 42.7 | |
% of Revenue | 1.1 | 0.8 | 26 b.p. | 1.0 | 0.7 | 23 b.p. | |
Adj. EBITDA | 133,384 | 122,861 | 8.6 | 80,899 | 74,834 | 8.1 | |
Adj. EBITDA margin, % | 12.7 | 12.8 | (10) b.p. | 7.7 | 7.8 | (10) b.p. | |
LTI, share-based payments and other one-off remuneration payment expenses and SSC | (1,606) | (1,022) | 57.1 | (1,606) | (1,022) | 57.1 | |
% of Revenue | (0.2) | (0.1) | (5) b.p. | (0.2) | (0.1) | (5) b.p. | |
Effect of the Karusel transformation | (218) | - | - | (218) | - | - | |
% of Revenue | (0.0) | - | (2) b.p. | (0.0) | - | (2) b.p. | |
EBITDA | 131,560 | 121,839 | 8.0 | 79,075 | 73,812 | 7.1 | |
EBITDA margin, % | 12.5 | 12.7 | (17) b.p. | 7.5 | 7.7 | (16) b.p. | |
Segment reporting (under pre-IFRS 16)
RUB mln | H1 2021 | H1 2020 | change, y-o-y, % | |
Proximity (Pyaterochka), including express delivery |
| |||
Revenue | 854,698 | 776,086 | 10.1 | |
EBITDA | 71,886 | 64,738 | 11.0 | |
EBITDA margin, % | 8.4 | 8.3 | 7 b.p. | |
Supermarkets (Perekrestok), including express delivery, excluding Vprok.ru Perekrestok | ||||
Revenue | 170,061 | 149,047 | 14.1 | |
EBITDA | 10,362 | 11,119 | (6.8) | |
EBITDA margin, % | 6.1 | 7.5 | (137) b.p. | |
Hypermarkets (Karusel) |
|
|
| |
Revenue | 18,439 | 31,652 | (41.7) | |
EBITDA | 752 | 780 | (3.6) | |
EBITDA margin, % | 4.1 | 2.5 | 161 b.p. | |
Other segments |
|
|
| |
Revenue | 10,505 | 5,840 | 79.9 | |
EBITDA | (2,136) | (877) | 143.6 | |
EBITDA margin, % | (20.3) | (15.0) | (532) b.p. | |
Corporate |
|
|
| |
EBITDA | (1,789) | (1,948) | (8.2) | |
Upon adoption of IFRS 16 the Management Board continued to assess the performance of the operating segments based on EBITDA pre-IFRS 16. EBITDA pre-IFRS 16 is calculated by adjusting EBITDA to include fixed lease expenses, fixed non-lease components of lease contracts and exclude gain on derecognition of right-of-use assets and lease liabilities.
The accounting policies used for segments are the same as the accounting policies applied to the condensed consolidated interim financial statements, except for the accounting of leases under pre-IFRS 16 rather than IFRS 16.
In H1 2021, Pyaterochka's EBITDA margin under pre-IFRS 16 increased by 7 b.p. y-o-y to 8.4%, driven primarily by an improved gross margin as a result of greater sales of higher margin assortment SKUs during the abnormally hot weather of May-June and an improved shrinkage level in H1 2021 reflecting a number of efficiency-focused measures. The EBITDA margin excluding express delivery operations would have been 8.5%.
Perekrestok's EBITDA margin under pre-IFRS 16 declined by 137 b.p. y-o-y in H1 2021 to 6.1%, mainly due to the one-off positive effect of the sale of a supermarket last year (c. +60 b.p.), the expansion of its express delivery service (c. 30 b.p.), an increased shrinkage level in Q2 2021 on the back of the slower than expected recovery of stores located in shopping malls, given approximately half of Perekrestok supermarkets are located in shopping malls that closed during the first wave of COVID.
In H1 2021, Karusel's EBITDA margin under pre-IFRS 16 increased by 161 b.p. y-o-y to 4.1%, on the back of the format's transformation and despite accelerated expenses related to the closure of stores.
Other segments include Vprok.ru Perekrestok, Chizhik, 5Post, Okolo and Mnogo Lososya. The segments generated a planned EBITDA loss, with the EBITDA margin under pre-IFRS 16 decreasing by 532 b.p. in H1 2021 primarily due to the expansion of new businesses.
Corporate expenses under pre-IFRS 16 decreased by 8.2% y-o-y in H1 2021.
The total negative impact on H1 2021 EBITDA margin from our digital sales, which include Vprok.ru Perekrestok, express delivery from Pyaterochka and Perekrestok stores, Okolo aggregator, 5Post's e-commerce last mile delivery is estimated at 38 b.p., up from 16 b.p. in H1 2020. Our offline business (Pyaterochka and Perekrestok excluding express delivery, Karusel and Chizhik) demonstrated an 8.1% margin in H1 2021, up from 8.0% in H1 2020.
D&A&I
Depreciation, amortisation and impairment costs under IFRS 16 increased as a percentage of revenue by 17 b.p. y-o-y to 6.8% (increased by 30 b.p. y-o-y to 3.4% pre-IFRS 16) in Q2 2021, totalling RUB 37,030 mln (RUB 18,658 mln pre-IFRS 16) and increased by 26 b.p. y-o-y to 7.0% (increased by 24 b.p. y-o-y to 3.5% pre-IFRS 16) totalling RUB 73,757 mln (RUB 36,836 mln pre-IFRS 16) in H1 2021. This was mainly due to the fact that growth in the gross book value of assets outpaced revenue growth and the accelerated depreciation rate owing to the increased number of refurbishments at Pyaterochka and Perekrestok (805 stores in H1 2021 vs 385 stores in H1 2020).
Non-operating gains and losses
RUB mln | IFRS 16 | Pre-IFRS 16 | |||||
Q2 2021 | Q2 2020 | change, | Q2 2021 | Q2 2020 | change, | ||
y-o-y, % | y-o-y, % | ||||||
Operating profit | 33,303 | 32,954 | 1.1 | 25,371 | 25,932 | (2.2) | |
Net finance costs | (14,151) | (14,550) | (2.7) | (4,195) | (4,473) | (6.2) | |
Net FX result | 897 | 1,770 | (49.3) | 390 | 594 | (34.3) | |
Profit before tax | 20,049 | 20,174 | (0.6) | 21,566 | 22,053 | (2.2) | |
Income tax expense | (5,129) | (5,402) | (5.1) | (5,433) | (5,778) | (6.0) | |
Net profit | 14,920 | 14,772 | 1.0 | 16,133 | 16,275 | (0.9) | |
Net profit margin, % | 2.7 | 3.0 | (26) b.p. | 3.0 | 3.3 | (35) b.p. | |
Effect of the Karusel transformation | 463 | 421 | 10.0 | 584 | 421 | 38.7 | |
% of Revenue | 0.1 | 0.1 | (0) b.p. | 0.1 | 0.1 | 2 b.p. | |
Adj. net profit | 15,383 | 15,193 | 1.3 | 16,717 | 16,696 | 0.1 | |
Net profit margin, % | 2.8 | 3.1 | (26) b.p. | 3.1 | 3.4 | (32) b.p. | |
RUB mln | IFRS 16 | Pre-IFRS 16 | |||||
H1 2021 | H1 2020 | change, | H1 2021 | H1 2020 | change, | ||
y-o-y, % | y-o-y, % | ||||||
Operating profit | 57,803 | 56,941 | 1.5 | 42,239 | 42,457 | (0.5) | |
Net finance costs | (27,516) | (28,603) | (3.8) | (8,040) | (8,505) | (5.5) | |
Net FX result | 777 | (1,935) | - | 289 | (453) | - | |
Profit before tax | 31,064 | 26,403 | 17.7 | 34,488 | 33,499 | 3.0 | |
Income tax expenses | (8,506) | (7,630) | 11.5 | (9,192) | (9,049) | 1.6 | |
Net profit | 22,558 | 18,773 | 20.2 | 25,296 | 24,450 | 3.5 | |
Net profit margin, % | 2.1 | 2.0 | 19 b.p. | 2.4 | 2.5 | (14) b.p. | |
Effect of the Karusel transformation | 926 | 814 | 13.8 | 840 | 814 | 3.2 | |
% of Revenue | 0.1 | 0.1 | 0 b.p. | 0.1 | 0.1 | (0) b.p. | |
Adj. net profit | 23,484 | 19,587 | 19.9 | 26,136 | 25,264 | 3.5 | |
Net profit margin, % | 2.2 | 2.0 | 19 b.p. | 2.5 | 2.6 | (14) b.p. | |
Net finance costs under IFRS 16 in Q2 2021 declined by 2.7% y-o-y to RUB 14,151 mln (decreased by 6.2% y-o-y to RUB 4,195 mln pre-IFRS 16) driven by a fall in the weighted average effective interest rate on X5's total debt from 7.31% for H1 2020 to 6.14% for H1 2021 as a result of declining interest rates in Russian capital markets, as well as actions taken by X5 to minimise interest expenses.
The positive net FX result totalled RUB 897 mln (RUB 390 mln under pre-IFRS 16) in Q2 2021, compared to positive RUB 1,770 mln (RUB 594 mln under pre-IFRS 16) in Q2 2020.
In Q2 2021 income tax expenses under IFRS 16 decreased by 5.1% (by 6.0% pre-IFRS 16).
Consolidated cash flow statement highlights
RUB mln | IFRS 16 | Pre-IFRS 16 | |||||
Q2 2021 | Q2 2020 | change, | Q2 2021 | Q2 2020 | change, | ||
y-o-y, % | y-o-y, % | ||||||
Net cash from operating activities before changes in working capital | 70,397 | 65,211 | 8.0 | 44,486 | 41,563 | 7.0 | |
Change in working capital | 998 | (15,968) | - | 932 | (15,042) | - | |
Net interest and income tax paid | (18,685) | (19,517) | (4.3) | (8,752) | (9,460) | (7.5) | |
Net cash flows generated from operating activities | 52,710 | 29,726 | 77.3 | 36,666 | 17,061 | 114.9 | |
Net cash used in investing activities | (23,662) | (20,749) | 14.0 | (24,086) | (20,749) | 16.1 | |
Net cash (used in) /generated from financing activities | (28,338) | (9,553) | 196.6 | (11,870) | 3,112 | - | |
Effect of exchange rate changes on cash & cash equivalents | (75) | 6 | - | (75) | 6 | - | |
Net increase/(decrease) in cash & cash equivalents | 635 | (570) | - | 635 | (570) | - | |
RUB mln | IFRS 16 | Pre-IFRS 16 | |||||
H1 2021 | H1 2020 | change, | H1 2021 | H1 2020 | change, | ||
y-o-y, % | y-o-y, % | ||||||
Net cash from operating activities before changes in working capital | 130,804 | 120,594 | 8.5 | 79,509 | 73,349 | 8.4 | |
Change in working capital | (3,917) | (316) | 1,139.6 | (4,103) | 40 | - | |
Net interest and income tax paid | (33,757) | (36,340) | (7.1) | (14,327) | (16,287) | (12.0) | |
Net cash flows generated from operating activities | 93,130 | 83,938 | 11.0 | 61,079 | 57,102 | 7.0 | |
Net cash used in investing activities | (42,366) | (38,043) | 11.4 | (42,790) | (38,043) | 12.5 | |
Net cash used in financing activities | (57,849) | (53,164) | 8.8 | (25,374) | (26,328) | (3.6) | |
Effect of exchange rate changes on cash & cash equivalents | (75) | (31) | 141.9 | (75) | (31) | 141.9 | |
Net increase in cash & cash equivalents | (7,160) | (7,300) | (1.9) | (7,160) | (7,300) | (1.9) | |
In Q2 2021, the Company's net cash from operating activities before changes in working capital under IFRS 16 increased by RUB 5,186 mln and totalled RUB 70,397 mln (increased by RUB 2,923 mln and totalled RUB 44,486 mln pre-IFRS 16), reflecting business growth. The positive change in working capital under IFRS 16 of RUB 998 mln in Q2 2021 reflects the normalised seasonality of working capital trends. The abnormal negative change of RUB 15,968 mln in Q2 2020 was driven by accounts payable and inventory turnover changes on the back of massive stockpiling of consumer perishables and dry groceries in March 2020 ahead of strict COVID restrictions.
Working capital highlights
RUB mln | 30-Jun-21 | 31-Dec-20 | 30-Jun-20 |
Inventories | 142,024 | 144,393 | 128,466 |
Trade, other accounts receivable and prepayments | 16,801 | 19,277 | 12,634 |
Trade accounts payable | 160,836 | 170,909 | 149,411 |
Provisions and other liabilities | 87,330 | 85,976 | 77,927 |
Net interest and income tax paid under IFRS 16 in Q2 2021 decreased by 4.3% y-o-y and totalled RUB 18,685 mln (decreased by 7.5% y-o-y and totalled RUB 8,752 mln pre-IFRS 16).
As a result, in Q2 2021, net cash flow generated from operating activities under IFRS 16 totalled RUB 52,710 mln, up from RUB 29,726 mln in Q2 2020 (RUB 36,666 mln, up from RUB 17,061 mln in Q2 2020 pre-IFRS 16).
In H1 2021, net cash flows generated from operating activities under IFRS 16 totalled RUB 93,130 mln, up 11.0% from RUB 83,938 mln for the same period of 2020 (and totalled RUB 61,079 mln, up 7.0% from RUB 57,102 mln for the same period of 2020 pre-IFRS 16) reflecting overall business growth.
Net cash used in investing activities, which generally consists of payments for property, plant and equipment, under IFRS 16 increased to RUB 23,662 mln (RUB 24,086 mln under pre-IFRS 16) in Q2 2021 from RUB 20,749 mln in Q2 2020, driven primarily by the Pyaterochka refurbishment programme. For H1 2021, net cash used in investing activities under IFRS 16 increased to RUB 42,366 mln (RUB 42,790 mln under pre-IFRS 16) from RUB 38,043 mln in H1 2020.
Net cash used in financing activities under IFRS 16 totalled RUB 28,338 mln (totalled RUB 11,870 mln pre-IFRS 16) in Q2 2021 compared to the RUB 9,553 mln net cash used in financing activities (net cash generated from financing activities of RUB 3,112 mln pre-IFRS 16) in Q2 2020. For H1 2021, net cash used in financing activities under IFRS 16 increased to RUB 57,849 mln from RUB 53,164 mln (and decreased to RUB 25,374 mln from RUB 26,328 mln pre-IFRS 16) in H1 2020.
Liquidity update
RUB mln | 30-Jun-21 | % in total | 31-Dec-20 | % in total | 30-Jun-20 | % in total |
Total debt | 266,197 |
| 261,947 |
| 231,778 |
|
Short-term debt | 76,274 | 28.7 | 77,026 | 29.4 | 73,622 | 31.8 |
Long-term debt | 189,923 | 71.3 | 184,921 | 70.6 | 158,156 | 68.2 |
Net debt (pre-IFRS 16) | 253,349 |
| 241,939 |
| 220,476 |
|
Net debt/ EBITDA (pre-IFRS 16) | 1.68 |
| 1.67 |
| 1.68 |
|
Lease liabilities (IFRS 16) | 568,689 |
| 548,501 |
| 518,454 |
|
Net debt/ EBITDA (under IFRS 16) | 3.24 |
| 3.24 |
| 3.28 |
|
The Company's net debt/EBITDA ratio under IFRS 16 was 3.24x (1.68x pre-IFRS 16) as of 30 June 2021.
The Company's debt pre-IFRS 16 is 100% denominated in Russian Roubles.
As of 30 June 2021, the Company had access to RUB 464,442 mln in available credit limits with major Russian and international banks.
Related Party Transactions
For a description of the related party transactions entered into by the Company, please refer to note 7 of the consolidated condensed interim financial statements.
Risks and Uncertainties
X5's risk management programme provides executive management with a periodic in-depth understanding of X5's key business risks and the risk management systems and internal controls in place to mitigate these risks. For a detailed description of key risks that the Company faces, please refer to the 2020 Annual Report. It should be noted that there are additional risks that management believe are immaterial or otherwise common to most companies, or that management is currently unaware of. The Company has assessed the risks for the first half of 2021 and believes that the risks identified are in line with those presented in the 2020 Annual Report. For a description of the financial risks faced by the Company, please refer to note 31 of the audited consolidated financial statements and the Company's 2020 Annual Report.
Interim report
The interim report, including the full set of reviewed IFRS condensed consolidated interim financial statements and notes thereto, is available on X5's corporate website at:
https://www.x5.ru/en/Pages/Investors/ResultsCenter.aspx
Information on Alternative Performance Measures
For more information on Alternative Performance Measures, which provide readers with a more detailed and accurate understanding of the Company's financial and operating performance, please refer to pages 99-101 of the Annual Report 2020.
(1) Adjusted EBITDA is EBITDA before costs related to the LTI programme, share-based payments, other one-off remuneration payment expenses and the impact of the Karusel transformation.
(2) The pre-IFRS 16 financial measures are calculated by adjusting the applicable IFRS measures to include fixed lease expenses, fixed non-lease components of lease contracts and exclude any gain on derecognition of right-of-use assets and lease liabilities, depreciation of right-of-use assets and interest on lease liabilities.
(3) LFL comparisons of retail sales between two periods are comparisons of retail sales in local currency (including VAT) generated by the relevant stores. The stores that are included in LFL comparisons are those that have operated for at least 12 full months. Their sales are included in the LFL calculation starting from the day of the store's opening. We include all stores that fit our LFL criteria in each reporting period.
(4) Please note that in this and other tables, and in the text of this press release, immaterial deviations in the calculation of % changes, subtotals and totals are due to rounding.
(5) Net retail sales represent revenue from the operations of X5-managed stores net of VAT. This number differs from revenue, which includes proceeds from wholesale operations, direct franchisees (royalty payments) and other revenue.
(6) Including Vprok.ru Perekrestok dark stores and Chizhik stores
(7) Mainly consists of lease/sublease income, income from sale of recyclable materials and other one-off gains
Note to Editors:
X5 Retail Group N.V. (LSE and MOEX: FIVE, Fitch - 'BB+', Moody's - 'Ba1', S&P - 'BB+', RAEX - 'ruAA+') is a leading Russian food retailer. The Company operates proximity stores under the Pyaterochka brand, Perekrestok supermarkets and Karusel hypermarkets. X5 provides an omnichannel experience to its customers, integrating retail stores and e-commerce through its businesses Vprok.ru Perekrestok, 5Post and Okolo.
As of 30 June 2021, X5 had 18,295 Company-operated stores. It has the leading market position in both Moscow and St Petersburg and a significant presence in the European part of Russia. Its store base includes 17,268 Pyaterochka proximity stores, 968 Perekrestok supermarkets and 40 Karusel hypermarkets. The Company operates 43 DCs and 4,128 Company-owned trucks across the Russian Federation.
X5 is one of the largest employers in Russia. The Company employs over 339 thousand people.
For the full year 2020, revenue totalled RUB 1,978,026 mln (USD 27,417 mln), EBITDA pre-IFRS 16 reached RUB 145,137 mln (USD 2,012 mln), and net profit pre-IFRS 16 for the period amounted to RUB 39,180 mln (USD 543 mln). In H1 2021, revenue totalled RUB 1,053,703 mln (USD 14,186 mln), adjusted EBITDA pre-IFRS 16 reached RUB 80,899 mln (USD 1,089 mln), and net profit pre-IFRS 16 amounted to RUB 25,296 mln (USD 341 mln).
X5's Shareholder structure is as follows: CTF Holdings S.A. - 47.86%, Intertrust Trustees Ltd (Axon Trust) - 11.43%, X5 Directors - 0.10%, treasury shares - 0.01%, Shareholders with less than 3% - 40.60%.
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 of 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.
For further details please contact: | |
Natalia Zagvozdina Head of Corporate Finance and IR Tel.: +7 (495) 662-88-88 ext. 27-300 e-mail: Natalia.Zagvozdina@x5.ru | Maria Yazeva Investor Relations Officer Tel.: +7 (495) 662-88-88 ext. 13-147 e-mail: Maria.Yazeva@x5.ru |