Last checked at 27 Apr 2023 08:00
+15.2 % y-o-y Revenue growth in Q1 2023driven by solid like-for-like (LFL) 1 sales and selling space expansion
+35.9 % y-o-y Digital business (express delivery, Vprok.ru, 5Post and Mnogo Lososya) net sales growth in Q1 2023Digital business net sales amounted to RUB 25.6 billion, which comprised 3.7% of consolidated Q1 2023 revenue.
24.0 % -88 b.p. Gross margin under IFRS 16 in Q1 2023(-88 b.p. to 23.7% pre-IFRS 162)driven by the aggressive expansion of the Chizhik hard discounter format into the regions, the consolidation of Krasny Yar and Slata, as well as the transformation of Pyaterochka's CVP
10.2 % -143 b.p. Adjusted EBITDA3 margin under IFRS 16 in Q1 2023(-126 b.p. to 5.8% pre-IFRS 16)
1.4% +98 b.p. Net profit margin under IFRS 16 in Q1 2023(+92 b.p. to 1.7% pre-IFRS 16)
2.65x Net debt/EBITDA ratio under IFRS 16 as of 31 March 2023(1.13x pre-IFRS 16)
Amsterdam, 27 April 2023 - 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 Chizhik retail chains, today released its unaudited condensed consolidated interim financial information for the three months ended 31 March 2023, in accordance with International Financial Reporting Standards, as adopted in the European Union.
Profit and loss statement highlights4
RUB mln | IFRS 16 | Pre-IFRS 16 | ||||
Q1 2023 | Q1 2022 | change,y-o-y, % or multiple | Q1 2023 | Q1 2022 | change,y-o-y, % or multiple | |
Revenue | 696,364 | 604,230 | 15.2 | 696,364 | 604,230 | 15.2 |
incl. net retail sales5 | 693,481 | 601,776 | 15.2 | 693,481 | 601,776 | 15.2 |
Pyaterochka (incl. express delivery) | 548,912 | 489,193 | 12.2 | 548,912 | 489,193 | 12.2 |
Perekrestok (incl. express delivery) | 101,442 | 96,565 | 5.1 | 101,442 | 96,565 | 5.1 |
Chizhik | 18,744 | 4,099 | 5x | 18,744 | 4,099 | 5x |
Karusel | 631 | 5,430 | (88.4) | 631 | 5,430 | (88.4) |
Gross profit | 167,231 | 150,430 | 11.2 | 164,949 | 148,472 | 11.1 |
Gross profit margin, % | 24.0 | 24.9 | (88) b.p. | 23.7 | 24.6 | (88) b.p. |
Adj. EBITDA | 70,923 | 70,179 | 1.1 | 40,236 | 42,532 | (5.4) |
Adj. EBITDA margin, % | 10.2 | 11.6 | (143) b.p. | 5.8 | 7.0 | (126) b.p. |
EBITDA | 70,191 | 69,556 | 0.9 | 39,504 | 41,909 | (5.7) |
EBITDA margin, % | 10.1 | 11.5 | (143) b.p. | 5.7 | 6.9 | (126) b.p. |
Operating profit | 30,516 | 26,190 | 16.5 | 19,332 | 17,106 | 13.0 |
Operating profit margin, % | 4.4 | 4.3 | 5 b.p. | 2.8 | 2.8 | (5) b.p. |
Net profit | 9,696 | 2,499 | 288.0 | 12,172 | 5,022 | 142.4 |
Net profit margin, % | 1.4 | 0.4 | 98 b.p. | 1.7 | 0.8 | 92 b.p. |
Revenue
Revenue growth reached 15.2% year-on-year in Q1 2023. Net retail sales increased by 15.2%, driven by a combination of 7.9% selling space growth and 6.5% LFL sales growth, while X5's digital business sales grew by 35.9% y-o-y.
Selling space by format, square metres (sqm)
AS AT 31-MAR-23 | AS AT 31-DEC-22 | CHANGEVS 31-DEC-22, % OR MULTIPLE | AS AT 31-MAR-22 | CHANGE Y-O-Y, % OR MULTIPLE | |
Pyaterochka | 7,634,733 | 7,497,056 | 1.8 | 7,183,452 | 6.3 |
Perekrestok | 1,068,031 | 1,085,496 | (1.6) | 1,094,674 | (2.4) |
Karusel | - | 49,225 | n/a | 108,982 | n/a |
Chizhik | 174,368 | 152,370 | 14.4 | 25,361 | 7x |
X5 Group6 | 9,203,045 | 9,107,479 | 1.0 | 8,528,416 | 7.9 |
Q1 2023 LFL store performance by format, % change y-o-y
In Q1 2023, LFL sales increased by 6.5% year-on-year, supported by solid LFL results of Pyaterochka and Perekrestok at 7.0% and 4.1%, respectively.
LFL traffic was the main driver of LFL sales in Q1 2023, with the LFL basket in positive territory at 2.8% year-on-year.
SALES | TRAFFIC | BASKET | |
Pyaterochka | 7.0 | 3.9 | 3.0 |
Perekrestok | 4.1 | 1.3 | 2.7 |
X5 Group7 | 6.5 | 3.6 | 2.8 |
For more details on net retail sales performance, please refer to X5's Q1 2023 Trading Update.
Gross profit margin
Gross profit margin under IFRS 16 decreased by 88 b.p. year-on-year to 24.0% (decreased by 88 b.p. year-on-year to 23.7% pre-IFRS 16) in Q1 2023, mainly due to the aggressive expansion of the Chizhik hard discounter format into the regions, the consolidation of Krasny Yar and Slata, as well as the transformation of Pyaterochka's CVP.
Selling, general and administrative (SG&A) expenses (excl. D&A&I and the impact of the Karusel transformation)
IFRS 16 | Pre-IFRS 16 | |||||
RUB mln | Q1 2023 | Q1 2022 | change,y-o-y, % | Q1 2023 | Q1 2022 | change,y-o-y, % |
Staff costs | (61,198) | (50,078) | 22.2 | (61,198) | (50,078) | 22.2 |
% of revenue | 8.8 | 8.3 | 50 b.p. | 8.8 | 8.3 | 50 b.p. |
incl. LTI and share-based payments | (732) | (376) | 94.7 | (732) | (376) | 94.7 |
staff costs excl. LTI and share-based payments as % of revenue | 8.7 | 8.2 | 46 b.p. | 8.7 | 8.2 | 46 b.p. |
Lease expenses | (5,271) | (4,169) | 26.4 | (31,357) | (28,168) | 11.3 |
% of revenue | 0.8 | 0.7 | 7 b.p. | 4.5 | 4.7 | (16) b.p. |
Utilities | (16,868) | (13,867) | 21.6 | (16,868) | (13,867) | 21.6 |
% of revenue | 2.4 | 2.3 | 13 b.p. | 2.4 | 2.3 | 13 b.p. |
Other store costs | (6,153) | (5,620) | 9.5 | (6,366) | (5,839) | 9.0 |
% of revenue | 0.9 | 0.9 | (5) b.p. | 0.9 | 1.0 | (5) b.p. |
Third-party services | (4,144) | (4,514) | (8.2) | (4,086) | (4,419) | (7.5) |
% of revenue | 0.6 | 0.7 | (15) b.p. | 0.6 | 0.7 | (14) b.p. |
Other expenses | (8,390) | (8,187) | 2.5 | (10,270) | (9,564) | 7.4 |
% of revenue | 1.2 | 1.4 | (15) b.p. | 1.5 | 1.6 | (11) b.p. |
SG&A (excl. D&A&I and the impact of the Karusel transformation) | (102,024) | (86,435) | 18.0 | (130,145) | (111,935) | 16.3 |
% of revenue | 14.7 | 14.3 | 35 b.p. | 18.7 | 18.5 | 16 b.p. |
SG&A (excl. D&A&I, LTI, share-based payments and the impact of the Karusel transformation) | (101,292) | (86,059) | 17.7 | (129,413) | (111,559) | 16.0 |
% of revenue | 14.5 | 14.2 | 30 b.p. | 18.6 | 18.5 | 12 b.p. |
In Q1 2023, 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 30 b.p. to 14.5% (increased by 12 b.p. to 18.6% pre-IFRS 16), mainly driven by increased staff costs, lease expenses and utilities as a percentage of revenue.
Staff costs (excluding LTI and share-based payments) as a percentage of revenue increased by 46 b.p. year-on-year in Q1 2023 to 8.7%, mainly due to a negative operating leverage effect.
LTI and share-based payment expenses amounted to RUB 732 million in Q1 2023, up by 94.7% from RUB 376 million in Q1 2022, driven by the introduction of the LTI programme for new businesses and an increase in accruals for the 2021-2023 LTI programme on the back of updated KPIs and a reassessment of the probabilities of the KPIs' achievement.
Lease expenses under IFRS 16 as a percentage of revenue in Q1 2023 increased by 7 b.p. year-on-year to 0.8%, mainly due to an increase in the number of reverse franchising stores. The decrease in pre-IFRS 16 lease expenses by 16 b.p. to 4.5% was caused by a positive operating leverage effect for fixed lease rates.
Utilities costs as a percentage of revenue in Q1 2023 increased by 13 b.p. year-on-year to 2.4%, mainly due to a negative operating leverage effect.
Other store costs under IFRS 16 as a percentage of revenue in Q1 2023 decreased by 5 b.p. year-on-year (falling by 5 b.p.pre-IFRS 16), mainly due to the increased cost efficiency of security and cleaning services.
Third-party service expenses under IFRS 16 as a percentage of revenue in Q1 2023 decreased by 15 b.p. year-on-year to 0.6% (down 14 b.p. to 0.6% pre-IFRS 16), mainly due to a shift in the timing of marketing initiatives.
Other expenses under IFRS 16 as a percentage of revenue in Q1 2023 decreased by 15 b.p. year-on-year to 1.2% (down 11 b.p. to 1.5% pre-IFRS 16), due to the high base effect in Q1 2022 driven by one-off expenses.
Lease/sublease and other income 8
As a percentage of revenue, the Company's income from leases, subleases and other operations under IFRS 16 totalled 0.7%, representing a decrease of 31 b.p. year-on-year in Q1 2023 (a decrease of 32 b.p. to 0.7% pre-IFRS 16), driven by lower income from sales of recyclables.
EBITDA and EBITDA margin
IFRS 16 | Pre-IFRS 16 | |||||
RUB mln | Q1 2023 | Q1 2022 | change,y-o-y, % | Q1 2023 | Q1 2022 | change,y-o-y, % |
Gross profit | 167,231 | 150,430 | 11.2 | 164,949 | 148,472 | 11.1 |
Gross profit margin, % | 24.0 | 24.9 | (88) b.p. | 23.7 | 24.6 | (88) b.p. |
SG&A (excl. D&A&I, LTI, share-based payments and the effect of the Karusel transformation) | (101,292) | (86,059) | 17.7 | (129,413) | (111,559) | 16.0 |
% of revenue | 14.5 | 14.2 | 30 b.p. | 18.6 | 18.5 | 12 b.p. |
Net impairment losses on financial assets | (66) | (435) | (84.8) | (66) | (435) | (84.8) |
% of revenue | 0.01 | 0.07 | (6) b.p. | 0.01 | 0.07 | (6) b.p. |
Lease/sublease and other income (excl. the effect of the Karusel transformation) | 5,050 | 6,243 | (19.1) | 4,766 | 6,054 | (21.3) |
% of revenue | 0.7 | 1.0 | (31) b.p. | 0.7 | 1.0 | (32) b.p. |
Adj. EBITDA | 70,923 | 70,179 | 1.1 | 40,236 | 42,532 | (5.4) |
Adj. EBITDA margin, % | 10.2 | 11.6 | (143) b.p. | 5.8 | 7.0 | (126) b.p. |
LTI, share-based payments and other one-off remuneration payment expenses and SSC | (732) | (376) | 94.7 | (732) | (376) | 94.7 |
% of revenue | 0.1 | 0.1 | 4 b.p. | 0.1 | 0.1 | 4 b.p. |
Effect of the Karusel transformation | - | (247) | (100.0) | - | (247) | (100.0) |
% of revenue | - | 0.04 | 4 b.p. | - | 0.04 | 4 b.p. |
EBITDA | 70,191 | 69,556 | 0.9 | 39,504 | 41,909 | (5.7) |
EBITDA margin, % | 10.1 | 11.5 | (143) b.p. | 5.7 | 6.9 | (126) b.p. |
D&A&I
Depreciation, amortisation and impairment costs under IFRS 16 decreased as a percentage of revenue by 148 b.p. year-on-year to 5.7% (down 121 b.p. year-on-year to 2.9% pre-IFRS 16) in Q1 2023, totalling RUB 39,675 million (RUB 20,172 million pre-IFRS 16). This was mainly driven by the high base effect of Q1 2022 and capex growth at a lower rate compared to revenue.
Non-operating gains and losses
IFRS 16 | Pre-IFRS 16 | |||||
RUB mln | Q1 2023 | Q1 2022 | change,y-o-y, % or multiple | Q1 2023 | Q1 2022 | change,y-o-y, % or multiple |
Operating profit | 30,516 | 26,190 | 16.5 | 19,332 | 17,106 | 13.0 |
Net finance costs | (16,763) | (17,066) | (1.8) | (3,160) | (5,810) | (45.6) |
Net FX result | (1,411) | (3,294) | (57.2) | (736) | (2,307) | (68.1) |
Profit before tax | 12,342 | 5,830 | 111.7 | 15,436 | 8,989 | 71.7 |
Income tax expense | (2,646) | (3,331) | (20.6) | (3,264) | (3,967) | (17.7) |
Net profit | 9,696 | 2,499 | 288.0 | 12,172 | 5,022 | 142.4 |
Net profit margin, % | 1.4 | 0.4 | 98 b.p. | 1.7 | 0.8 | 92 b.p. |
Net finance costs under IFRS 16 in Q1 2023 decreased by 1.8% year-on-year to RUB 16,763 million (down 45.6% year-on-year to RUB 3,160 million pre-IFRS 16), driven by lower finance costs on the back of decreased interest rates in Russian capital markets vs Q1 2022 and lower total debt. Under IFRS 16 this was offset by increasing interest on lease liabilities.
The negative net FX result totalled RUB 1,411 million (RUB 736 million under pre-IFRS 16) in Q1 2023, compared with negative RUB 3,294 million (negative RUB 2,307 million under pre-IFRS 16) in Q1 2022, due to depreciation of the rouble.
In Q1 2023, income tax expense under IFRS 16 decreased by 20.6% year-on-year (decreased by 17.7% year-on-year pre-IFRS 16) due to one-off effects.
Consolidated cash flow statement highlights
IFRS 16 | Pre-IFRS 16 | |||||
RUB mln | Q1 2023 | Q1 2022 | change,y-o-y, % or multiple | Q1 2023 | Q1 2022 | change,y-o-y, % or multiple |
Net cash from operating activities before changes in working capital | 69,843 | 70,757 | (1.3) | 39,447 | 43,306 | (8.9) |
Change in working capital | (30,879) | (24,192) | 27.6 | (30,699) | (23,894) | 28.5 |
Net interest and income tax paid | (22,227) | (20,409) | 8.9 | (8,651) | (9,178) | (5.7) |
Net cash flows generated from operating activities | 16,737 | 26,156 | (36.0) | 97 | 10,234 | (99.1) |
Net cash used in investing activities | (17,076) | (21,967) | (22.3) | (17,200) | (22,124) | (22.3) |
Net cash (used in)/generated from financing activities | (3,919) | 22,966 | n/a | 12,845 | 39,045 | (67.1) |
Effect of exchange rate changes on cash & cash equivalents | 122 | (5) | n/a | 122 | (5) | n/a |
Net increase in cash and cash equivalents | (4,136) | 27,150 | n/a | (4,136) | 27,150 | n/a |
In Q1 2023, the Company's net cash from operating activities before changes in working capital under IFRS 16 decreased by RUB 914 million (down RUB 3,859 million under pre-IFRS 16) and totalled RUB 69,843 million (RUB 39,447 million under pre-IFRS 16). The negative change in working capital under IFRS 16 of RUB 30,879 million in Q1 2023 was driven by an increase in inventories and accounts payable on the back of business growth.
Working capital highlights
RUB mln | 31-Mar-23 | 31-Dec-22 | 31-Mar-22 |
Inventories | 213,201 | 208,661 | 169,122 |
Trade, other accounts receivable and prepayments | 17,831 | 21,382 | 16,734 |
Trade accounts payable | 206,943 | 238,641 | 192,458 |
Provisions and other liabilities | 128,160 | 130,450 | 95,375 |
Short-term contract liabilities | 3,071 | 3,767 | 3,981 |
Net interest and income tax paid under IFRS 16 in Q1 2023 increased by 8.9% year-on-year (down 5.7% year-on-year pre-IFRS 16) and totalled RUB 22,227 million (RUB 8,651 million pre-IFRS 16). This was driven by higher income tax paid due to a low base effect in Q1 2022 on the back of state support measures for income tax payment deferral.
As a result, net cash flow generated from operating activities under IFRS 16 totalled RUB 16,737 million in Q1 2023, down from RUB 26,156 million in Q1 2022 (RUB 97 million, down from RUB 10,234 million in Q1 2022 pre-IFRS 16).
In Q1 2023, net cash used in investing activities, which predominantly consists of payments for property, plant and equipment, decreased to RUB 17,076 million under IFRS 16 (to RUB 17,200 million pre-IFRS 16) due to a change in the timing of new store openings.
Net cash used in financing activities under IFRS 16 totalled RUB 3,919 million (net cash generated from financing activities of RUB 12,845 million pre-IFRS 16) in Q1 2023, compared with net cash generated from financing activities of RUB 22,966 million (RUB 39,045 million pre-IFRS 16) in Q1 2022.
Liquidity update
RUB mln | 31-Mar-23 | % of total | 31-Dec-22 | % of total | 31-Mar-22 | % of total |
Total debt | 247,390 |
| 234,532 |
| 333,408 |
|
Short-term debt | 99,989 | 40.4 | 87,146 | 37.2 | 115,489 | 34.6 |
Long-term debt | 147,401 | 59.6 | 147,386 | 62.8 | 217,919 | 65.4 |
Net debt (pre-IFRS 16) | 208,271 |
| 191,277 |
| 280,196 | |
Net debt/EBITDA (pre-IFRS 16) | 1.13x |
| 1.02x |
| 1.67x | |
Lease liabilities (IFRS 16) | 597,204 |
| 591,160 |
| 570,090 | |
Net debt/EBITDA (IFRS 16) | 2.65x |
| 2.58x |
| 3.08x |
The Company's net debt/EBITDA ratio under IFRS 16 was 2.65x (1.13x pre-IFRS 16) as of 31 March 2023.
The Company's debt pre-IFRS 16 is 100% denominated in Russian roubles.
As of 31 March 2023, the Company had access to RUB 421,044 million in available credit limits with major banks.
Notes:
1. 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 LFL calculations starting from the day of the store's opening. We include all stores that fit our LFL criteria in each reporting period. Sales of express delivery service from stores and dark stores that have operated for less than 12 full months are also included in LFL calculations.
2. The pre-IFRS 16 financial measures are calculated by adjusting the applicable IFRS measures to include fixed lease expenses and fixed non-lease components of lease contracts, and to exclude any gain on derecognition of right-of-use assets and lease liabilities, depreciation of right-of-use assets and interest on lease liabilities, and gain/loss from asset sale and leaseback operations for the proportion of rights retained as recognised under IFRS 16.
3. 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.
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. Including Mnogo Lososya, Vprok.ru, Krasny Yar and Slata.
6. Including Vprok.ru dark stores, Mnogo Lososya dark kitchens, Krasny Yar and Slata stores and joint dark stores.
7. Excluding Krasny Yar and Slata, Vprok.ru and Mnogo Lososya; including Chizhik and Karusel.
8. Mainly consists of lease/sublease income, income from the sale of recyclable materials and other one-off gains.
Note to Editors
X5 Retail Group N.V. (LSE and MOEX: FIVE; Expert RA - ruAAA; ACRA - AAA(RU)) is a leading Russian food retailer. The Company operates proximity stores under the Pyaterochka brand, Perekrestok supermarkets and Chizhik hard discounters. X5 provides an omnichannel experience to its customers, integrating retail stores and e-commerce through its businesses Vprok.ru, 5Post and Mnogo Lososya.
As of 31 March 2023, X5 had 21,760 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 19,549 Pyaterochka proximity stores, 956 Perekrestok supermarkets, 591 Chizhik hard discounters and 596 Krasny Yar and Slata stores. The Company operates 55 DCs and 4,490 Company-owned trucks across the Russian Federation.
X5 is one of the largest employers in Russia. The Company employs over 345 thousand people.
For the full year 2022, revenue totalled RUB 2,605,232 million (USD 38,005 million*), EBITDA pre-IFRS 16 reached RUB 186,788 million (USD 2,725 million*), and net profit pre-IFRS 16 for the period amounted to RUB 52,248 million (USD 762 million*). In Q1 2023, revenue totalled RUB 696,364 million (USD 9,569 million**), adjusted EBITDA pre-IFRS 16 reached RUB 40,236 million (USD 553 million**), and net profit pre-IFRS 16 amounted to RUB 12,172 million (USD 167 million**).
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 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 Group N.V. speak only as of the date of this announcement. Save as required by any applicable laws or regulations, X5 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.
* FX rate: 68.5494 USD/RUB
** FX rate: 72.7738 USD/RUB
For further details, please contact:
Polina UgryumovaHead of Corporate Finance and IRTel.: +7 (495) 662-88-88 ext. 13-312e-mail: Polina.Ugryumova@x5.ruMaria YazevaInvestor Relations OfficerTel.: +7 (495) 662-88-88 ext. 13-147e-mail: Maria.Yazeva@x5.ru