24 Feb 2021 07:50
Press Release | St. Petersburg | 24 February 2021
Lenta Reports Record EBITDA and Net Income in FY 2020
St. Petersburg, Russia, 24 February 2021: Lenta IPJSC (MOEX & LSE: LNTA), one of the largest retail chains in Russia, today published its audited consolidated IFRS accounts for the full year ended 31 December 2020.
A conference call with the Chief Financial Officer to discuss these results is scheduled for later today. Please see the dial-in details at the end of this press release.
FY 2020 Key Financial Highlights1
· Total Sales increased by 6.7% y-o-y to RUB 445.5 billion
· Retail Sales increased by 7.3% y-o-y to RUB 437.5 billion, driven by the strong performance of both Lenta's core Hypermarket and Supermarket formats
· Gross Profit was RUB 101.5 billion, an increase of 10.7%, which resulted in a Gross Margin of 22.8%, an improvement of 83 bps y-o-y
· SG&A expenses decreased as a percentage of sales to 18.3%, an improvement of 3 bps y-o-y
· EBITDA reached an all-time high of RUB 39.3 billion, a 15.8% increase y-o-y, and EBITDA Margin rose by 69 bps to 8.8%
· Net Income grew to RUB 17.4 billion, compared to a Net Loss of RUB 2.1 billion in the previous year, and Net Income Margin increased to 3.9%
· CapEx stood at RUB 7.6 billion, down 46% y-o-y
· Net Cash from Operating Activities was RUB 27.3 billion, down 12.3% y-o-y
· Net Debt to EBITDA ratio decreased to 1.5x from 2.3x in FY 2019
FY 2020 Key Financial Results | IFRS 16 | IAS 17 | |||||
RUB million | FY 2020 | FY 2019 | Change | FY 2020 | FY 2019 | Change | |
Total Sales | 445,544 | 417,500 | 6.7% | 445,544 | 417,500 | 6.7% | |
Retail Sales | 437,493 | 407,761 | 7.3% | 437,493 | 407,761 | 7.3% | |
Hypermarkets | 399,262 | 372,787 | 7.1% | 399,262 | 372,787 | 7.1% | |
Supermarkets | 38,231 | 34,974 | 9.3% | 38,231 | 34,974 | 9.3% | |
Wholesale | 8,051 | 9,739 | -17.3% | 8,051 | 9,739 | -17.3% | |
Gross Profit | 101,816 | 92,017 | 10.6% | 101,494 | 91,659 | 10.7% | |
Gross Margin (%) | 22.9% | 22.0% | 81 bps | 22. 8% | 22.0% | 83 bps | |
SG&A | (80,114) | (75,084) | 6.7% | (81,538) | (76,535) | 6.5% | |
SG&A as % of Total Sales | 18.0% | 18.0% | 0 bps | 18.3% | 18.3% | -3 bps | |
EBITDAR | 45,950 | 40,665 | 13.0% | 45,586 | 40,302 | 13.1% | |
EBITDAR Margin | 10.3% | 9.7% | 57 bps | 10.2% | 9.7% | 58 bps | |
Rent as % of Total Sales | -0.2% | -0.3% | 4 bps | -1.4% | -1.5% | 11 bps | |
EBITDA | 44,919 | 39,506 | 13.7% | 39,315 | 33,959 | 15.8% | |
EBITDA Margin | 10.1% | 9.5% | 62 bps | 8.8% | 8.1% | 69 bps | |
Operating Profit before impairment | 26,379 | 21,066 | 25.2% | 24,591 | 19,251 | 27.7% | |
Operating Profit Margin before impairment | 5.9% | 5.1% | 87 bps | 5.5% | 4.6% | 91 bps | |
Reversal of impairment (impairment) | 2,907 | (11,850) | 3,005 | (11,850) | |||
Operating Profit | 29,286 | 9,216 | 217.8% | 27,595 | 7,401 | 272.9% | |
Operating Profit Margin | 6.6% | 2.2% | 437 bps | 6.2% | 1.8% | 442 bps | |
Net Interest Expense | (8,902) | (12,040) | -26.1% | (6,217) | (9,260) | -32.9% | |
Net FX gain / (Loss) | (386) | 221 | (247) | 118 | |||
Profit / (Loss) Before Income Tax | 19,998 | (2,603) | 21,131 | (1,740) | |||
Net Income / (Loss) | 16,541 | (2,794) | 17,447 | (2,104) | |||
Net Income Margin | 3.7% | -0.7% | 438 bps | 3.9% | -0.5% | 442 bps | |
Total Sales demonstrated robust growth of 6.7% and amounted to RUB 445.5 billion, compared to RUB 417.5 billion in 2019, predominantly driven by a higher Average Ticket, despite lower Traffic throughout the year.
Retail Sales grew by 7.3% to RUB 437.5 billion (2019: RUB 407.8 billion), supported by changing customer behaviors due to the COVID-19 pandemic, successful promotional activities, enhancements to Lenta's loyalty program, and a noticeable trend of trading up throughout much of the year.
Both Lenta's Hypermarket and Supermarket formats continued to show good performance in 2020, amid the COVID-19 pandemic, further proving the resilience of Lenta's Hypermarket format.
Retail sales at hypermarkets were up 7.1% year-over-year thanks to growth in like-for-like Average Ticket despite a decline in the like-for-like Traffic. During 2020, our Supermarket format showed Retail Sales growth of 9.3% year-over-year.
Gross Profit (IAS 17) grew to RUB 101.5 billion, up 10.7% year-on-year, and Gross Profit Margin improved by 83 bps to 22.78% from 21.95% in 2019 as a result of an improvement in shrinkage, higher retail margins, and improved trade terms with suppliers. Additional positive impact came from a 17.3% sales decline in our low-margin wholesale business throughout the year, which partially offset higher stock provisions.
Lenta remained focused on maintaining strict cost management amidst the volatile environment of 2020, nonetheless COVID-19 pandemic-related costs, in the amount of RUB 1.5 billion, put extra pressure on profitability.
In 2020, EBITDA (IAS 17) in absolute terms reached an all-time high, while the EBITDA margin also showed significant improvement. Absolute EBITDA rose by 15.8% year-over-year and amounted to RUB 39.3 billion, while the EBITDA margin rose to 8.8%, up from 8.1% in the previous year. This strong performance in EBITDA was primarily driven by retail sales growth coupled with a higher gross margin.Net Interest Expense (IAS 17) decreased by 32.9% year-over-year to RUB 6.2 billion in FY 2020.
Lenta delivered Net Income (IAS 17) of RUB 17.4 billion for the year, compared to a net loss of RUB 2.1 billion in 2019, due mainly to strong retail sales. As a result, the Net Income Margin was 3.9% in FY 2020.
Selling, general and administrative (SG&A) | IFRS 16 | IAS 17 | |||||
RUB million | FY 2020 | FY 2019 | Change | FY 2020 | FY 2019 | Change | |
Payroll and related taxes | 31,265 | 28,119 | 11.2% | 31,265 | 28,119 | 11.2% | |
as a % of Total Sales | 7.0% | 6.7% | 28 bps | 7.0% | 6.7% | 28 bps | |
Depreciation and Amortization | 18,540 | 18,440 | 0.5% | 14,724 | 14,708 | 0.1% | |
as a % of Total Sales | 4.2% | 4.4% | -26 bps | 3.3% | 3.5% | -22 bps | |
Store Operations2 | 14,084 | 13,580 | 3.7% | 14,084 | 13,580 | 3.7% | |
as a % of Total Sales | 3.2% | 3.3% | -9 bps | 3.2% | 3.3% | -9 bps | |
Professional Fees | 4,318 | 4,388 | -1.6% | 4,318 | 4,388 | -1.6% | |
as a % of Total Sales | 1.0% | 1.1% | -8 bps | 1.0% | 1.1% | -8 bps | |
Leases | 1,031 | 1,159 | -11.0% | 6,271 | 6,342 | -1.1% | |
as a % of Total Sales | 0.2% | 0.3% | -5 bps | 1.4% | 1.5% | -11 bps | |
Advertising | 5,749 | 5,177 | 11.0% | 5,749 | 5,177 | 11.0% | |
as a % of Total Sales | 1.3% | 1.2% | 5 bps | 1.3% | 1.2% | 5 bps | |
Other | 5,127 | 4,221 | 21.5% | 5,127 | 4,221 | 21.5% | |
as a % of Total Sales | 1.2% | 1.0% | 14 bps | 1.2% | 1.0% | 14 bps | |
Total SG&A | 80,114 | 75,084 | 6.7% | 81,538 | 76,535 | 6.5% | |
as a % of Total Sales | 18.0% | 18.0% | 18.3% | 18.3% | -3 bps | ||
SG&A excluding D&A | 61,574 | 56,644 | 8.7% | 66,814 | 61,827 | 8.1% | |
as a % of Total Sales | 13.8% | 13.6% | 25 bps | 15.0% | 14.8% | 19 bps | |
Selling, General, and Administrative expenses (IAS 17) increased by 6.5% year-over-year to RUB 81.5 billion, and amounted to 18.3% of Total Sales, an improvement of 3 bps.
Payroll and related taxes rose by 11.2% year-over-year due to COVID-19 pandemic-related intensity allowance costs, changes to our senior management team, bonus compensation in connection with certain milestones being reached, new store expansion, and the further roll-out of Lentochka, which is one of our online channels.
2. Store Operations includes utilities, cleaning, repair and maintenance, and security services.
FY 2020 Cash Flow Statement | IFRS 16 | IAS 17 | |||||
RUB million | FY 2020 | FY 2019 | Change | FY 2020 | FY 2019 | Change | |
Profit before income tax | 19,998 | (2,603) | 21,131 | (1,740) | |||
Net adjustments for loss on disposal of assets, impairment, depreciation and amortization, and other | 25,943 | 43,558 | -40.4% | 19,247 | 37,153 | -48.2% | |
Movements in Working Capital | (2,138) | 7,479 | (2,071) | 7,422 | |||
Cash generated from operating activities | 43,803 | 48,434 | -9.6% | 38,307 | 42,835 | -10.6% | |
Net Interest & Income Taxes Paid | (13,763) | (14,562) | -5.5% | (11,046) | (11,767) | -6.1% | |
Net cash from Operating Activities | 30,040 | 33,872 | -11.3% | 27,260 | 31,068 | -12.3% | |
Net cash used in Investing Activities | (7,374) | (13,964) | -47.2% | (7,409) | (14,008) | -47.1% | |
Net cash (used) in / generated from Financing Activities | (74,262) | 19,692 | (71,447) | 22,540 | |||
Net Increase / (Decrease) in Cash & Cash Equivalents | (51,596) | 39,600 | (51,596) | 39,600 | |||
Net Cash from Operating Activities (IAS 17) in FY 2020 amounted to RUB 27.3 billion.
Capital expenditures in 2020 were 45.7% lower than in 2019 and amounted to RUB 7.6 billion. The reduction mainly reflected hypermarket openings and slow implementation of maintenance and improvement projects, taking into account the COVID-19 situation.
FY 2020 Debt Position and Leverage | IFRS 16 | IAS 17 | |||
RUB million | 31-Dec-20 | 31-Dec-19 | 31-Dec-20 | 31-Dec-19 | |
Gross Debt | 113,394 | 182,701 | 78,952 | 150,541 | |
Long-term Debt | 45,941 | 82,110 | 45,941 | 82,110 | |
Short-term Debt | 33,011 | 68,431 | 33,011 | 68,431 | |
Lease Liabilities (IFRS 16) | 34,442 | 32,160 | |||
Cash & Cash Equivalents | 21,809 | 73,405 | 21,809 | 73,405 | |
Net Debt | 91,585 | 109,296 | 57,143 | 77,136 | |
Net Debt / EBITDA ratio | 1.5x | 2.3x | |||
Lenta materially improved its leverage position over the course of 2020, closing the year with Gross Debt of RUB 79.0 billion (IAS 17), compared to RUB 150.5 billion as of the end of 2019. Cash & Cash Equivalents at the end of FY 2020 stood at RUB 21.8 billion due to proactive efforts to pay down debt obligations.
As of 31 December 2020, Lenta's Net Debt to EBITDA ratio stood at 1.5x compared to 2.3x one year earlier (IAS 17).
FY 2021 Outlook
Lenta will provide detailed guidance for FY 2021 at the company's Capital Markets Day on the 18th of March 2021.
FY 2020 IFRS Results Conference Call
Lenta will host an investor and analyst conference call at 17:00 Moscow time (14:00 London, 09:00 New York), on Wednesday, 24 February 2021. On the call will be Rud Pedersen (CFO) and Tim Post (IRO).
To participate in the conference call, please use the following dial-in details:
Conference ID: 1920893 ("Lenta FY 2020 IFRS Results Conference Call")
Russian Federation: +7 495 646 9190 (local access)8 10 800 2867 5011 (toll-free)
United Kingdom: +44 (0)330 336 9411 (local access)0800 279 7204 (toll-free)
United States: +1 929-477-0402 (local access)888-204-4368 (toll-free)
Participants are encouraged to register approximately 5-10 minutes prior to the start of the call.
For further information, please visit www.lentainvestor.com or contact:
Lenta Mariya FilippovaHead of Public Relations and Government Affairsmaria.filippova@lenta.com | Lenta Timothy PostInvestor Relations Officertimothy.post@lenta.com |
EM (International Media Inquiries)Lenta@em-comms.com |
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About Lenta
Lenta is the largest hypermarket chain in the Russian Federation and the fourth largest food retailer. The Company was founded in 1993 in St. Petersburg and as of December 31, 2020 operated 254 hypermarkets and 139 supermarkets in 88 cities across Russia with more than 1.5 million square meters of Selling Space. The average Lenta hypermarket has approximately 5,500 square meters of selling space, while the Lenta supermarket averages 800 square meters. The company operates 13 distribution centers throughout Russia. Lenta is listed on both the London Stock Exchange and Moscow Exchange, trading under the ticker: 'LNTA'.
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 Lenta'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 Lenta speak only as of the date of this announcement. Except as required by any applicable laws or regulations, Lenta 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.