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OJSC 'MAGNIT' (FRA:5M71) Magnit reports 9.6% total sales growth, 5.2% LFL sales growth and 7.1% EBITDA margin in 2Q 2021

Transparency directive : regulatory news

29/07/2021 08:59

MAGNIT PJSC (MGNT)
Magnit reports 9.6% total sales growth, 5.2% LFL sales growth and 7.1% EBITDA margin in 2Q 2021

29-Jul-2021 / 09:59 MSK
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.


 

 

 

Magnit Reports 9.6% total sales growth, 5.2% LFL Sales Growth and 7.1% EBITDA margin in 2Q 2021

 

 

Krasnodar, Russia (July 29, 2021): Magnit PJSC (MOEX and LSE: MGNT; the Company), one of Russia's leading retailers, announces its 2Q and 1H 2021 operational and unaudited financial results.

 

 

 

 

9.6%

TOTAL REVENUE growth

2Q 2021 Key Operational and Financial Highlights

  • Total revenue increased by 9.6% y-o-y to RUB 424.3 billion;
  • Net retail sales reached RUB 413.7 billion increasing 9.1% y-o-y;
  • LFL[1] sales growth of 5.2% driven by 10.0% traffic growth and 4.4% reduction in average ticket;

5.2%

lfl sales growth

 

  • The Company opened 519 stores on gross basis (308 convenience stores, one supermarket and 210 drogeries). As part of the Company's ongoing efficiency improvement campaign, 75 stores were closed resulting in a net store addition of 444. As of June 30, 2021 the total store base was 22,344;
  • Selling space increase of 142 thousand sq. m. bringing total selling space to 7,748 thousand sq. m. (6.3% y-o-y growth);
  • The Company redesigned 143 stores (131 convenience stores and 12 supermarkets). As at June 30, 2021, 74% of convenience stores, 34% of supermarkets and 59% of drogeries are either new or refurbished;
  • Gross profit increased by 5.5% y-o-y to RUB 99.5 billion with a margin of 23.4% as a result of better promo margin, lower shrinkage and favorable format mix partially offset by slightly higher supply chain costs and promotional share;

 

7.1%

EBITDA margin

 

 

  • EBITDA was RUB 30.3 billion with a 7.1% margin driven by gross margin dynamics and strict cost control;
  • Net income of RUB 12.1 billion with a margin of 2.8%.

 

 

«

 

 

 

 

 

 

Jan Dunning

Magnit's President

and CEO

 

 

»

"Despite the strong comparable performance last year we delivered a very good set of results for the second quarter. Sales growth accelerated across all formats, underpinned by further growth in LFL sales and rapid expansion. I am pleased to see mature stores as a key driver of these improvements.

 

Consumer behavior and shopping patterns are now normalizing. Since June we have seen healthy LFL performances, with positive ticket and traffic development. Magnit continues gaining market share, and our engagement with existing customers is positive, reflected by increased frequency, increased spend per visit and 'trading up' behaviours.

 

In delivering a 7.1% EBITDA margin with sustainable q-o-q improvement we are on track to perform in line with our strategy both this year and beyond, having already made excellent progress as evidenced by improvements across margin and working capital cycle as well as very comfortable levels of leverage already achieved.

 

Continuous improvement of sales densities, sustainable margins, better cash generation and flexible financial position allowed us to speed up organic expansion and take advantage of a unique and value-accretive M&A opportunity through the acquisition of Dixy. This is a strategically important transaction for Magnit that dramatically changes our market positioning. Integration of such large business and extraction of synergies will, of course, take time and effort, however, our ambitious long-term targets remain unchanged and may be achieved even a bit earlier".

 

 

 

~50

RUB billion

total amount of dividends announced

for 2020

 

 

 

 

 

 

 

 

 

 

 

 

76

hard disounters in operation

 

 

 

 

Key events in 2Q 2021 and after the Reported Period

  • Magnit completed its strategic acquisition of the DIXY retail chain comprising 2,477 stores in Russia significantly strengthening competitive positions in the Moscow and St. Petersburg markets;
  • A new Board of Directors consisting of nine members, including five independent non-executive directors, were elected at the Company's AGM. For the fourth consecutive year Charles Ryan was elected a Chairman of the Board of Directors;
  • The Board called an EGM with a view to increasing the size of the Board of Directors from 9 to 11 members;
  • Magnit announced FY 2020 dividends of c. RUB 25 billion or RUB 245.31 per one ordinary share bringing the total dividend payment to RUB 50 billion (RUB 490.62 per ordinary share), which is 61% higher than in the previous year;
  • Two issues of the exchange-traded bonds in a value of RUB 10 billion each with an interest rate of 7.05% per annum were placed on MoEx. Analytical Credit Rating Agency ACRA assigned credit rating AA (RU) to each bond issue;
  • Magnit increased its discounter pilot to 76 stores and reported 20-30% LFL sales growth across discounter stores converted from convenience stores;
  • Magnit continued developing its super app and became the first retailer in Russia to introduce a Credit Broker online service;
  • Magnit launched its own delivery service from Magnit Cosmetic stores and superstores across numerous regions;
  • Magnit and Wildberries launched express delivery partnership.

 

 

2Q and 1H 2021 Operating Results

 

Retail Sales

 

2Q 2021

2Q 2020

Change

Change, %

1H 2021

1H 2020

Change

Change, %

Total Net Retail Sales, million RUB

413,693

379,174

34,519

9.1%

801,592

743,959

57,634

7.7%

Convenience Stores[2]

324,476

295,796

28,680

9.7%

624,418

575,591

48,827

8.5%

Supermarkets[3]

51,513

49,992

1,521

3.0%

101,628

100,955

673

0.7%

Drogerie Stores

35,240

30,876

4,365

14.1%

70,252

62,282

7,970

12.8%

Other Formats[4]

2,464

2,511

-47

-1.9%

5,295

5,131

163

3.2%

Number of Tickets, mln

1,243

1,092

151

13.8%

2,346

2,287

59

2.6%

Convenience Stores

1,051

920

132

14.3%

1,974

1,922

52

2.7%

Supermarkets

86

78

8

10.0%

164

168

-3

-2.0%

Drogerie Stores

99

87

12

14.4%

193

181

12

6.5%

Other Formats

7

7

-1

-10.6%

14

16

-1

-9.3%

Average Ticket[5], RUB

333

347

-14

-4.2%

342

325

16

5.0%

Convenience Stores

309

322

-13

-4.0%

316

300

17

5.6%

Supermarkets

602

643

-41

-6.4%

618

602

17

2.8%

Drogerie Stores

356

356

-1

-0.2%

364

344

20

5.9%

Other Formats

356

326

30

9.2%

357

315

42

13.3%

 

Stores and Selling Space

 

 

2Q 2021

2Q 2020

Change

Change, %

1H 2021

1H 2020

Change

Change, %

Number of Stores (EOP)

22,344

20,894

1,450

6.9%

22,344

20,894

1,450

6.9%

Convenience Stores

15,348

14,581

767

5.3%

15,348

14,581

767

5.3%

Supermarkets

469

472

-3

-0.6%

469

472

-3

-0.6%

Drogerie Stores

6,527

5,841

686

11.7%

6,527

5,841

686

11.7%

Store Openings (Net)

444

34

410

n/a

780

169

611

361.5%

Convenience Stores

250

-13

263

n/a

437

-41

478

n/a

Supermarkets

-2

0

-2

n/a

-1

-1

0

0.0%

Drogerie Stores

196

47

149

317.0%

344

211

133

63.0%

Total Selling Space (EOP), th. sq.m

7,748

7,290

458

6.3%

7,748

7,290

458

6.3%

Convenience Stores

5,275

4,956

320

6.4%

5,275

4,956

320

6.4%

Supermarkets

943

944

-1

-0.1%

943

944

-1

-0.1%

Drogerie Stores

1,500

1,350

151

11.2%

1,500

1,350

151

11.2%

Other formats

30

41

-11

-26.9%

30

41

-11

-26.9%

Selling Space Addition (Net), th. sq.m

142

14

129

n/a

252

52

200

n/a

Convenience Stores

106

4

102

n/a

186

4

182

n/a

Supermarkets

-1

-3

3

n/a

1

-5

6

n/a

Drogerie Stores

40

11

29

n/a

72

47

25

n/a

Other formats

-4

2

-5

n/a

-8

5

-13

n/a

 

 

 

2Q and 1H 2021 LFL Results

 

 

2Q 2021

1H 2021

 

Average Ticket

Traffic

Sales

Average Ticket

Traffic

Sales

Total

-4.4%

10.0%

5.2%

4.7%

0.0%

4.7%

Convenience Stores

-4.4%

10.5%

5.7%

5.1%

0.2%

5.3%

Supermarkets

-6.5%

9.1%

2.0%

2.5%

-1.8%

0.7%

Drogerie Stores

-0.7%

6.2%

5.5%

5.5%

-0.6%

4.9%

 

 

 

 

4.6%

LTM sales density[6] improvement y-o-y

 

 

 

Trading Performance

 

Total sales in 2Q 2021 grew by 9.6% y-o-y to RUB 424.3 billion. Net retail sales grew by 9.1% y-o-y, driven by a combination of 6.3% selling space growth and 5.2% LFL sales growth.

 

Net retail sales growth continued to outpace selling space growth on further improvement of sales densities. Overall sales densities in 2Q 2021 improved by 1.0% q-o-q and 4.6% y-o-y while in the Company's main convenience store format these improved by 5.9% y-o-y.

 

 

93%

of selling space is already matured

 

 

 

 

 

10.0%

lfl traffic growth in 2Q 2021

 

LFL sales growth accelerated from 4.1% in the previous quarter to 5.2% in 2Q 2021 predominantly driven by the strong performance of mature stores. 107 stores entered LFL in 2Q (including 41 convenience stores, 65 drogeries and 1 supermarket). Only 7% of Magnit's selling space is currently in the 'ramp-up' phase with 93% already matured.

 

In the reported quarter the structure of LFL sales growth has changed compared to five previous consecutive quarters. Strong LFL traffic growth driven by firstly inflow of new unique customers and then by rising visit frequency, became the main contributor. Magnit continued gaining customers from traditional retail and other market players. This comparable performance peaked in end-March and started easing since April, resulting in 10.0% LFL traffic growth vs 9.4% decline in 1Q 2021.

 

LFL average ticket decreased by 4.4% due to the strong comparable performance. The only contributor to the reduction in average ticket was a reduction of the average number of items per basket as consumer behavior started normalizing after abnormal patterns and strong forward buying during periods of lockdown. After its peak in February, on-shelf price inflation corrected slightly and stabilised in the second quarter. Ongoing trading up was another positive driver of the ticket growth. These effects were observed in the beginning of the reported quarter with gradual normalization month-on-month, leading to both positive LFL traffic and ticket development in June supported by trading up and healthy inflation.

 

A decline in the overall average ticket in April-May was again a result of a strong performance during the prior period, however from June growth returned combined with positive y-o-y growth of customer visits (see Appendix).

 

Acceleration of revenue and LFL sales growth versus the previous quarter was delivered despite promotional share as a % of sales remaining flat compared to the previous quarter and was up y-o-y due to weaker comparatives, normalizing shopping patterns and efficient seasonal promotional campaigns supported by favorable weather conditions and the timing of the domestic tourist season.

 

50 mln

of loyalty program active users

During the reported quarter the number of active loyalty card users exceeded 50 million. Company-wide, the share of tickets using the loyalty card was 50% with sales penetration of 65%. The loyalty program continues to deliver positive cross-format gains with sustainable growth of customers visiting 2+ store formats (41% of Magnit customer base at the end of the reporting period).

 

 

 

78.4%

of total net retail sales generated by convenience segment

Store Network Development and Performance by Format

 

The convenience segment generated 78.4% of total net retail sales in the reported quarter. In 2Q 2021 Magnit accelerated its expansion program both q-o-q and y-o-y and opened (gross) 308 convenience stores (94 in 2Q 2020). The Company continued its efficiency campaign and closed 58 convenience stores vs 107 store closures in 2Q 2020. As a result, Magnit added 250 stores (net) during the reported quarter. The selling space growth of convenience stores accelerated to 6.4% y-o-y. Sales in the convenience format grew by 9.7% driven by LFL sales growth of 5.7% and selling space growth of 6.4%. LFL average ticket growth was negative and stood at -4.4% against strong comparatives. LFL traffic increased 10.5%, overcompensating negative LFL average ticket growth.

 

12.5%

of total net retail sales generated by supermarkets

Supermarkets generated 12.5% of the Group's net retail sales in the reported quarter. During 2Q 2021 the Company opened one supermarket and closed three stores. Redesign program is gaining traction with 24 supermarkets being refurbished in 1H 2021 vs 5 in 1H 2020. The pace of redesign in the 2H 2021 is expected to remain intact. Selling space across this format remained almost flat y-o-y. LFL sales growth reached 2.0% vs -0.7% in the previous quarter, driven by strong LFL traffic recovery to 9.1%. As a result, net retail sales growth of supermarkets improved to 3.0% in the reported quarter.

 

8.5%

of total net retail sales generated by drogerie

 

 

 

 

 

 

 

 

 

 

 

 

7.6

RUB billion

annual GMV runrate

 

The share of drogerie format as a proportion of the total net retail sales increased to 8.5% in the reported quarter vs 8.1% a year ago. During 2Q 2021 Magnit opened (net) 196 cosmetics stores and added 40 thousand sq. m. of selling space, delivering a 11.2% y-o-y increase in selling space, the highest across all formats. Driven by this increase in selling space and LFL sales growth of 5.5%, sales grew 14.1% representing again the strongest performance across all Magnit's store formats. LFL average ticket growth was slightly negative at -0.7% well compensated by 6.2% LFL traffic growth.

 

During 2Q 2021 Magnit continued its renovation program and redesigned 131 convenience stores and 12 supermarkets resulting in the combined share of refurbished and new stores at: 74% for convenience stores, 34% for supermarkets and 59% for the drogerie format.

 

 

E-commerce

 

Magnit has been testing e-commerce services since the second half of 2020. The Company currently runs a number of online delivery projects, both independently and in cooperation with partners (express delivery, regular delivery, e-pharma, cosmetics and partnerships).

 

Magnit fulfils around 15,000 orders a day. The run rate for Magnit's online channel stands at RUB 7.6 billion based on the last week of June.

 

Average ticket for Magnit's own delivery service is c. RUB 1,200 including VAT which is approx. 3.4 times higher than in the convenience stores (RUB 353 including VAT in 2Q 2021). This is mostly due to a larger number of items per basket.

 

Magnit's e-commerce services today cover over 2,000 stores in 62 regions and 106 cities, with 61% of the current revenue generated outside Moscow and St. Petersburg. By the end of 2021, the Company plans to have over 4,000 stores across all formats covered by e-commerce services including Magnit's own delivery and partnerships in more than 50 regions across Russia.

 

 

 

 

 

Financial Results for 2Q and 1H 2021 (IAS 17)

 

RUB mln

2Q 2021

2Q 2020

Change

1H 2021

1H 2020

Change

Total Revenue

424,341

387,323

9.6%

822,230

763,361

7.7%

Retail

413,693

379,174

9.1%

801,592

743,959

7.7%

Wholesale

10,648

8,149

30.7%

20,638

19,403

6.4%

Gross Profit

99,501

94,337

5.5%

192,571

179,522

7.3%

Gross Margin, %

23.4%

24.4%

-91 bps

23.4%

23.5%

-10 bps

SG&A, % of Sales

-20.4%

-20.4%

-2 bps

-20.4%

-20.5%

4 bps

EBITDA pre LTI[7]

30,600

30,482

0.4%

58,603

53,570

9.4%

EBITDA Margin pre LTI, %

7.2%

7.9%

-66 bps

7.1%

7.0%

11 bps

EBITDA

30,250

30,476

-0.7%

57,928

53,220

8.8%

EBITDA Margin, %

7.1%

7.9%

-74 bps

7.0%

7.0%

7 bps

EBIT

17,739

18,676

-5.0%

34,695

30,137

15.1%

EBIT Margin, %

4.2%

4.8%

-64 bps

4.2%

3.9%

27 bps

Net Finance Costs

-2,790

-3,497

-20.2%

-5,371

-7,274

-26.2%

FX Gain/ (Loss)

634

1,005

-36.9%

444

-824

-153.9%

Profit before Tax

15,583

16,185

-3.7%

29,768

22,039

35.1%

Taxes

-3,509

-3,342

5.0%

-6,820

-4,995

36.5%

Net Income

12,073

12,843

-6.0%

22,948

17,044

34.6%

Net Income Margin, %

2.8%

3.3%

-47 bps

2.8%

2.2%

56 bps

For 2Q and 1H 2021 financial results in accordance with IFRS 16 - see Appendix

 

 

 

 

 

23.4%

Gross margin

in 2Q 2021

 

 

 

 

 

 

 

26 bps

y-o-y reduction of shrinkage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7.1%

ebitda margin in 2Q 2021

 

 

 

 

 

 

 

 

 

 

 

 

2.8%

Net income margin

in 2Q 2021

 

Total revenue in 2Q 2021 increased by 9.6% driven by net retail sales growth by 9.1% and wholesale revenue increase by 30.7%. Wholesale operations accounted for 2.5% of total sales on the back of recovery of HORECA consumption.

 

Gross Profit in 2Q 2021 increased by 5.5% y-o-y to RUB 99.5 billion with a margin of 23.4% as a result of better promotional margin, lower shrinkage and favorable format mix. This was partially offset by slightly higher supply chain costs and higher penetration of Magnit's loyalty program. Format mix positively impacted gross margin, with the share of Magnit's high-margin drogerie business growing to 8.5% in 2Q 2021 partly offset by the increase of wholesale operations. Promotional intensity was slightly higher y-o-y due to weal comparatives and normalizing shopping patterns, with different consumption trends (including forward buying of dry food) in the same quarter of the last year. This resulted in a gross profit margin reduction of 91 bps y-o-y, reflecting a strong comparative performance during the prior year, and one-off effects of the last year comparable period.

 

Supply chain costs grew y-o-y due to a continued increase of on-shelf availability and higher transportation costs driven by the increase in container shipping tariffs in the international and domestic markets.

 

Alongside the growing share of fresh products and overall improvement of on-shelf availability, shrinkage as a proportion of sales decreased further by 26 bps y-o-y. This was driven by ongoing optimization of supply chain processes, renegotiation of quality standards with suppliers and other initiatives.

 

SG&A costs were controlled and remained almost flat y-o-y as a percent of sales (20.4%). This was achieved as a result of lower rent costs and depreciation, partially offset by higher marketing costs and negatively impacted by stores in the 'ramp up' phase.

 

Advertising expenses increased by 26 bps y-o-y on higher marketing activities including digital marketing and loyalty campaigns.

 

Rental costs as a percent of sales decreased by 15 bps y-o-y driven by higher sales density, improved lease terms with landlords and the closing of inefficient stores. This was achieved despite the increased share of leased selling space to 78.7% in 2Q 2021 vs 77.4% a year ago.

 

Despite the acceleration in store openings (which started in 4Q last year) and their 'ramp-up' period, depreciation as a percent of sales reduced by 10 bps y-o-y as most of the newly opened stores were leased.

 

Personnel costs as a percent of sales decreased by 7 bps y-o-y thanks to continued productivity improvements and on-going automation of business processes.

 

Repair and maintenance costs as a percent of sales increased by 6 bps y-o-y driven by acceleration of the store refurbishment program (143 stores were refurbished in 2Q 2021 vs 19 in 2Q 2020)

 

Other costs including utilities, packaging and raw materials, bank and tax expenses remained broadly flat as a percent of sales y-o-y.

 

As a result, EBITDA was RUB 30.3 billion with a 7.1% margin, driven by gross margin dynamics and strict cost control. LTI expenses in the reported period stood at 0.08% of sales - as a result EBITDA margin pre-LTI was 7.2%. EBITDA margin for the 1H 2021 was 7.0% with y-o-y improvement of 7 bps.

 

The Company increased its total debt by 97.3 billion in the reported quarter by means of long-term bank loans and bond issuance to finance accelerated expansion and the upcoming acquisition of the Dixy retail chain. This increase happened during the period of growing market rates. As a result, average cost of debt increased to 6.4% (12 bps y-o-y or 49 bps q-o-q). Higher cost of debt and total amount of borrowings were netted by the increase in interest income. This led to the decrease of net finance costs in 2Q 2021 by 20.2% (or 25 bps) y-o-y to RUB 2.8 billion. The Company's debt profile improved further through an increased share of long-term borrowings and record long debt maturity of 24 months (vs 21 months a quarter ago).

 

In 2Q 2021 the Company reported FX gain in the amount of RUB 0.6 billion related to direct import operations.

 

Income tax in 2Q 2021 was RUB 3.5 billion. Effective tax rate stood at 22.5%.

 

As a result, net income in 2Q 2021 decreased by 6.0% y-o-y and stood at RUB 12.1 billion. Net income margin decreased by 47 bps y-o-y to 2.8%. Net income for 1H 2021 grew by 34.6% with a margin improvement of 56 bps to 2.8%.

 

Financial Position Highlights (IFRS 16)

 

RUB mln

30.06.2021

31.12.2020

30.06.2020

Inventories

199,744

205,949

219,236

Trade and other receivables

12,329

8,564

9,949

Cash and cash equivalents

129,370

44,700

21,149

Long-term borrowings

222,930

147,695

117,389

Trade and other payables

165,973

184,325

138,461

Short-term borrowings and short-term portion of long-term borrowings

42,560

18,392

91,204

 

 

11.2

DAYS

y-o-y optimisation of inventories[8]

Despite ongoing improvement to on-shelf availability, the 38 bps increase of share of drogerie format as a percent of net retail sales, supplier inflation and total sales growth of 9.6%, inventories decreased by RUB 19.5 billion vs June 30, 2020 and stood at 199.7 billion. This was driven by a number of projects launched in 2020 including the reduction of slow-moving items, assortment harmonization and IT solutions aimed at better on-shelf availability and promotion forecasting.

 

Trade and other payables grew by RUB 27.5 billion vs June 30, 2020 and stood at RUB 166.0 billion driven by higher sales and increased payment days. Accounts receivables increased by RUB 2.4 billion vs June 30, 2020 and stood at RUB 12.4 billion due to higher sales and improved commercial terms with suppliers.

 

 

Debt Composition and Leverage

 

 

June 30, 2021

March 31, 2021

December 31, 2020

June 30, 2020

IAS 17

 

 

 

 

Total Debt, RUB billion

265.5

168.2

166.1

208.6

Long-Term Debt

222.9

144.0

147.7

117.4

Short-Term Debt

42.6

24.2

18.4

91.2

Net Debt, RUB billion

136.1

161.7

121.4

187.4

Net Debt/EBITDA

1.2x

1.4х

1.1х

2.0х

IFRS 16

 

 

 

 

Net Debt, RUB billion

498.9

522.8

479.0

538.8

Net Debt/EBITDA

2.7x

2.8x

2.7x

3.3

 

 

1.2x

net debt/ebitda
as of June 30, 2021

(IAS 17)

Gross Debt increased by 57.8% within the reported quarter on the back of additional borrowings to finance accelerated expansion and the acquisition of the Dixy retail chain and reached RUB 265.5 billion as at June 30, 2021. Cash position substantially increased to RUB 129.4 billion as at June 30, 2021 compared to RUB 6.6 billion as at March 31, 2021. As a result, Net Debt decreased by 15.8% q-o-q to RUB 136.1 billion as at June 30, 2021.

 

The Company's debt is fully RUB denominated, matching revenue structure. The Net Debt to EBITDA ratio was 1.2x as at June 30, 2021 vs 1.4x as at March 31, 2021.

 

Capex in 2Q 2021 more than tripled y-o-y and stood at RUB 17.2 billion. This was driven by the acceleration of expansion program (519 store openings on gross basis in 2Q 2021 vs 177 in 2Q 2020). Total capital expenditures for the first six months of 2021 stood at RUB 25.6 billion vs RUB 12.3 billion in 1H 2020 (up 2.0x y-o-y). Capex is expected to increase further in the second half of the year in line with the calendarization of the store opening and redesign process with the latter accelerating further in the second half of the year.

 

 

DIXY Acquisition

 

2,477

stores added after dixy acquisition

On July 22, 2021 Magnit completed the acquisition of DIXY retail chain with 2,477 stores in Russia (2,438 convenience stores under the DIXY brand and 39 superstores under the Megamart brand). The majority of the convenience stores are located in Moscow and the Moscow region (1,319 outlets) and in St. Petersburg and the Leningrad region (438 outlets). As part of the transaction Magnit has also acquired five distribution centers and a fleet of approx. 700 trucks. The purchase price at closing amounted to Rub 87.6 bn.

 

The acquisition of the DIXY retail business is expected to significantly strengthen Magnit's competitive position in the Russian food retail sector. Strong exposure to the strategically important Moscow and St.Petersburg regions will lead to a sharp increase in the Company's market positions in both capitals, including more than two-fold market share growth in both Moscow and St.Petersburg. Strong physical presence in Moscow and St.Petersburg will provide substantial support to further development of Magnit's e-grocery initiatives. Potential synergies in procurement, category management and various business processes are expected to benefit the Company's customers and provide value accretion for its shareholders.

 

The transaction has been approved by Magnit's Board of Directors on May 18, 2021[9]. Russia's Federal Antimonopoly Service announced its clearance to the transaction on July 15, 2021.

 

 

More information is available at https://www.magnit.com/en/media/press-releases/magnit-completes-acqusition-of-dixy/

 

FY 2021 Guidance

 

2,000

stores on gross basis to be opened by magnit organically in 2021

Magnit confirms its full year store opening, redesign and capex guidance published on February 4th, 2021.

 

In 2021 Magnit plans to open around 2,000 stores of different format on a gross basis as part of its organic expansion and redesign about 700 stores. Capital expenditures is expected to be approximately RUB 60-65 billion[10].

Based on further detailed analysis of the performance of newly acquired Dixy stores, respective instruction of the Federal Antimonopoly Service[11] and overlap with existing network, the Company may potentially take a decision to slightly adjust its organic store opening program in the respective regions. It is expected that any adjustment will not lead to material impact on the Company's development plans.

 

 

 

Note:

 

  1. This announcement contains inside information disclosed in accordance with the Market Abuse Regulation effective from July 3, 2016.
  2. Please note that there may be small variations in calculation of totals, subtotals, and/or percentage change due to rounding of decimals.

 

 

 

For further information, please contact:

 

Dina Chistyak

Director for Investor Relations 
dina_chistyak@magnit.ru

Office: +7 (861) 210 9810 x 15101

 

Media Inquiries                    Twitter

press@magnit.ru                    @MagnitIR

 

 

 

 

 

Note to editors

 

Public Joint Stock Company "Magnit" is one of Russia's leading retailers. Founded in 1994, the company is headquartered in the southern Russian city of Krasnodar. As of June 30, 2021, Magnit operated 39 distribution centers and 22,344 stores (15,348 convenience, 469 supermarkets and 6,527 drogerie stores) in 3,802 cities and towns throughout 7 federal regions of the Russian Federation.

In accordance with the unaudited IFRS 16 management accounts results for 1H 2021, Magnit had revenues of RUB 822.2 billion and an EBITDA of RUB 94.4 billion. Magnit's local shares are traded on the Moscow Exchange (MOEX: MGNT) and its GDRs on the London Stock Exchange (LSE: MGNT) and it has a credit rating from Standard & Poor's of BB.

 

 

 

Forward-looking statements

 

This document contains or may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected sales growth rate and/or store openings are forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from what is expressed or implied by the statements. Any forward-looking statement is based on information available to Magnit as of the date of the statement. All written or oral forward-looking statements attributable to Magnit are qualified by this caution. Magnit does not undertake any obligation to update or revise any forward-looking statement to reflect any change in circumstances.

 

APPENDIX

 

2Q and 1H 2021 Store Openings

 

 

2Q 2021

2Q 2020

Change

Change, %

1H 2021

1H 2020

Change

Change, %

Store Openings (Gross)

519

177

342

193.2%

926

498

428

85.9%

Convenience Stores

308

94

214

227.7%

549

239

310

129.7%

Supermarkets

1

1

0

0.0%

2

1

1

100.0%

Drogerie Stores

210

82

128

156.1%

375

258

117

45.3%

Store Closures

75

143

-68

-47.6%

146

329

-183

-55.6%

Convenience Stores

58

107

-49

-45.8%

112

280

-168

-60.0%

Supermarkets

3

1

2

200.0%

3

2

1

50.0%

Drogerie Stores

14

35

-21

-60.0%

31

47

-16

-34.0%

Store Openings (Net)

444

34

410

n/a

780

169

611

361.5%

Convenience Stores

250

-13

263

n/a

437

-41

478

n/a

Supermarkets

-2

0

-2

n/a

-1

-1

0

0.0%

Drogerie Stores

196

47

149

317.0%

344

211

133

63.0%

 

 

2Q 2021 Monthly Operating Results

 

 

April

Change

May

Change

June

Change

Total net retail sales, RUB million

135,377

8.4%

139,472

9.3%

138,844

9.6%

Convenience Stores

106,195

7.8%

109,283

10.1%

108,998

11.2%

Supermarkets

17,315

4.1%

17,423

3.4%

16,774

1.6%

Drogerie Stores

10,954

22.3%

11,972

12.7%

12,314

9.0%

Other formats

913

5.1%

794

-3.0%

758

-8.1%

Number of tickets, million

401

19.2%

421

14.4%

421

8.6%

Convenience Stores

339

19.3%

356

15.1%

356

9.2%

Supermarkets

28

18.0%

29

10.3%

28

2.8%

Drogerie Stores

31

21.3%

34

12.9%

34

10.0%

Other formats

2.4

-4.4%

2.2

-10.7%

2.1

-16.8%

Average ticket[12], RUB

337

-9.1%

332

-4.4%

330

0.9%

Convenience Stores

313

-9.6%

307

-4.4%

306

1.8%

Supermarkets

613

-11.8%

601

-6.2%

593

-1.2%

Drogerie Stores

351

0.8%

357

-0.2%

359

-0.9%

Other formats

354

6.2%

353

9.3%

360

12.3%

Number of Stores (EOP)

21,981

n/a

22,099

n/a

22,344

n/a

Convenience Stores

15,159

n/a

15,218

n/a

15,348

n/a

Supermarkets

469

n/a

469

n/a

469

n/a

Drogerie Stores

6,353

n/a

6,412

n/a

6,527

n/a

Store Openings (Gross)

107

n/a

141

n/a

271

n/a

Convenience Stores

77

n/a

78

n/a

153

n/a

Supermarkets

0

n/a

1

n/a

0

n/a

Drogerie Stores

30

n/a

62

n/a

118

n/a

Store Closures

26

n/a

23

n/a

26

n/a

Convenience Stores

16

n/a

19

n/a

23

n/a

Supermarkets

2

n/a

1

n/a

0

n/a

Drogerie Stores

8

n/a

3

n/a

3

n/a

Store Openings (Net)

81

n/a

118

n/a

245

n/a

Convenience Stores

61

n/a

59

n/a

130

n/a

Supermarkets

-2

n/a

0

n/a

0

n/a

Drogerie Stores

22

n/a

59

n/a

115

n/a

Total Selling Space (EOP), th. sq. m.

7,631

4.7%

7,669

5.2%

7,748

6.3%

Convenience Stores

5,194

4.8%

5,220

5.3%

5,275

6.4%

Supermarkets

941

-0.2%

943

0.0%

943

-0.1%

Drogerie Stores

1,465

9.0%

1,477

9.4%

1,500

11.2%

Other formats

31

-23.2%

30

-26.4%

30

-26.9%

Selling Space Added (Net), th. sq. m.

24.9

n/a

38.1

n/a

79.4

n/a

Convenience Stores

24.8

n/a

25.5

n/a

55.9

n/a

Supermarkets

-2.1

n/a

1.6

n/a

0.0

n/a

Drogerie Stores

4.9

n/a

12.0

n/a

23.5

n/a

Other formats

-2.8

n/a

-0.9

n/a

0.0

n/a

 

 

Financial Results for 2Q and 1H 2021 (IFRS 16)

 

RUB mln

2Q 2021

2Q 2020

Change

1H 2021

1H 2020

Change

Total Revenue

424,341

387,323

9.6%

822,230

763,361

7.7%

Retail

413,693

379,174

9.1%

801,592

743,959

7.7%

Wholesale

10,648

8,149

30.7%

20,638

19,403

6.4%

Gross Profit

99,513

94,337

5.5%

192,586

179,522

7.3%

Gross Margin, %

23.5%

24.4%

-91 bps

23.4%

23.5%

-9 bps

SG&A, % of Sales

-18.8%

-19.0%

15 bps

-18.9%

-19.1%

15 bps

EBITDA pre LTI[13]

49,586

48,138

3.0%

95,038

88,194

7.8%

EBITDA Margin pre LTI, %

11.7%

12.4%

-74 bps

11.6%

11.6%

1 bps

EBITDA

49,236

48,133

2.3%

94,363

87,845

7.4%

EBITDA Margin, %

11.6%

12.4%

-82 bps

11.5%

11.5%

-3 bps

EBIT

25,947

25,365

2.3%

49,107

42,772

14.8%

EBIT Margin, %

6.1%

6.5%

-43 bps

6.0%

5.6%

37 bps

Net Finance Costs

-10,438

-11,118

-6.1%

-20,601

-22,994

-10.4%

FX Gain/ (Loss)

666

1,097

-39.3%

454

-920

-149.4%

Profit before Tax

16,175

15,344

5.4%

28,959

18,858

53.6%

Taxes

-3,629

-3,174

14.3%

-6,660

-4,359

52.8%

Net Income

12,546

12,170

3.1%

22,300

14,500

53.8%

Net Income Margin, %

3.0%

3.1%

-19 bps

2.7%

1.9%

81 bps

 

 


[1] LFL calculation base includes stores, which have been operating for 12 months since its first day of sales. LFL sales growth and average ticket growth are calculated based on sales turnover including VAT.

 

[2] Convenience Stores include convenience stores and small pilots such as Magnit City and My Price

[3] Supermarkets include Magnit Family supermarkets and Magnit Extra superstores

[4] Other Formats include pharmacies and stores located at Russian Post offices

[5] Excluding VAT

[6] Net retail sales of the last four quarters divided by the average selling space at the end of the last five quarters

[7] LTI - Long-Term Incentive Program

[8] Inventory turnover days = ((inventories as of 31.03.2021 + inventories as of 30.06.2021)/2/cost of goods sold for 2Q 2021) x 91

[10] Does not include RUB 87.6 billion spent on DIXY acquisition

[11] FAS prescription to one-time reduce market share limit of 35% in 22 municipalities in the North-West and Central regions till 1st July 2022

[12] Excluding VAT

[13] LTI - Long-Term Incentive Program



ISIN: US55953Q2021
Category Code: MSCU
TIDM: MGNT
LEI Code: 2534009KKPTVL99W2Y12
OAM Categories: 2.2. Inside information
Sequence No.: 118703
EQS News ID: 1222530

 
End of Announcement EQS News Service

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