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Sector
Telecoms
Size
Mid Cap
Market Cap £2.13bn
Enterprise Value £9.36bn
Revenue £6.57bn
Position in Universe 264th / 1818

Russian retailer Ozon to spend $300 mln on logistics to boost growth

Mon 16th March, 2020 2:36pm
* Ozon to spend over $300 mln on logistics in 2-3 years
    * Company has talked to investment banks about IPO
    * Sales increased 93% to $1.1 billion in 2019 
    * Coronavirus boosting sales of health-related goods

    By Alexander Marrow
    MOSCOW, March 16 (Reuters) - Russian online retailer Ozon
plans to spend more than $300 million on logistics in the next
two to three years, its CFO 
Daniil Fedorov told Reuters, and has also talked to investment
banks about a possible stock market listing.
    Ozon, which sells everything from white goods to children's
clothes, wants to increase market share in Russia's crowded
e-commerce sector, which analysts expect to grow significantly
in the coming years, as large companies, including Yandex
 YNDX.O  and Mail.Ru  MAILRq.L  and Sberbank  SBER.MM  jostle
for space. 
    Ozon's sales increased 93% to 80.7 billion roubles ($1.1
billion) in 2019 and the volume of orders more than doubled to
32.2 million. 
    Fedorov said Ozon intends to grab market share during this
"hypergrowth stage" by adding 250,000 square metres of
distribution centres across the country, an increase of around
125%. 
    Fedorov said that Russia's e-commerce market is
"fragmented", with Ozon, along with most other players, having a
less than 10% market share, based on the company's and
independent estimates. 
    He said Russia's huge distances, 11 time zones and often
unreliable third-party logistics providers are some of the
problems facing the country's e-commerce firms.
    Ozon has spoken to some investment banks about a potential
initial public offering (IPO) within two years, Fedorov said,
but the $300 million logistics spending will primarily come from
shareholders, which include Russian conglomerate Sistema
 AFKS.MM  and investment fund Baring Vostok.     
    "We are constantly working on financing, shareholders are
supporting the company, but we are quite possibly considering
different options," Fedorov said. "We're going to close some
additional financing this year."
    Baring Vostok said it continues to invest in existing and
new Russian projects and is committed to Ozon's growth strategy.
    Sistema said it plans to continue investing in Ozon, along
with other shareholders. 
    Fedorov said Ozon had seen increased sales since the
coronavirus outbreak, which he put down to people switching to
online purchases instead of visiting shops and demand for
certain health-related items had significantly increased since
January. 
    Ozon's sales of personal hygiene items are about 30-40%
higher than a typical winter season, while sales of books about
viruses have significantly increased.     
    "Volume-wise, we are actually seeing very good growth, it
has even slightly accelerated," said Fedorov. "Certain
categories in health, like masks, have exploded."

    ($1 = 74.9296 roubles)

 (Editing by Jane Merriman)
 ((alexander.marrow@thomsonreuters.com; +7 495 775 1242;))
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