REG - X5 Retail Group N.V - X5 reports 20.8% revenue growth in 2023
22/03/2024 07:30
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RNS Number : 9380H X5 Retail Group N.V. 22 March 2024
X5 reports 20.8% revenue growth in 2023, 6.9% adj. EBITDA margin pre-IFRS 16
+ 20.8 % y-o-y
Revenue growth in 2023
driven by solid like-for-like (LFL)(1) sales and selling space expansion
+75.7% y-o-y
Digital business (express delivery, Vprok.ru, 5Post and Mnogo Lososya) net
sales growth in 2023
Digital business net sales amounted to RUB 123.6 billion, which comprised 3.9%
of consolidated FY 2023 revenue
24.1 % +3 b.p.
Gross margin pre-IFRS 16(2) in 2023
predominantly driven by higher commercial margin and lower shrinkage in
Pyaterochka, partially offset by higher logistics costs and a higher share of
the hard discounter format in revenue
6.9% -34 b.p.
Adjusted EBITDA(3) margin pre-IFRS 16 in 2023
2.9% +86 b.p.
Net profit margin pre-IFRS 16 in 2023
0.87x
Net debt/EBITDA(4) ratio pre-IFRS 16 as of 31 December 2023
Amsterdam, 22 March 2024 - 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 2023
Annual Report, including consolidated financial statements audited by TSATR -
Audit Services LLC ("B1"), prepared in accordance with International Financial
Reporting Standards as adopted in the European Union, as well as unaudited
2023 Annual Report including consolidated and company financial statements
prepared in accordance with International Financial Reporting Standards as
adopted in the European Union and in accordance with the Dutch Civil Code.
Igor Shekhterman, X5 Chief Executive Officer:
"During 2023, X5 once again demonstrated strong results and a commitment to
excellence despite ongoing market turbulence. We continued to cement our
leadership in the Russian food retail market by developing our three key
formats - the proximity store, supermarket and hard discounter - while growing
our presence through organic expansion and strategic M&A. We also
undertook a number of positive measures to boost efficiency and labour
productivity in response to market constraints, and strengthened our focus on
supporting the people and communities that we serve.
X5 continued to actively expand its retail network, which reached 24,472
stores across all formats, while further developing our online services to
offer a first-class omnichannel shopping experience. In 2023, X5 posted
double-digit revenue growth of 20.8% year-on-year and solid like-for-like
sales performance of 9.6%, while maintaining EBITDA margin at 6.8%.
Among the drivers of our strong performance was the Pyaterochka proximity
store format, which expanded by 2,144 new stores and posted revenue growth of
17.3% year-on-year, as well as growth in like-for-like sales of 9.8%
year-on-year. In 2023, the chain launched its first stores in the Russian Far
East, making X5 the first nationwide food retailer to enter this region. This
milestone development has brought Pyaterochka's wide selection of high-quality
foods at affordable prices to the doorstep of local customers, while creating
new jobs and opportunities for local suppliers.
Throughout the year, we continued to revamp the Perekrestok supermarket format
to enhance its unique value proposition, drive efficiency gains and boost
like-for-like sales. Perekrestok posted growth in like-for-like sales of 8.3%
and revenue growth of 8.7% in 2023, amid an ongoing transformation that aims
to build a more efficient business while maintaining the format's
customer-centric focus.
A key focus over the year was the development of our hard discounter format,
Chizhik, which has attracted growing customer demand thanks to its curated
selection of high-quality and affordable products, including a variety of
unique private labels. In 2023, Chizhik opened 983 new stores to reach a total
of 1,500 stores nationwide, while its revenue increased threefold
year-on-year. In line with X5's regional expansion strategy, our hard
discounter launched operations in Siberia during the year and is poised for
further significant growth in the region. The development of the Chizhik
network remains a top priority for X5 in response to ongoing consumer demand.
Our digital businesses delivered net sales growth of 75.7% year-on-year and
grew to account for 3.9% of consolidated revenue in 2023. As digital
businesses remain a core part of our customer journey, we have focused on
streamlining our online services, using both stores and dark stores, and
improving the mobile app experience with an aim to become a leader in the
online food retail segment, particularly in Moscow and the Moscow Region.
We continued the rapid expansion of express delivery services from Pyaterochka
proximity stores and Perekrestok supermarkets to provide our customers with a
seamless omnichannel shopping experience. At the same time, ongoing
competition and the current pressure on margins in this segment have not yet
allowed us to effectively translate top-line growth into better profitability.
In 2023, our online delivery logistics service, 5Post, entered Siberia and
passed the milestone of 20,000 pickup points across Russia. With this move,
5Post has made online shopping more accessible for customers in Siberia while
coming closer to reaching 100% coverage of its targeted geographic footprint.
An important part of our strategy is to maximise our presence at each step of
the customer journey. In this regard, we have been developing a unified
loyalty programme that serves as an umbrella for X5's businesses and services.
In 2023, X5 integrated nearly all of its businesses - including express
delivery services, our online media platform Food.ru, and the sushi delivery
service Mnogo Lososya - into the updated X5 Club loyalty programme. Now
customers can conveniently earn and spend bonus points when shopping at
Pyaterochka and Perekrestok, ordering meals or posting recipes on Food.ru, all
from a single loyalty account. The expansion of our loyalty programme will
drive new efficiency gains, create a highly tailored customer experience and
offer better insights into customer needs.
Among the external challenges in 2023 was a notable shortage of operating
personnel on the market, which resulted in a significant increase in labour
costs. To offset the negative impact of this development on our margins, we
introduced a number of initiatives to improve efficiency. Key measures
included increasing automation in our in-store and logistics operations and
introducing day and night non-contact picking, which enabled us to increase
labour productivity by 9% in 2023.
Looking ahead to 2024, we do not foresee a substantial improvement in the
labour market and therefore plan to continue our initiatives to boost the
efficiency of X5's business processes. These include further rolling out
automation in stores and logistics, scaling up contactless pickup, and
increasing the number of self-service checkouts at our stores. We expect to
see further growth in labour productivity thanks to these measures in 2024.
We also aim to continue growing our footprint in existing and new regions of
presence via targeted M&A deals. In 2023, X5 acquired the retail operators
Tamerlan and Victoria Baltia, which enabled X5 to expand its presence in
southern Russia and gain a foothold in the highly promising Kaliningrad
Region. M&As and strategic partnerships will help X5 to further solidify
its leadership in the Russian food market and drive additional organic
growth.
Our active expansion on the domestic market has gone hand in hand with a
robust and growing commitment to community support and engagement. In 2023, X5
collected more than 936 tonnes of food and non-food items to more than 469,000
people in need through the Basket of Kindness and other charitable projects.
X5 also carried out various initiatives to promote environmental awareness
among customers, boost healthy food choices among school children, and turn
our Pyaterochka stores into community centres. With the approval of X5's
updated sustainable development strategy in September 2023, we have combined
our more ambitious climate targets with a stronger emphasis on developing
social programmes, supporting local communities and promoting inclusion.
Our focus on people remains a core value at X5 Group. Over the past year, our
team members consistently displayed the professionalism and tireless
commitment to customer service that lie at the heart of our company's success.
We will continue to give back to our employees by fostering an environment
that empowers them to grow and develop to their full potential.
I would like to thank all of X5's employees for their hard work and dedication
over the past year, and extend my deep gratitude to our partners and investors
for their continued cooperation and trust. I am confident that our focus on
business efficiency, excellent customer service and social responsibility will
further solidify our standing as a market leader in the year to come."
Key financial results highlights(5) (pre-IFRS 16)
RUB mln Q4 2023 Q4 2022 change, FY 2023 FY 2022 change,
y-o-y, % or multiple
y-o-y, % or multiple
Revenue 881,216 705,183 25.0 3,145,859 2,605,232 20.8
incl. net retail sales(6) 874,505 702,134 24.5 3,128,847 2,596,086 20.5
Pyaterochka (incl. express delivery)(7) 685,594 560,440 22.3 2,491,009 2,122,793 17.3
Perekrestok (incl. express delivery) 119,760 104,400 14.7 418,938 385,495 8.7
Chizhik 41,661 15,233 3x 118,425 35,893 3x
Gross profit 212,340 158,047 34.4 757,776 626,744 20.9
Gross profit margin, % 24.1 22.4 168 b.p. 24.1 24.1 3 b.p.
Adj. EBITDA 54,740 36,574 49.7 217,952 189,468 15.0
Adj. EBITDA margin, % 6.2 5.2 103 b.p. 6.9 7.3 (34) b.p.
EBITDA 53,062 35,838 48.1 214,764 186,788 15.0
EBITDA margin, % 6.0 5.1 94 b.p. 6.8 7.2 (34) b.p.
Operating profit 29,273 13,825 111.7 130,104 97,632 33.3
Operating profit margin, % 3.3 2.0 136 b.p. 4.1 3.7 39 b.p.
Net profit 19,034 5,853 3x 90,284 52,248 72.8
Net profit margin, % 2.2 0.8 133 b.p. 2.9 2.0 86 b.p.
Revenue
Revenue growth reached 25.0% year-on-year in Q4 2023. Net retail sales
increased by 24.5%, driven by a combination of 12.1% selling space growth and
13.2% LFL sales growth, while X5's digital business sales grew by 89.4% y-o-y.
Selling space by format, square metres (sqm)
SELLING SPACE, AS AT 31-DEC-23 AS AT 31-DEC-22 CHANGE
SQUARE METRES (SQ. M)
VS 31-DEC-22, % OR MULTIPLE
Pyaterochka(8) 8,339,205 7,497,056 11.2
Perekrestok 1,084,913 1,085,496 (0.1)
Chizhik 442,110 152,370 190.2
Joint dark stores 10,258 8,087 26.8
X5 Group(9) 10,206,011 9,107,479 12.1
Q4 and FY 2023 LFL store performance by format, % change y-o-y
In Q4 2023, LFL sales increased by 13.2% year-on-year, supported by solid LFL
results for Pyaterochka and Perekrestok at 13.0% and 14.4%, respectively. The
LFL basket was the main driver of LFL sales in Q4 2023, with LFL traffic in
positive territory at 3.0% year-on-year.
Q4 2023 FY 2023
SALES TRAFFIC BASKET SALES TRAFFIC BASKET
Pyaterochka 13.0 3.0 9.6 9.8 4.9 4.7
Perekrestok 14.4 3.0 11.0 8.3 2.2 6.0
X5 Group(10) 13.2 3.0 9.9 9.6 4.6 4.8
For more details on net retail sales performance, please refer to X5's Q4 202
(https://www.x5.ru/wp-content/uploads/2024/01/q4_2023_trading_update_eng.pdf)
3
(https://www.x5.ru/wp-content/uploads/2024/01/q4_2023_trading_update_eng.pdf)
Trading Update
(https://www.x5.ru/wp-content/uploads/2024/01/q4_2023_trading_update_eng.pdf)
.
(https://www.x5.ru/ru/PublishingImages/Pages/Media/News/Trading_Update_Q3%202021__RUS.pdf)
Gross profit margin
Gross profit margin pre-IFRS 16 increased by 168 b.p. year-on-year to 24.1% in
Q4 2023, mainly due to a higher commercial margin driven by the low base
effect of Q4 2022 and assortment optimisation in Pyaterochka, as well as lower
shrinkage in all formats.
Gross profit margin pre-IFRS 16 for FY 2023 remained flat year-on-year at
24.1%. The growth of commercial margin on the back of assortment optimisation
and promotions, as well as lower shrinkage in Pyaterochka, was offset by
higher logistics costs and a higher share of the hard discounter format in
revenue.
Selling, general and administrative (SG&A) expenses (excl. D&A&I
and the impact of the Karusel transformation) (pre-IFRS 16)
RUB mln Q4 2023 Q4 2022 change, FY 2023 FY 2022 change,
y-o-y, %
y-o-y, %
Staff costs (77,442) (58,057) 33.4 (266,357) (209,940) 26.9
% of revenue 8.8 8.2 56 b.p. 8.5 8.1 41 b.p.
incl. LTI and share-based payments (1,735) (729) 138.0 (5,056) (2,517) 100.9
staff costs excl. LTI and share- 8.6 8.1 46 b.p. 8.3 8.0 34 b.p.
based payments as % of revenue
Lease expenses (36,342) (30,581) 18.8 (134,995) (117,825) 14.6
% of revenue 4.1 4.3 (21) b.p. 4.3 4.5 (23) b.p.
Utilities (15,316) (14,224) 7.7 (61,518) (51,309) 19.9
% of revenue 1.7 2.0 (28) b.p. 2.0 2.0 (1) b.p.
Other store costs (8,118) (6,677) 21.6 (28,030) (24,573) 14.1
% of revenue 0.9 0.9 (3) b.p. 0.9 0.9 (5) b.p.
Third-party services (11,342) (7,600) 49.2 (26,256) (19,796) 32.6
% of revenue 1.3 1.1 21 b.p. 0.8 0.8 7 b.p.
Other expenses (17,074) (10,257) 66.5 (50,125) (36,714) 36.5
% of revenue 1.9 1.5 48 b.p. 1.6 1.4 18 b.p.
SG&A (excl. D&A&I and the impact of the Karusel transformation) (165,634) (127,396) 30.0 (567,281) (460,157) 23.3
% of revenue 18.8 18.1 73 b.p. 18.0 17.7 37 b.p.
SG&A (excl. D&A&I, LTI, share-based payments and the impact of the (163,899) (126,667) 29.4 (562,225) (457,640) 22.9
Karusel transformation)
% of revenue 18.6 18.0 64 b.p. 17.9 17.6 31 b.p.
In Q4 2023, SG&A expenses excluding D&A&I, LTI, share-based
payments and the impact of the Karusel transformation pre-IFRS 16 as a
percentage of revenue increased by 64 b.p. to 18.6%, mainly driven by higher
staff costs, other expenses, and third party services 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 Q4 2023 to 8.6%, mainly due to
the indexation of salaries for store employees.
LTI and share-based payment expenses amounted to RUB 1,735 million in Q4 2023,
up by 138% from RUB 729 million in Q4 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
probability of achieving these KPIs.
Lease expenses pre-IFRS 16 as a percentage of revenue in Q4 2023 decreased by
21 b.p. year-on-year to 4.1%, mainly due to a positive operating leverage
effect for fixed lease rates, partially compensated by a higher number of
revenue-linked leases.
Utilities costs as a percentage of revenue in Q4 decreased by 28 b.p.
year-on-year to 1.7%, driven by the optimisation of electricity consumption
and cleaning costs.
Other store costs pre-IFRS 16 as a percentage of revenue in Q4 2023 decreased
by 3 b.p. year-on-year, mainly due to the optimisation of store security
operations.
Third-party service expenses pre-IFRS 16 as a percentage of revenue in Q4 2023
increased by 21 b.p. year-on-year to 1.3%, mainly due to higher marketing
expenses and promotional activities.
Other expenses pre-IFRS 16 as a percentage of revenue in Q4 2023 increased by
48 b.p. year-on-year to 1.9%, due to a growing share of courier service costs
and aggregator commissions for express delivery, and a higher reverse
franchising agency fees.
In 2023, SG&A expenses excluding D&A&I, LTI, share-based payments
and the impact of the Karusel transformation pre-IFRS 16 as a percentage of
revenue increased by 31 b.p. to 17.9%, mainly driven by higher staff costs,
other expenses, and third-party services as a percentage of revenue.
Lease/sublease and other income(11)
As a percentage of revenue, the Company's income from leases, subleases and
other operations pre-IFRS 16 totalled 0.7%, representing a decrease of 3 b.p.
year-on-year in Q4 2023. This was driven by a negative operating leverage
effect for fixed lease rates.
EBITDA and EBITDA margin (pre-IFRS 16)
RUB mln Q4 2023 Q4 2022 change, FY 2023 FY 2022 change,
y-o-y, %
y-o-y, %
Gross profit 212,340 158,047 34.4 757,776 626,744 20.9
Gross profit margin, % 24.1 22.4 168 b.p. 24.1 24.1 3 b.p.
SG&A (excl. D&A&I, LTI, share-based payments and the effect of the (163,899) (126,667) 29.4 (562,225) (457,640) 22.9
Karusel transformation)
% of revenue 18.6 18.0 64 b.p. 17.9 17.6 31 b.p.
Net impairment gain on financial assets 11 (48) n/a (97) (346) (72.0)
% of revenue (0.00) 0.01 (1) b.p. 0.00 0.01 (1) b.p.
Lease/sublease and other income (excl. the effect of the Karusel 6,288 5,242 20.0 22,498 20,710 8.6
transformation)
% of revenue 0.7 0.7 (3) b.p. 0.7 0.8 (8) b.p.
Adj. EBITDA 54,740 36,574 49.7 217,952 189,468 15.0
Adj. EBITDA margin, % 6.2 5.2 103 b.p. 6.9 7.3 (34) b.p.
LTI, share-based payments and other one-off remuneration payment expenses and (1,735) (729) 138.0 (5,056) (2,517) 100.9
SSC
% of revenue 0.2 0.1 9 b.p. 0.2 0.1 6 b.p.
Effect of the Karusel transformation 57 (7) n/a 1,868 (163) n/a
% of revenue 0.01 (0.00) 1 b.p. 0.06 (0.01) 7 b.p.
EBITDA 53,062 35,838 48.1 214,764 186,788 15.0
EBITDA margin, % 6.0 5.1 94 b.p. 6.8 7.2 (34) b.p.
D&A&I
Depreciation, amortisation and impairment costs pre-IFRS 16 decreased as a
percentage of revenue by 42 b.p. year-on-year to 2.7% in Q4 2023, totalling
RUB 23,789 million. This was mainly attributable to the fact that revenue
growth outpaced growth in the gross book value of assets, as well as the
optimisation of the Company's refurbishment plan. In 2023, depreciation,
amortisation and impairment costs pre-IFRS 16 decreased by 73 b.p.
year-on-year to 2.7%, totalling RUB 84,660 million.
Non-operating gains and losses (pre-IFRS 16)
RUB mln Q4 2023 Q4 2022 change, FY 2023 FY 2022 change,
y-o-y, % or multiple
y-o-y, % or multiple
Operating profit 29,273 13,825 111.7 130,104 97,632 33.3
Net finance costs (2,515) (3,204) (21.5) (9,445) (18,439) (48.8)
Net FX result 454 (1,795) n/a (2,185) (2,699) (19.0)
Profit before tax 27,212 8,826 3x 118,474 76,494 54.9
Income tax expense (8,178) (2,973) 3x (28,190) (24,246) 16.3
Net profit 19,034 5,853 3x 90,284 52,248 72.8
Net profit margin, % 2.2 0.8 133 b.p. 2.9 2.0 86 b.p.
Net finance costs pre-IFRS 16 in Q4 2023 decreased by 21.5% year-on-year to
RUB 2,515 million, driven by higher interest income on short-term financial
investments, partially compensated by higher interest costs due to increased
interest rates on the Russian capital market.
The net FX result totalled RUB 454 million pre-IFRS 16 in Q4 2023, compared
with negative RUB 1,795 million in Q4 2022, due to the appreciation of the
rouble.
In Q4 2023, income tax expense pre-IFRS 16 increased by a factor of three
year-on-year due to the increase in profit before tax.
In FY 2023, the effective tax rate pre-IFRS 16 was 23.8%, down from 31.7% in
2022.
Key cash flow highlights (pre-IFRS 16)
RUB mln Q4 2023 Q4 2022 change, FY 2023 FY 2022 change,
y-o-y, % or multiple
y-o-y, % or multiple
Net cash from operating activities before changes in working capital 54,155 35,270 53.5 213,464 187,026 14.1
Change in working capital 16,311 7,235 125.4 22,901 4,088 6x
Adj. net interest and income tax paid(12) (15,071) (6,850) 120.1 (41,969) (35,887) 16.9
Interest received on short-term financial investments 3,515 - n/a 5,747 - n/a
Net interest and income tax paid (11,556) (6,850) 68.8 (36,222) (35,887) 0.9
Adj. net cash flows generated from operating activities(12) 55,395 35,655 55.4 194,396 155,227 25.2
Net cash flows generated from operating activities 58,910 35,655 65.2 200,143 155,227 28.9
Adj. net cash used in investing activities(13) (48,030) (26,062) 84.3 (128,561) (76,295) 68.5
(Payment for)/Repayment of short-term financial investments (33,515) (30,000) 11.7 (65,747) - n/a
Net cash used in investing activities (81,545) (56,062) 45.5 (194,308) (76,295) 154.7
Net cash generated from/(used in) financing activities 9,002 23,824 (62.2) (8,617) (61,641) (86.0)
Effect of exchange rate changes on (11) 137 n/a 302 (98) n/a
cash and cash equivalents
Net increase in cash and cash equivalents (13,644) 3,554 n/a (2,480) 17,193 n/a
In Q4 2023, the Company's net cash from operating activities before changes in
working capital pre-IFRS 16 increased by RUB 18,885 million and totalled RUB
54,155 million. The higher positive change in working capital pre-IFRS 16 of
RUB 16,311 million in Q4 2023 vs. RUB 7,235 million in Q4 2022 was driven by a
lower increase in inventories due to logistical problems caused by unfavorable
weather conditions, and a higher increase in trade account payables due to
business growth and the impact of an additional non-working day at the end of
December.
Working capital highlights (IFRS 16)
RUB mln 31-Dec-23 31-Dec-22 31-Dec-21
Inventories 236,826 208,661 166,840
Trade, other accounts receivable and prepayments 27,924 21,382 20,190
Trade accounts payable 290,232 238,641 212,949
Provisions and other liabilities 157,071 130,450 104,673
Short-term contract liabilities 1,458 3,767 2,392
Adjusted net interest and income tax paid pre-IFRS 16 in Q4 2023 increased by
120.1% year-on-year and totalled RUB 15,071 million. This was due to an
increase in interest rates on the Russian capital market on the back of the
key rate increase, as well as an increase in income tax due to business
growth.
As a result, adjusted net cash flow generated from operating activities
pre-IFRS 16 totalled RUB 55,395 million, up from RUB 35,655 million in Q4
2022.
In 2023, net cash flows generated from operating activities pre-IFRS 16
totalled RUB 200,143 million, up 28.9% from RUB 155,227 million in 2022.
In Q4 2023, adjusted net cash used in investing activities pre-IFRS 16, which
predominantly consists of payments for property, plant and equipment,
increased to RUB 48,030 million due to renewal of the truck fleet. For 2023,
adjusted net cash used in investing activities pre-IFRS 16 increased to RUB
128,561 million from RUB 76,295 million in 2022.
Net cash generated from financing activities pre-IFRS 16 totalled RUB 9,002
million in Q4 2023, compared with net cash generated from financing activities
of RUB 23,824 million in Q4 2022. In 2023, net cash used in financing
activities pre-IFRS 16 decreased to RUB 8,617 million from RUB 61,641 million
in 2022.
Liquidity update
RUB mln 31-Dec-23 % of total 31-Dec-22 % of total 31-Dec-21 % of total
Pre-IFRS 16
Total debt 228,229 234,532 294,338
Short-term debt 100,833 44.2 87,146 37.2 87,767 29.8
Long-term debt 127,396 55.8 147,386 62.8 206,571 70.2
Net debt 187,454 191,277 268,276
Net debt/EBITDA 0,87x 1,02x 1,67x
IFRS 16
Lease liabilities 670,961 591,160 577,363
Net debt/EBITDA 2,49x 2,58x 3,16x
The Company's net debt/EBITDA ratio pre-IFRS 16 was 0.87x as of 31 December
2023.
The Company's debt pre-IFRS 16 is 100% denominated in Russian roubles.
As of 31 December 2023, the Company had access to RUB 549,740 million in
available lines of credit with major banks.
Effect of IFRS 16 on X5 Group's financial statements
Effect on gross profit
Gross profit and gross margin under IFRS 16 are higher by RUB 2,832 million
and 32 b.p. compared to pre-IFRS 16 in Q4 2023 (RUB 10,264 million and 33 b.p.
in 2023), respectively, due to the lease for distribution centres, which is a
part of cost of sales pre-IFRS 16, but is excluded from the gross profit
calculation under IFRS 16 in order to align the presentation of depreciation
of right-of-use assets and other assets.
Effect on EBITDA, operating profit and finance costs
Lease expenses, other store costs, third party services and other expenses in
the total amount of RUB 31,162 million are excluded from SG&A expenses
under IFRS 16 in Q4 2023 (RUB 117,984 million in 2023). Additional
depreciation of RUB 20,660 million related to leased assets has been added to
SG&A costs under IFRS 16 in Q4 2023 (RUB 81,296 million in 2023).
Net financial costs under IFRS 16 in Q4 2023 exceed the pre-IFRS 16 amount by
RUB 17,053 million due to the interest expense on lease liabilities (RUB
60,742 million in 2023).
IFRS 16 increases the Company's EBITDA significantly, as lease expenditure
previously recognised in the income statement is excluded. Adjusted EBITDA
margin under IFRS 16 is 391 b.p. higher compared to pre-IFRS 16 amount in Q4
2023 (411 b.p. in 2023). Interest expense on liabilities is recognised in
finance costs, below the EBITDA level under IFRS 16.
Effect on net profit
The positive net FX result under IFRS 16 is RUB 567 million higher compared to
pre-IFRS 16 amount in Q4 2023 (negative RUB 1,969 million in 2023) due to
revaluation of foreign currency liabilities resulting from lease contracts
denominated in foreign currencies.
IFRS 16 results in lower income tax expense due to lower profit before tax.
The effective tax rate under IFRS 16 is 31.2% in Q4 2023 and 24.3% in 2023.
Net profit and net profit margin under IFRS 16 are lower by RUB 2,181 million
and 25 b.p. compared to pre-IFRS 16 amount in Q4 2023 (RUB 11,691 million and
37 b.p. in 2023) as a result of additional depreciation and interest expense.
Effect on cash flow statement
IFRS 16 affects the presentation of the cash flow statement but not the net
change in cash result, as principal payments on leases are classified as
financing activities, prepayments are classified as investing activities, and
interest payments are considered interest paid in operating activities.
APPENDIX
Key financial results highlights (IFRS 16)
RUB mln Q4 2023 Q4 2022 change, FY 2023 FY 2022 change,
y-o-y, % or multiple
y-o-y, % or multiple
Revenue 881,216 705,183 25.0 3,145,859 2,605,232 20.8
incl. net retail sales(1)(4) 874,505 702,134 24.5 3,128,847 2,596,086 20.5
Pyaterochka (incl. express delivery)(1)(5) 685,594 560,440 22.3 2,491,009 2,122,793 17.3
Perekrestok (incl. express delivery) 119,760 104,400 14.7 418,938 385,495 8.7
Chizhik 41,661 15,233 3x 118,425 35,893 3x
Gross profit 215,172 160,332 34.2 768,040 635,196 20.9
Gross profit margin, % 24.4 22.7 168 b.p. 24.4 24.4 3 b.p.
Adj. EBITDA 89,158 66,841 33.4 347,345 305,529 13.7
Adj. EBITDA margin, % 10.1 9.5 64 b.p. 11.0 11.7 (69) b.p.
EBITDA 87,480 66,105 32.3 344,157 302,849 13.6
EBITDA margin, % 9.9 9.4 55 b.p. 10.9 11.6 (68) b.p.
Operating profit 43,031 24,368 76.6 178,201 138,118 29.0
Operating profit margin, % 4.9 3.5 143 b.p. 5.7 5.3 36 b.p.
Net profit 16,853 2,083 8x 78,593 45,188 73.9
Net profit margin, % 1.9 0.3 162 b.p. 2.5 1.7 76 b.p.
Selling, general and administrative (SG&A) expenses (excl. D&A&I
and the impact of the Karusel transformation) (IFRS 16)
RUB mln Q4 2023 Q4 2022 change, FY 2023 FY 2022 change,
y-o-y, %
y-o-y, %
Staff costs (77,442) (58,057) 33.4 (266,357) (209,940) 26.9
% of revenue 8.8 8.2 56 b.p. 8.5 8.1 41 b.p.
incl. LTI and share-based payments (1,735) (729) 138.0 (5,056) (2,517) 100.9
staff costs excl. LTI and share- 8.6 8.1 46 b.p. 8.3 8.0 34 b.p.
based payments as % of revenue
Lease expenses (7,838) (5,424) 44.5 (26,922) (19,624) 37.2
% of revenue 0.9 0.8 12 b.p. 0.9 0.8 10 b.p.
Utilities (15,316) (14,224) 7.7 (61,518) (51,309) 19.9
% of revenue 1.7 2.0 (28) b.p. 2.0 2.0 (1) b.p.
Other store costs (7,899) (6,454) 22.4 (27,168) (23,685) 14.7
% of revenue 0.9 0.9 (2) b.p. 0.9 0.9 (5) b.p.
Third-party services (11,467) (7,702) 48.9 (26,710) (20,187) 32.3
% of revenue 1.3 1.1 21 b.p. 0.8 0.8 7 b.p.
Other expenses (14,510) (8,219) 76.5 (40,622) (30,118) 34.9
% of revenue 1.6 1.2 48 b.p. 1.3 1.2 14 b.p.
SG&A (excl. D&A&I and the impact of the Karusel transformation) (134,472) (100,080) 34.4 (449,297) (354,863) 26.6
% of revenue 15.3 14.2 107 b.p. 14.3 13.6 66 b.p.
SG&A (excl. D&A&I, LTI, share-based payments and the impact of the (132,737) (99,351) 33.6 (444,241) (352,346) 26.1
Karusel transformation)
% of revenue 15.1 14.1 97 b.p. 14.1 13.5 60 b.p.
EBITDA and EBITDA margin (IFRS 16)
RUB mln Q4 2023 Q4 2022 change, FY 2023 FY 2022 change,
y-o-y, %
y-o-y, %
Gross profit 215,172 160,332 34.2 768,040 635,196 20.9
Gross profit margin, % 24.4 22.7 168 b.p. 24.4 24.4 3 b.p.
SG&A (excl. D&A&I, LTI, share-based payments and the effect of the (132,737) (99,351) 33.6 (444,241) (352,346) 26.1
Karusel transformation)
% of revenue 15.1 14.1 97 b.p. 14.1 13.5 60 b.p.
Net impairment gain on financial assets 11 (48) n/a (97) (346) (72.0)
% of revenue (0.00) 0.01 (1) b.p. 0.00 0.01 (1) b.p.
Lease/sublease and other income (excl. the effect of the Karusel 6,712 5,908 13.6 23,643 23,025 2.7
transformation)
% of revenue 0.8 0.8 (8) b.p. 0.8 0.9 (13) b.p.
Adj. EBITDA 89,158 66,841 33.4 347,345 305,529 13.7
Adj. EBITDA margin, % 10.1 9.5 64 b.p. 11.0 11.7 (69) b.p.
LTI, share-based payments and other one-off remuneration payment expenses and (1,735) (729) 138.0 (5,056) (2,517) 100.9
SSC
% of revenue 0.2 0.1 9 b.p. 0.2 0.1 6 b.p.
Effect of the Karusel transformation 57 (7) n/a 1,868 (163) n/a
% of revenue 0.01 (0.00) 1 b.p. 0.06 (0.01) 7 b.p.
EBITDA 87,480 66,105 32.3 344,157 302,849 13.6
EBITDA margin, % 9.9 9.4 55 b.p. 10.9 11.6 (68) b.p.
Non-operating gains and losses (IFRS 16)
RUB mln Q4 2023 Q4 2022 change, FY 2023 FY 2022 change,
y-o-y, % or multiple
y-o-y, % or multiple
Operating profit 43,031 24,368 76.6 178,201 138,118 29.0
Net finance costs (19,568) (16,798) 16.5 (70,187) (68,417) 2.6
Net FX result 1,021 (3,457) n/a (4,154) (2,032) 104.4
Profit before tax 24,484 4,113 6x 103,860 67,669 53.5
Income tax expense (7,631) (2,030) 4x (25,267) (22,481) 12.4
Net profit 16,853 2,083 8x 78,593 45,188 73.9
Net profit margin, % 1.9 0.3 162 b.p. 2.5 1.7 76 b.p.
Key cash flow highlights (IFRS 16)
RUB mln Q4 2023 Q4 2022 change, FY 2023 FY 2022 change,
y-o-y, % or multiple
y-o-y, % or multiple
Net cash from operating activities before changes in working capital 88,149 64,872 35.9 341,711 300,768 13.6
Change in working capital 17,528 7,702 127.6 24,443 5,924 4x
Adj. net interest and income tax paid(1)(6) (32,095) (20,420) 57.2 (102,624) (85,768) 19,7
Interest received on short-term financial investments 3,515 - n/a 5,747 - n/a
Net interest and income tax paid (28,580) (20,420) 40.0 (96,877) (85,768) 13.0
Adj. net cash flows generated from operating activities(1)(6) 73,582 52,154 41.1 263,530 220,924 19.3
Net cash flows generated from operating activities 77,097 52,154 47.8 269,277 220,924 21.9
Adj. net cash used in investing activities(17) (47,808) (25,935) 84.3 (127,864) (75,978) 68.3
(Payment for)/Repayment of short-term financial investments (33,515) (30,000) 11.7 (65,747) - n/a
Net cash used in investing activities (81,323) (55,935) 45.4 (193,611) (75,978) 154.8
Net cash generated from/(used in) financing activities (9,407) 7,200 n/a (78,448) (127,655) (38.5)
Effect of exchange rate changes on (11) 137 n/a 302 (98) n/a
cash and cash equivalents
Net increase in cash and cash equivalents (13,644) 3,556 n/a (2,480) 17,193 n/a
Dividends
In view of restrictions that limit X5's ability to upstream funds from its
Russian subsidiaries to the Dutch parent company, the Supervisory Board will
not declare a dividend with respect to the financial year 2023. While the
Company remains committed to its long-term goal of returning company profits
to shareholders, the Supervisory Board believes it would be in the Company's
best interest to temporarily deviate from its dividend policy as long as
current uncertainties and regulatory conditions prevail.
Publication of 2023 Annual report
On 22 March X5 released two sets of 2023 Annual report:
1. 2023 Annual Report including consolidated financial statements
audited by B1, which is in compliance with the FCA requirements, and
2. 2023 Annual Report including consolidated and company financial
statements prepared in accordance with the Dutch Civil Code, unaudited.
B1 is not eligible to perform audit under Dutch Civil Code requirements
therefore the Company released a separate set of statutory reporting documents
for Dutch regulatory purposes. As described on page 226 of the 2023 Annual
Report, the auditor's report of the Company's 2023 consolidated and company
financial statements, as required under article 2:393 Dutch Civil Code, is
absent pending completion of the work to be conducted on the audit of the
Company's 2022 Financial Statements by Reanda Audit & Assurance B.V., and
their subsequent potential re-appointment as the Company's auditor for the
2023 Financial Statements. Pending the issue of an audit opinion by a Dutch
auditor, and in view of the Company being of the opinion that the 2023
Financial Statements give a true and fair view of the financial position and
results of the Group, the Company has decided, for transparency purposes, to
submit its 2023 Annual Report to the Company's Annual General Meeting of
Shareholders without auditor's report. The Company will submit its 2023
Financial Statements with the Dutch auditor's report if and when such report
will be issued.
Related party transactions
For a description of the related party transactions entered into by the
Company, please refer to note 8 of the consolidated financial statements.
Risks and Uncertainties
X5's risk management programme provides executive management with a periodic
and 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 2023
Annual Report. It should be noted that there are additional risks that
management believe are immaterial or otherwise common to most companies, or
that it is currently unaware of. The Company has assessed the risks for the
first half of 2024 and believes that the risks identified are in line with
those presented in the 2023 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 2023 Annual Report.
Annual Report and Accounts
The Annual Report and Accounts, including the full set of audited consolidated
financial statements and notes thereto, prepared in accordance with
International Financial Reporting Standards as adopted in the European Union,
are available on X5's corporate website at:
https://www.x5.ru/en/investors/annual-reports/
(https://www.x5.ru/en/investors/annual-reports/)
To access the 2023 Annual Report please click here:
http://www.rns-pdf.londonstockexchange.com/rns/9380H_1-2024-3-22.xhtml
(http://www.rns-pdf.londonstockexchange.com/rns/9380H_1-2024-3-22.xhtml)
Information on Alternative Performance Measures
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 75-78 of the 2023 Annual Report.
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. Express delivery
sales 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 pre-IFRS 16 is EBITDA pre-IFRS 16 before costs
related to the LTI programme, share-based payments, other one-off remuneration
payment expenses and the impact of the Karusel transformation.
4. Earnings before interest, taxes, depreciation, amortization and
impairment.
5. 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.
6. 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. Including
Karusel in Q4 and FY 2022.
7. Including Pokupochka, PokupALKO, Victoria, Kvartal, Deshevo and CASH.
8. Including Pokupochka, PokupALKO, Victoria, Kvartal, Deshevo and CASH.
9. Including Vprok.ru dark stores, Mnogo Lososya dark kitchens, and
Krasny Yar and Slata stores. Including Karusel in Q4 and FY 2022.
10. Excluding Krasny Yar and Slata, Vprok.ru and Mnogo Lososya; including
Chizhik.
11. Mainly consists of lease/sublease income, income from the sale of
recyclable materials and other one-off gains.
12. Adjusted for interest received on short-term financial investments.
13. Adjusted for cash used for short-term financial investments.
14. 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. Including
Karusel in Q4 and FY 2022.
15. Including Pokupochka, PokupALKO, Victoria, Kvartal, Deshevo, and CASH.
16. Adjusted for interest received on short-term financial investments.
17. Adjusted for cash used for short-term financial investments.
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, Chizhik hard
discounters, and Krasny Yar and Slata stores. 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 December 2023, X5 had 24,472 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, as well as a growing presence in the
Russian Far East. Its store base includes 21,308 Pyaterochka proximity stores,
972 Perekrestok supermarkets, 1,500 Chizhik hard discounters and 610 Krasny
Yar and Slata stores. The Company operates 62 DCs and 5,344 Company-owned
trucks across the Russian Federation.
X5 is one of the largest employers in Russia. The Company employs over 372
thousand people.
For the full year 2023, revenue totalled RUB 3,145,859 million (USD 36,903
million*), EBITDA pre-IFRS 16 reached RUB 214,764 million (USD 2,519
million*), and net profit pre-IFRS 16 for the period amounted to RUB 90,284
million (USD 1,059 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: 85.2466 USD/RUB
For further details, please contact:
Polina Ugryumova
Head of Corporate Finance and IR
Tel.: +7 (495) 662-88-88 ext. 13-312
e-mail: Polina.Ugryumova@x5.ru (mailto:Polina.Ugryumova@x5.ru)
Maria Yazeva
Investor Relations Officer
Tel.: +7 (495) 662-88-88 ext. 13-147
e-mail: Maria.Yazeva@x5.ru (mailto:Maria.Yazeva@x5.ru)
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