REG - X5 Retail Group N.V - X5 reports 19.2% revenue growth in Q2 2023
15/08/2023 08:00
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RNS Number : 2719J X5 Retail Group N.V. 15 August 2023
X5 reports 19.2% revenue growth in Q2 2023, 7.8% adj. EBITDA margin pre-IFRS 16
+19.2 % y-o-y
Revenue growth in Q2 2023
driven by solid like-for-like (LFL) (1) sales and selling space expansion
+83.7 % y-o-y
Digital business (express delivery, Vprok.ru, 5Post and Mnogo Lososya) net
sales growth in Q2 2023
Digital business net sales amounted to RUB 27.0 billion, which comprised 3.5%
of consolidated Q2 2023 revenue.
24.4 % -137 b.p.
Gross margin under IFRS 16 in Q2 2023
(-139 b.p. to 24.1% pre-IFRS 16(2))
driven by the aggressive expansion of the Chizhik hard discounter format into
regional markets, the consolidation of Krasny Yar and Slata, as well as the
transformation of Pyaterochka's CVP
11.9 % -212 b.p.
Adjusted EBITDA(3) margin under IFRS 16 in Q2 2023
(-179 b.p. to 7.8% pre-IFRS 16)
3.4 % -72 b.p.
Net profit margin under IFRS 16 in Q2 2023
(-11 b.p. to 3.8% pre-IFRS 16)
2.71x
Net debt/EBITDA ratio under IFRS 16 as of 30 June 2023 (vs. 2.58x as of 31
December 2022)
(1.10х as of 30 June 2023 vs. 1.02х as of 31 December 2022 pre-IFRS 16 )
Amsterdam, 15 August 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 interim
report for the three months (Q2) and six months (H1) ended 30 June 2023, in
accordance with IAS 34 "Interim Financial Reporting" as adopted by the
European Union. The interim report has been reviewed by the Company's
independent auditor but has not been audited.
Igor Shekhterman, X5 Chief Executive Officer, commented:
"During the first half of 2023, X5 focused on adapting its customer value
proposition while continuing to pursue its dynamic expansion on the domestic
grocery market. Our current priority is developing and expanding our
Pyaterochka proximity stores and Chizhik hard discounters as well as improving
efficiency and transforming the existing store base of our Perekrestok
supermarket format to increase like-for-like sales. In Q2 2023, X5
demonstrated strong revenue growth of 19.2%, driven both by organic
development and M&A.
We continued to develop our Pyaterochka proximity store network and adapt its
CVP to changing market conditions, including by expanding the low-price
segment that has proven attractive to our customers. This and other measures
have resulted in traffic gains, with Pyaterochka's like-for-like traffic
increasing by 7.2% year-on-year in Q2 2023.
In a major milestone during the reporting period, Pyaterochka launched
operations in the Russian Far East, becoming the first nationwide food
retailer to establish a presence in this territory.
In line with our strategy, we continued the active expansion of our Chizhik
hard discounter format. The expansion of this format serves an important
social function by providing a wide range of customers with access to
affordable, high-quality food, while creating new jobs and expanding
opportunities for local suppliers. At the end of Q2 2023, Chizhik had 809
stores across 27 regions of Russia, with plans to accelerate the rate of new
store openings in H2 2023.
Our strategic priorities for Perekrestok include revamping our CVP to focus on
the supermarket's unique assortment and presence in large cities, and
prioritising LFL growth over new store openings. Perekrestok is particularly
attractive to customers on the go thanks to its varied assortment of fresh and
ultra-fresh products, take-out and dine-in meal options, and basics covering
all customer needs through both private labels and branded products. Our new
store formats also feature a high level of service and a pleasant ambiance
that transform the shopping experience. We aim to drive sales growth by
focusing on Perekrestok's online services, particularly express delivery.
X5's digital businesses posted solid growth in Q2 2023, with net sales
increasing by 83.7 % year-on-year and accounting for 3.5% of consolidated
revenue for the quarter. We continue to actively develop our express delivery
services, both internally through our retail stores and dark stores, and
externally through partnerships with leading delivery aggregators. The number
of online orders increased 2.8x year-on-year in Q2 2023. During this period,
we launched a joint pilot project between Avito Delivery, a leading Russian
online classified ads platform, and X5's e-commerce delivery service 5Post to
offer parcel drop-off and pick-up options at select 5Post locations. The pilot
may be scaled up in the future to enable customers to drop off and collect
Avito orders at more than 13,000 additional pickup points and more than 5,000
multi-parcel lockers located in X5's Pyaterochka and Perekrestok retail chain
stores.
A key driver of customer engagement is our unified loyalty programme, X5 Club,
which enables customers to earn and redeem bonus points for various X5 Group
services on a single platform. In Q2 2023, X5 Club was expanded to include
X5's express delivery services, the ready-to-eat digital service Mnogo
Lososya, and the online media platform Food.ru. As of June, our loyalty
programme counted more than 72 million members, while its sales penetration
reached 76%. We plan to further develop the loyalty programme as part of our
aim to drive new efficiency gains, create a highly tailored customer
experience and offer better insights into customer needs.
In parallel to pursuing business expansion through organic growth, in Q2 2023
X5 secured an agreement to acquire Tamerlan, the operator of three retail
chains in southern Russia. This acquisition will enable us to expand our
presence in this region, while giving local customers more opportunities to
benefit from the wide selection and affordable prices at X5 stores. We will
maintain our strategy of seeking attractive inorganic growth opportunities as
market conditions continue to evolve.
Throughout this time, X5 has remained committed to its sustainability strategy
as guided by the UN Sustainable Development Goals, with food security becoming
a primary focus. In June 2023, the Company published its third annual
Sustainability Report. Among the report's key highlights, X5 collected and
distributed more than 518 tonnes of food to approximately 199,000 people in
need through the Basket of Kindness food drive in 2022. And in July of this
year, X5 marked the one-year anniversary of its food-sharing initiative, which
saw the Company donate more than 13 tonnes of food to more than 26,000 people
in the project's first 12 months of operation. Moving forward, we plan to
scale up our food assistance programmes while continuing our work to reduce
the environmental impact of our operations.
I would like to express my gratitude to our partners and investors for their
continued trust and cooperation during the current challenging environment. I
would also like to extend my appreciation to all of X5's employees, who have
shown flexibility and dedication as we work to adjust quickly to meet
customers' needs. This effort forms the foundation of our customer-focused
approach, and drives our continued success as the domestic food retailer of
choice."
Profit and loss statement highlights(4)
RUB mln IFRS 16 Pre-IFRS 16
Q2 2023 Q2 2022 change, Q2 2023 Q2 2022 change,
y-o-y, % or multiple
y-o-y, % or multiple
Revenue 772,043 647,950 19.2 772,043 647,950 19.2
incl. net retail sales(5) 768,609 646,164 18.9 768,609 646,164 18.9
Pyaterochka (incl. express delivery) 616,986 534,319 15.5 616,986 534,319 15.5
Perekrestok (incl. express delivery) 100,401 95,345 5.3 100,401 95,345 5.3
Chizhik 26,586 6,818 4x 26,586 6,818 4x
Gross profit 188,394 167,016 12.8 185,835 164,957 12.7
Gross profit margin, % 24.4 25.8 (137) b.p. 24.1 25.5 (139) b.p.
Adj. EBITDA 92,086 91,013 1.2 60,512 62,376 (3.0)
Adj. EBITDA margin, % 11.9 14.0 (212) b.p. 7.8 9.6 (179) b.p.
EBITDA 92,446 90,152 2.5 60,872 61,515 (1.0)
EBITDA margin, % 12.0 13.9 (194) b.p. 7.9 9.5 (161) b.p.
Operating profit 52,700 51,578 2.2 41,169 41,519 (0.8)
Operating profit margin, % 6.8 8.0 (113) b.p. 5.3 6.4 (108) b.p.
Net profit 26,307 26,762 (1.7) 29,489 25,442 15.9
Net profit margin, % 3.4 4.1 (72) b.p. 3.8 3.9 (11) b.p.
RUB mln IFRS 16 Pre-IFRS 16
H1 2023 H1 2022 change, H1 2023 H1 2022 change,
y-o-y, % or multiple
y-o-y, % or multiple
Revenue 1,468,407 1,252,180 17.3 1,468,407 1,252,180 17.3
incl. net retail sales(6) 1,462,090 1,247,940 17.2 1,462,090 1,247,940 17.2
Pyaterochka (incl. express delivery) 1,165,898 1,023,512 13.9 1,165,898 1,023,512 13.9
Perekrestok (incl. express delivery) 201,843 191,910 5.2 201,843 191,910 5.2
Chizhik 45,330 10,917 4x 45,330 10,917 4x
Gross profit 355,625 317,446 12.0 350,784 313,429 11.9
Gross profit margin, % 24.2 25.4 (113) b.p. 23.9 25.0 (114) b.p.
Adj. EBITDA 163,009 161,192 1.1 100,748 104,908 (4.0)
Adj. EBITDA margin, % 11.1 12.9 (177) b.p. 6.9 8.4 (152) b.p.
EBITDA 162,637 159,708 1.8 100,376 103,424 (2.9)
EBITDA margin, % 11.1 12.8 (168) b.p. 6.8 8.3 (142) b.p.
Operating profit 83,216 77,768 7.0 60,501 58,625 3.2
Operating profit margin, % 5.7 6.2 (54) b.p. 4.1 4.7 (56) b.p.
Net profit 36,003 29,261 23.0 41,661 30,464 36.8
Net profit margin, % 2.5 2.3 12 b.p. 2.8 2.4 40 b.p.
Revenue
Revenue growth reached 19.2% year-on-year in Q2 2023. Net retail sales
increased by 18.9%, driven by a combination of 10.4% selling space growth and
7.8% LFL sales growth, while X5's digital business sales grew by 83.7% y-o-y.
Selling space by format, square metres (sqm)
AS AT 30-JUN-23 AS AT 31-DEC-22 CHANGE AS AT 30-JUN-22 CHANGE Y-O-Y, % OR MULTIPLE
VS 31-DEC-22, % OR MULTIPLE
Pyaterochka 7,899,872 7,497,056 5.4 7,271,291 8.6
Perekrestok 1,067,171 1,085,496 (1.7) 1,107,702 (3.7)
Chizhik 239,559 152,370 57.2 44,129 5x
Joint dark stores 10,258 8,087 26.8 5,358 91.5
X5 Group(7) 9,541,021 9,107,479 4.8 8,643,579 10.4
Q2 and H1 2023 LFL store performance by format, % change y-o-y
In Q2 2023, LFL sales increased by 7.8% year-on-year, supported by
Pyaterochka's and Perekrestok's solid LFL results of 8.5% and 4.6%,
respectively.
LFL traffic was the main driver of LFL sales in Q2 2023, with the LFL basket
in positive territory at 1.1% year-on-year.
Q2 2023 H1 2023
SALES TRAFFIC BASKET SALES TRAFFIC BASKET
Pyaterochka 8.5 7.2 1.2 7.8 5.6 2.0
Perekrestok 4.6 2.3 2.3 4.3 1.8 2.5
X5 Group(8) 7.8 6.6 1.1 7.2 5.2 1.9
For more details on net retail sales performance, please refer to X5's Q2 202
(https://www.x5.ru/wp-content/uploads/2023/07/q2_2023_trading_update_eng.pdf)
3
(https://www.x5.ru/wp-content/uploads/2023/07/q2_2023_trading_update_eng.pdf)
Trading Update
(https://www.x5.ru/wp-content/uploads/2023/07/q2_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 under IFRS 16 decreased by 137 b.p. year-on-year to 24.4%
(down 139 b.p. year-on-year to 24.1% pre-IFRS 16) in Q2 2023, mainly due to
the aggressive expansion of the Chizhik hard discounter format into regional
markets, the consolidation of Krasny Yar and Slata, as well as the
transformation of Pyaterochka's CVP.
Gross profit margin for H1 2023 decreased by 113 b.p. under IFRS 16 (down 114
b.p. pre-IFRS 16) due to the increasing share of the hard discounter format in
revenue, 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 Q2 2023 Q2 2022 change, Q2 2023 Q2 2022 change,
y-o-y, %
y-o-y, %
Staff costs (62,672) (50,210) 24.8 (62,672) (50,210) 24.8
% of revenue 8.1 7.7 37 b.p. 8.1 7.7 37 b.p.
incl. LTI and share-based payments (1,429) (685) 108.6 (1,429) (685) 108.6
staff costs excl. LTI and share-based payments as % of revenue 7.9 7.6 29 b.p. 7.9 7.6 29 b.p.
Lease expenses (6,628) (4,619) 43.5 (32,912) (29,054) 13.3
% of revenue 0.9 0.7 15 b.p. 4.3 4.5 (22) b.p.
Utilities (14,426) (11,122) 29.7 (14,426) (11,122) 29.7
% of revenue 1.9 1.7 15 b.p. 1.9 1.7 15 b.p.
Other store costs (6,440) (5,784) 11.3 (6,652) (6,001) 10.8
% of revenue 0.8 0.9 (6) b.p. 0.9 0.9 (6) b.p.
Third-party services (5,305) (3,425) 54.9 (5,158) (3,329) 54.9
% of revenue 0.7 0.5 15 b.p. 0.7 0.5 15 b.p.
Other expenses (8,249) (7,514) 9.8 (10,632) (9,113) 16.7
% of revenue 1.1 1.2 (9) b.p. 1.4 1.4 (3) b.p.
SG&A (excl. D&A&I and the impact of the Karusel transformation) (103,720) (82,674) 25.5 (132,452) (108,829) 21.7
% of revenue 13.4 12.8 68 b.p. 17.2 16.8 36 b.p.
SG&A (excl. D&A&I, LTI, share-based payments and the impact of the (102,291) (81,989) 24.8 (131,023) (108,144) 21.2
Karusel transformation)
% of revenue 13.2 12.7 60 b.p. 17.0 16.7 28 b.p.
IFRS 16 Pre-IFRS 16
RUB mln H1 2023 H1 2022 change, H1 2023 H1 2022 change,
y-o-y, %
y-o-y, %
Staff costs (123,870) (100,288) 23.5 (123,870) (100,288) 23.5
% of revenue 8.4 8.0 43 b.p. 8.4 8.0 43 b.p.
incl. LTI and share-based payments (2,161) (1,061) 103.7 (2,161) (1,061) 103.7
staff costs excl. LTI and share-based payments as % of revenue 8.3 7.9 36 b.p. 8.3 7.9 36 b.p.
Lease expenses (11,899) (8,788) 35.4 (64,269) (57,222) 12.3
% of revenue 0.8 0.7 11 b.p. 4.4 4.6 (19) b.p.
Utilities (31,294) (24,989) 25.2 (31,294) (24,989) 25.2
% of revenue 2.1 2.0 14 b.p. 2.1 2.0 14 b.p.
Other store costs (12,593) (11,404) 10.4 (13,018) (11,840) 9.9
% of revenue 0.9 0.9 (5) b.p. 0.9 0.9 (6) b.p.
Third-party services (9,449) (7,939) 19.0 (9,244) (7,748) 19.3
% of revenue 0.6 0.6 1 b.p. 0.6 0.6 1 b.p.
Other expenses (16,639) (15,701) 6.0 (20,902) (18,677) 11.9
% of revenue 1.1 1.3 (12) b.p. 1.4 1.5 (7) b.p.
SG&A (excl. D&A&I and the impact of the Karusel transformation) (205,744) (169,109) 21.7 (262,597) (220,764) 18.9
% of revenue 14.0 13.5 51 b.p. 17.9 17.6 25 b.p.
SG&A (excl. D&A&I, LTI, share-based payments and the impact of the (203,583) (168,048) 21.1 (260,436) (219,703) 18.5
Karusel transformation)
% of revenue 13.9 13.4 44 b.p. 17.7 17.5 19 b.p.
In Q2 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 60 b.p. to 13.2% (up 28 b.p. to 17.0%
pre-IFRS 16), mainly driven by increased staff costs, lease expenses,
utilities costs and third-party services as a percentage of revenue.
Staff costs (excluding LTI and share-based payments) as a percentage of
revenue increased by 29 b.p. year-on-year in Q2 2023 to 7.9%, mainly due to
the negative operating leverage effect as well as the hiring of additional
store personnel at Perekrestok on the back of the new CVP.
LTI and share-based payment expenses amounted to RUB 1,429 million in Q2 2023,
up by 108.6% from RUB 685 million in Q2 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 the KPIs.
Lease expenses under IFRS 16 as a percentage of revenue in Q2 2023 increased
by 15 b.p. year-on-year to 0.9%, mainly due to an increase in the number of
reverse franchising stores. The 22 b.p. decrease in pre-IFRS 16 lease expenses
to 4.3% was caused by a positive operating leverage effect for fixed lease
rates.
Utilities costs as a percentage of revenue in Q2 2023 increased by 15 b.p.
year-on-year to 1.9%, mainly due to a negative operating leverage effect and
increase in tariffs.
Other store costs under IFRS 16 as a percentage of revenue in Q2 2023
decreased by 6 b.p. year-on-year (falling by 6 b.p. pre-IFRS 16), mainly due
to the optimisation of store security operations.
Third-party service expenses under IFRS 16 as a percentage of revenue in Q2
2023 increased by 15 b.p. year-on-year to 0.7% (up 15 b.p. to 0.7% pre-IFRS
16), mainly due to the normalisation of marketing expenses vs Q2 2022.
Other expenses under IFRS 16 as a percentage of revenue in Q2 2023 decreased
by 9 b.p. year-on-year to 1.1% (down 3 b.p. to 1.4% pre-IFRS 16), due to the
reversal of one-off provisions partially offset by the growing share of
courier service costs for express delivery.
In H1 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 44 b.p. to 13.9% (up 19 b.p. to 17.7%
pre-IFRS 16), mainly driven by higher staff costs, lease expenses and
utilities as a percentage of revenue.
Lease/sublease and other income(9)
As a percentage of revenue, the Company's income from leases, subleases and
other operations under IFRS 16 totalled 0.8%, representing a decrease of 11
b.p. year-on-year in Q2 2023 (a decrease of 8 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 Q2 2023 Q2 2022 change, Q2 2023 Q2 2022 change,
y-o-y, %
y-o-y, %
Gross profit 188,394 167,016 12.8 185,835 164,957 12.7
Gross profit margin, % 24.4 25.8 (137) b.p. 24.1 25.5 (139) b.p.
SG&A (excl. D&A&I, LTI, share-based payments and the effect of the (102,291) (81,989) 24.8 (131,023) (108,144) 21.2
Karusel transformation)
% of revenue 13.2 12.7 60 b.p. 17.0 16.7 28 b.p.
Net impairment gain on financial assets 12 288 (95.8) 12 288 (95.8)
% of revenue 0.00 0.04 (4) b.p. 0.00 0.04 (4) b.p.
Lease/sublease and other income (excl. the effect of the Karusel 5,971 5,698 4.8 5,688 5,275 7.8
transformation)
% of revenue 0.8 0.9 (11) b.p. 0.7 0.8 (8) b.p.
Adj. EBITDA 92,086 91,013 1.2 60,512 62,376 (3.0)
Adj. EBITDA margin, % 11.9 14.0 (212) b.p. 7.8 9.6 (179) b.p.
LTI, share-based payments and other one-off remuneration payment expenses and (1,429) (685) 108.6 (1,429) (685) 108.6
SSC
% of revenue 0.2 0.1 8 b.p. 0.2 0.1 8 b.p.
Effect of the Karusel transformation 1,789 (176) n/a 1,789 (176) n/a
% of revenue 0.23 (0.03) 26 b.p. 0.23 (0.03) 26 b.p.
EBITDA 92,446 90,152 2.5 60,872 61,515 (1.0)
EBITDA margin, % 12.0 13.9 (194) b.p. 7.9 9.5 (161) b.p.
IFRS 16 Pre-IFRS 16
RUB mln H1 2023 H1 2022 change, H1 2023 H1 2022 change,
y-o-y, %
y-o-y, %
Gross profit 355,625 317,446 12.0 350,784 313,429 11.9
Gross profit margin, % 24.2 25.4 (113) b.p. 23.9 25.0 (114) b.p.
SG&A (excl. D&A&I, LTI, share-based payments and the effect of the (203,583) (168,048) 21.1 (260,436) (219,703) 18.5
Karusel transformation)
% of revenue 13.9 13.4 44 b.p. 17.7 17.5 19 b.p.
Net impairment losses on financial assets (54) (147) (63.3) (54) (147) (63.3)
% 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 11,021 11,941 (7.7) 10,454 11,329 (7.7)
transformation)
% of revenue 0.8 1.0 (20) b.p. 0.7 0.9 (19) b.p.
Adj. EBITDA 163,009 161,192 1.1 100,748 104,908 (4.0)
Adj. EBITDA margin, % 11.1 12.9 (177) b.p. 6.9 8.4 (152) b.p.
LTI, share-based payments and other one-off remuneration payment expenses and (2,161) (1,061) 103.7 (2,161) (1,061) 103.7
SSC
% of revenue 0.1 0.1 6 b.p. 0.1 0.1 6 b.p.
Effect of the Karusel transformation 1,789 (423) n/a 1,789 (423) n/a
% of revenue 0.12 (0.03) 16 b.p. 0.12 (0.03) 16 b.p.
EBITDA 162,637 159,708 1.8 100,376 103,424 (2.9)
EBITDA margin, % 11.1 12.8 (168) b.p. 6.8 8.3 (142) b.p.
D&A&I
Depreciation, amortisation and impairment costs under IFRS 16 decreased as a
percentage of revenue by 81 b.p. year-on-year to 5.1% (down 53 b.p.
year-on-year to 2.6% pre-IFRS 16) in Q2 2023, totalling RUB 39,746 million
(RUB 19,703 million pre-IFRS 16). This was mainly due to the fact that revenue
growth outpaced growth in the gross book value of assets. In H1 2023,
depreciation, amortisation and impairment costs under IFRS 16 decreased by 114
b.p. year-on-year to 5.4% (down 86 b.p. year-on-year to 2.7% pre-IFRS 16),
totalling RUB 79,421 million (RUB 39,875 million pre-IFRS 16).
Non-operating gains and losses
IFRS 16 Pre-IFRS 16
RUB mln Q2 2023 Q2 2022 change, Q2 2023 Q2 2022 change,
y-o-y, % or multiple
y-o-y, % or multiple
Operating profit 52,700 51,578 2.2 41,169 41,519 (0.8)
Net finance costs (16,252) (18,253) (11.0) (1,744) (5,972) (70.8)
Net FX result (2,087) 6,231 n/a (1,086) 2,352 n/a
Profit before tax 34,361 39,556 (13.1) 38,339 37,899 1.2
Income tax expense (8,054) (12,794) (37.0) (8,850) (12,457) (29.0)
Net profit 26,307 26,762 (1.7) 29,489 25,442 15.9
Net profit margin, % 3.4 4.1 (72) b.p. 3.8 3.9 (11) b.p.
IFRS 16 Pre-IFRS 16
RUB mln H1 2023 H1 2022 change, H1 2023 H1 2022 change,
y-o-y, % or multiple
y-o-y, % or multiple
Operating profit 83,216 77,768 7.0 60,501 58,625 3.2
Net finance costs (33,015) (35,319) (6.5) (4,904) (11,782) (58.4)
Net FX result (3,498) 2,937 n/a (1,822) 45 n/a
Profit before tax 46,703 45,386 2.9 53,775 46,888 14.7
Income tax expense (10,700) (16,125) (33.6) (12,114) (16,424) (26.2)
Net profit 36,003 29,261 23.0 41,661 30,464 36.8
Net profit margin, % 2.5 2.3 12 b.p. 2.8 2.4 40 b.p.
Net finance costs under IFRS 16 in Q2 2023 decreased by 11% year-on-year to
RUB 16,252 million (down 70.8% year-on-year to RUB 1,744 million pre-IFRS 16),
driven by lower finance costs on the back of decreased interest rates in
Russian capital markets vs Q2 2022 and lower total debt.
The negative net FX result totalled RUB 2,087 million (RUB 1,086 million under
pre-IFRS 16) in Q2 2023, compared with positive RUB 6,231 million (positive
RUB 2,352 million under pre-IFRS 16) in Q2 2022, due to the depreciation of
the rouble.
In Q2 2023, income tax expense under IFRS 16 decreased by 37.0% year-on-year
(down 29.0% year-on-year pre-IFRS 16) due to the high base effect of Q2 2022
driven by a one-off effect from provisions.
In H1 2023, the effective tax rate under IFRS 16 was 22.9% (22.5% under
pre-IFRS 16), down from 35.5% in H1 2022 (35.0% under pre-IFRS 16).
Consolidated cash flow statement highlights
IFRS 16 Pre-IFRS 16
RUB mln Q2 2023 Q2 2022 change, Q2 2023 Q2 2022 change,
y-o-y, % or multiple
y-o-y, % or multiple
Net cash from operating activities before changes in working capital 90,205 89,817 0.4 58,906 61,603 (4.4)
Change in working capital 16,864 5,699 3x 16,865 5,898 3x
Adj. net interest and income tax paid(10) (21,117) (19,536) 8.1 (6,637) (7,245) (8.4)
Interest received on short-term financial investments 2,232 - n/a 2,232 - n/a
Net interest and income tax paid (18,885) (19,536) (3.3) (4,405) (7,245) (39.2)
Adj. net cash flows generated from operating activities(10) 85,952 75,980 13.1 69,134 60,256 14.7
Net cash flows generated from operating activities 88,184 75,980 16.1 71,366 60,256 18.4
Adj. net cash used in investing activities(11) (30,354) (15,058) 101.6 (30,507) (15,143) 101.5
(Payment for)/Repayment of short-term financial investments (32,232) 30,000 n/a (32,232) 30,000 n/a
Net cash (used in)/generated from investing activities (62,586) 14,942 n/a (62,739) 14,857 n/a
Net cash used in financing activities (37,435) (105,309) (64.5) (20,464) (89,500) (77.1)
Effect of exchange rate changes on cash and cash equivalents 134 (309) n/a 134 (309) n/a
Net increase in cash and cash equivalents (11,703) (14,696) (20.4) (11,703) (14,696) (20.4)
IFRS 16 Pre-IFRS 16
RUB mln H1 2023 H1 2022 change, H1 2023 H1 2022 change,
y-o-y, % or multiple
y-o-y, % or multiple
Net cash from operating activities before changes in working capital 160,048 160,574 (0.3) 98,353 104,909 (6.2)
Change in working capital (14,015) (18,493) (24.2) (13,834) (17,996) (23.1)
Adj. net interest and income tax paid(10) (43,344) (39,945) 8.5 (15,288) (16,423) (6.9)
Interest received on short-term financial investments 2,232 - n/a 2,232 - n/a
Net interest and income tax paid (41,112) (39,945) 2.9 (13,056) (16,423) (20.5)
Adj. net cash flows generated from operating activities(10) 102,689 102,136 0.5 69,231 70,490 (1.8)
Net cash flows generated from operating activities 104,921 102,136 2.7 71,463 70,490 1.4
Adj. net cash used in investing activities(11) (47,430) (37,025) 28.1 (47,707) (37,267) 28.0
(Payment for)/Repayment of short-term financial investments (32,232) 30,000 n/a (32,232) 30,000 n/a
Net cash used in investing activities (79,662) (7,025) 11x (79,939) (7,267) 11x
Net cash used in financing activities (41,354) (82,343) (49.8) (7,619) (50,455) (84.9)
Effect of exchange rate changes on cash and cash equivalents 256 (314) n/a 256 (314) n/a
Net increase in cash and cash equivalents (15,839) 12,454 n/a (15,839) 12,454 n/a
In Q2 2023, the Company's net cash from operating activities before changes in
working capital under IFRS 16 increased by RUB 388 million (down RUB 2,697
million under pre-IFRS 16) and totalled RUB 90,205 million (RUB 58,906 million
under pre-IFRS 16). The positive change in working capital under IFRS 16 of
RUB 16,864 million in Q2 2023 vs. RUB 5,699 million in Q2 2022 was driven by
an increase in trade accounts payable due to the effect of the low base of Q1
2023 on the back of earlier stock purchases ahead of Russian holidays on 23
February and 8 March and a negative effect on inventories from additional
stock purchases last year.
Working capital highlights
RUB mln 30-Jun-23 31-Dec-22 30-Jun-22
Inventories 207,849 208,661 175,204
Trade, other accounts receivable and prepayments 22,055 21,382 12,921
Trade accounts payable 222,308 238,641 187,672
Provisions and other liabilities 131,061 130,450 97,827
Short-term contract liabilities 1,779 3,767 5,826
Adjusted net interest and income tax paid under IFRS 16 in Q2 2023 increased
by 8.1% year-on-year (down 8.4% year-on-year pre-IFRS 16) and totalled RUB
21,117 million (RUB 6,637 million pre-IFRS 16). This was due to the low base
effect of income tax paid in Q2 2022 driven by income tax prepayments made in
previous periods.
As a result, adjusted net cash flow generated from operating activities under
IFRS 16 totalled RUB 85,952 million in Q2 2023, up from RUB 75,980 million in
Q2 2022 (RUB 69,134 million, up from RUB 60,256 million in Q2 2022 pre-IFRS
16).
In H1 2023, adjusted net cash flows generated from operating activities under
IFRS 16 totalled RUB 102,689 million, up 0.5% from RUB 102,136 million in H1
2022 (totalling RUB 69,231 million, down 1.8% from RUB 70,490 million in H1
2022 pre-IFRS 16).
In Q2 2023, adjusted net cash used in investing activities, which
predominantly consists of payments for property, plant and equipment,
increased to RUB 30,354 million under IFRS 16 (RUB 30,507 million pre-IFRS 16)
due to the low base effect of Q2 2022 driven by capex control measures, as
well as the acquisition of Tamerlan in Q2 2023. For H1 2023, adjusted net cash
used in investing activities under IFRS 16 increased to RUB 47,430 million
(RUB 47,707 million under pre-IFRS 16) from RUB 37,025 million (RUB 37,267
million under pre-IFRS 16) in H1 2022.
Net cash used in financing activities under IFRS 16 totalled RUB 37,435
million (RUB 20,464 million pre-IFRS 16) in Q2 2023, compared with net cash
used in financing activities of RUB 105,309 million (RUB 89,500 million
pre-IFRS 16) in Q2 2022. In H1 2023, net cash used in financing activities
under IFRS 16 decreased to RUB 41,354 million from RUB 82,343 million
(decreasing to RUB 7,619 million from RUB 50,455 million pre-IFRS 16) in H1
2022.
Liquidity update
RUB mln 30-Jun-23 % of total 31-Dec-22 % of total 30-Jun-22 % of total
Total debt 228,985 234,532 243,928
Short-term debt 109,997 48.0 87,146 37.2 60,490 24.8
Long-term debt 118,988 52.0 147,386 62.8 183,438 75.2
Net debt (pre-IFRS 16) 201,569 191,277 205,412
Net debt/EBITDA (pre-IFRS 16) 1.10x 1.02x 1.11x
Lease liabilities (IFRS 16) 626,676 591,160 558,072
Net debt/EBITDA (IFRS 16) 2.71x 2.58x 2.58x
The Company's net debt/EBITDA ratio under IFRS 16 was 2.71x (1.10x pre-IFRS
16) as of 30 June 2023.
The Company's debt pre-IFRS 16 is 100% denominated in Russian roubles.
As of 30 June 2023, the Company had access to RUB 442,961 million in available
lines of credit with major banks.
Related Party Transactions
For a description of the related party transactions entered into by the
Company, please refer to note 8 of the consolidated condensed interim
financial statements.
Risks and Uncertainties
X5's risk management programme provides executive management with a periodic
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 2022
Annual Report. It should be noted that there are additional risks that
management believe are immaterial or otherwise common to most companies, or
that management is currently unaware of. The Company has assessed the risks
for the first half of 2023 and believes that the risks identified are in line
with those presented in the 2022 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 2022 Annual Report.
Interim report
The interim report, including the full set of reviewed IFRS condensed
consolidated interim financial statements and notes thereto, is available on
X5's corporate website at:
https://www.x5.ru/en/investors/financial-and-operational-results/
(https://www.x5.ru/en/investors/financial-and-operational-results/)
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 73-76 of the Annual
Report 2022.
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. 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. 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
7. Including Vprok.ru dark stores, Mnogo Lososya dark kitchens, and
Krasny Yar and Slata stores.
8. Excluding Krasny Yar and Slata, Vprok.ru and Mnogo Lososya; including
Chizhik.
9. Mainly consists of lease/sublease income, income from the sale of
recyclable materials and other one-off gains.
10. Adjusted for interest received on short-term financial investments
11. 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 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 30 June 2023, X5 had 22,682 Company-operated stores. It has the leading
market position in both Moscow and St Petersburg, as well as a significant
presence in the European part of Russia and a growing presence in the Russian
Far East. Its store base includes 20,248 Pyaterochka proximity stores, 956
Perekrestok supermarkets, 809 Chizhik hard discounters and 596 Krasny Yar and
Slata stores. The Company operates 59 DCs and 4,604 Company-owned trucks
across the Russian Federation.
X5 is one of the largest employers in Russia. The Company employs over 358
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 H1 2023, revenue totalled RUB 1,468,407 million
(USD 19,095 million**), adjusted EBITDA pre-IFRS 16 reached RUB 100,748
million (USD 1,310 million**), and net profit pre-IFRS 16 amounted to RUB
41,661 million (USD 542 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: 76.8996 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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