DJ Magnit reports 19.5% total sales growth and 7.2% EBITDA margin in 2021
MAGNIT PJSC (MGNT) Magnit reports 19.5% total sales growth and 7.2% EBITDA margin in 2021 04-March-2022 / 09:00 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.
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Magnit Reports 19.5% total sales growth and 7.2% EBITDA margin in 2021 Krasnodar, Russia (March 4, 2022): Magnit PJSC (MOEX and LSE: MGNT; the Company), one of Russia's leading retailers, announces its audited FY 2021 financial results prepared in accordance with IFRS.
FY 2021 Key Operational and Financial Highlights
-- Total revenue increased by 19.5% y-o-y to RUB 1,856.1 billion. Total revenue adjusted for
the Dixy acquisition increased by 10.8%;
19.5% -- Net retail sales reached RUB 1,807.8 billion increasing 19.7% y-o-y. Net retail sales
growth adjusted for the Dixy acquisition was 11.3%;
TOTAL REVENUE -- LFL[1] sales growth of 7.0% driven by 7.1% average ticket growth and 0.1% LFL traffic
growth decline;
-- Materially exceeded full year organic store opening guidance. The Company opened 2,295
stores[2] on gross basis (1,450 Magnit and 14 Dixy convenience stores, 825 drogeries and 6
supermarkets). As part of the Company's ongoing efficiency improvement campaign, 259 stores were
closed resulting in a net store addition of 2,036. As of December 31, 2021 the total store base was
26,077;
-- Selling space increase of 708 thousand sq. m. and addition of 793 thousand sq. m. as a
2,295 result of the Dixy acquisition, bringing total selling space to 8,997 thousand sq. m. (20.0% y-o-y
growth);
organic store -- Met the full year guidance on the number of store redesigns. The Company redesigned 703
openings stores under Magnit brand (611 convenience stores, 74 supermarkets and 18 drogeries). As at December
(gross) 31, 2021 78% of convenience stores, 45% of supermarkets and 62% of drogeries are either new or
refurbished;
-- Gross profit increased by 20.1% y-o-y to RUB 439.2 billion with a margin of 23.7% as a
result of better promotional margin, lower shrinkage and favorable format mix;
-- Cash SG&A[3] expenses as a percentage of sales increased by 25 bps to 17.8% higher
advertising and other costs.
-- EBITDA was RUB 133.1 billion with a 7.2% margin - an improvement of 13 bps y-o-y as a
result of stronger gross margin but partially offset by Dixy consolidation;
-- Net income increased by 36.8% y-o-y to of RUB 51.7 billion with a margin of 2.8% vs 2.4% a
year ago;
-- As of December 31, 2021 Net Debt was RUB 197.0 billion. Net Debt / EBITDA ratio was 1.5x.
1.5x
net debt /
ebitda ratio
Key events after the reported period
-- In February 2022, certain countries announced new packages of sanctions against the public
debt of the Russian Federation, a number of Russian banks and organizations, as well as personal
sanctions against a number of individuals.
Due to the growing geopolitical tensions, since February 2022, there has been a significant increase in
volatility on the securities and currency markets, as well as a significant depreciation of the ruble
against the US dollar and the euro. It is expected that these events may affect the activities of Russian
enterprises in various sectors of the economy.
The Group regards these events as non-adjusting events after the reporting period, the quantitative
effect of which cannot be estimated at the moment with a sufficient degree of confidence. Currently, the
Group's management is analyzing the possible impact of changing micro- and macroeconomic conditions on
the Group's financial position and results of operations. Financial Results for FY 2021
IAS 17 IFRS 16
RUB mln FY 2021 FY 2020 Change FY 2021 FY 2020 Change
Total Revenue 1,856,079 1,553,777 19.5% 1,856,079 1,553,777 19.5%
Retail 1,807,752 1,510,071 19.7% 1,807,752 1,510,071 19.7%
Wholesale 48,327 43,707 10.6% 48,327 43,707 10.6%
Gross Profit 439,238 365,729 20.1% 439,264 365,756 20.1%
Gross Margin, % 23.7% 23.5% 13 bps 23.7% 23.5% 13 bps
SG&A, % of Sales -20.6% -20.5% -17 bps -19.2% -19.1% -15 bps
EBITDA pre LTI[4] 134,054 110,264 21.6% 215,132 179,043 20.2%
EBITDA Margin pre LTI, % 7.2% 7.1% 13 bps 11.6% 11.5% 7 bps
EBITDA 133,143 109,410 21.7% 214,220 178,189 20.2%
EBITDA Margin, % 7.2% 7.0% 13 bps 11.5% 11.5% 7 bps
EBIT 79,744 63,493 25.6% 108,897 88,424 23.2%
EBIT Margin, % 4.3% 4.1% 21 bps 5.9% 5.7% 18 bps
Net Finance Costs -12,966 -13,497 -3.9% -46,578 -44,268 5.2%
FX Gain/ (Loss) 302 -1,310 -123.1% 281 -1,453 -119.3%
Profit before Tax 67,081 48,686 37.8% 62,600 42,703 46.6%
Taxes -15,387 -10,905 41.1% -14,494 -9,709 49.3%
Net Income 51,694 37,781 36.8% 48,106 32,993 45.8%
Net Income Margin, % 2.8% 2.4% 35 bps 2.6% 2.1% 47 bps
Total revenue in FY 2021 increased by 19.5%. This growth was underpinned by net retail sales growth of
19.7% and wholesale revenue growth of 10.6%. Wholesale operations accounted for 2.6% of total sales.
23.7%
Gross margin Gross Profit in FY 2021 increased by 20.1% y-o-y to RUB 439.2 billion with a margin of 23.7%. An
improvement of 13 bps y-o-y was a result of better promotional margin, lower shrinkage and favorable
in FY 2021 format mix. The latter positively impacted gross margin, with the share of wholesale operations
decreasing to 2.6% from 2.8% a year ago. Promotional intensity was slightly higher y-o-y driven by the
dynamics of the 1H.
Transportation expenses were flat y-o-y and stood at 2.5% as a percent of sales despite continued
increase of on-shelf availability. This was due to higher DC productivity and utilization, which offset
the negative impact of the increased container shipping tariffs.
20 bps Alongside the growing share of fresh products, overall improvement of on-shelf availability and
consolidation of the Dixy business, shrinkage as a proportion of sales decreased further by 20 bps y-o-y.
y-o-y This was driven by ongoing optimization of supply chain processes, renegotiation of quality standards
reduction of with suppliers and other initiatives.
shrinkage
IAS 17 IFRS 16
RUB mln FY 2021 FY 2020 Change FY 2021 FY 2020 Change
Staff costs 166,606 139,886 19.1% 166,606 139,886 19.1%
as a % of sales 9.0% 9.0% -3 bps 9.0% 9.0% -3 bps
Rent 80,834 67,011 20.6% 2,739 1,429 91.7%
as a % of sales 4.4% 4.3% 4 bps 0.1% 0.1% 6 bps
Depreciation, amortization & impairment 53,399 45,917 16.3% 105,323 89,765 17.3%
as a % of sales 2.9% 3.0% -8 bps 5.7% 5.8% -10 bps
Utilities & communication services 34,252 28,827 18.8% 34,252 28,827 18.8%
as a % of sales 1.8% 1.9% -1 bps 1.8% 1.9% -1 bps
Advertising 11,475 7,628 50.4% 11,475 7,628 50.4%
as a % of sales 0.6% 0.5% 13 bps 0.6% 0.5% 13 bps
Other expenses 10,944 7,265 50.6% 10,907 7,265 50.1%
as a % of sales 0.6% 0.5% 12 bps 0.6% 0.5% 12 bps
Bank Services 9,022 7,108 26.9% 9,022 7,108 26.9%
as a % of sales 0.5% 0.5% 3 bps 0.5% 0.5% 3 bps
Repair & maintenance 8,216 6,732 22.1% 8,192 6,732 21.7%
as a % of sales 0.4% 0.4% 1 bps 0.4% 0.4% 1 bps
Taxes, other than income tax 2,944 2,925 0.7% 2,944 2,925 0.7%
as a % of sales 0.2% 0.2% -3 bps 0.2% 0.2% -3 bps
Packaging & materials 5,500 4,861 13.1% 5,500 4,861 13.1%
as a % of sales 0.3% 0.3% -2 bps 0.3% 0.3% -2 bps
Total SG&A 383,194 318,159 20.4% 356,962 296,425 20.4%
as a % of sales 20.6% 20.5% 17 bps 19.2% 19.1% 15 bps
Cash SG&A (excl. D&A) 329,795 272,242 21.1% 251,638 206,660 21.8%
as a % of sales 17.8% 17.5% 25 bps 13.6% 13.3% 26 bps
17.8%
SG&A costs increased by 17 bps y-o-y to 20.6% as a percent of sales.
Cash SG&A
expenses
in FY 2021 Cash SG&A expenses as a percentage of sales increased by 25 bps to 17.8% on higher advertising and other
costs.
Advertising expenses increased by 13 bps y-o-y to 0.6% as a percentage of sales on higher marketing
activities including digital marketing and loyalty campaigns.
Rental costs as a percentage of sales increased by 4 bps y-o-y to 4.4% driven by the consolidation of
Dixy stores predominantly located in the Moscow and Saint-Petersburg regions with higher rent rates,
acceleration of stores openings and, subsequently, larger number of stores in the ramp up period as well
as higher share of leased selling space. The share of leased selling space increased to 80.2% at the end
of 2021 vs 78.0% a year ago. Despite the above-mentioned factors, rent expense of Magnit's business
standalone decreased as a percentage of sales thanks to higher sales density, improved lease terms with
landlords and the closure of inefficient stores.
Staff costs as a percentage of sales remained flat y-o-y at 9.0% (-3bps y-o-y). Higher productivity of
in-store personnel, on-going automation of business processes partially offset additional pressure from
new stores in the 'ramp-up' phase and slightly higher staff rotation due to pandemic last year.
Utilities, repair and maintenance, packaging and materials, bank and tax expenses remained broadly flat
as a percentage of sales y-o-y.
Other costs increased by 12 bps y-o-y to 0.6% as a percentage of sales on higher advisory services,
online order picking and delivery and software maintenance.
Other income and expense increased by 25 bps to 1.3% as a percentage of sales due to higher income from
sales of packaging materials as well as advertising, rental and sublease income.
As a result, EBITDA was RUB 133.1 billion with a 7.2% margin - an improvement of 13 bps y-o-y. This was
7.2% driven by gross margin dynamics partially offset by higher SG&A costs. LTI expenses in the reported
period stood at 0.05% of sales - as a result, EBITDA margin pre-LTI was 7.2% (in line with the reported
ebitda margin EBITDA).
in 2021
Depreciation as a percentage of sales reduced by 8 bps y-o-y to 2.9% due to consolidation of Dixy
business with lower share of depreciation as a percentage of sales as well as positive operating leverage
effect.
As a result, operating profit in 2021 stood at RUB 79.7 billion with 4.3% EBIT margin.
Net finance costs in 2021 decreased by 3.9% and stood at RUB 13.0 billion. In the reported period the
Company increased its total debt by RUB 104.3 billion by obtaining long-term bank loans and bond
issuance. These supported the Company's accelerated expansion and the acquisition of Dixy.
As a result, average cost of debt increased to 6.4% (33 bps y-o-y). 99.8% of the Company's debt profile
is represented by long-term borrowings and bonds with an average maturity of 18 months.
Higher interest expense was offset by higher interest income compared to the previous year.
In 2021 the Company reported FX gain in the amount of RUB 0.3 billion related to direct import
operations.
Income tax in 2021 was RUB 15.4 billion with effective tax rate of 22.9%.
As a result, net income in 2021 increased by 36.8% y-o-y and stood at RUB 51.7 billion. Net income margin
increased by 35 bps y-o-y to 2.8%.
2.8%
Net income
margin
in 2021
Balance Sheet and Cash Flows Financial Position Highlights (IFRS 16)
RUB mln 31.12.2021 31.12.2020
Non-current assets 889, 346 678,461
Inventories 224,873 205,949
Trade and other receivables 11,727 8,564
Cash and cash equivalents 73,399 44,700
Other current assets 10,100 7,718
Assets 1,209,444 945,392
Equity 178,985 182,889
Long-term loans and borrowings 205,287 147,695
Other long-term liabilities 410,132 330,535
Trade and other payables 240,771 184,325
Short-term loans and borrowings 65,139 18,392
Other short-term liabilities 109,129 81,557
Equity and liabilities 1,209,444 945,392
Inventories increased by RUB 18.9 billion (9.2%) compared with December 31, 2020 and stood at RUB 225
billion on the back of total sales growth of 19.5%. Adjusted for the Dixy acquisition, inventories of the
Magnit's standalone business reduced substantially. This was driven by a number of ongoing projects,
including the reduction of slow-moving items, assortment harmonization and IT solutions that are aimed at
better on-shelf availability and promotion forecasting.
Trade and other payables grew by RUB 56.4 billion compared with December 31, 2020 and stood at RUB 240.8
negative billion, driven by higher sales and increased payment days. Accounts receivables increased by RUB 3.2
working billion vs December 31, 2020 and stood at RUB 11.7 billion due to higher sales and improved commercial
capital with terms with suppliers.
18.3
billion As a result, working capital as of December 31, 2021 turned negative with the cash release of RUB 18.3
billion. Negative working capital was achieved for both the standalone Magnit and Dixy businesses.
cash release
(IAS 17)
Debt Composition and Leverage
December 31, 2021 June 30, 2021 December 31, 2020
IAS 17
Total Debt, RUB billion 270.4 265.5 166.1
Long-Term Debt 205.3 222.9 147.7
Short-Term Debt 65.1 42.6 18.4
Net Debt, RUB billion 197.0 136.1 121.4
Net Debt/EBITDA 1.5x 1.2x 1.1?
IFRS 16
Net Debt, RUB billion 653.3 498.9 479.0
Net Debt/EBITDA 3.0x 2.7x 2.7x
As at December 31, 2021 Gross Debt increased by RUB 104.3 billion or 62.8% compared to December 31, 2020
and stood at RUB 270.4 billion. The Company's cash position increased to RUB 73.4 billion as at December
1.5x 31, 2021 from RUB 44.7 billion as at December 31, 2020. As a result, Net Debt increased by 62.3% y-o-y to
RUB 197.0 billion as at December 31, 2021.
net debt/
ebitda
as of
December 31, The Company's debt is fully RUB denominated, matching its revenue structure. The Net Debt to EBITDA ratio
2021 (IAS 17) was 1.5x as at December 31, 2021 vs 1.1x as at December 31, 2020.
Cash Flow Statement for 2021
IAS 17 IFRS 16
million RUB 12M 2021 12M 2020 Change 12M 2021 12M 2020 Change
Operating cash flows before working capital changes 136,443 109,930 24.1% 215,359 175,540 22.7%
Changes in working capital 18,298 30,217 -39.4% 18,499 30,580 -39.5%
Net Interest and income tax paid -30,776 -25,738 19.6% -64,388 -56,509 13.9%
Net cash from operating activities 123,965 114,409 8.4% 169,470 149,611 13.3%
Net cash used in investing activities -127,903 -29,533 333.1% -126,689 -29,020 336.6%
Net cash generated / (used) from/(in) financing activities 32,638 -49,077 -166.5% -14,082 -84,793 -83.4%
Net cash increase / (decrease) 28,699 35,798 -19.8% 28,699 35,798 -19.8%
The Company's cash flows from operating activities before changes in working capital in 2021 equaled to
RUB 136.4 billion, which was RUB 26.5 billion or 24.1% higher y-o-y. The change in working capital
continued to improve and stood at RUB 18.3 billion compared to RUB 30.2 billion in 2020 as a result of
higher y-o-y trade and other payables partially offset by higher inventories.
Net interest and income tax paid in 2021 increased by RUB 5.0 billion or 19.6% to RUB 30.8 billion. Net
interest expenses decreased by 0.7% y-o-y to RUB 12.6 billion in 2021 due to higher average amount of
cash on bank accounts during the reported period. Income tax paid for 2021 increased by 39.2% to RUB 18.2
billion.
With this net cash flow from operating activities in 2021 increased by 8.4% to RUB 124.0 billion as a
result of higher EBITDA and positive movement of working capital.
124
RUB billion Net cash used in investing activities predominantly composed of capital expenditures increased by 333.1%
to RUB 127.9 billion in 2021 due to acceleration of expansion and redesign programs as well as Dixy
net Cash acquisition.
generated by
operations
Capital expenditure for the full year 2021 almost doubled and stood at RUB 66.9 billion, compared with
RUB 32.1 billion in 2020. This increase was driven by almost twofold acceleration of the Group's
expansion and store redesign program (2,295 store openings on gross basis and 703 redesigns in 2021 vs
1,292 and 385 respectively in 2020).
In 2021 net cash generated from financing activities was RUB 32.6 billion vs RUB 49.1 billion used in
2020. In 2021 the Company paid dividends in the total amount of RUB 48.1 billion[5].
As a result of factors mentioned above net cash position in 2021 increased by RUB 28.7 billion to RUB
73.4 billion as of December 31, 2021.
Note: 1. This announcement contains inside information disclosed in accordance with the Market Abuse Regulationeffective from July 3, 2016. 2. Please note that there may be small variations in calculation of totals, subtotals, and/or percentagechange due to rounding of decimals. 3. Please follow the link to view 2021 financial report - https://www.magnit.com/en/shareholders-and-investors/results-and-reports/tabs-results-2021 or https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
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
"Magnit" is one of Russia's leading retailers. Founded in 1994, the company is headquartered in the
southern Russian city of Krasnodar. As of December 31, 2021, Magnit operated 45 distribution centers and
26,077 stores in 3,898 cities and towns throughout 7 federal regions of the Russian Federation.
In accordance with the audited IFRS 16 results for FY 2021, Magnit had revenues of RUB 1,856.1 billion
and an EBITDA of RUB 214.2 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.
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[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] The number of stores does not include pharmacies
[3] Selling, general and administrative expenses excluding depreciation and amortization
[4] LTI - Long-Term Incentive Program
[5] Excluding intercompany transactions between PJSC Magnit and JSC Tander
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ISIN: US55953Q2021 Category Code: MSCU TIDM: MGNT LEI Code: 2534009KKPTVL99W2Y12 OAM Categories: 2.2. Inside information Sequence No.: 146812 EQS News ID: 1294327 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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