DJ Magnit reports 38.2% total sales growth (19.1% adjusted for the Dixy acquisition) and 7.0% EBITDA margin in 1H 2022
MAGNIT PJSC (MGNT) Magnit reports 38.2% total sales growth (19.1% adjusted for the Dixy acquisition) and 7.0% EBITDA margin in 1H 2022 19-Aug-2022 / 09:00 MSK Dissemination of a Regulatory Announcement that contains inside information in accordance with the Market Abuse Regulation (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
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Magnit Reports 38.2% total sales growth (19.1% ADJUSTED FOR THE DIXY ACqUISItiON) and 7.0% EBITDA margin in 1H 2022 Krasnodar, Russia (August 19, 2022): Magnit PJSC (MOEX and LSE: MGNT; the Company), one of Russia's leading retailers, announces its reviewed 1H 2022 financial results prepared in accordance with IFRS.
1H 2022 Key Operational and Financial Highlights
-- Total revenue increased by 38.2% y-o-y to RUB 1,136.3 billion. Total revenue adjusted for
the Dixy acquisition increased by 19.1%;
-- Net retail sales reached RUB 1,113.8 billion increasing 39.0% y-o-y. Net retail sales
38.2% growth adjusted for the Dixy acquisition was 19.8%;
-- LFL[1] sales growth of 12.6% driven by 13.1% average ticket growth and 0.5% LFL traffic
TOTAL REVENUE decline;
growth
-- The Company opened 851 stores on gross basis or 654 on a net basis. As of June 30, 2022 the
total store base was 26,731;
-- Selling space increase of 261 thousand sq. m. bringing total selling space to 9,258
thousand sq. m. (19.5% y-o-y growth);
-- The Company redesigned 184 stores (175 Magnit and 5 Dixy convenience stores, three
supermarkets and one drogerie). As at June 30, 2022 79% of convenience stores, 46% of supermarkets
and 63% of drogeries are either new or refurbished;
-- Gross profit[2] increased by 38.4% y-o-y to RUB 263.6 billion with a flat margin y-o-y of
23.2% as a result of higher shrinkage offset by lower transportation costs;
-- Cash SG&A[3] expenses as a percentage of sales decreased by 35 bps to 17.0% on lower
23.2% personnel expenses and positive operating leverage effect. This was partially offset by higher other
costs;
Gross margin
-- EBITDA was RUB 80.1 billion with a 7.0% margin - flat y-o-y driven by gross margin dynamics
and strict cost control offset by other income and expenses dynamics;
-- Net income increased by 39.6% y-o-y to RUB 32.0 billion with a flat margin y-o-y of 2.8%.
In the second quarter it was predominantly driven by one-off effects of FX gain on direct import
operations and interest income on bank deposits;
1.2x -- As of June 30, 2022 Net Debt was RUB 184.0 billion. Net Debt / EBITDA ratio was 1.2x[4].
net debt /
ebitda ratio
Key events after the reported period
-- Magnit published its third annual sustainability report. The Company delivered notable
results in reducing specific greenhouse gas emissions, water and electricity consumption, and food
waste and increasing the share of recyclable packaging and launched several major ESG projects.
-- On August 18, 2022 Magnit has notified CB JP Morgan International LLC ("Custodian") of the
need to take actions to ensure that holders of global depositary receipts ("GDRs") representing the
Company's shares deposited with Russian depositaries receive the corresponding number of the
Company's shares ("Automatic Conversion"). Financial Results for 1H 2022
IAS 17 IFRS 16
RUB mln 1H 2022 1H 2021 Change 1H 2022 1H 2021 Change
Total Revenue 1,136,266 822,230 38.2% 1,136,266 822,230 38.2%
Retail 1,113,847 801,592 39.0% 1,113,847 801,592 39.0%
Wholesale 22,419 20,638 8.6% 22,419 20,638 8.6%
Gross Profit 263,624 190,476 38.4% 264,347 190,491 38.8%
Gross Margin, % 23.2% 23.2% 4 bps 23.3% 23.2% 10 bps
SG&A, % of Sales ?19.7% ?20.2% 49 bps ?18.4% ?18.7% 26 bps
Other income & expenses, % of Sales 0.6% 1.0% -39 bps 0.8% 1.3% -51 bps
EBITDA pre LTI[5] 80,526 58,603 37.4% 128,860 95,038 35.6%
EBITDA Margin pre LTI, % 7.1% 7.1% -4 bps 11.3% 11.6% -22 bps
EBITDA 80,105 57,928 38.3% 128,439 94,363 36.1%
EBITDA Margin, % 7.0% 7.0% 0 bps 11.3% 11.5% -17 bps
EBIT 49,577 34,695 42.9% 66,114 49,107 34.6%
EBIT Margin, % 4.4% 4.2% 14 bps 5.8% 6.0% -15 bps
Net Finance Costs ?6,592 ?5,371 22.7% -26,699 ?20,601 29.6%
FX Gain/ (Loss) -2,111 444 -575.4% -1,906 454 -519.7%
Profit before Tax 40,874 29,768 37.3% 37,508 28,959 29.5%
Taxes ?8,838 ?6,820 29.6% ?8,166 ?6,660 22.6%
Net Income 32,035 22,948 39.6% 29,343 22,300 31.6%
Net Income Margin, % 2.8% 2.8% 3 bps 2.6% 2.7% -13 bps
Total revenue in 1H 2022 increased by 38.2% partly driven by the consolidation of the Dixy business.
Adjusted for the Dixy acquisition sales growth was 19.1%. This growth was underpinned by net retail sales
growth of 39.0% and wholesale revenue growth of 8.6%. Wholesale operations accounted for 2.0% of total
sales (down from 2.5% a year ago).
23.2%
Gross Profit in 1H 2022 increased by 38.4% y-o-y to RUB 263.6 billion. Gross margin remained broadly flat
Gross margin y-o-y at 23.2% as a result of higher shrinkage offset by lower transportation costs. Promotional
intensity on average for the first six months was slightly lower y-o-y.
in 1H 2022
Transportation costs decreased by 23 bps y-o-y to 1.9% as a percent of sales driven by operating leverage
and higher utilization of the Company's own truck fleet.
Shrinkage as a proportion of sales increased by 22 bps y-o-y driven by consolidation of Dixy business as
well as losses of fruits & vegetables in international transit due to supply-chain disruptions.
IAS 17 IFRS 16
RUB mln 1H 2022 1H 2021 Change 1H 2022 1H 2021 Change
Staff costs 98,115 73,801 32.9% 98,115 73,801 32.9%
as a % of sales 8.6% 9.0% -34 bps 8.6% 9.0% -34 bps
Rent 48,712 35,348 37.8% 2,418 863 180.1%
as a % of sales 4.3% 4.3% -1 bps 0.2% 0.1% 11 bps
Depreciation, amortization & impairment 30,528 23,234 31.4% 62,325 45,256 37.7%
as a % of sales 2.7% 2.8% -14 bps 5.5% 5.5% -2 bps
Utilities & communication services 20,626 15,298 34.8% 20,626 15,298 34.8%
as a % of sales 1.8% 1.9% -5 bps 1.8% 1.9% -5 bps
Advertising 4,407 3,934 12.0% 4,407 3,934 12.0%
as a % of sales 0.4% 0.5% -9 bps 0.4% 0.5% -9 bps
Other expenses 6,549 3,463 89.1% 6,494 3,463 87.5%
as a % of sales 0.6% 0.4% 16 bps 0.6% 0.4% 15 bps
Bank Services 6,039 3,891 55.2% 6,039 3,891 55.2%
as a % of sales 0.5% 0.5% 6 bps 0.5% 0.5% 6 bps
Repair & maintenance 4,383 3,296 33.0% 4,356 3,296 32.2%
as a % of sales 0.4% 0.4% -2 bps 0.4% 0.4% -2 bps
Taxes, other than income tax 1,584 1,447 9.5% 1,584 1,447 9.5%
as a % of sales 0.1% 0.2% -4 bps 0.1% 0.2% -4 bps
Packaging & materials 2,792 2,238 24.8% 2,792 2,238 24.8%
as a % of sales 0.2% 0.3% -3 bps 0.2% 0.3% -3 bps
Total SG&A 223,737 165,950 34.8% 209,158 153,488 36.3%
as a % of sales 19.7% 20.2% -49 bps 18.4% 18.7% -26 bps
Cash SG&A (excl. D&A) 193,209 142,716 35.4% 146,833 108,232 35.7%
as a % of sales 17.0% 17.4% -35 bps 12.9% 13.2% -24 bps
17.0%
Cash SG&A
expenses
in 1H 2022
SG&A costs decreased by 49 bps y-o-y to 19.7% as a percent of sales.
Cash SG&A expenses as a percentage of sales decreased by 35 bps to 17.0% on lower personnel expenses and
positive operating leverage effect. This was partially offset by higher other costs.
Personnel costs as a percentage of sales decreased by 34 bps y-o-y to 8.6% on the back of continued
in-store productivity improvements and ongoing automation of business processes.
Other costs as a percentage of sales increased by 16 bps y-o-y to 0.6% predominantly driven by faster
y-o-y growth of online services.
Advertising expenses decreased by 9 bps y-o-y to 0.4% as a percentage of sales on lower marketing
activities.
Rental costs as a percentage of sales remained flat y-o-y driven by higher sales density, improved lease
terms with landlords and closing of inefficient stores. This was achieved despite the increased share of
leased selling space to 80.8% as of June 30, 2022 vs 78.7% a year ago and consolidation of Dixy stores
predominantly located in Moscow and St Petersburg regions with higher rent rates.
Utilities, packaging, raw materials, repair, maintenance, bank and tax expenses as a percentage of sales
remained broadly flat y-o-y.
Other income and expenses decreased by 39 bps to 0.6% as a percentage of sales due to a lower percentage
of sales of secondary materials and on provisions for write-off of intangible assets related to software
not in use.
As a result, EBITDA increased by 38.3% to RUB 80.1 billion with a 7.0% margin which remained flat on a
y-o-y basis. This was driven by gross margin dynamics and strict cost control offset by other income and
expenses dynamics.
7.0%
ebitda margin
in 1H 2022 Depreciation as a percentage of sales reduced by 14 bps y-o-y to 2.7% due to consolidation of Dixy
business with lower share of depreciation as a percentage of sales, a slowdown in the store opening and
refurbishment programmes, as well as positive operating leverage effect.
As a result, operating profit in 1H 2022 stood at RUB 49.6 billion with 4.4% EBIT margin.
Net finance costs in 1H 2022 increased by 22.7% and stood at RUB 6.6 billion due to the higher cost of
debt and total amount of borrowings. The Company increased its total debt by RUB 27.4 billion during the
last twelve months by obtaining bank loans. These supported the Company's accelerated expansion and the
acquisition of Dixy last year. Interest expenses were partially offset by income from bank deposits.
As a result, average cost of debt as of the end of 2Q 2022 increased by 146 bps y-o-y to 7.9% but visibly
reduced vs previous quarter (down 89 bps from 8.8%). 77% of the Company's debt profile is represented by
long-term borrowings and bonds with an average maturity of 14 months.
In 1H 2022 the Company reported FX loss in the amount of RUB 2.1 billion related to direct import
operations.
Income tax in 1H 2022 was RUB 8.8 billion with effective tax rate of 21.6%.
As a result, net income in 1H 2022 increased by 39.6% y-o-y and stood at RUB 32.0 billion. Net income
margin remained flat y-o-y at 2.8%.
2.8%
Net income
margin
in 1H 2022
Balance Sheet and Cash Flows Financial Position Highlights (IFRS 16)
RUB mln June 30, 2022 December 31, 2021 June 30, 2021
Non-current assets 862,785 889,662 684,767
Inventories 212,835 224,873 199,744
Trade and other receivables 10,495 11,727 12,329
Cash and cash equivalents 93,822 73,399 129,370
Other current assets 27,596 10,100 6,735
Assets 1,207,532 1,209,760 1,032,945
Equity 208,356 178,997 181,798
Long-term loans and borrowings 116,591 205,287 222,930
Other long-term liabilities 395,528 410,073 335,431
Trade and other payables 212,251 241,135 163,443
Short-term loans and borrowings 176,271 65,139 42,560
Other short-term liabilities 98,535 109,129 86,783
Equity and liabilities 1,207,532 1,209,760 1,032,945
Inventories increased by RUB 13.1 billion (+6.6% y-o-y) compared with June 30, 2021 and stood at RUB
212.8 billion on the back of total sales growth of 38.2%. 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. Turnover of inventories improved by
12.7 days y-o-y.
Trade and other payables grew by RUB 48.8 billion compared with June 30, 2021 and stood at RUB 212.3
12.7 billion, driven by higher sales and improved payment days. Accounts receivables decreased by RUB 1.8
billion vs June 30, 2021 and stood at RUB 10.5 billion as a result of ongoing optimization initiatives
days and implementation of electronic document flow with suppliers.
Y-O-Y
OPTIMISATION
OF As a result, working capital as of June 30, 2022 was negative with the cash release of RUB 11.1 billion
INVENTORIES (IAS 17). Negative working capital was achieved for both the standalone Magnit and Dixy businesses.
[6]
Debt Composition and Leverage
June 30, 2022 March 31, 2022 December 31, 2021 June 30, 2021
IAS 17
Total Debt, RUB billion 292.9 320.7 270.4 265.5
Long-Term Debt 116.6 146.9 205.3 222.9
Short-Term Debt 176.3 173.8 65.1 42.6
Net Debt, RUB billion 184.0 228.3 197.0 136.1
Net Debt/EBITDA 1.2x 1.6x 1.5x 1.2x
IFRS 16
Net Debt, RUB billion 628.4 682.1 653.3 498.9
Net Debt/EBITDA 2.5x 3.0x 3.0x 2.7x
As at June 30, 2022 Gross Debt increased by RUB 27.4 billion or 10.3% compared to June 30, 2021 and stood
at RUB 292.9 billion. Total debt decreased by 8.7% or RUB 27.8 billion versus end of the previous quarter
1.2x due to redemption of bond issues and repayment of some bank loans. The Company's cash position including
deposits, reported in the financial assets4, increased further to RUB 108.8 billion as at June 30, 2022
net debt/ from RUB 92.4 billion as at March 31, 2022. As a result, Net Debt increased by 35.2% y-o-y to RUB 184.0
ebitda billion as at June 30, 2022 (but was down 19.4% q-o-q).
as of June
30, 2022
(IAS 17) The Company's debt is fully RUB denominated, matching its revenue structure. The Net Debt to EBITDA ratio
returned to the pre-Dixy acquisition level of 1.2x as at June 30, 2022 vs 1.6x as at March 31, 2022.
Cash Flow Statement for 1H 2022
IAS 17 IFRS 16
million RUB 1H 2022 1H 2021 Change 1H 2022 1H 2021 Change
Operating cash flows before working capital changes 86,992 59,079 47.2% 134,871 93,578 44.1%
Changes in working capital 11,075 -14,864 -174.5% 10,959 -14,516 -175.5%
Net Interest and income tax paid -17,835 -12,462 43.1% -37,943 -27,693 37.0%
Net cash from operating activities 80,231 31,753 152.7% 107,887 51,370 110.0%
Net cash used in investing activities -48,096 -22,259 116.1% -46,192 -21,945 110.5%
Net cash generated / (used) from/(in) financing activities -6,170 75,170 -108.2% -35,730 55,238 -164.7%
Effect from exchange rate changes on cash and cash equivalents -5,542 7 n/a -5,542 7 n/a
Net cash increase / (decrease) 20,423 84,670 -75.9% 20,423 84,670 -75.9%
The Company's cash flows from operating activities before changes in working capital in 1H 2022 equaled
to RUB 87.0 billion, which was RUB 27.9 billion or 47.2% higher y-o-y. The change in working capital
continued to improve and stood at RUB 11.1 billion compared to RUB -14.9 billion in 1H 2021.
Net interest and income tax paid in 1H 2022 increased by RUB 5.4 billion or 43.1% to RUB 17.8 billion.
Net interest expenses increased by 78.1% y-o-y to RUB 9.4 billion in 1H 2022 due to higher average
amount of borrowings and higher cost of debt compared to the previous year. Income tax paid for 1H 2022
increased by 17.5% to RUB 8.4 billion.
With this net cash flow from operating activities in 1H 2022 increased by 152.7% to RUB 80.2 billion as
a result of higher EBITDA and positive movement of working capital.
Net cash used in investing activities increased by 116.1% to RUB 48.1 billion in 1H 2022 due to deposits
with the term over three months in the amount of RUB 15 billion.
80.2 Total capital expenditures for the first six months of 2022 stood at RUB 23.4 billion vs RUB 25.6
billion in 1H 2021 (down 8.3% y-o-y). This was driven by some slowdown in the store opening and
RUB billion refurbishment programmes (851 store openings on gross basis and 184 redesigns in 1H 2022 vs 926 and 243
respectively in 1H 2021).
net Cash
generated by
operations
In 1H 2022 net cash used in financing activities was RUB 6.2 billion vs RUB 75.2 billion of cash
generated from financing activities in 1H 2021. In 1H 2022 the Company paid dividends in the total
amount of RUB 28.8 billion[7].
As a result of factors mentioned above net cash position in 1H 2022 increased by RUB 20.4 billion to RUB
93.8 billion as of June 30, 2022.
Recent Trading
LFL[8] sales growth in July-August (quarter-to-date) 2022 continues accelerating versus previous months
and exceeds the 2Q average results. Within the structure of LFL sales, traffic continued stabilizing
returning to a positive territory; average ticket growth remains strong despite deflationary environment
on month-to-month basis.
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 1H 2022 financial report - https://www.magnit.com/en/shareholders-and-investors/results-and-reports/.
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 June 30, 2022, Magnit operated 45 distribution centers and
26,731 stores in 3,963 cities and towns throughout 7 federal regions of the Russian Federation and in the
Republic of Uzbekistan.
In accordance with the reviewed IFRS 16 results for 1H 2022, Magnit had revenues of RUB 1,136.3 billion
and an EBITDA of RUB 128.4 billion. Magnit's local shares are traded on the Moscow Exchange (MOEX: MGNT)
and its GDRs on the London Stock Exchange (LSE: MGNT).
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. Dixy stores will be added to the LFL panel after full 12 months of operations since consolidation.
[2] In 2022 the Group adjusted its accounting policy and included associated expenses on goods processing for the production of culinary offerings and other ready meals at its stores into the cost of goods sold. The management of the Group believes that these changes are aimed at appropriate reporting consistent with other market players. The above expenses were previously included in the selling, general and administrative expenses. The Group applied changes retrospectively
[3] Selling, general and administrative expenses excluding depreciation and amortization
[4] Including deposits, reported in the financial assets. Cash allocated on these deposits is immediately available and can be withdrawn at any time without loss of value (without penalty for withdrawing)
[5] LTI - Long-Term Incentive Program
[6] Inventory turnover days = ((inventories as of 31.12.2021 + inventories as of 30.06.2022)/2/cost of goods sold for 1H 2022) x 181
[7] Excluding intercompany transactions between PJSC Magnit and JSC Tander
[8] The Company included Dixy branded stores into LFL panel starting from July 22, 2022, after full 12 months of operations
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ISIN: US55953Q2021 Category Code: MSCU TIDM: MGNT LEI Code: 2534009KKPTVL99W2Y12 OAM Categories: 2.2. Inside information Sequence No.: 182310 EQS News ID: 1423689 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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