- ISIN: US55953Q2021
- Land: Russland
Nachricht vom 20.08.2019 | 09:00
Magnit announces 10.5% revenue growth and adjusted EBITDA margin of 6.9% in 1H 2019
MAGNIT PJSC (MGNT)
Magnit announces 10.5% revenue growth and adjusted EBITDA margin of 6.9% in 1H 2019
Krasnodar, Russia (20 August, 2019): Magnit PJSC (MOEX and LSE: MGNT), one of Russia's leading retailers announces its reviewed 1H 2019 results prepared in accordance with IFRS.
Key operating and financial highlights for 1H 2019:
Events after the reported period:
Financial results for 1H 2019
Total net retail sales in 1H 2019 stood at RUB 643.0 billion or 10.0% higher than in 1H 2018 driven by 16.7% selling space growth (or 1,536 new stores) and LFL sales growth of 1.1%. The main contribution to sales comes from the convenience segment while strongest sales growth was demonstrated by the drogerie format.
Wholesale revenue in 1H 2019 increased by 41.7% up to RUB 14.9 billion primarily driven by contribution from SIA Group. Share of wholesale segment increased from 1.8% in 1H 2018 to 2.3% in 1H 2019.
Gross Profit in 1H 2019 increased by 5.8% YoY and stood at RUB 155.6 billion with margin of 23.7%. Gross profit margin deteriorated by 106 bps as a result of the following factors:
SG&A expenses in 1H 2019 reached RUB 142.6 billion and as a percentage of sales increased by 85 bps YoY:
As a result, operating profit for the Company in 1H 2019 stood at RUB 20.0 billion or 26.9% lower than a year ago.
Finance costs increased by 74.3% to RUB 7.6 billion compared to RUB 4.4 billion in 1H 2018 due to higher average amount of borrowings compared to the previous year. The weighted average effective interest rate for 1H 2019 was 8.4% (including the effect of subsidized debt).
Income tax for 1H 2019 was RUB 3.4 billion. Effective tax rate increased to 26.0% compared to 20.9% in 1H 2018 due to higher share of non-deductible expenses.
As a result, net income in 1H 2019 decreased by 44.8% YoY and stood at RUB 9.8 billion. Net income margin decreased by 149 bps YoY to 1.5%.
Cash Flow Statement for 1H 2019
The Company's cash flows from operating activities before changes in working capital for 1H 2019 equalled to RUB 45.2 billion, which was RUB 0.2 billion or 0.4% higher YoY. The change in working capital increased to RUB 22.5 billion from RUB 16.4 billion in 1H 2018 mainly due to inventories increase as a result of assortment review, increase of trade payables turnover days mainly driven by addition of SIA payables of RUB 18.1 billion in the end of 2018 and overall turnover increase.
Net interest and income tax paid in 1H 2019 increased by RUB 2.6 billion or 45.2% to RUB 8.4 billion. Net interest expenses increased by 36.7% YoY to RUB 6.7 billion in 1H 2019 due to higher YoY average amount of borrowings. Income tax paid for 1H 2019 increased to RUB 1.7 billion.
With this net cash flows from operating activities in 1H 2019 decreased by 37.3% to RUB 14.3 billion.
Net cash used in investing activities predominantly composed of capital expenditures increased by 8.5% from RUB 20.3 billion in 1H 2018 to RUB 22.1 billion in 1H 2019. The result is attributable to higher number of store openings (1,536 stores in 1H 2019 vs 612 in 1H 2018), more refurbishments conducted in 1H 2019 partially offset by decrease of advance payments and lower investments in own production.
In 1H 2019 net cash used in financing activities was RUB 2.1 billion vs RUB 10.2 billion in 1H 2018. In 1H 2019 the Company paid dividends in the amount of RUB 29.9 billion and did a buyback of RUB 5.1 billion. The rest was driven by dynamics of proceeds from borrowings and repayment of loans.
Debt composition and leverage as of 30.06.2019
As of 30 June 2019 Net Debt under IAS 17 was RUB 181.4 billion compared to RUB 137.8 billion at the end of 2018. The net debt increase was due to payments of dividends for the full year 2018 and acceleration of redesign program and store openings. Company's debt is fully RUB denominated matching revenue structure. As of end of 1H 2019 it was 61% long-term debt. Net/Debt to EBITDA ratio was 2.1x.
Changes in classification of income and expense in the profit and loss statement
Numbers presented in this press release differ from the numbers prepared in accordance with the management accounts announced by Magnit for the 1Q and 2Q 2019 operating results. Based on the results review, certain income and expense items of the profit and loss statement were reclassified. This reclassification did not impact the final financial result but changed the allocation of items within the profit and loss statement. The changes relate to:
Adjusted numbers are provided in the table below:
IFRS 16 implications
IFRS 16 came into force from the beginning of this year. The Company uses the full retrospective approach. According to the new standard the Company reconsidered rent with fixed rates as financial lease liabilities.
Under the IFRS 16 methodology rent expense went down by RUB 30.5 billion bringing new EBITDA up to RUB 74.4 billion and EBITDA margin of 11.3%, which is 472 bps better versus IAS 17 result.
Depreciation increased by RUB 22.2 billion and interest expenses grew by RUB 16.1 billion.
1H 2019 income tax compared to IAS 17 improved by 42.2% or RUB 1.5 billion, while profit before tax decreased by 54.8% or RUB 7.3 billion. New effective tax rate was 33.3% compared to 26.0% in 1H 2019 pre-IFRS 16 driven by increased share of non-deductible expenses.
As a result, IFRS 16 net income stood at RUB 4.0 billion or 0.6% margin. It was RUB 5.8 billion and 88 bps lower compared to previous accounting methodology.
IFRS 16 has the following key impacts on the statement of financial position:
IFRS 16 affects the structure of Cash flow statement with no impact on the Net cash change itself.
For further information, please contact:
Dmitry Kovalenko Dina Chistyak Media Inquiries
Director for Investor Relations Director for Investor Relations Media Relations Department
Office: +7 (861) 210-48-80 Office: +7 (861) 210-9810 x 15101
Note to editors:
Public Joint Stock Company "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, 2019, Magnit operated 38 distribution centers and 19,884 stores (14,231 convenience, 466 supermarkets and 5,187 drogerie stores) in 3,354 cities and towns throughout 7 federal regions of the Russian Federation.
In accordance with the reviewed IFRS results for 1H 2019, Magnit had revenues of RUB 658 billion and an EBITDA of RUB 43 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.
This document contains forward-looking statements that may or may not prove accurate. For example, statements regarding expected sales growth rate and 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.
 LFL calculation base includes stores, which have been opened for 12 months since its first day of sales. LFL sales growth and average ticket growth are calculated based on sales turnover including VAT.
 The number of stores does not include pharmacies.
 Adjusted for long-term incentive program accruals and one-off costs related to damage cased from the fire at Voronezh DC.
 1H 2018 numbers have been recalculated for reclassification of lease and sublease income from G&A expenses to a separate line and reclassification of FX differences below EBITDA.
 Adjusted for the accident on Voronezh DC and LTI expense
 Long-Term Incentive Program
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