1st Mar 2007 07:07
X5 Retail Group N.V.01 March 2007 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN X5 RETAIL GROUP N.V. ANNOUNCES PRELIMINARY Q4 AND FY 2006 RESULTS GROUP PRO FORMA SALES OF US $3,485 MILLION, UP +47% VS. 2005 GROUP PRO FORMA GROSS MARGIN OF 27.9% VS. 25.4% IN 2005 GROUP PRO FORMA NORMALIZED EBITDA OF US $360 MILLION, UP +56% (1) VS. 2005 Amsterdam, 1 March 2007 - X5 Retail Group N.V., Russia's largest food retailerin terms of sales, is pleased today to present a strong set of preliminaryfinancial results for the full year of 2006. The figures provided are managementaccounts on pro-forma basis. The year of 2006 has been an eventful period for the Group. The merger betweenPyaterochka and Perekrestok was closed on 18 May 2006 and was immediatelyfollowed by intense internal work ensuring that the merger benefits are realisedaccording to plan. In 2006, the Group faced two major challenges - successfulintegration of the two bigger national chains designed to extract practicalsynergies of the merger, and at least maintenance of the growth rates of thecompany. The preliminary results of FY 2006 clearly show that both objectivesare being met successfully. Growth On a pro forma basis, sales increased by 47% to US$3,485 million, whichrepresents a significant acceleration of growth in comparison to 34% in FY 2005.Through a successful effort by our purchasing team, due to gradual introductionof private labels and upgrade of our logistics capacity, X5 managed to raisegross margin from 25.4% to 27.9%, thereby generating gross profit growth of animpressive 60.9%. The Group has made significant investments in the business in terms of storeopenings and an increased marketing budget. Nevertheless, the operating costbase remained tight and pro forma EBITDA has increased 31% to US$ 295 million,which translates in 56% increase in case the effect of the Tushino Plaza capitalgain in 2005 and ESOP restructuring costs in 2006 are excluded. In 2006, the Group successfully completed its store opening program gainingadditional net selling space of approximately 126,000 square metres, thusoutstripping its FY 2006 store opening target to add approximately 120,000square metres. Also, the Group experienced strong Like-for-Like sales(2) trendsacross both chains (+11%), demonstrating the strongest performance in Q4 2006(+13%). Over the year, the Group showed continued improvement of PyaterochkaLike-for-Like sales performance in St. Petersburg, with the traffic of 0% in Q42006 vs. Q4 2005. In January 2007, LfL sales performance of Pyaterochka in St.Petersburg continued to improve demonstrating positive traffic (+2.5%) for thefirst time over the last several years. Integration The merger between Pyaterochka and Perekrestok was closed on 18 May 2006 and wasimmediately followed by intense internal work ensuring that the merger benefitsare realised according to plan. The first seven months of this work hasconfirmed the logic of the combination. While results responsibilities remainedwith the two operating divisions, back office centralisation was an immediatepriority. In 2006, the Group centralised key functions in its corporate centreto focus on extracting practical synergies in purchasing, advertising, M&A, costof financing, and prepared for next steps of integration in the areas of HR,logistics and IT. A new international management team composed of professionalswith extensive and successful experience in major Russian companies and leadinginternational retail chains was built up at corporate HQ to lead the integrationprocess and further progress of the Group. There have been already achieved first practical results. During 2H 2006 theGroup's integrated purchasing team re-concluded contracts with all suppliers onbehalf of the enlarged company, with initial net savings of at least US$ 20million in 2006. These savings were partially re-invested into price. In 2006, new modern logistics centres have been opened in Moscow and St.Petersburg which will support the Group's growth and provide further efficiencygains. In November, the Group's single M&A team successfully closed the secondlargest on Russia's food retail market deal to acquire a Moscow basedsupermarket chain "Merkado" of 16 stores which were quickly integrated into theexisting formats of Pyaterochka and Perekrestok. Quotes Lev Khasis, Group CEO: "The strong financial performance of X5 Retail Group in 2006 and the specificprogress in integration of Pyaterochka and Perekrestok clearly demonstrate thatwe are passing smoothly through the integration process, stepping now into theperiod of capitalisation on practical synergies of the merger. We are in processof building a solid multi-format foundation to continue our further expansion inthe role of the main consolidator of the Russian food retail market. I amexcited and confident about our future." Vitaliy Podolskiy, Group CFO: "Strong financial results of the Group in 2006 maintain our confidence insuccessful realization of our further investment plans and in our ability toattract necessary capital for the execution of these plans." 12M2006 Financial Highlights Pro Forma X5 Retail Group N.V. Calculated on the basis of the results of both the Pyaterochka and Perekrestokchains from 1 January - 31 December 2006 • Net Sales of US $3,485 million; up 46.8% vs. 12M 2005 • Gross profit of US $972 million, up 60.9% vs. 12M 2005; Gross margin of 27.9% vs. 25.4% 12M 2005 • EBITDA of US $295 million, up 31.0% vs. 12M 2005; EBITDA margin of 8.5% vs. 9.5% 12M 2005 Pyaterochka chain stand-alone Calculated on the basis of the results of the Pyaterochka chain from 1 January - 31 December 2006 • Net Sales of US $1,973 million; up 45.2% vs. 12M 2005 • Gross profit of US $530 million, up 56.5% vs. 12M 2005; Gross margin of 26.9% vs. 24.9% 12M 2005 • EBITDA of US $179 million, up 10.0% vs. 12M 2005; EBITDA margin of 9.1% vs. 12.0% 12M 2005 Perekrestok chain stand-alone Calculated on the basis of the results of the Perekrestok chain from 1 January - 31 December 2006 • Net Sales of US$1,512 million; up 49% vs. 12M 2005 • Gross profit of US $442 million, up 66.6% vs. 12M 2005; Gross margin of 29.3% vs. 26.2% 12M 2005 • EBITDA of US $116 million, up 85.9% vs. 12M 2005; EBITDA margin of 7.7% vs. 6.1% 12M 2005 Q4 2006 Financial Highlights Pro Forma X5 Retail Group N.V. Calculated on the basis of the results of both the Pyaterochka and Perekrestokchains from 1 October - 31 December 2006 • Net Sales of US $ 1,074 million; up 51.1% vs. Q4 2005 • Gross profit of US $ 325 million, up 72.3% vs. Q4 2005; Gross margin of 30.3% vs. 26.6% Q4 2005 • EBITDA of US $ 120 million, up 54.2% vs. Q4 2005; EBITDA margin of 11.2% vs. 11.0% Q4 2005 Pyaterochka chain stand-alone Calculated on the basis of the results of the Pyaterochka chain from 1 October - 31 December 2006 • Net Sales of US $ 599 million; up 49.6% vs. Q4 2005 • Gross profit of US $ 172 million, up 65.2% vs. Q4 2005; Gross margin of 28.8% vs. 26.1% Q4 2005 • EBITDA of US $ 79 million, up 50.2% vs. Q4 2005; EBITDA margin of 13.2% vs. 13.1% Q4 2005 Perekrestok chain stand-alone Calculated on the basis of the results of the Perekrestok chain from 1 October - 31 December 2006 • Net Sales of US $ 475 million; up 53.0% vs. Q4 2005 • Gross profit of US $ 153 million, up 81.0% vs. Q4 2005; Gross margin of 32.3% vs. 27.3% Q4 2005 • EBITDA of US $ 41 million, up 62.6%% vs. Q4 2005; EBITDA margin of 8.7% vs. 8.2% Q4 2005 Note to Editors: X5 Retail Group N.V. is Russia's largest food retailer in terms of sales. As of31 December 2006, the Group had 451 company-managed "Pyaterochka" soft discountstores located in the Moscow (222), St. Petersburg (204) and Yekaterinburg (25)areas, and 168 company-managed "Perekrestok" supermarkets across Central Russiaand Ukraine, including 100 stores in Moscow. As of 31 December 2006, franchisees operated 605 Pyaterochka branded storesacross Russia, in Ukraine and Kazakhstan. Perekrestok had 10 convenience storesoperated by franchisees in the Moscow area. Pyaterochka and Perekrestok have merged their operations as of 18 May 2006 tocreate the clear leader in the Russian food retail market. The Group's pro forma net sales for the FY 2006 were $3,485 million, up +47% vs.2005 (preliminary management accounts). Pyaterochka chain provided US $1,973million of net sales, while the Perekrestok chain contributed US $1,512 millionof net sales. Forward looking statements: This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identifiedby 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 otherwords of similar meaning. By their nature, forward-looking statements involve risk and uncertainty becausethey relate to future events and circumstances, a number of which are beyond X5Retail Group N.V.'s control. As a result, actual future results may differmaterially from the plans, goals and expectations set out in theseforward-looking statements. Any forward-looking statements made by or on behalf of X5 Retail Group N.V.speak only as at the date of this announcement. Save as required by anyapplicable laws or regulations, X5 Retail Group N.V. undertakes no obligationpublicly to release the results of any revisions to any forward-lookingstatements in this document that may occur due to any change in its expectationsor to reflect events or circumstances after the date of this document. Enquiries to: X5 Retail Group N.V. Gennady Frolov Head of Corporate Communications Office +7 495 984 6956 ext.2093 Mobile +7 495 998 3335 Email [email protected] -------------------------- (1) For comparability excluding the capital gain of USD $18.7 million on thesale of Tushino Plaza in 2005 and before ESOP restructuring charges in 2006 (2) Measured in Roubles and applicable for stores operational on or before 1January 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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