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.


 

 

 

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.

 

 

 

 

19.5%

TOTAL REVENUE growth

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%;
  • 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%;
  • LFL[1] sales growth of 7.0% driven by 7.1% average ticket growth and 0.1% LFL traffic decline;

 

2,295

organic store openings (gross)

  • 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 result of the Dixy acquisition, bringing total selling space to 8,997 thousand sq. m. (20.0% y-o-y growth);
  • Met the full year guidance on the number of store redesigns. The Company redesigned 703 stores under Magnit brand (611 convenience stores, 74 supermarkets and 18 drogeries). As at December 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.

 

 

 

 

 

1.5x

net debt / ebitda ratio

 

  • 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.

 

 

 

 

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

 

 

 

23.7%

Gross margin

in FY 2021

 

 

 

 

 

20 bps

y-o-y reduction of shrinkage

 

 

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.

 

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 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.

 

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. This was driven by ongoing optimization of supply chain processes, renegotiation of quality standards with suppliers and other initiatives.

 

 

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%

Cash SG&A expenses

in FY 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7.2%

ebitda margin in 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.8%

Net income margin

in 2021

SG&A costs increased by 17 bps y-o-y to 20.6% as a percent of sales.

 

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 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).

 

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%.

 

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

 

 

 

 

 

 

 

negative working capital with

18.3

billion

cash release

(IAS 17)

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 billion, driven by higher sales and increased payment days. Accounts receivables increased by RUB 3.2 billion vs December 31, 2020 and stood at RUB 11.7 billion due to higher sales and improved commercial terms with suppliers.

 

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.

 

 

 

 

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

1.1х

IFRS 16

 

 

 

Net Debt, RUB billion

653.3

498.9

479.0

Net Debt/EBITDA

3.0x

2.7x

2.7x

 

 

1.5x

net debt/ebitda
as of December 31, 2021 (IAS 17)

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 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.

 

The Company's debt is fully RUB denominated, matching its revenue structure. The Net Debt to EBITDA ratio 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%

 

 

 

124

RUB billion

net Cash generated by operations

 

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.

 

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 acquisition.

 

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 Regulation effective from July 3, 2016.
  2. Please note that there may be small variations in calculation of totals, subtotals, and/or percentage change 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.

 


[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



ISIN: US55953Q2021
Category Code: MSCU
TIDM: MGNT
LEI Code: 2534009KKPTVL99W2Y12
OAM Categories: 2.2. Inside information
Sequence No.: 146812
EQS News ID: 1294327

 
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