Magnit raises EBITDA margin guidance for 2013 to 9.5-10%
MOSCOW. April 24 (Interfax) - Magnit , Russia's leading retailer, has raised its EBITDA margin guidance for 2013 to 9.5-10%.
"We have optimism for the upper bar. I think it will be 9.5-10%," Magnit chief executive Sergei Galitsky said in a conference call on Tuesday. However, he warned that investors and analysts should still better go by the more conservative forecast of 9.5%.
Earlier this year, he provided EBITDA margin guidance of 9.2-9.8%. The average estimate is 9.5%, Galitsky said.
Magnit on Tuesday released financial results for the first quarter of 2013 that were generally in line with the consensus forecast - slightly higher for net profit but slightly lower for EBITDA and the margin.
The retailer increased net profit by 29% to 6.156 billion rubles and EBITDA by 25.8% to 12.214 billion rubles. The EBITDA margin was 9.31%, down from 9.65% a year earlier.
Magnit's gross profit grew 37.9% to 35.07 billion rubles, and the gross margin rose to 26.72% from 25.28% in the first quarter of 2012.
Galitsky said that Magnit's margin in the first quarter of this year came under pressure from a pay increase for employees at hypermarkets; higher leasing costs as the company began to open more stores in Moscow and St. Petersburg, where rents are higher; and an increase in product losses due to a higher share of fruit and vegetables in the product selection at stores.
He also said that Magnit wants to optimize utility costs with its own sales company. "We're trying to enter the wholesale market for energy resources. This is all we can do in the area of optimizing utility costs," Galitsky said.
"Costs that affect the whole market don't scare us, because everyone's costs add up to the same as ours. But that we have entered the wholesale market for energy resources will help us, I think," Galitsky said.
Magnit is the leading Russian retailer by sales, number of stores and market capitalization. It overtook X5 Retail Group in terms of sales in the first quarter of 2013.
Magnit had 7,075 stores at the end of March, including 6,209 convenience stores, 132 hypermarkets, 21 Magnit Semeiny stores and 436 cosmetics stores.
The retailer's sales grew 30.4% year-on-year to 131.2 billion rubles in the first quarter of 2013.
Magnit increased sales by 33.7% to 448.7 billion rubles in 2012 and set an industry record for EBITDA margin, which was 10.56% for the year and 11.33% in the fourth quarter. However, Galitsky has repeatedly warned that the company will not be able to always maintain such a high margin.