MOSCOW. Aug 25 (Interfax) - X5 Retail Group, the leading Russian retailer by sales volume, posted a net profit of $73 million in the second quarter of 2011 under International Financial Reporting Standards (IFRS), 195% more than in the same period last year, the company said in a statement.
That was slightly below the consensus forecast of $81 million compiled by Interfax.
EBITDA rose to $285 million from $220 million a year earlier. Analysts forecast $280 million.
The EBITDA margin declined to 7.1% from 8.3%.
Net sales increased 41% year-on-year in Q2 in ruble erms to RUR 112,626 mln or 52% in USD terms to USD 4,021 mln; Gross profit totaled USD 946 mln, for a gross margin of 23.5%; EBITDA amounted to USD 285 mln, for an EBITDA margin of 7.1%; Net profit increased 195% year-on-year to USD 73 mln, for a net margin of 1.8%.
Net sales increased 44% year-on-year in RUR terms in H1 2011 to RUR 225,181 mln or 52% in USD terms to USD 7,867 mln; Gross profit totaled USD 1,860 mln, for a gross margin of 23.6%; EBITDA amounted to USD 566 mln, for an EBITDA margin of 7.2%; Net profit increased 64% year-on-year to USD 170 mln for a net margin of 2.2%.
"We continue to execute on our priorities for strengthening margins, driving organic growth and integrating Kopeyka. In the second quarter of 2011, we successfully maintained X5's price leadership while managing supplier inflation, which resulted in a solid gross margin of 23.5% and helped drive EBITDA margin of 7.1%," said X5 Retail Group CEO Andrei Gusev.
"Stepped up expansion, LFL sales and the acquisition of Kopeyka drove top-line growth of 41% this quarter. Our organic expansion program is on track to meet the Company's objectives of 540 new stores this year. In Q2 2011 we nearly doubled the number of new stores added compared to the second quarter last year. As of mid-August 2011 we have also rebranded about 500 Kopeyka stores as X5 discounters plus a few supermarkets. We expect to complete the integration by the end of 2011 and deliver substantial synergies in 2012."
"Our focus on efficiency and productivity programs helped to reduce staff costs year on year despite the Russian social tax rise. However, EBITDA performance was weighed down this quarter as we took lower sales from Kopeyka stores during the integration and rebranding process, resulting in lower operating margin. In addition, Other Expenses rose substantially in part due to a doubtful debts provision we decided to take this quarter following a conservative assessment of receivables," said X5 Retail Group CFO Kieran Balfe.
"We are focused on strengthening cash generation through a combination of top-line growth, operational efficiency and working capital improvement. Net debt rose compared to last year due to the acquisition of Kopeyka, but we improved average interest rate in part by renegotiating Kopeyka's debt on X5's more favorable terms. Higher operating profit, reversal of negative forex effects and an improved effective tax rate resulted in a net profit of USD 73 mln."
X5 Retail Group N.V. is Russia's largest retailer in terms of sales. The Company was created as a result of a merger between Pyaterochka (soft discounter chain) and Perekrestok (supermarket chain) on 18 May 2006. In June 2008, X5 acquired Karusel hypermarket chain and substantially strengthened its position in the hypermarket format.
As at 30 June 2011, X5 had 2,683 Company-managed stores located in Moscow, St. Petersburg and other regions of European Russia, Urals and Ukraine, including 1,606 soft discount stores, 306 supermarkets, 70 hypermarkets, 54 convenience stores and 647 acquired Kopeyka stores (including 315 stores rebranded as Pyaterochka and one as Perekrestok).
