Magnit Reports 33.7% total sales growth (14.6% adjusted for dixy acquisition), 9.9% LFL Sales Growth and 7.4% EBITDA margin in 4Q 2021
MAGNIT PJSC (MGNT)
Magnit Reports 33.7% total sales growth (14.6% adjusted for dixy acquisition), 9.9% LFL Sales Growth and 7.4% EBITDA margin in 4Q 2021
04-Feb-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 33.7% total sales growth (14.6% adjusted for dixy acquisition), 9.9% LFL Sales Growth and 7.4% EBITDA margin in 4Q 2021
Krasnodar, Russia (February 4, 2022): Magnit PJSC (MOEX and LSE: MGNT; Magnit, the Company), one of Russia's leading retailers, announces its 4Q and 12M 2021 operational and unaudited financial results.
33.7%
TOTAL REVENUE growth
4Q 2021 Key Operational and Financial Highlights
Total revenue increased by 33.7% y-o-y to RUB 544.6 billion. Total revenue adjusted for the Dixy acquisition increased by 14.6%; Net retail sales reached RUB 530.7 billion increasing 34.3% y-o-y. Net retail sales growth adjusted for the Dixy acquisition was 15.6%; LFL[1] sales growth of 9.9% driven by 10.7% average ticket growth and 0.7% LFL traffic decline;9.9%
lfl sales growth
The Company opened 834 stores on a gross basis (565 Magnit and 9 Dixy convenience stores, 256 drogeries and 4 supermarkets). As part of the Company's ongoing efficiency driving campaign, 72 stores were closed resulting in a net addition of 762 stores. As of December 31, 2021 the total store base was 26,077; Selling space increase of 273 thousand sq. m., bringing total selling space to 8,997 thousand sq. m. (20.0% y-o-y growth); The Company redesigned 315 stores under Magnit brand (279 convenience stores, 28 supermarkets and 8 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 38.1% y-o-y to RUB 131.3 billion. Gross margin increased by 77 bps y-o-y to 24.1% as a result of improved commercial terms, lower supply chain costs, smarter promotions and a favorable format mix;
7.4%
EBITDA margin
EBITDA was RUB 40.2 billion with a 7.4% margin - an improvement of 36 bps y-o-y and 21 bps q-o-q driven by strong gross margin dynamics; Net income increased by 36.4% y-o-y to RUB 15.2 billion with a margin of 2.8%.
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%; LFL1 sales growth of 7.0% driven by 7.1% average ticket growth and 0.1% LFL traffic decline;
2,295
stores opened (gross)
Materially exceeded full year organic store opening guidance. The Company opened 2,295 stores 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 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); Gross profit increased by 20.1% y-o-y to RUB 439.2 billion. Gross profit margin stood at 23.7%;
7.2%
EBITDA margin
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 RUB 51.7 billion with a margin of 2.8% vs 2.4% a year ago.
«
Jan Dunning
Magnit's President
and CEO
»
"We are delighted with Magnit's performance in 2021, a year in which we delivered significant progress against our strategy. In July we completed the strategically important acquisition of Dixy, adding another 2,500 stores to our network and strengthening our overall market position. We accelerated our organic expansion and opened almost 2,300 stores - above our original guidance - alongside redesigning a further 700 stores.
We delivered market leading LFL sales growth in every quarter, resulting in continued sales density improvement in our mature stores. Total sales growth driven by same-store sales and then additional selling space reached 33.7%.
We have already made good progress with the integration of Dixy and have successfully extracted first portion of synergies and achieved further margin improvements for the combined business - 7.4% EBITDA margin in the quarter and 7.2% for the full year. This gives us confidence in our ability to achieve our ambitious long-term growth targets.
Our recently launched e-commerce sales channel has gained traction, achieving RUB 11 bn Gross Merchandise Value for the full year with more than 100,000 orders carried out daily at the end of December.
We continued to develop our 'My Price' discounter concept and today have over 200 stores in operation delivering encouraging results. In 2022 we plan to add hundreds of stores of this format and will continue developing our quality value-for-money offering.
We have recorded another set of working capital optimization which turned negative for the first time in the history with RUB 18.5 billion cash release.
We ended 2021 in an extremely strong financial position. Leverage reduced to a comfortable level of 1.5x, a very good result given the acceleration of our store roll-out and acquisition of Dixy. Cash generation from operations increased, and, combined with further improvements in working capital, resulted in a healthy free cash flow position. As a result, we are pleased to be able to pay an increased dividend distribution to shareholders for the first nine months 2021, representing a 20% year-on-year growth".
~30
RUB billion
dividends distributed
for 9M 2021
Key events in 4Q 2021 and after the Reported Period
Magnit distributed dividends for 9M 2021 in the total amount of c. RUB 30 billion or RUB 294.37 per one ordinary share; S&P Global Ratings upgraded Magnit's credit rating to "BB+" level; Magnit has reached an agreement for the long-term leasehold rights for the 56 stores operating under the Edelweiss brand in Kazan and 58 Radezh stores in Volgograd; Magnit and Wildberries rolled out express delivery of goods from convenience stores to new regions and launched a pickup service for alcohol; Magnit and Delivery Club have launched thirty-minute express grocery delivery; Magnit fulfilled over 100,000 online orders in one day in the lead-up to the New Year on December 30, 2021; Magnit has launched a pharmacy dark store; The Company has started implementing AI-powered customer offering personalization; Magnit has begun construction of the greenhouses for growing strawberries and blueberries.
Consolidation of the Dixy business and changes to the reporting standards
Magnit completed the acquisition of the Dixy retail business on July 22, 2021, and subsequent performance of Dixy has been consolidated into Magnit's results. Sales and operating results of the stores under the Dixy brand are reported separately, and growth metrics will be published starting from 3Q 2022. Dixy stores are not included in the LFL panel; this will begin after full 12 months of operations following consolidation. The Dixy retail business does not form a separate segment - Magnit will continue reporting consolidated financial results for the Group.
4Q and FY 2021 Operating Results
Retail Sales
4Q 2021
4Q 2020
Change
Change, %
FY 2021
FY 2020
Change
Change, %
Total Net Retail Sales, million RUB
530,708
395,160
135,548
34.3%
1,807,752
1,510,071
297,681
19.7%
Magnit
456,792
395,160
61,632
15.6%
1,680,528
1,510,071
170,457
11.3%
Convenience Stores[2]
355,702
301,153
54,549
18.1%
1,309,682
1,161,295
148,387
12.8%
Supermarkets[3]
56,129
53,923
2,206
4.1%
208,316
203,541
4,776
2.3%
Drogerie Stores
42,317
36,997
5,320
14.4%
152,215
134,272
17,943
13.4%
Other Formats[4]
2,644
3,087
-444
-14.4%
10,314
10,963
-649
-5.9%
DIXY
73,916
n/a
n/a
n/a
127,224
n/a
n/a
n/a
Convenience Stores
70,057
n/a
n/a
n/a
120,552
n/a
n/a
n/a
Supermarkets[5]
3,858
n/a
n/a
n/a
6,672
n/a
n/a
n/a
Number of Tickets, mln
1,391
1,155
236
20.5%
5,147
4,641
506
10.9%
Magnit
1,203
1,155
48
4.2%
4,806
4,641
165
3.6%
Convenience Stores
1,010
962
48
5.0%
4,044
3,890
154
4.0%
Supermarkets
79
84
-5
-5.5%
328
338
-10
-2.9%
Drogerie Stores
107
100
7
7.0%
408
380
27
7.2%
Other Formats
6
9
-3
-28.9%
27
33
-6
-18.5%
DIXY
188
n/a
n/a
n/a
341
n/a
n/a
n/a
Convenience Stores
183
n/a
n/a
n/a
331
n/a
n/a
n/a
Supermarkets
5
n/a
n/a
n/a
10
n/a
n/a
n/a
Average Ticket[6], RUB
382
342
39
11.5%
351
325
26
7.9%
Magnit
380
342
38
11.0%
350
325
24
7.5%
Convenience Stores
352
313
39
12.4%
324
299
25
8.5%
Supermarkets
708
643
65
10.1%
636
603
33
5.4%
Drogerie Stores
396
371
26
6.9%
373
353
20
5.7%
Other Formats
399
332
67
20.1%
371
322
49
15.1%
DIXY
393
n/a
n/a
n/a
373
n/a
n/a
n/a
Convenience Stores
383
n/a
n/a
n/a
364
n/a
n/a
n/a
Supermarkets
722
n/a
n/a
n/a
676
n/a
n/a
n/a
Stores and Selling Space
4Q 2021
4Q 2020
Change
Change, %
FY 2021
FY 2020
Change
Change, %
Number of Stores (EOP)
26,077
21,564
4,513
20.9%
26,077
21,564
4,513
20.9%
Magnit
23,626
21,564
2,062
9.6%
23,626
21,564
2,062
9.6%
Convenience Stores
16,190
14,911
1,279
8.6%
16,190
14,911
1,279
8.6%
Supermarkets
470
470
0
0.0%
470
470
0
0.0%
Drogerie Stores
6,966
6,183
783
12.7%
6,966
6,183
783
12.7%
DIXY
2,451
n/a
n/a
n/a
2,451
n/a
n/a
n/a
Convenience Stores
2,412
n/a
n/a
n/a
2,412
n/a
n/a
n/a
Supermarkets
39
n/a
n/a
n/a
39
n/a
n/a
n/a
Store Openings (Net)
762
410
352
85.9%
2,036
839
1,197
142.7%
Magnit
788
410
378
92.2%
2,062
839
1,223
145.8%
Convenience Stores
533
212
321
151.4%
1,279
289
990
342.6%
Supermarkets
3
1
2
200.0%
0
-3
3
-100.0%
Drogerie Stores
252
197
55
27.9%
783
553
230
41.6%
DIXY
-26
n/a
n/a
n/a
-26
n/a
n/a
n/a
Convenience Stores
-26
n/a
n/a
n/a
-26
n/a
n/a
n/a
Supermarkets
0
n/a
n/a
n/a
0
n/a
n/a
n/a
Total Selling Space (EOP), th. sq.m
8,997
7,497
1,500
20.0%
8,997
7,497
1,500
20.0%
Magnit
8,204
7,497
708
9.4%
8,204
7,497
708
9.4%
Convenience Stores
5,635
5,090
546
10.7%
5,635
5,090
546
10.7%
Supermarkets
937
941
-4
-0.4%
937
941
-4
-0.4%
Drogerie Stores
1,604
1,428
175
12.3%
1,604
1,428
175
12.3%
Other formats
28
37
-10
-25.6%
28
37
-10
-25.6%
DIXY
793
n/a
n/a
n/a
793
n/a
n/a
n/a
Convenience Stores
718
n/a
n/a
n/a
718
n/a
n/a
n/a
Supermarkets
75
n/a
n/a
n/a
75
n/a
n/a
n/a
Selling Space Addition (Net), th. sq.m
273
126
148
n/a
701
258
443
n/a
Magnit
280
126
154
n/a
708
258
449
n/a
Convenience Stores
226
85
141
n/a
546
138
408
n/a
Supermarkets
-4
1
-4
n/a
-4
-7
3
n/a
Drogerie Stores
58
45
14
n/a
175
126
49
n/a
Other formats
0
-4
4
n/a
-10
2
-11
n/a
DIXY
-7
n/a
n/a
n/a
-7
n/a
n/a
n/a
Convenience Stores
-7
n/a
n/a
n/a
-7
n/a
n/a
n/a
Supermarkets
0
n/a
n/a
n/a
0
n/a
n/a
n/a
4Q and 12M 2021 LFL Results[7]
4Q 2021
12M 2021
Average Ticket
Traffic
Sales
Average Ticket
Traffic
Sales
Total (Magnit excl. Dixy)
10.7%
-0.7%
9.9%
7.1%
-0.1%
7.0%
Convenience Stores
11.9%
-0.1%
11.9%
8.0%
0.2%
8.2%
Supermarkets
10.0%
-6.2%
3.1%
5.2%
-3.1%
1.9%
Drogerie Stores
6.3%
-1.5%
4.7%
5.2%
-0.8%
4.4%
4.7%
LTM sales density[8] improvement y-o-y
20%
selling space
growth y-o-y
Trading Performance
Total sales in 4Q 2021 grew by 33.7% y-o-y to RUB 544.6 billion. Net retail sales grew by 34.3% y-o-y, driven by a combination of 20.0% selling space growth and 9.9% LFL sales growth. Net retail sales achieved by the stores under the Magnit brand accelerated to 15.6% from 13.8% in 3Q 2021 driven by LFL sales growth in the mature outlets and higher selling space growth.
Net retail sales growth continued to outpace selling space growth on further improvement of sales densities. Overall sales densities in 4Q 2021 (excluding stores under the Dixy brand) improved by 1.6% q-o-q and 4.7% y-o-y while across the Company's main convenience store format these improved by 1.9% q-o-q and 5.9% y-o-y.
Net retail sales growth of Magnit business was strong and exceeded 35% in October and November 2021. In December 2021 it slightly decelerated to 32.5% driven by weaker performance of the last 2.5 weeks due to the high base effect of 2020 (social payments in December 2020), slight deceleration of on-shelf inflation versus peak levels and various COVID-related restrictions in the regions.
Selling space growth increased further from 18.4% in the previous quarter to 20.0% in the reported quarter, driven by accelerated organic expansion and the Dixy acquisition (2,477 stores added in 3Q 2021 but consolidated from July 22nd, 2021, i.e. 4Q was the first full quarter with Dixy stores consolidated). Selling space growth adjusted for the Dixy acquisition accelerated to 9.4% compared to the previous quarter, reflecting a record high number of store openings per quarter (825 on gross basis) since 1Q 2019.
LFL sales growth accelerated further from 8.6% in the previous quarter to 9.9% in 4Q 2021 predominantly driven by the strong performance of mature stores. 406 stores entered LFL comparison in 4Q (including 214 convenience stores and 192 drogeries). Only 7% of Magnit's selling space is currently in the 'ramp-up' phase with 93% already mature.
Performance of LFL stores was strong across all the regions with Caucasian and Siberian stores demonstrating the first-rate results in the double-digit zone.
LFL sales growth in the reported quarter was driven by strong LFL average ticket growth of 10.7% due to acceleration of inflation on top of the continued CVP improvements, store ramp-up effects, etc., while number of SKUs in the average customer basket and average price per article were under pressure, especially in December. LFL traffic was -0.7% driven by COVID uncertainty followed by the lockdown in November and the introduction of QR codes in shopping malls. The latter mostly affected traffic of larger formats located in the malls and a limited number of cosmetics stores in certain regions where they were not deemed 'essential' stores.
Acceleration of revenue and LFL sales growth versus previous quarter did not require any intensification of promo activity - it remained flat y-o-y with some acceleration q-o-q due to seasonal factors.
59 mln
of loyalty program cardholders
During the quarter the number of loyalty program cardholders reached 58.7 million. Company-wide, the proportion of tickets using the loyalty card was 56% with sales penetration of 69%. During peak days of the quarter it reached 59% and 73% correspondingly. The loyalty program continues to deliver positive cross-format gains - 43% of Magnit's customer base at the end of the reporting period (compared to 40% in the previous quarter) visit 2+ store formats. Average ticket of the active user is 1.8x higher vs transaction without loyalty card in a convenience store and 2.0x higher in large formats.
11.9%
LFL sales growth in Magnit convenience in 4Q 2021
Store Network Development and Performance by Format
The convenience segment within the Magnit brand generated 67.0% of total net retail sales in 4Q 2021. In the quarter Magnit accelerated its expansion program both q-o-q and y-o-y and opened (gross) 565 convenience stores (336 in 3Q 2021 and 243 in 4Q 2020). The Company continued its efficiency campaign and closed 32 convenience stores (flat y-o-y). Magnit added 533 convenience stores (net) during the quarter. The selling space growth of convenience stores picked up to 10.7% y-o-y, driving a 18.1% acceleration in sales in the format - the strongest performance across all Magnit's store formats - driven by LFL sales growth of 11.9% and selling space growth of 10.7%. LFL sales growth was driven by LFL average ticket growth of +11.9% while LFL traffic growth was -0.1%. Adjusted for the ramp-up effect following acceleration in redesign campaign, LFL traffic in convenience stores would be positive.
74
magnit supermarkets redesigned in 2021
Magnit supermarkets generated 10.6% of the Group's net retail sales in the reported quarter. During 4Q 2021 the Company opened four supermarkets and closed one store, focusing on refurbishment versus adding new space. The Company's redesign program is gaining traction with 74 supermarkets refurbished during 2021 including 28 in 4Q 2021. Selling space across this format remained almost flat y-o-y. The Company was able to deliver LFL sales growth of 3.1% - in line with the previous quarter - despite the introduction of QR codes for customers of shopping malls where a third of Magnit's supermarkets are located. This was driven by 10.0% average ticket growth and 6.2% traffic decline. Traffic reduction was partly due to higher share of stores in the ramp-up phase following acceleration in the redesign campaign (6% of large format store portfolio has been redesigned in the reported quarter). As a result, net retail sales growth of supermarkets improved to 4.1% in the quarter.
12.3%
y-o-y selling space increase in drogerie in 4Q 2021
13.9%
share of the Dixy stores in the total net retail sales in 4Q 2021
11.2
RUB billion
GMV in 2021
The sales contribution of Magnit's drogerie format represented 8.0% of total net retail sales. During 4Q 2021 Magnit opened (net) 252 cosmetics stores - a record high since 3Q 2019. Selling space increased by 12.3% y-o-y or by 58 thousand sq. m., the highest of all formats. Driven by this increase in selling space and LFL sales growth of 4.7%, sales grew 14.4%. LFL traffic declined by 1.5% due to the introduction of QR codes in certain regions where drogeries were not considered stores selling essential goods. This was well compensated by 6.3% LFL average ticket growth. LFL trends in the cosmetics format reflect lower inflation on the non-food assortment, different mix of products on promotion and high comparison base.
During 4Q 2021 Magnit continued its renovation program and redesigned 279 convenience stores, 28 supermarkets and 8 drogeries. This resulted in the combined share of refurbished and new stores at: 78% for convenience stores, 45% for supermarkets and 62% for the drogerie format.
The share of Dixy stores in the Group's total net retail sales reached 13.9% in the fourth quarter including 13.2% of Dixy convenience stores. In the reported period nine convenience stores were opened, while 35 outlets have been closed, resulting in 2,451 stores and 793 thousand sq. m. of selling space as at December 31, 2021 compared to 2,477 stores at the end of the previous quarter. On pro-forma basis, Dixy' store estate demonstrated mid-single digit LFL sales growth, driven by mature stores, despite high comparison base and strong sales density overall.
E-commerce
Magnit has been piloting e-commerce services since the third quarter of 2020. The Company currently runs a number of online delivery projects, including own delivery and partnerships (express delivery, regular delivery, e-pharma, cosmetics and partnerships).
Total e-commerce GMV (incl. VAT) in the reported period was RUB 6.0 billion, contributing more than half to the full year e-commerce GMV of RUB 11.2 billion.
During 4Q 2021, the average number of orders per day almost doubled and reached 62,274. On December 30th Magnit fulfilled over 100,000 orders.
The average ticket across all online services was c. RUB 1,074 including VAT. This average ticket is approximately 2.7x higher than in the convenience stores (RUB 403 in 4Q 2021). This is mostly due to a larger number of items per basket. The average ticket within Magnit own delivery service was RUB 1,235.
Magnit's e-commerce services today cover over 4,490 offline stores and 20 dark stores in 64 regions and 301 cities, with 69% of the current revenue generated outside Moscow and St. Petersburg. The largest and fastest growing segment is express delivery, where orders are expected to be fulfilled within 60 minutes.
4Q 2021
4Q 2020
Change
Change, times/%
12M 2021
12M 2020
Change
Change, times/%
GMV, billion RUB
6.0
0.3
5.7
18.5x
11.2
0.4
10.9
32x
Number of orders per day (average)
62,274
3,959
58,315
15.7x
29,481
2,496
26,985
11.8x
Average ticket incl. VAT, RUB
1,074
912
162
17.8%
1,045
925
120
13.0%
Number of stores covered, EOP
4,490
1,290
3,200
3.5x
4,490
1,290
3,200
3.5x
190
My Price discounters as at December 31, 2021
Discounters
Magnit started piloting discounters in July 2020 as a response to the fast changing economic environment. The concept is aimed at price-sensitive consumers who frequently make minor purchases of traditional goods or stock up on products.
As at December 31, 2021 the Company had 190 operating 'My Price' discounters compared to 15 stores a year ago. During 2021 Magnit opened 175 stores including 78 in the reported quarter. Out of 190 operating discounters 71 are new store openings and 119 have been reformatted from convenience stores.
Average ticket at My price discounters increased by 8% y-o-y and stood at RUB 324. Outlets reformatted from convenience stores delivered LFL sales growth of above 30%.
Financial Results for 4Q and FY 2021 (IAS 17)
RUB mln
4Q 2021
4Q 2020
Change
FY 2021
FY 2020
Change
Total Revenue
544,552
407,227
33.7%
1,856,079
1,553,777
19.5%
Retail
530,708
395,160
34.3%
1,807,752
1,510,071
19.7%
Wholesale
13,844
12,067
14.7%
48,327
43,707
10.6%
Gross Profit
131,255
95,027
38.1%
439,238
365,729
20.1%
Gross Margin, %
24.1%
23.3%
77 bps
23.7%
23.5%
13 bps
SG&A, % of Sales
-21.2%
-20.5%
-72 bps
-20.6%
-20.5%
-17 bps
EBITDA pre LTI[9]
40,452
28,803
40.4%
134,054
110,264
21.6%
EBITDA Margin pre LTI, %
7.4%
7.1%
36 bps
7.2%
7.1%
13 bps
EBITDA
40,167
28,592
40.5%
133,143
109,410
21.7%
EBITDA Margin, %
7.4%
7.0%
36 bps
7.2%
7.0%
13 bps
EBIT
23,745
16,516
43.8%
79,744
63,493
25.6%
EBIT Margin, %
4.4%
4.1%
30 bps
4.3%
4.1%
21 bps
Net Finance Costs
-3,835
-2,856
34.3%
-12,966
-13,497
-3.9%
FX Gain/ (Loss)
-150
419
-135.7%
302
-1,310
-123.1%
Profit before Tax
19,760
14,080
40.3%
67,081
48,686
37.8%
Taxes
-4,590
-2,962
55.0%
-15,387
-10,905
41.1%
Net Income
15,170
11,117
36.4%
51,694
37,781
36.8%
Net Income Margin, %
2.8%
2.7%
6 bps
2.8%
2.4%
35 bps
For 4Q and FY 2021 financial results in accordance with IFRS 16 - see Appendix
24.1%
Gross margin
in 4Q 2021
7.4%
ebitda margin in 4Q 2021
2.8%
Net income margin
in 4Q 2021
Total revenue in 4Q 2021 increased by 33.7%. This growth was underpinned by net retail sales growth of 34.3% and wholesale revenue growth of 14.7%. Wholesale operations accounted for 2.5% of total sales.
Gross Profit in 4Q 2021 increased by 38.1% y-o-y to RUB 131.3 billion. Gross margin increased by 77 bps y-o-y to 24.1% as a result of lower supply chain costs, improved commercial terms, smarter promotions and a favorable format mix. Promotional intensity was flat y-o-y with some acceleration q-o-q due to seasonal factors. On a q-o-q basis gross margin improved by 52 bps from 23.6% in 3Q 2021.
Despite further increases to on-shelf availability, supply chain costs decreased by 12 bps y-o-y. This was due to higher DC productivity and utilization, which offset the negative impact of the increased container shipping tariffs.
Shrinkage as a proportion of sales increased by 5 bps y-o-y driven by consolidation of the Dixy business. Shrinkage as a percentage of sales at Magnit's standalone business remained flat y-o-y despite the growing share of fresh products and overall improvement of on-shelf availability.
SG&A costs increased by 72 bps y-o-y to 21.2% as a percent of sales due to the different calendarisation of personnel costs versus the previous year as well as the accelerated expansion and redesign with higher a share of stores in the ramp-up phase.
Personnel costs as a percentage of sales increased by 62 bps which was predominantly driven by the different calendarisation of the annual bonus accrual (44 bps) versus previous year. Total amount of expenses related to STIP[10] remained flat y-o-y. Other influencing factors include higher share of outsource staff and much bigger number of new stores in the ramp-up phase. This was partially offset by continued productivity improvements and ongoing automation of business processes.
Advertising expenses decreased by 21 bps y-o-y on more efficient marketing activities and calendarisation of loyalty campaigns.
Rental costs as a percentage of sales increased by 12 bps y-o-y driven by consolidation of Dixy stores predominantly located in the Moscow and Saint-Petersburg regions with higher rent rates, acceleration in store 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% in 4Q 2021 vs 78.0% a year ago. Despite the above-mentioned factors, rent expense of Magnit's standalone business decreased as a percentage of sales thanks to higher sales density, improved lease terms with landlords and the closure of inefficient stores.
Utilities costs as a percentage of sales increased by 8 bps y-o-y on accelerated store openings and their ramp-up period as well as y-o-y increase in cleaning expenses due to higher frequency of cleaning and sanitary treatment.
Depreciation, repair and maintenance, packaging and raw materials, bank, tax and other expenses as a percentage of sales remained broadly flat y-o-y.
As a result, EBITDA was RUB 40.2 billion with a 7.4% margin - an improvement of 36 bps y-o-y and 21 bps q-o-q. This was driven by strong gross margin dynamics but partially offset by higher SG&A costs as well as the consolidation of Dixy business with lower profitability. EBITDA margin for the FY 2021 was 7.2% with a y-o-y improvement of 13 bps.
Net finance costs in 4Q 2021 increased by 34.3% y-o-y to RUB 3.8 billion (but were flat in absolute terms q-o-q) due to the higher total amount of borrowings. The Company increased its total debt by RUB 104.3 billion during the last twelve months, 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 y-o-y to 6.4% (33 bps y-o-y) but remained flat q-o-q. 99.8% of the Company's debt profile is represented by long-term borrowings and bonds with an average maturity of 18 months.
In 4Q 2021 the Company reported FX loss of RUB 0.2 billion related to direct import operations.
Income tax in 4Q 2021 was RUB 4.6 billion. The effective tax rate stood at 23.2%.
As a result, net income in 4Q 2021 increased by 36.4% y-o-y and stood at RUB 15.2 billion. Net income margin increased by 6 bps y-o-y to 2.8%. Net income for FY 2021 grew by 36.8% with a margin improvement of 35 bps to 2.8%.
Financial Position Highlights (IFRS 16)
RUB mln
31.12.2021
31.12.2020
Inventories
224,873
205,949
Trade and other receivables
11,902
8,564
Cash and cash equivalents
73,399
44,700
Long-term borrowings and loans
205,287
147,695
Trade and other payables
239,737
184,325
Short-term loans and borrowings
65,139
18,392
negative working capital with
18.5
billion
cash release
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 33.7%. 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 55.4 billion compared with December 31, 2020 and stood at RUB 239.7 billion, driven by higher sales and increased payment days. Accounts receivables increased by RUB 3.3 billion vs December 31, 2020 and stood at RUB 11.9 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 18.5 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
(IAS17)
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. Total debt remained flat versus end of the previous quarter. 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. During the reported quarter leverage reduced significantly from 1.9x as at September 30, 2021.
Capex in 4Q 2021 increased by 89.3% and stood at RUB 23.9 billion. This was driven by an almost twofold acceleration of the Group's expansion and a more than quadrupling of the store redesign program (834 store openings on gross basis and 315 redesigns in 4Q 2021 vs 445 and 72 respectively in 4Q 2020). Total capital expenditure for the full year almost doubled and stood at RUB 65.9 billion (matching guidance), compared with RUB 32.0 billion in FY 2020.
FY 2022 Guidance
Number of store openings (all formats, gross)
>2,000
Number of redesigns (all formats)
~900
GMV on-line growth, RUB billion
>2.0x
CAPEX, RUB billion
80-85
>2,000
stores on gross basis to be opened by magnit organically in 2022
In 2022 Magnit plans to open more than 2,000 stores of different format on a gross basis as part of its organic expansion which is broadly in line with the previous year, adjusted for small organic-type acquisitions. The store opening program for the current year reflects a strict return requirement and continued focus on operating efficiency. The Company also plans to refurbish around 900 stores, more than in the previous year.
In 2022, the Company will continue developing its e-commerce services including Magnit's own delivery and partnerships and plans to at least double its e-commerce GMV.
In 2022 Capital expenditure is expected to be approximately RUB 80-85 billion, excluding M&A activity. An increase in the planned absolute investment compared to 2021 reflects the greater number of store redesigns, Dixy store network refurbishment and maintenance, launch of new own production facilities and higher spending on efficiency projects focused on both sales growth and productivity improvement, including supply-chain optimization and IT infrastructure. The Company expects that in 2022 capex of total sales will remain at similar levels to 2021.
Note:
This announcement contains inside information disclosed in accordance with the Market Abuse Regulation effective from July 3, 2016. Please note that there may be small variations in calculation of totals, subtotals, and/or percentage change due to rounding of decimals.
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
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 unaudited IFRS 16 management accounts results for FY 2021, Magnit had revenues of RUB 1,856 billion and an EBITDA of RUB 214 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.
APPENDIX
4Q 2021 Monthly Sales
October
Change
November
Change
December
Change
Total net retail sales, RUB million
168,086
35.6%
162,423
35.2%
200,199
32.5%
Magnit
144,308
16.5%
139,281
15.9%
173,203
14.6%
Convenience Stores
113,449
18.7%
110,603
18.9%
131,650
17.0%
Supermarkets
16,950
8.5%
15,815
1.8%
23,365
2.7%
Drogerie Stores
12,985
12.3%
12,050
14.5%
17,282
15.9%
Other formats
925
-17.3%
813
-22.6%
906
-1.3%
DIXY
23,778
n/a
23,141
n/a
26,996
n/a
Convenience Stores
22,523
n/a
22,051
n/a
25,483
n/a
Supermarkets
1,255
n/a
1,091
n/a
1,513
n/a
4Q and FY 2021 Store Openings
4Q 2021
4Q 2020
Change
Change, %
FY 2021
FY 2020
Change
Change, %
Store Openings (Gross)
834
445
389
87.4%
2,295
1,292
1,003
77.6%
Magnit
825
445
380
85.4%
2,281
1,292
989
76.5%
Convenience Stores
565
243
322
132.5%
1,450
669
781
116.7%
Supermarkets
4
2
2
100.0%
6
4
2
50.0%
Drogerie Stores
256
200
56
28.0%
825
619
206
33.3%
DIXY
9
n/a
n/a
n/a
14
n/a
n/a
n/a
Convenience Stores
9
n/a
n/a
n/a
14
n/a
n/a
n/a
Supermarkets
0
n/a
n/a
n/a
0
n/a
n/a
n/a
Store Closures
72
35
37
105.7%
259
453
-194
-42.8%
Magnit
37
35
2
5.7%
219
453
-234
-51.7%
Convenience Stores
32
31
1
3.2%
171
380
-209
-55.0%
Supermarkets
1
1
0
0.0%
6
7
-1
-14.3%
Drogerie Stores
4
3
1
33.3%
42
66
-24
-36.4%
DIXY
35
n/a
n/a
n/a
40
n/a
n/a
n/a
Convenience Stores
35
n/a
n/a
n/a
40
n/a
n/a
n/a
Supermarkets
0
n/a
n/a
n/a
0
n/a
n/a
n/a
Store Openings (Net)
762
410
352
85.9%
2,036
839
1,197
142.7%
Magnit
788
410
378
92.2%
2,062
839
1,223
145.8%
Convenience Stores
533
212
321
151.4%
1,279
289
990
342.6%
Supermarkets
3
1
2
200.0%
0
-3
3
-100.0%
Drogerie Stores
252
197
55
27.9%
783
553
230
41.6%
DIXY
-26
n/a
n/a
n/a
-26
n/a
n/a
n/a
Convenience Stores
-26
n/a
n/a
n/a
-26
n/a
n/a
n/a
Supermarkets
0
n/a
n/a
n/a
0
n/a
n/a
n/a
Financial Results for 4Q and FY 2021 (IFRS 16)
RUB mln
4Q 2021
4Q 2020
Change
FY 2021
FY 2020
Change
Total Revenue
544,552
407,227
33.7%
1,856,079
1,553,777
19.5%
Retail
530,708
395,160
34.3%
1,807,752
1,510,071
19.7%
Wholesale
13,844
12,067
14.7%
48,327
43,707
10.6%
Gross Profit
131,234
95,054
38.1%
439,264
365,756
20.1%
Gross Margin, %
24.1%
23.3%
76 bps
23.7%
23.5%
13 bps
SG&A, % of Sales
-19.9%
-19.2%
-71 bps
-19.2%
-19.1%
-15 bps
EBITDA pre LTI[11]
63,138
46,168
36.8%
215,132
179,043
20.2%
EBITDA Margin pre LTI, %
11.6%
11.3%
26 bps
11.6%
11.5%
7 bps
EBITDA
62,853
45,957
36.8%
214,220
178,189
20.2%
EBITDA Margin, %
11.5%
11.3%
26 bps
11.5%
11.5%
7 bps
EBIT
31,016
22,572
37.4%
108,897
88,424
23.2%
EBIT Margin, %
5.7%
5.5%
15 bps
5.9%
5.7%
18 bps
Net Finance Costs
-13,398
-10,509
27.5%
-46,578
-44,268
5.2%
FX Gain/ (Loss)
-183
485
-137.7%
281
-1,453
-119.3%
Profit before Tax
17,435
12,547
39.0%
62,600
42,703
46.6%
Taxes
-4,136
-2,657
55.7%
-14,494
-9,709
49.3%
Net Income
13,299
9,890
34.5%
48,106
32,993
45.8%
Net Income Margin, %
2.4%
2.4%
1 bps
2.6%
2.1%
47 bps
[1] LFL calculation base includes Magnit 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. Dixy stores will be added to the LFL panel after full 12 months of operations since consolidation
[2] Convenience Stores include convenience stores and small pilots such as Magnit City and My Price discounters
[3] Supermarkets include Magnit Family supermarkets and Magnit Extra superstores
[4] Other Formats include pharmacies and stores located at Russian Post offices
[5] Supermarkets include Megamart and Minimart stores
[6] Excluding VAT
[7] Excluding Dixy stores. Dixy stores will be added to the LFL panel after full 12 months of operations after consolidation
[8] Net retail sales of the last four quarters divided by the average selling space at the end of the last five quarters (excluding Dixy)
[9] LTI - Long-Term Incentive Program
[10] Short-Term Incentive Program
[11] LTI - Long-Term Incentive Program
ISIN: US55953Q2021 Category Code: MSCU TIDM: MGNT LEI Code: 2534009KKPTVL99W2Y12 OAM Categories: 2.2. Inside information Sequence No.: 140857 EQS News ID: 1276600
End of Announcement EQS News Service