OREANDA-NEWS. December 08, 2009. Dixy Group – one of the leading Russian food retailers - announces consolidated unaudited IFRS results for the first nine months of 2009.

Key P&L figures for first 9 months of 2009 in comparison to the first 9 months of 2008 results

In RUR

• Total Revenues increased 14.5% to RUR 39,622 mln.

• Gross Profit increased 22.9% to RUR 10,613 mln.

• Gross Profit Margin increased from 25.0% for the first 9 months of 2008 to 26.8%.

• EBITDA increased 12.3% to RUR 2,124 mln.

• Net Loss totaled RUR 102.0 mln.

• Net operating cash flow increased by 19.7% to RUR 302,8 mln.

In USD

• Total Revenues decreased 15.2% to USD 1,219.8 mln.

• Gross Profit decreased 9.0% to USD 326.7 mln.

• EBITDA decreased 16.8% to USD 65.4 mln.

• Net Loss totaled USD 3.1 mln.

• Net operating cash flow declined by 11.4% to USD 9.3 mln.

Commenting on Group performance during the first 9 months of 2009, the President of the Company Ilya Yakubson said:

“All-in-all, our nine months 2009 results are fully consistent with our plans and expectations. In the third quarter we started to implement a set of measures aimed at stimulating sales, including changes in pricing policies, special marketing campaigns, which allowed us to increase the number of purchases in our Dixy stores. The gross profit margin declined from 28.6% in the second to 26.1% in the third quarter of 2009. We will continue to push forward in this direction, expanding our advertising and promo activities, optimizing our assortment matrix, in order to drive-up the average check. At the end of October, we successfully completed the rollout of our IT platform, ALDATA GOLD for all business units of the Company including stores, warehouses and offices.”

Key unaudited financial indicators

 

 

In thousands of RUR

 

 

 

 

9M 2009

9M 2008

Growth (%)

Net Sales

39 621 662

34 593 724

14.5%

Gross Profit

10 612 742

8 632 014

22.9%

EBITDAR

3 789 623

3 147 568

20.4%

EBITDA

2 123 932

1 890 717

12.3%

Net Profit

-101 952

242 745

NA

Net Operating cash flow

In thousands of USD

302 799

252 880

19.7%

 

 

 

 

9M 2009

9M 2008

Growth (%)

Net Sales

1 219 826

1 438 684

-15.2%

Gross Profit

326 733

358 988

-9.0%

EBITDAR

116 671

130 901

-10.9%

EBITDA

65 389

78 631

-16.8%

Net Profit

-3 139

10 095

NA

Net Operating cash flow

9 322

10 517

-11.4%

 

9M 2009

9M 2008

 

Gross Profit

26.8%

25.0%

 

EBITDAR

9.6%

9.1%

 

EBITDA

5.4%

5.5%

 

Net Profit

-0.3%

0.7%

 

Net Sales as of the first 9 months of 2009 amounted to RUR 39 622 mln., representing a 14.5% increase over the first 9 months of 2008 results. Falling short of our retail sales targets is due to natural propensity of lower retail spending due to adverse economic environment, while also due to low efficiency in the execution at the level of our logistics function. Sales in USD amounted to USD 1 219.8 mln., representing a decrease of 15.2% from the same period last year. The decrease in USD revenue is due to USD appreciation against the RUR, exceeding the RUB sales growth during the period. While in the third quarter, there is a further decline in sales growth rate, we notice a positive trend in traffic growth, which we believe is primarily due to the substantial increase in our marketing and promotional activity.

Gross profit for the first nine months of 2009 amounted to RUR 10 613 mln. (USD 326.7 mln.), demonstrating growth of 22.9% in RUR (-9.0% in USD) from the first 9 months of 2008 result. Gross margin increased from 25.0% in the first nine months of 2008 to 26.8% over the same period in 2009, declining in Q3 to 26.1% from 28.6% in Q2 2009. The decline is due to a more aggressive pricing policy, and to deep-discount type promotional campaigns, which while helping to pump-up traffic, fail to stimulate ticket growth, generating mostly low marginal.

Thous. RUR

 

 

 

 

9M 2009

9M 2008

Growth (%)

Salaries

3 997 784 1 665

3 531 570

13.2%

Lease Expense

691

1 256 851

32.5%

 

D&A

1 165 308

810 549

43.8%

 

Utilities

453 635

293 446

54.6%

 

Other   Expenses   (shrinkage,   transport,

bank charges, advertising costs etc.)

2 371 700

1 659 430

42.9%

SG&A Expense % revenue

9 654 118

7 551 846

27.8%

 

9M 2009

9M 2008

 

Salaries

10.1%

10.2%

 

Lease Expense

4.2%

3.6%

D&A

2.9%

2.3%

Utilities

1.1%

0.8%

Other   Expenses   (shrinkage,   transport,

bank charges, advertising costs etc.)

6.0%

 

 

4.8%

24.4%

 

21.8%

 

Salary Expense, in 9M 2009 amounted to RUR 3 998 mln. versus RUR 3 532 mln. for the 9M 2008. Demonstrating a 13.2% year-on-year growth and a 5.9% quarter-on-quarter decline. Further reduction of salary expense in Q3 to 9.7% of Sales is due to optimization of wages and reduction of total headcount.

Utilities and maintenance expenses: 54.6% growth in utilities and maintenance expense to RUR 454 mln. for the 9M 2009 versus RUR 293 mln. for the 9M 2008 is due to a 19.5% growth in total selling space and an over 50% growth in warehousing areas, following the opening of the 35,000 sq. m. DC in Serpukhov, Moscow region, in Q4 2008 and a 7,500 sq. m. DC in Chelyabinsk in Q2 2009.

Shrinkage for the first nine months of 2009 amounted to RUR 728 mln. In Q3 shrinkage expense slightly decreased to RUR 230 mln. from RUR 243 mln. in Q2 and RUR 255 mln. in Q1 2009. For 9M 2009, Shrinkage Expense remains at 1.8% of Sales, down from 1.92% in Q1 to 1.79% in Q3, which remains one of the highest levels in our sector. Reduction of shrinkage is one of the key priorities for the management.

EBITDAR amounted to RUR 3 790 mln. (USD 116.7 mln.), which represents a 20.4% growth in RUR (10.9% decline in USD). EBITDAR margin increased from 9,1% for the first nine months of 2008 to 9,6% over the same period in 2009. EBITDAR growth is primarily due to the increase in Gross Profit for the Company during the period.

Lease Expense for the 9M 2009 amounted to RUR 1 666 mln. a 32.5% increase from RUR 1 257 mln. for the 9M 2008. During the 12 months period preceding the end of the Q3 2009 the Group opened 91 Dixy stores on leased basis with a total selling space of over 25 thousand sq. m. increasing by 33.5% format’s leased selling space. Quarter on quarter the lease expense continues to declines, from RUR 575 mln. in Q1 to RUR 554 mln. in Q2 to RUR 538 mln. in Q3. These reductions were achieved by further

successful efforts to renegotiate lease agreements and by continuous optimization of the retail assets portfolio. Lease expense as a percentage of revenue increased to 4.2% from 3.6% for the 2008 first nine months period, due primarily to slower revenue growth and predominately lease based expansion.

EBITDA increased by 12.3% in RUR terms (a 16.8% decline in USD), to RUR 2 124 mln. (USD 65.4 mln.). EBITDA margin of 5.4% was slightly lower than 5.5% for the 9M 2008. Lower Salary Expense was offset by higher Leasing Expense, Maintenance and Utilities charges, and a 45% growth in Shrinkage from RUR 504 mln. for the first nine months of 2008 to RUR 728 mln. for the same period in 2009.

Net Loss: in 9M 2009 the Group recorded a Net Loss of RUR 102 mln. (USD 3.1 mln.) primarily due to RUR 163 mln. in FX translational losses sustained during the period and to RUR 290 mln. in accrued profit taxes for the nine months period, including RUR 254 mln. accrued in Q3 2009.

Net debt including outstanding obligations under the leasing agreements as of September 30, 2009 amounted to RUR 8,525 mln. or USD 283,3 mln.

 

Key operating statistics 9M 2008 – 2009

 

 

 

 

9M 2009

509

9M 2008

425

Growth (%)

Number of stores

19.8%

Number of employees

16,085

15,854

1.5%

Total Space owned, sq.m.

169,199

152,005

11.3%

Total Space, sq.m.

463,032

387,342

19.5%

Selling Space, sq.m. by format:

197,425

166,823

18.3%

DIXY

161,500

136,224

18.6%

V-MART

--

915

 

MEGAMART

30,305

24,755

22.4%

MINIMART

5,620

4,930

14.0%

 

 

 

Thous. RUR

9M 2009

9M 2008

Growth (%)

DIXY

33 088 352

29 377 137

12.6% -57.2%

V-MART

68 034

158 869

28.7% 17.1%

MEGAMART

4 483 396

3 482 829

60.6%

MINIMART

1 476 071

1 259 986

14.5%

OTHER REVENUE

505 809

314 903

 

39 621 662

34 593 724

 

 

 

 

Thous. USD

DIXY

V-MART

MEGAMART

MINIMART

OTHER REVENUE

9M 2009

1 018 686

2 095

138 030

45 444

15 572

9M 2008

1 221 736

6 607

144 844

52 400

13 096

Growth (%)

-16.6%

-68.3%

-4.7%

-13.3%

18.9%

1 219 826

1 438 684

-15.2%