OREANDA-NEWS. December 7, 2010. X5 Retail Group N.V., Russia's largest retailer in terms of sales (LSE ticker: “FIVE”), published its IFRS results for the quarter and nine months ended 30 September 2010, reviewed by auditors.

Q3 2010 Highlights

•           Net sales increased 21% year-on-year in RUR terms to RUR 80,050 mln or 24% in USD terms to USD 2,614 mln;

•           Gross profit totaled USD 630 mln, for a gross margin of 24.1%;

•           EBITDA amounted to USD 194 mln, for an EBITDA margin of 7.4%. EBITDA margin, excl. ESOP amounted to 8.0%;

•           X5 reported a net profit of USD 80 mln for a net margin of 3.0%.

9M 2010 Highlights

•           Net sales increased 19% year-on-year in RUR terms to RUR 235,910 mln or 28% in USD terms to USD 7,798 mln;

•           Gross profit totaled USD 1,862 mln, for a gross margin of 23.9%);

•           EBITDA amounted to USD 593 mln, for an EBITDA margin of 7.6%;

•           X5 reported a net profit of USD 183 mln for a net margin of 2.4%.

2010 Outlook

X5 reiterates 2010 outlook for RUR net sales growth in the low 20-percent range and now expects to exceed its store opening plan with 250-300 discounters, 20 supermarkets and 10 hypermarkets while maintaining capital expenditure below the RUR 18 bin limit for 2010.

We are preparing for a significant step-up plans in 2011 and still finalizing on the growth level. We will provide the preliminary guidance when the plan is approved.

X5 Retail Group CEO Lev Khasis commented:

"X5 delivered 21% net sales growth in RUR terms in Q3 2010 driven by new store openings, solid LFL performance at discounters and strong improvement at converted Paterson supermarkets. We are well on track to deliver on X5's 2010 sales outlook, with a recovery in consumer spending and trading up trends becoming evident as we head into the end of the year.

"Execution of our store expansion plan has been strong and disciplined: we added a record 258 stores through the first nine months, including 116 in the third quarter, and will exceed the Company's annual plan while staying below our CapEx limit We are excited about the launch of Pyaterochka-Maxi as a new economy-class hypermarket format. Our multi-year Strategic Efficiency Programme has also made progress in readying IT systems transformation, logistics, labour productivity and energy savings initiatives to build a strong, efficient growth platform and drive X5's competitive advantages.

X5 Retail Group Acting CFO Anton Volyanskiy added:

"X5's Strategic Efficiency Programme has made good progress with SAP for Retail and SAP for HR successfully integrated and logistics centralisation level outpacing our initial plan. Gross margin has picked up 20bps, helped by the higher centralisation rate and successful negotiations with suppliers on converting bonuses to discounts in accordance with New Russian Retail Law. EBITDA performance in Q3 2010 was affected by SG&A expense rise (staff salary indexation and leasing costs up) with sales from new store openings still ramping up. "

"We closed the quarter with a substantially strengthened balance sheet as the USD 1.1 bin loan was successfully refinanced mainly with long-term ruble debt, taking advantage of market conditions for the strongest borrowers. As a result, we have secured significant financial resources to seize new opportunities and support X5's business objectives for aggressive growth and efficiency."