Dixy Group Increases Net Profit Four Times in 2Q Dixy Group Increases
OREANDA-NEWS. DIXY Group (MOEX: DIXY) - one of Russia's leading retailers of foods and everyday products - today announced unaudited IFRS results for the second quarter and the first half of 2014.
Key Highlights of the second quarter and the first half of 2014:
In the first half of 2014, the Company opened 145 stores on net basis. As of June 30, 2014, the Company operated 1,944 stores in Central, North-West and Urals Federal Districts of Russia.
Selling Space increased by 21% year-on-year to 659,903 sq. m as of June 30, 2014.
Revenue increased by 26.7% (14.5% in USD) year-on-year to RUB 57.1 bln (USD 1.6 bln) in the second quarter and grew by 22.4% (8.6% in USD) year-on-year to RUB 107.0 bln (USD 3.1 bln) in the first half of 2014.
Gross Profit grew by 27.4% (15.1% in USD) year-on-year to RUB 17.1 bln (USD 489.6 mln) in the second quarter of 2014, and grew by 24.2% (10.2% in USD) year-on-year to RUB 32.5 bln (USD 928.4 mln) in the first
half of 2014.
Gross Margin increased by 20 bp year-on-year to 30.0% in the second quarter and by 50 bp year-on-year to 30.4% in the first half of 2014.
EBITDA grew by 55.6% (40.6% in USD) year-on-year to RUB 4.2 bln (USD 118.9 mln) in the second quarter of 2014, and grew by 39.2% (23.4% in USD) year-on-year to RUB 7.4 bln (USD 211.5 mln) in the first half of 2014.
EBITDA Margin improved by 140 bp year-on-year to 7.3% in the second quarter, and by 80 bp year-on-year to 6.9% in the first half of 2014.
Net Profit jumped 4 times year-on-year to RUB 1.3 bln (USD 37.1 mln) in the second quarter of 2014, and almost tripled to RUB 2.0 bln (USD 56.2 mln) in the first half of 2014.
Net Profit Margin improved by 160 bp year-on-year to 2.3% in the second quarter of 2014, and by 100 bp year-on-year to 1.8% in the first half of 2014.
Operating Cash Flow increased by 79.4% (59.1% in USD) year-on-year to RUB 4.9 bln (USD 140.9 mln) in the first half of 2014.
In the first half of 2014, the Company opened 145 stores on net basis and increased selling space by 21% year-on-year.
In the second quarter of 2014, the Company continued to improve stores layout and convenience, and intensified ticket and traffic driving promotional campaigns for DIXY neighborhood stores. In April 2014, the Company also started new advertising campaign to communicate the high quality of D-brand products.
These initiatives resulted in 11.7% like-for-like sales growth for the Group, and 13.7% like-for-like sales growth for DIXY banner in the second quarter of 2014.
The Company continued to enhance the logistical and distribution processes efficiency, and improved centralization level (deliveries through own distribution centers) for its neighborhood stores to 88% in the second quarter of 2014. The logistic service level (success of deliveries ratio) stood at 91% in the first half of 2014.
Revenues
Revenue increased by 26.7% (14.5% in USD) year-on-year to RUB 57.1 bln (USD 1.6 bln), driven by organic expansion and supported by 11.7% like-for-like sales growth in the second quarter of 2014.
DIXY neighborhood stores revenue increased by 31.0% (18.3% in USD) year-on-year to RUB 45.0 bln (USD 1.3 bln) in the second quarter of 2014. Victoria supermarkets revenue grew by 21.5% (9.8% in USD) year-on-year to RUB 5.9 bln (USD 169.3 mln), while MegaMart compact hypermarkets revenue increased by 8.1% (decreased by 2.4% in USD) to RUB 3.4 bln (USD 96.0 mln) in the second quarter of 2014.
Gross Profit
Gross Profit grew by 27.4% (15.1% in USD) year-on-year to RUB 17.1 bln (USD 489.6 mln) in the second quarter of 2014.
Gross Margin increased by 20 bp year-on-year to 30.0% in the second quarter of 2014, driven by better commercial terms, offset partially by increased shrinkages. Cost of goods sold, as a percentage of sales, decreased by 50 bp year-on-year to 67.0% of sales in the second quarter of 2014. Shrinkage costs, as a percentage of sales, increased by 50 bp year-on-year to 2.3% of sales in the second quarter of 2014, due mainly to growing share of fresh categories, particularly, fruits and vegetables, in DIXY sales mix. Transportation costs, as a percentage of sales, decreased by 20 bp to 0.7% year-on-year in the second quarter of 2014, due to logistic processes optimization in DIXY division.
Operating Expenses
Selling, General & Administrative Expenses increased by 22.3% (10.5% in USD) year-on-year to RUB 14.7 bln (USD 419.1 mln) in the second quarter of 2014.
SG&A expenses, as a percentage of sales, decreased by 90 bp year-on-year to 25.7%. The decrease was driven by the reduction of staff expenses, as a percentage of sales, offset partially by increased operating lease, and depreciation and amortization expenses, as a percentage of sales, in the second quarter of 2014.
Staff expenses increased by 17.9% (6.5% in USD) year-on-year to RUB 7.2 bln (USD 205.1 mln) in the second quarter of 2014, due primarily to organic growth of the business and wage indexations. Staff expenses, as a percentage of sales, decreased by 90 bp to 12.6% in the second quarter of 2014 from 13.5% in the second quarter of 2013, driven mainly by higher staff productivity.
Operating lease expenses grew by 29.9% (17.3% in USD) year-on-year to RUB 3.2 bln (USD 91.8 mln), and, as a percentage of sales, increased by 10 bp year-on-year to 5.6% in the second quarter of 2014, mainly, as a result of growing share of rented space and rent rates inflation. The share of total space leased increased by 200 basis points to 75% of Company's total space as of 30 June 2014 from 73% of Company's total space as of 30 June 2013.
Utilities, repair and maintenance expenses increased by 26.7% (14.4% in USD) year-on-year to RUB 1.4 bln (USD 38.7 mln) in the second quarter of 2014, due mainly to utilities tariffs indexation.
EBITDA grew by 55.6% (40.6% in USD) year-on-year to RUB 4.2 bln (USD 118.9 mln) in the second quarter of
2014.
EBITDA Margin increased by 140 bp year-on-year to 7.3% in the second quarter of 2014. Operating and Net Profits
Depreciation and amortization expenses increased by 39.2% (25.8% in USD) year-on-year to RUB 1.7 bln (USD 48.5 mln), driven mainly by organic growth of the store chain, as well as logistic infrastructure development. D&A expenses, as a percentage of sales, increased by 30 bp to 3.0% in the second quarter of 2014.
Operating Profit grew by 69.3% (52.9% in USD) year-on-year to RUB 2.5 bln (USD 70.4 mln) in the second quarter of 2014. Operating Margin improved by 110 bp year-on-year to 4.3% in the second quarter of 2014.
Income tax expense increased year-on-year by 87.0% (68.9% in USD) to RUB 385.0 mln (USD 11.0 mln) in the second quarter of 2014. Effective tax rate decreased to 22.9% for the second quarter of 2014 from 39.3% for the second quarter of 2013. The decrease was due primarily to the corporate restructuring program, and intercompany payments optimization.
Net Profit increased 4 times year-on-year to RUB 1.3 bln (USD 37.1 mln) in the second quarter of 2014, and almost tripled year-on-year to RUB 2.0 bln (USD 56.2 mln) in the first half of 2014.
Net Profit Margin improved by 160 bp year-on-year to 2.3% in the second quarter of 2014, and by 100 bp year-on-year to 1.8% in the first half of 2014.
Cash Flows and Debt
Net Cash from Operating Activities increased by 79.4% (59.1% in USD) to RUB 4.9 bln (USD 140.9 mln) in the first half of 2014 from RUB 2.7 bln (USD 88.5 mln) in the first half of 2013. The increase was due to revenues and profitability growth, helped by efficient working capital management.
As of June 30, 2014, Total Financial Debt to EBITDA ratio declined to 1.8, and Total Financial Debt amounted to RUB 26.9 bln (USD 801.3 mln), while Net Debt amounted to RUB 22.8 bln (USD 676.5 mln) as of June 30, 2014.
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