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Russia's retailer Magnit ups IFRS profit by 38% y/y in 2013.

January 28, 2014

Russian retailer Magnit reported IFRS net profit increase of 38.4% y/y to USD 1 .12bnmn in 2013. In Q4/13 alone net profit went up by 35% y/y to USD 361.9mn , above the expectation of USD 319mn profit by the analysts surveyed by Reuters. Net profit growth declined slightly vs. 40% y/y seen in Jan- Sep 2013 and 38% y/y in Q3. Previosuly, Magnit already reported declining sales in Q4 due to lower consumer activity in December. In 2013, revenues increased by 29.2% y/y to RUB 579.5bn ( USD 16.7bn ), meeting company's own target of 29% growth. In 2013, EBITDA gained 33.3% y/y to USD 2.03bn , at a margin of 11.6% vs. 10.56% in 2012. In Q4/13 alone retailer's EBITDA increased by 32.45% y/y to USD 623.8mn (vs. USD 590mn expected by Reuters). EBITDA margin in Q4 was 12.5% vs. 11.3% for the same quarter of the previous year. The retailer expects lower revenues and slower consumer activity in 2014. Revenues are seen increasing by 22%-24% vs. previous target of 25%, while margins are expected to squeeze to 10.5%. At the same time capex of USD 1.7bn-USD 1.8bn head is expected. The head of the company Sergey Galitskiy also said during the phone conference that 40% of net profit will be directed to dividend payouts. Despite higher than expected profitability, Magnit's shares went down in Moscow at the announcement of IFRS report. Bloomberg suggested that this was due to declining sales and recent announcement of an IPO of retailer Lenta , that could attract the capital in the sector. The shares recovered on the announcement of higher dividends by Magnit , however. To remind, in Q1/13 and Q2/13 Magnit for the first time beat another major retail chain X5 Group in terms of revenues. In May Bloomberg reported that Magnit plans almost 10,000 additional stores in the next five years. Number of convenience stores is seen doubling by the end of 2017 to 12,000, number of cosmetics stores is to increase to 4,000, and number of hypermarkets is to quadruple to 500.

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Source: IntelliNews - Weekly Reports

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