X5 Retail Group, Russia’s largest retailer by sales, has reported a strong first half, with double-digit growth in sales and profits.
The company said today (25 August) that net sales increased 44% year-on-year in rouble terms to RUB225.18m (US$7.81bn) or 52% in US dollar terms to US$7.87bn. Net profit increased 64% year-on-year to USD170m for a net margin of 2.2%.
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X5 Retail Group CEO Andrei Gusev said: “We continue to execute on our priorities for strengthening margins, driving organic growth and integrating Kopeyka. In the second quarter of 2011, we successfully maintained X5’s price leadership while managing supplier inflation, which resulted in a solid gross margin of 23.5% and helped drive EBITDA margin of 7.1%.”
He added: “Our organic expansion programme is on track to meet the company’s objectives of 540 new stores this year. In the second quarter of 2011, we nearly doubled the number of new stores added compared to the second quarter last year. As of mid-August, we have also rebranded about 500 Kopeyka stores as X5 discounters plus a few supermarkets. We expect to complete the integration by the end of 2011 and deliver substantial synergies in 2012.”
CFO Kieran Balfe added: “Our focus on efficiency and productivity programmes helped to reduce staff costs year on year despite the Russian social tax rise. However, EBITDA performance was weighed down this quarter as we took lower sales from Kopeyka stores during the integration and rebranding process, resulting in lower operating margin. In addition, other expenses rose substantially in part due to a doubtful debts provision we decided to take this quarter following a conservative assessment of receivables.”
The company’s EBITDA reached US$566m up 42%, on the same period a year before.
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