Amsterdam-based X5 Retail Group NV, Russia’s largest food retailer in terms of sales, has reported a 47% pro forma revenue increase for 2006 to US$3.49bn.
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The company stated that the introduction of more private labels and upgraded logistics had resulted in an increase in gross margins from 25.4% to 27.9%. Gross profit increased by 60.9% to $972m.
Pro forma EBITDA rose by 31% to US$295m. The company said it managed to keep its operating cost base tight while still making “significant investments in the business in terms of store openings and an increased marketing budget”.
It has been an eventful year for the company, which completed the merger of Pyaterochka and Perekrestok on 18 May 2006 – immediately followed by a major integration programme. X5 said it faced two major challenges in 2006, to integrate the two largest national chains to extract practical synergies of the merger, while maintaining growth rates.
CEO Lev Khasis believes the full-year results show that these challenges were met. “The strong financial performance of X5 Retail Group in 2006 and the specific progress in integration of Pyaterochka and Perekrestok clearly demonstrate that we are passing smoothly through the integration process, stepping now into the period of capitalisation on practical synergies of the merger,” he said.
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By GlobalDataKhasis continued: “We are in process of building a solid multi-format foundation to continue our further expansion in the role of the main consolidator of the Russian food retail market. I am excited and confident about our future.”
Looking at the two retail chains separately, net sales at Pyaterochka rose by 45.2% in 2006 to $1.97bn, with gross profit up by 56.5% at $530m. EBITDA increased by 10% to $179m.
Meanwhile, Perekrestok saw net sales increase by 49% to $1.51bn, with the chain’s gross profit rising by 66.6% to $442m, and EBITDA up by 85.9% at $116m.
