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MAGNIT PJSC (MGNT)

PJSC 'Magnit' Announces Reviewed 1H 2018 Financial Results

20-Aug-2018 / 10:00 MSK

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.

The issuer is solely responsible for the content of this announcement.

Press Release | Krasnodar | August 20, 2018

PJSC "Magnit" Announces Reviewed 1H 2018 Results

Krasnodar, Russia (20 August, 2018): Magnit PJSC (MOEX and LSE: MGNT), one of Russia's leading retailers announces its reviewed 1H 2018 results prepared in accordance with IFRS.

During 2Q 2018 Magnit added (net) 335 stores. The total store base as of June 30, 2018 reached 16,960 stores (12,503 convenience stores, 244 hypermarkets, 213 "Magnit Family" stores and 4,000 drogerie stores). Addition of selling space in 1H 2018 was 190 thousand sq. m. compared to 252 thousand sq. m.in 1H 2017.

Revenue increased by 7.2% from 555 billion RUR in 1H 2017 to 595 billion RUR in 1H 2018 on the back of 11.7% selling space growth and negative LFL sales dynamics (-4.5% in 1H 2018).

LFL performance in 1H 2018 was influenced by low food inflation and unfavourable timing of Easter holidays (coming before standard salary payment), lower number of stores opened after redesign (414 vs. 830 respectively), as well as intensifying competition and cannibalisation.

Gross Profit decreased y-o-y and stood at 147 billion RUR in 1H 2018. Gross Margin in 1H 2018 was 24.7%. The decrease was due to (1) price investments; (2) extensive promo held in May and June and (3) shrinkage growth caused by incorrect promo volume projections. As part of the Company's strategic plan, management is taking steps to address the promo issue.

EBITDA in 1H 2018 was 44 billion RUR. EBITDA margin in 1H 2018 was 7.4%. EBITDA result was driven by the gross profit dynamics, increase of the lease expense due to the higher share of leased stores as well as one-off inventory write-offs of inventory and accrued provisions in the amount of 1.5 billion RUR. Negative impact was partially offset by the improvement in payroll and other operating expenses. EBITDA adjusted for one-off effects would be 7.7% in 1H 2018 and 8.2% in 2Q 2018.

Net Income in 1H 2018 was 18 billion RUR down from 21 billion RUR in 1H 2017 on the back of lower EBITDA partially offset by the improvement of interest and tax expense. Net Income Margin in 1H 2018 was 3.0%.

According to the reviewed results for the 1H 2018 some figures in this press release are immaterially different from those announced by the Company in its management accounts on July 26, 2018.


2Q 2018 Monthly Operating Metrics:
	April	Y-o-Y, %	May	Y-o-Y, %	June	Y-o-Y, %
New Store Openings (NET)	107	n/a	75	n/a	153	n/a
Convenience stores	65	n/a	55	n/a	100	n/a
Hypermarkets	1	n/a	0	n/a	1	n/a
Supermarkets	1	n/a	1	n/a	1	n/a
Drogerie Stores	40	n/a	19	n/a	51	n/a

Number of Stores (EOP)	16,732	n/a	16,807	n/a	16,960	n/a
Convenience stores	12,348	n/a	12,403	n/a	12,503	n/a
Hypermarkets	243	n/a	243	n/a	244	n/a
Supermarkets	211	n/a	212	n/a	213	n/a
Drogerie Stores	3,930	n/a	3,949	n/a	4,000	n/a

New Selling Space, th. sq. m.	35	n/a	28	n/a	52	n/a
Convenience stores	23	n/a	21	n/a	37	n/a
Hypermarkets	2	n/a	0	n/a	2	n/a
Supermarkets	1	n/a	3	n/a	1	n/a
Drogerie Stores	9	n/a	4	n/a	12	n/a

Total Selling Space (EOP), th. sq. m.	5,865	13.0%	5,893	12.4%	5,945	11.7%
Convenience stores	4,034	13.6%	4,056	12.9%	4,092	12.1%
Hypermarkets	696	1.6%	696	1.1%	698	1.0%
Supermarkets	232	10.5%	234	10.9%	235	12.6%
Drogerie Stores	903	21.7%	907	20.7%	919	19.7%

Number of Customers, million	355	8.3%	383	9.9%	378	10.5%
Convenience stores	301	8.9%	326	10.6%	320	10.9%
Hypermarkets	21	(0.1%)	21	0.2%	22	3.1%
Supermarkets	12	6.7%	12	5.7%	12	8.4%
Drogerie Stores	22	9.9%	23	12.3%	23	13.3%

Retail Sales1, million RUR	96,110	4.4%	100,929	3.9%	102,779	7.6%
Convenience stores	73,122	5.8%	77,214	5.0%	78,011	8.5%
Hypermarkets	11,385	(6.3%)	11,522	(7.5%)	12,118	(1.7%)
Supermarkets	5,059	4.2%	5,120	1.5%	5,312	6.8%
Drogerie Stores	6,545	10.2%	7,073	15.9%	7,338	16.8%

1 Excluding Wholesale


2Q and 1H 2018 Key Operating Metrics:
	2Q 2018	2Q 2017	Y-o-Y, %	1H 2018	1H 2017	Y-o-Y, %
New Store Openings (NET)	335	535	n/a	610	785	n/a
Convenience stores	220	405	n/a	378	593	n/a
Hypermarkets	2	3	n/a	1	3	n/a
Supermarkets	3	1	n/a	5	(4)	n/a
Drogerie Stores	110	126	n/a	226	193	n/a

Number of Stores (EOP)	16,960	14,844	n/a	16,960	14,844	n/a
Convenience stores	12,503	11,114	n/a	12,503	11,114	n/a
Hypermarkets	244	240	n/a	244	240	n/a
Supermarkets	213	190	n/a	213	190	n/a
Drogerie Stores	4,000	3,300	n/a	4,000	3,300	n/a

New Selling Space, th. sq. m.	115	172	n/a	190	252	n/a
Convenience stores	81	133	n/a	134	199	n/a
Hypermarkets	4	7	n/a	(4)	7	n/a
Supermarkets	5	0	n/a	6	(4)	n/a
Drogerie Stores	25	32	n/a	53	49	n/a

Total Selling Space (EOP), th. sq. m.	5,945	5,320	11.7%	5,945	5,320	11.7%
Convenience stores	4,092	3,652	12.1%	4,092	3,652	12.1%
Hypermarkets	698	691	1.0%	698	691	1.0%
Supermarkets	235	209	12.6%	235	209	12.6%
Drogerie Stores	919	768	19.7%	919	768	19.7%

Number of Customers, million	1,116	1,018	9.6%	2,121	1,944	9.1%
Convenience stores	947	860	10.2%	1,795	1,636	9.7%
Hypermarkets	64	63	1.1%	123	123	0.6%
Supermarkets	36	34	6.9%	69	65	6.1%
Drogerie Stores	68	61	11.9%	134	121	10.7%

LFL Results:

2Q 2018 - 2Q 20172


Formats	# of Stores	Average Ticket	Traffic	Sales
Convenience stores	9,515	(3.3%)	(2.2%)	(5.4%)
Hypermarkets	227	(6.3%)	(0.4%)	(6.7%)
Supermarkets	171	(3.0%)	(2.8%)	(5.7%)
Drogerie Stores	3,093	2.9%	(2.2%)	0.7%
Total	13,006	(3.1%)	(2.1%)	(5.2%)

1H 2018 - 1H 20172


Formats	# of Stores	Average Ticket	Traffic	Sales
Convenience stores	9,049	(1.8%)	(3.0%)	(4.7%)
Hypermarkets	227	(4.7%)	(1.2%)	(5.8%)
Supermarkets	171	(1.8%)	(2.8%)	(4.5%)
Drogerie Stores	3,026	3.7%	(3.1%)	0.4%
Total	12,473	(1.7%)	(2.9%)	(4.5%)

2LFL calculation base includes stores (all formats), which have been opened 12 months prior to the last month of the reporting period. i.e. by June 1,

2017

2Q and 1H 20183 Key Financial Results, million RUR


	2Q 2018	2Q 2017	Growth Rate	1H 2018	1H 2017	Growth Rate
Net sales	306,701	288,042	6.5%	595,263	555,025	7.2%
Convenience stores	228,348	214,535	6.4%	443,648	411,817	7.7%
Hypermarkets	35,025	36,940	(5.2%)	68,882	71,737	(4.0%)
Supermarkets	15,490	14,870	4.2%	30,184	28,727	5.1%
Drogerie Stores	20,956	18,326	14.4%	42,031	36,960	13.7%
Wholesale	6,883	3,372	104.1%	10,517	5,784	81.8%
Gross Profit	75,270	78,743	(4.4%)	147,172	148,565	(0.9%)
Gross Margin, %	24.5%	27.3%	n/a	24.7%	26.8%	n/a
EBITDAR	36,321	38,896	(6.6%)	69,411	70,517	(1.6%)
EBITDAR Margin, %	11.8%	13.5%	n/a	11.7%	12.7%	n/a
EBITDA	23,663	27,795	(14.9%)	44,163	48,790	(9.5%)
Adjusted EBITDA	25,163	27,795	(9.5%)	45,663	48,790	(6.4%)
EBITDA Margin, %	7.7%	9.6%	n/a	7.4%	8.8%	n/a
Adjusted EBITDA Margin, %	8.2%	9.6%	n/a	7.7%	8.8%	n/a
EBIT	14,998	19,432	(22.8%)	26,726	32,342	(17.4%)
EBIT Margin, %	4.9%	6.7%	n/a	4.5%	5.8%	n/a
Net Income	10,360	13,205	(21.5%)	17,765	20,748	(14.4%)
Net Income Margin, %	3.4%	4.6%	n/a	3.0%	3.7%	n/a

3 Please follow the link to view 1H 2018 financial report http://ir.magnit.com/en/financial-reports/

Notes:

1. This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation which came into effect on 3 July 2016.

2. Please note that there may be small variations in calculation of totals, subtotals and/ or percentage change due to rounding of decimals.

For further information, please contact:

Dina Svishcheva

Investor Relations

Email: Chisty [email protected]

Office: +7-861-277-4554 x 15101

Media Inquiries

Media Relations Department Email: [email protected]

Note to editors:

Public Joint Stock Company "Magnit" is one of Russia's leading retailers. Founded in 1994, the company is headquartered in the southern Russian city of Krasnodar. As of June 30, 2018, Magnit operated 37 distribution centers and 16,960 stores (12,503 convenience, 244 hypermarkets, 213 supermarkets and 4,000 drogerie stores) in 2,808 cities and towns throughout 7 federal regions of the Russian Federation.

In accordance with the reviewed IFRS consolidated financial statements for 1H 2018, Magnit had revenues of RUB 595 billion and an EBITDA of RUB 44 billion. Magnit's local shares are traded on the Moscow Exchange (MOEX: MGNT) and its GDRs on the London Stock Exchange (LSE: MGNT) and it has a credit rating from Standard & Poor's of BB.



ISIN:	US55953Q2021
Category Code:	MSCU
TIDM:	MGNT
LEI Code:	2534009KKPTVL99W2Y12
OAM Categories:	2.2. Inside information
Sequence No.:	5894
EQS News ID:	715499



End of Announcement	EQS News Service

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