Magnit

Earnings Release • Apr 21, 2017

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PJSC MAGNIT - Unaudited 1Q 2017 Financial Results1st Quarter Results -

PR Newswire

London, April 21

Press Release

Krasnodar

April 21, 2017

PJSC “Magnit” Announces Unaudited 1Q 2017 Results

Krasnodar, Russia (April 21, 2017): Magnit PJSC, one of Russia’s leading retailers (MOEX and LSE: MGNT) announces its unaudited 1Q 2017 results prepared in accordance with IFRS[1].

During 1Q 2017 the Company added (net) 250 stores (188 convenience stores and 67 drogerie stores) and increased its selling space by 13.80% in comparison with 1Q 2016 from 4.52 million sq. m. to 5.15 million sq. m. The total store base as of March 31, 2017 reached 14,309 stores (10,709 convenience stores, 237 hypermarkets, 189 “Magnit Family” stores and 3,174 drogerie stores).

Revenue increased from 255.30 billion RUR in 1Q 2016 to 266.98 billion RUR in 1Q 2017.

Gross Profit increased from 65.04 billion RUR in 1Q 2016 to 71.89 billion RUR in 1Q 2017. Gross Margin in 1Q 2017 was 26.93%.

EBITDA increased from 19.79 billion RUR in 1Q 2016 to 21.00 billion RUR in 1Q 2017. EBITDA margin in the 1Q of 2017 was 7.86%.

Net Income was 7.54 billion RUR in 1Q 2017. Net Income Margin for 1Q 2017 was 2.83%.

According to Rosstat, general CPI in 2017 was the following: in January 0.6%, February 0.2%, March 0.1% (2016: January 1.0%, February 0.6%, March 0.5%).

General CPI in 1Q 2017 was 1.0% compared to 2.1% in 1Q 2016.

Food inflation in 2017 was the following: in January 0.9%, February 0.2%, March 0.1% (2016: January 1.2%, February 0.7%, March 0.4%).

Food inflation in 1Q 2017 was 1.2% compared to 2.3% in 1Q 2016.

January 2017 Key Operating and Financial Highlights:

	January 2017	January 2016	Growth Rate
Number of opened stores, NET	30	64	n/a
convenience stores	19	12	n/a
hypermarkets	(1)	0	n/a
magnit family	(3)	(1)	n/a
drogerie stores	15	53	n/a
Total number of stores	14,089	12,153	n/a
convenience stores	10,540	9,606	n/a
hypermarkets	236	219	n/a
magnit family	191	154	n/a
drogerie stores	3,122	2,174	n/a
Selling space, eop, th. sq. m.	5,074.57	4,430.42	14.54%
convenience stores	3,459.67	3,124.66	10.72%
hypermarkets	682.09	639.14	6.72%
magnit family	210.45	169.26	24.34%
drogerie stores	722.35	497.36	45.24%
Selling space growth, th. sq.m.	6.90	16.70	n/a
convenience stores	7.27	5.10	n/a
hypermarkets	(1.58)	0	n/a
magnit family	(2.31)	(0.92)	n/a
drogerie stores	3.51	12.52	n/a
Number of customers, million	299.35	280.13	6.86%
convenience stores	251.48	236.46	6.35%
hypermarkets	19.10	20.83	(8.30)%
magnit family	10.19	9.40	8.38%
drogerie stores	18.58	13.44	38.23%
Net retail sales, million RUR	85,188.43	80,468.24	5.87%
convenience stores	63,963.51	59,501.40	7.50%
hypermarkets	11,084.10	12,549.55	(11.68)%
magnit family	4,461.90	4,270.65	4.48%
drogerie stores	5,678.92	4,146.64	36.95%
Net retail sales, million US$[2]	1,420.79	1,054.45	34.74%
convenience stores	1,066.80	779.71	36.82%
hypermarkets	184.86	164.45	12.41%
magnit family	74.42	55.96	32.98%
drogerie stores	94.71	54.34	74.31%

February and 2M 2017 Key Operating and Financial Highlights:

	February 2017	February 2016	Growth Rate	2? 2017	2? 2016	Growth Rate
Number of opened stores, NET	70	149	n/a	100	213	n/a
convenience stores	66	57	n/a	85	69	n/a
hypermarkets	1	4	n/a	0	4	n/a
magnit family	(2)	2	n/a	(5)	1	n/a
drogerie stores	5	86	n/a	20	139	n/a
Total number of stores	14,159	12,302	n/a	14,159	12,302	n/a
convenience stores	10,606	9,663	n/a	10,606	9,663	n/a
hypermarkets	237	223	n/a	237	223	n/a
magnit family	189	156	n/a	189	156	n/a
drogerie stores	3,127	2,260	n/a	3,127	2,260	n/a
Selling space, eop, th. sq. m.	5,100.27	4,484.81	13.72%	5,100.27	4,484.81	13.72%
convenience stores	3,482.84	3,143.96	10.78%	3,482.84	3,143.96	10.78%
hypermarkets	684.54	652.47	4.92%	684.54	652.47	4.92%
magnit family	208.75	171.16	21.96%	208.75	171.16	21.96%
drogerie stores	724.13	517.23	40.00%	724.13	517.23	40.00%
Selling space growth, th. sq. m.	25.70	54.39	n/a	32.60	71.09	n/a
convenience stores	23.17	19.30	n/a	30.44	24.40	n/a
hypermarkets	2.45	13.33	n/a	0.87	13.33	n/a
magnit family	(1.70)	1.90	n/a	(4.01)	0.98	n/a
drogerie stores	1.78	19.87	n/a	5.29	32.39	n/a
Number of customers, million	292.20	292.27	(0.02)%	591.55	572.45	3.34%
convenience stores	244.40	246.28	(0.77)%	495.88	482.80	2.71%
hypermarkets	18.65	21.32	(12.50)%	37.75	42.19	(10.53)%
magnit family	9.77	9.79	(0.21)%	19.96	19.14	4.26%
drogerie stores	19.38	14.87	30.34%	37.97	28.32	34.07%
Net retail sales, million RUR	85,274.17	84,002.48	1.51%	170,462.61	164,470.72	3.64%
convenience stores	63,259.39	61,641.01	2.63%	127,222.91	121,142.41	5.02%
hypermarkets	11,262.05	13,044.46	(13.66)%	22,346.15	25,594.01	(12.69)%
magnit family	4,460.38	4,508.85	(1.07)%	8,922.28	8,779.50	1.63%
drogerie stores	6,292.34	4,808.16	30.87%	11,971.27	8,954.80	33.69%
Net retail sales, million US$[3]	1,460.17	1,087.70	34.24%	2,878.52	2,142.77	34.34%
convenience stores	1,083.21	798.15	35.71%	2,148.35	1,578.28	36.12%
hypermarkets	192.84	168.90	14.17%	377.35	333.45	13.17%
magnit family	76.38	58.38	30.82%	150.67	114.38	31.72%
drogerie stores	107.75	62.26	73.06%	202.15	116.67	73.28%

March and 3M 2017 Key Operating and Financial Highlights:

	March 2017	March 2016	Growth Rate	3? 2017	3? 2016	Growth Rate
Number of opened stores, NET	150	132	n/a	250	345	n/a
convenience stores	103	52	n/a	188	121	n/a
hypermarkets	0	2	n/a	0	6	n/a
magnit family	0	1	n/a	(5)	2	n/a
drogerie stores	47	77	n/a	67	216	n/a
Total number of stores	14,309	12,434	n/a	14,309	12,434	n/a
convenience stores	10,709	9,715	n/a	10,709	9,715	n/a
hypermarkets	237	225	n/a	237	225	n/a
magnit family	189	157	n/a	189	157	n/a
drogerie stores	3,174	2,337	n/a	3,174	2,337	n/a
Selling space, eop, th. sq. m.	5,147.99	4,523.63	13.80%	5,147.99	4,523.63	13.80%
convenience stores	3,518.62	3,162.88	11.25%	3,518.62	3,162.88	11.25%
hypermarkets	684.54	653,65	4.73%	684.54	653.65	4.73%
magnit family	208.59	172.03	21.25%	208.59	172.03	21.25%
drogerie stores	736.24	535.07	37.60%	736.24	535.07	37.60%
Selling space growth, th. sq.m.	47.72	38.81	n/a	80.32	109.91	n/a
convenience stores	35.78	18.92	n/a	66.22	43.32	n/a
hypermarkets	0.00	1.18	n/a	0.87	14.51	n/a
magnit family	(0.16)	0.87	n/a	(4.17)	1.85	n/a
drogerie stores	12.11	17.84	n/a	17.40	50.23	n/a
Number of customers, million	334.53	321.07	4.19%	926.08	893.52	3.64%
convenience stores	280.07	271.22	3.27%	775.95	754.01	2.91%
hypermarkets	21.49	23.22	(7.46)%	59.24	65.42	(9.44)%
magnit family	11.24	10.51	6.96%	31.20	29.66	5.22%
drogerie stores	21.72	16.12	34.78%	59.69	44.44	34.32%
Net retail sales, million RUR	94,108.71	89,964.28	4.61%	264,571.32	254,435.00	3.98%
convenience stores	70,059.16	66,367.33	5.56%	197,282.06	187,509.74	5.21%
hypermarkets	12,451.58	13,878.89	(10.28)%	34,797.73	39,472.89	(11.84)%
magnit family	4,934.81	4,735.59	4.21%	13,857.09	13,515.09	2.53%
drogerie stores	6,663.17	4,982.48	33.73%	18,634.44	13,937.28	33.70%
Net retail sales, million US$[4]	1,619.52	1,275.91	26.93%	4,496.71	3,409.36	31.89%
convenience stores	1,205.65	941.25	28.09%	3,353.05	2,512.58	33.45%
hypermarkets	214.28	196.84	8.86%	591.43	528.93	11.82%
magnit family	84.92	67.16	26.45%	235.52	181.10	30.05%
drogerie stores	114.67	70.66	62.27%	316.72	186.76	69.59%

LFL Results

Formats	1Q 2017 - 1Q 2016[5]
# of Stores	Average Ticket	Traffic	Sales
Convenience Stores	8,932	1.80%	(3.81)%	(2.08)%
Hypermarkets	220	(2.18)%	(13.61)%	(15.49)%
Magnit Family	144	(2.40)%	(11.09)%	(13.22)%
Drogeries	2,127	0.14%	(0.21)%	(0.07)%
Total	11,423	(0.14)%	(4.64)%	(4.77)%

1Q 2017 Key Financial Results, million RUR

	1Q 2017	1Q 2016	Growth Rate
Net sales	266,983.08	255,302.74	4.58%
convenience stores	197,282.06	187,509.74	5.21%
hypermarkets	34,797.73	39,472.89	(11.84)%
magnit family	13,857.09	13,515.09	2.53%
drogerie stores	18,634.44	13,937.28	33.70%
wholesale	2,411.76	867.74	177.94%
Gross profit	71,887.31	65,035.93	10.53%
Gross margin,%	26.93%	25.47%	n/a
EBITDAR	31.621.20	28,808.89	9.76%
EBITDAR margin, %	11.84%	11.28%	n/a
EBITDA	20,995.41	19,789.41	6.09%
EBITDA margin, %	7.86%	7.75%	n/a
EBIT	12,910.15	13,819.87	(6.58)%
EBIT margin, %	4.84%	5.41%	n/a
Net income	7,543.09	8,243.28	(8.49)%
Net income margin, %	2.83%	3.23%	n/a

1Q 2017 Key Financial Results, US$ million[6]

	1Q 2017	1Q 2016	Growth Rate
Net sales	4,537.70	3,420.99	32.64%
convenience stores	3,353.05	2,512.58	33.45%
hypermarkets	591.43	528.93	11.82%
magnit family	235.52	181.10	30.05%
drogerie stores	316.72	186.76	69.59%
wholesale	40.99	11.63	252.45%
Gross profit	1,221.81	871.46	40.20%
Gross margin, %	26.93%	25.47%	n/a
EBITDAR	537.44	386.03	39.22%
EBITDAR margin, %	11.84%	11.28%	n/a
EBITDA	356.84	265.17	34.57%
EBITDA margin, %	7.86%	7.75%	n/a
EBIT	219.42	185.18	18.49%
EBIT margin, %	4.84%	5.41%	n/a
Net income	128.20	110.46	16.06%
Net income margin, %	2.83%	3.23%	n/a

Notes:

1. Net revenue in US$ terms is calculated using the average exchange rate for the period.
2. This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation which came into effect on 3 July 2016.
3. 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:

Timothy Post	Head of Investor Relations Email: post@magnit.ru Office: +7-861-277-4554 x 17600 Mobile: +7-961-511-7678 Direct Line: +7-861-277-4562
Investor Relations Office	MagnitIR@magnit.ru Direct Line: +7-861-277-4562 Website: ir.magnit.com/
Media Inquiries	Media Relations Department press@magnit.ru

Company description:

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 March 31, 2017, Magnit operated 35 distribution centers and 14,089 stores (10,540 convenience, 427 hypermarkets and 3,122 drogerie stores) in 2,494 cities and towns throughout 7 federal regions of the Russian Federation.

In accordance with the audited IFRS results for 2016, Magnit had revenues of RUB 1,075 billion and an EBITDA of RUB 108 billion. Magnit's local shares are traded on the Moscow Stock 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+. Measured by market capitalization, Magnit is one of the largest retailers in Europe.

[1] Based on management accounts

[2] Based on the average exchange rate for January 2017 - 59.9583 RUB per 1 USD, January 2016 – 76.3127 RUB per 1 USD

[3] Based on the average exchange rate for February 2017 – 58.4000 RUB per 1 USD, February 2016 – 77.2298 RUB per 1 USD, 2M 2017 – 59.2188 RUB per 1 USD, 2M 2016 – 76.7560 RUB per 1 USD

[4] Based on the average exchange rate for March 2017 - 58.1091 RUB per 1 USD, March 2016 – 70.5101 RUB per 1 USD, 3M 2017 – 58.8366 RUB per 1 USD, 3M 2016 – 74.6283 RUB per 1 USD

[5] LFL calculation base includes stores (all formats), which have been opened 12 months prior to the last month of the reporting period. i.e. by March 1, 2016.

[6] Based on the average exchange rate for 1Q 2017 - 58.8366 RUB per 1 USD, 1Q 2016 – 74.6283 RUB per 1 USD