8.5% in 2Q 2021 partly offset by the increase of wholesale operations. Promotional intensity was slightly
higher y-o-y due to weal comparatives and normalizing shopping patterns, with different consumption
26 bps trends (including forward buying of dry food) in the same quarter of the last year. This resulted in a
gross profit margin reduction of 91 bps y-o-y, reflecting a strong comparative performance during the
y-o-y prior year, and one-off effects of the last year comparable period.
Supply chain costs grew y-o-y due to a continued increase of on-shelf availability and higher
transportation costs driven by the increase in container shipping tariffs in the international and
Alongside the growing share of fresh products and overall improvement of on-shelf availability, shrinkage
as a proportion of sales decreased further by 26 bps y-o-y. This was driven by ongoing optimization of
supply chain processes, renegotiation of quality standards with suppliers and other initiatives.
SG&A costs were controlled and remained almost flat y-o-y as a percent of sales (20.4%). This was
achieved as a result of lower rent costs and depreciation, partially offset by higher marketing costs and
negatively impacted by stores in the 'ramp up' phase.
Advertising expenses increased by 26 bps y-o-y on higher marketing activities including digital marketing
and loyalty campaigns.
Rental costs as a percent of sales decreased by 15 bps y-o-y driven by higher sales density, improved
lease terms with landlords and the closing of inefficient stores. This was achieved despite the increased
share of leased selling space to 78.7% in 2Q 2021 vs 77.4% a year ago.
Despite the acceleration in store openings (which started in 4Q last year) and their 'ramp-up' period,
depreciation as a percent of sales reduced by 10 bps y-o-y as most of the newly opened stores were
Personnel costs as a percent of sales decreased by 7 bps y-o-y thanks to continued productivity
improvements and on-going automation of business processes.
Repair and maintenance costs as a percent of sales increased by 6 bps y-o-y driven by acceleration of the
store refurbishment program (143 stores were refurbished in 2Q 2021 vs 19 in 2Q 2020)
Other costs including utilities, packaging and raw materials, bank and tax expenses remained broadly flat
as a percent of sales y-o-y.
As a result, EBITDA was RUB 30.3 billion with a 7.1% margin, driven by gross margin dynamics and strict
cost control. LTI expenses in the reported period stood at 0.08% of sales - as a result EBITDA margin
pre-LTI was 7.2%. EBITDA margin for the 1H 2021 was 7.0% with y-o-y improvement of 7 bps.
The Company increased its total debt by 97.3 billion in the reported quarter by means of long-term bank
loans and bond issuance to finance accelerated expansion and the upcoming acquisition of the Dixy retail
chain. This increase happened during the period of growing market rates. As a result, average cost of
debt increased to 6.4% (12 bps y-o-y or 49 bps q-o-q). Higher cost of debt and total amount of borrowings
7.1% were netted by the increase in interest income. This led to the decrease of net finance costs in 2Q 2021
by 20.2% (or 25 bps) y-o-y to RUB 2.8 billion. The Company's debt profile improved further through an
ebitda margin increased share of long-term borrowings and record long debt maturity of 24 months (vs 21 months a
in 2Q 2021 quarter ago).
In 2Q 2021 the Company reported FX gain in the amount of RUB 0.6 billion related to direct import
Income tax in 2Q 2021 was RUB 3.5 billion. Effective tax rate stood at 22.5%.
As a result, net income in 2Q 2021 decreased by 6.0% y-o-y and stood at RUB 12.1 billion. Net income
margin decreased by 47 bps y-o-y to 2.8%. Net income for 1H 2021 grew by 34.6% with a margin improvement
of 56 bps to 2.8%.
in 2Q 2021 Financial Position Highlights (IFRS 16)
RUB mln 30.06.2021 31.12.2020 30.06.2020
Inventories 199,744 205,949 219,236
Trade and other receivables 12,329 8,564 9,949
Cash and cash equivalents 129,370 44,700 21,149
Long-term borrowings 222,930 147,695 117,389
Trade and other payables 165,973 184,325 138,461
Short-term borrowings and short-term portion of long-term borrowings 42,560 18,392 91,204
Despite ongoing improvement to on-shelf availability, the 38 bps increase of share of drogerie format as
a percent of net retail sales, supplier inflation and total sales growth of 9.6%, inventories decreased
11.2 by RUB 19.5 billion vs June 30, 2020 and stood at 199.7 billion. This was driven by a number of projects
launched in 2020 including the reduction of slow-moving items, assortment harmonization and IT solutions
DAYS aimed at better on-shelf availability and promotion forecasting.
of Trade and other payables grew by RUB 27.5 billion vs June 30, 2020 and stood at RUB 166.0 billion driven
inventories by higher sales and increased payment days. Accounts receivables increased by RUB 2.4 billion vs June 30,
 2020 and stood at RUB 12.4 billion due to higher sales and improved commercial terms with suppliers.
Debt Composition and Leverage
June 30, 2021 March 31, 2021 December 31, 2020 June 30, 2020
Total Debt, RUB billion 265.5 168.2 166.1 208.6
Long-Term Debt 222.9 144.0 147.7 117.4
Short-Term Debt 42.6 24.2 18.4 91.2
Net Debt, RUB billion 136.1 161.7 121.4 187.4
Net Debt/EBITDA 1.2x 1.4? 1.1? 2.0?
Net Debt, RUB billion 498.9 522.8 479.0 538.8
Net Debt/EBITDA 2.7x 2.8x 2.7x 3.3
Gross Debt increased by 57.8% within the reported quarter on the back of additional borrowings to finance
accelerated expansion and the acquisition of the Dixy retail chain and reached RUB 265.5 billion as at
June 30, 2021. Cash position substantially increased to RUB 129.4 billion as at June 30, 2021 compared to
RUB 6.6 billion as at March 31, 2021. As a result, Net Debt decreased by 15.8% q-o-q to RUB 136.1 billion
as at June 30, 2021.
net debt/ The Company's debt is fully RUB denominated, matching revenue structure. The Net Debt to EBITDA ratio was
ebitda 1.2x as at June 30, 2021 vs 1.4x as at March 31, 2021.
as of June
(IAS 17) Capex in 2Q 2021 more than tripled y-o-y and stood at RUB 17.2 billion. This was driven by the
acceleration of expansion program (519 store openings on gross basis in 2Q 2021 vs 177 in 2Q 2020). Total
capital expenditures for the first six months of 2021 stood at RUB 25.6 billion vs RUB 12.3 billion in 1H
2020 (up 2.0x y-o-y). Capex is expected to increase further in the second half of the year in line with
the calendarization of the store opening and redesign process with the latter accelerating further in the
second half of the year.
On July 22, 2021 Magnit completed the acquisition of DIXY retail chain with 2,477 stores in Russia (2,438
convenience stores under the DIXY brand and 39 superstores under the Megamart brand). The majority of the
convenience stores are located in Moscow and the Moscow region (1,319 outlets) and in St. Petersburg and
the Leningrad region (438 outlets). As part of the transaction Magnit has also acquired five distribution
centers and a fleet of approx. 700 trucks. The purchase price at closing amounted to Rub 87.6 bn.
The acquisition of the DIXY retail business is expected to significantly strengthen Magnit's competitive
2,477 position in the Russian food retail sector. Strong exposure to the strategically important Moscow and
St.Petersburg regions will lead to a sharp increase in the Company's market positions in both capitals,
stores added including more than two-fold market share growth in both Moscow and St.Petersburg. Strong physical
after dixy presence in Moscow and St.Petersburg will provide substantial support to further development of Magnit's
acquisition e-grocery initiatives. Potential synergies in procurement, category management and various business
processes are expected to benefit the Company's customers and provide value accretion for its
The transaction has been approved by Magnit's Board of Directors on May 18, 2021. Russia's Federal
Antimonopoly Service announced its clearance to the transaction on July 15, 2021.
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