X5 Retail Group - the largest Russian retail company - in the first quarter of 2018 reduced its net profit by almost a third, to 5.628 billion rubles, including due to the growth of staff salaries and rental payments. For investors, this turned out to be unpleasant news: on Thursday the retailer's shares lost more than 4% in price. Since the beginning of this year, due to a decrease in capitalization by 37%, the company lost about $ 4.5 billion, its nearest competitor, "Magnit" - $ 5.6 billion.
The net profit of X5 Retail Group (Pyaterochka, Perekrestok and Karusel) in the first quarter of 2018 compared to the same period in 2017 decreased by 32.6%, to 5.628 billion rubles. Net profit was 16% below the consensus forecast Bloomberg, analysts say IC Aton.
The last time about the decline in quarterly earnings the company reported on the results of October-December 2015, then it fell by 25.9%.
In X5, it was explained that this time the decrease was due to the increase in staff costs, which was increased wages in late 2017, the cost of renting space and utility costs.
The latter factor is the result of anomalously cold weather, which is why the consumption of electricity increased. Up to 18.4% of revenue increased administrative, general and commercial expenses. The closest competitor of X5 is Magnit, where this year VTB Group became a co-owner, net profit in the first quarter of this year decreased by only 1.83%, to 7.405 billion rubles.
In 2017, X5 Retail Group's revenue increased by 25.3% year-on-year to 1.295 trillion rubles, adjusted EBITDA by 24.7% to RUB 99.131 billion, net profit increased by 40.8% to 31% , 39 billion rubles.
At the same time in January-March of this year, the revenue of X5 increased by 19.9% to 351.518 billion rubles. The company attributed revenue growth to an increase in comparable sales by 0.5% and growth in sales area by 20%. During the same period, Magnit's revenue increased by 8.08% to 288.561 billion rubles.
EBITDA was 7.5% below the consensus forecast, analysts at Aton note. Svetlana Demashkevich, CFO of X5, said on Thursday that despite the decline in EBITDA margin (to 6.3% in the first quarter of 2018 compared to 7.7% a year earlier), the retailer expects that by the end of this year the figure will be above 7%. Meanwhile, Ms. Demyashkevich admitted that in 2019-2020 the pace of opening new stores could be revised. As of the end of 2017, X5 had 12.12 thousand points.
Investors negatively reacted to the results of quarterly reporting X5. On Thursday, starting from the first minutes of trading on the London Stock, the price of the retailer's receipts sharply rushed down and by 11:25 it dropped to the minimum mark since August 25, 2016 - $ 26.24 per share, which is almost 10% below the closing of the trading environment. As of April 26, the price was fixed at $ 27.7 per receipt, losing 4.4% for the day. The company's capitalization fell by $ 350 million a day to $ 7.52 billion.
Almost continuous decline in the value of the company continues from January 12: during this time it lost in price more than $ 4.5 billion (minus 37%).
Capitalization of "Magnit" for this time also decreased by 37%, having lost $ 5.6 billion.
The negative reaction of investors to the reporting of X5 is understandable: the fall in profitability and profit for the year almost twice makes them recall the stories from "Dixie" and "Magnet", when these networks seriously reduced revenue, commented the head of the trading operations on the Russian stock market IK "Freedom Finance" »George Vashchenko. Senior analyst of BCS Global Markets Marat Ibragimov predicts that the decline in X5's profit may continue in the second quarter. "But then investors can see profit growth," the expert notes. Nevertheless, he believes that the situation prevailing in the first quarter will not have a negative impact on the amount of dividends for the year 2018.