Lenta IPJSC (LNTA;LENT)
Lenta IPJSC: LENTA REPORTS TOTAL SALES GROWTH OF 11.1% AND 6.1% EBITDA MARGIN IN FY 2022
29-March-2023 / 09:00 CET/CEST
The issuer is solely responsible for the content of this announcement.
Press Release | St. Petersburg | 29 March 2023 LENTA REPORTS TOTAL SALES GROWTH OF 11.1% AND 6.1% EBITDA MARGIN IN FY 2022 29 March 2023 St. Petersburg, Russia | Lenta IPJSC (LSE: LNTA, MOEX: LENT), one of the largest multi-format retail chains in Russia, today announces its financial results for the fourth quarter and audited financial results for full year of 2022. |
FY 2022 Highlights1,2 - Total Sales increased by 11.1% y-o-y to RUB 537.4 billion
- Retail Sales reached RUB 530.2 billion, representing 11.4% y-o-y growth
- Gross Profit was RUB 120.7 billion, an increase of 8.7%. Gross Margin declined by 51 bps and stood at 22.5%
- SG&A expenses increased as a percent of Sales by 178 bps due to the expansion of small-format stores and significantly increased share of online sales in Total Sales
- EBITDA was RUB 32.6 billion with an 6.1% EBITDA Margin
- CapEx stood at RUB 11.0 billion, up 17.8% y-o-y
- As of 31 December 2022, the Net Debt to EBITDA ratio was 1.6x vs. 1.4x as of 31 December 2021
Q4 2022 Highlights1,2 - Total Sales increased by 0.6% y-o-y to RUB 148.2 billion
- Retail Sales reached RUB 145.8 billion, representing 0.7% y-o-y growth
- Gross Profit was RUB 31.4 billion, decreased by 6.3%. Gross Margin decreased by 154 bps and stood at 21.2%
- SG&A expenses decreased as a percent of Sales by 61 bps thanks to lower personnel related expenses as well as decreased store operations costs
- EBITDA was RUB 9.7 billion, decrease of 15.2%. EBITDA Margin decreased by 121 bps and stood at 6.5%
- Including Utkonos results starting from 1 February 2022
- Please note that all Financial Highlights are based upon pre–IFRS 16 figures
Vladimir Sorokin, Chief Executive Officer:
| «Our business remains stable and flexible despite serious challenges in 2022 for both retail industry and the entire Russian economy. Throughout the year, the Lenta team focused on adapting to the new business environment. The measures we implemented drove solid performance and enabled us to maintain operational efficiency and, of course, to continue to meet the daily needs of our customers in terms of fresh products and quality essentials. In 2022, Lenta’s retail sales grew by 11.4%. Our online business doubled last year, with revenue from online sales reaching 7.5% of Lenta’s total sales for the year. Despite the substantial transformation of our business, the development of our small-format stores and the growing share of our online business, we were able to improve our operational efficiency considerably in the fourth quarter. Selling, general and administrative expenses as a percentage of revenue in the fourth quarter decreased by 61 basis points. We completed the integration of Billa and Semya chains last year; all Billa stores are now operating under the Lenta brand. In addition, we fully integrated all acquired stores into the Company’s operating processes. One important focal point of our work last year was the establishment of a team devoted for the development of our small-format stores. We now have a Small-Format Division that is going to focus on improving our supermarkets and convenience stores and expanding in this segment. Moreover, we continued to develop our online business throughout 2022, which included efforts to amalgamate the operating models for Lenta Online and Utkonos. Thanks to the concerted efforts of our Lenta-U team, we were able to greatly improve the efficiency of our online business, and we plan to continue working on this going forward. The year 2023 is an important one for us: it marks Lenta’s 30th anniversary, and we have big plans for the year. Despite turbulence in the business environment, we remain committed to Lenta’s key development priorities, including restoring LFL growth at hypermarkets, increasing margins, and expanding and developing new formats and our online business. Instead of standing still, we are looking for new formats and approaches to doing business that will continue to meet the needs of our customers to the best of our ability. In February 2023, we launched a pilot project for a new hypereconomy format in St Petersburg, where we offer our customers better prices while providing the fairly broad product range found in our hypermarkets, which is especially important at a time when consumers are facing rising prices. We are testing a number of innovations in underperforming stores in order to find the best options for reducing operating costs and increasing sales density. The pilot project is our response to the needs of customers focused on savings and who want a choice of products in lower price segments. This project, like our results for 2022 as a whole, would not have been possible without the dedicated and professional work of our team. I would like to thank all Lenta employees, and I am looking forward to seeing what we can accomplish together in 2023». |
Q4 & FY 2022 FINANCIAL HIGHLIGHTS
Key Financial Results, pre–IFRS 16 RUB million | Q4’22 | Q4’21 | Change | FY’22 | FY’21 | Change | Total Sales | 148,157 | 147,316 | 0.6% | 537,401 | 483,641 | 11.1% | Gross Profit | 31,400 | 33,497 | -6.3% | 120,739 | 111,107 | 8.7% | Gross Margin (%) | 21.2% | 22.7% | -154 bps | 22.5% | 23.0% | -51 bps | SG&A | -27,565 | -28,302 | -2.6% | -112,987 | -93,066 | 21.4% | SG&A as % of Total Sales | -18.6% | -19.2% | 61 bps | -21.0% | -19.2% | -178 bps | EBITDAR | 12,868 | 14,195 | -9.3% | 44,681 | 47,643 | -6.2% | EBITDAR Margin | 8.7% | 9.6% | -95 bps | 8.3% | 9.9% | -154 bps | Rent as % of Total Sales | -2.1% | -1.9% | -26 bps | -2.2% | -1.7% | -50 bps | EBITDA | 9,684 | 11,414 | -15.2% | 32,638 | 39,242 | -16.8% | EBITDA Margin | 6.5% | 7.7% | -121 bps | 6.1% | 8.1% | -204 bps | Operating Profit before impairment | 4,810 | 6,854 | -29.8% | 14,404 | 23,185 | -37.9% | Operating Profit Margin before impairment | 3.2% | 4.7% | -141 bps | 2.7% | 4.8% | -211 bps | (Impairment) / Reversal of impairment | -2,322 | 173 | - | -2,322 | 164 | - | Operating Profit | 2,488 | 7,026 | -64.6% | 12,082 | 23,348 | -48.3% | Operating Profit Margin | 1.7% | 4.8% | -309 bps | 2.2% | 4.8% | -258 bps | Net Interest Expense | -1,284 | -1,294 | -0.8% | -4,924 | -4,923 | 0.0% | Net FX loss | -265 | -28 | 846.4% | -52 | -497 | -89.5% | Profit Before Income Tax | 939 | 5,704 | -83.5% | 7,106 | 17,928 | -60.4% | Net Income | 207 | 4,102 | - | 4,850 | 13,646 | -64.5% | Net Income Margin | 0.1% | 2.8% | -264 bps | 0.9% | 2.8% | -192 bps |
For Q4 & FY 2022 financial highlights prepared in accordance with IFRS 16, please refer to Appendix 1 In Q4 2022, Total Sales increased by 0.6% to RUB 148.2 billion. Lenta’s Retail Sales in Q4 2022 increased by 0.7% to RUB 145.8 billion, compared to RUB 144.8 billion in Q4 2021, driven by 1.9% Total Selling Space organic growth which was partially offset by LFL Sales decline of 1.3%.
In Q4 2022, Gross Profit (pre–IFRS 16) decreased by 6.3% year-over-year to RUB 31.4 billion. Gross Margin dropped by 154 bps to 21.2%; the decrease in Gross Margin was driven mainly by higher investments in traffic retention, increased promo share, a shift in the sales product mix toward lower margin goods, as well as increased share of small-format stores with lower gross margin level. The decline in Gross Profit which was slightly offset by a 2.6% decrease in Total SG&A led to a 15.2% decrease in EBITDA (pre–IFRS 16) year-over-year. In Q4 2022, Lenta’s EBITDA Margin stood at 6.5%. EBITDA Margin declined by 121 bps compared to the previous year, driven by the decline of Gross Margin which was partially offset by the decrease of SG&A as a percentage of Total Sales resulted from lower personnel related expenses as well as decreased store operations costs. Selling, General, and Administrative (SG&A) expenses, pre–IFRS 16 | RUB million | Q4’22 | Q4’21 | Change | FY’22 | FY’21 | Change | Payroll and related taxes | 9,391 | 10,963 | -14.3% | 44,169 | 35,436 |
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