Krasnodar, Russia (22 October, 2018): Magnit PJSC (MOEX and LSE: MGNT), one of Russia’s leading retailers announces its unaudited 3Q 2018 results prepared in accordance with IFRS¹.

Revenue increased by 8.4% from 286 billion RUB in 3Q 2017 to 310 billion RUR in 3Q 2018 on the back of significant LFL sales recovery to −2.0% compared to −5.2% in the previous quarter. The change of the LFL sales trend dynamics across all formats is the result of the improved CVP achieved through the new developments of the category management and promo activity. The best performance was demonstrated by “Magnit Cosmetic” stores — LFL sales reached 3.9% in 3Q 2018 on the back of 3.8% LFL average ticket growth and 0.1% traffic growth.

During 3Q 2018 Magnit added (net) 482 stores. The total store base as of September 30, 2018 reached 17,442 stores (12,813 convenience stores, 457 supermarkets and 4,172 drogerie stores). Addition of selling space in 9M 2018 was 337 thousand sq. m. compared to 495 thousand sq. m.in 9M 2017. The quality of new store openings has improved which supported sales density growth of the new stores compared to the existing store base. All new stores are being opened under the new format with the improved layout, design, navigation and equipment. We have redesigned 380 stores in 3Q 2018.

EBITDA in 3Q 2018 increased by 5.3% y-o-y compared to the negative dynamics in 2Q this year. EBITDA margin in 3Q 2018 was 7.0%. There was a seasonal decrease compared to 2Q 2018. Nevertheless, this year traditional seasonal decrease moderated. The 23.9% decrease of gross margin was largely offset by the cost optimization initiatives: payroll expenses due to the reduction in the number of the management personnel and the packaging and raw materials due to the introduction of the tender procedures and lower procurement prices.

Net Income increased by 10% from 6.9 billion RUB in 3Q 2017 to 7.6 billion RUB in 3Q 2018. The key factor which impacted the more pronounced positive dynamics of net income compared to EBITDA in 3Q 2018 was the improvement of interest expense due to lower credit rates this year compared to the previous year. Net Income Margin in 3Q 2018 was 2.5%.

Olga Naumova, Magnit’s Chief Executive Officer, said:

“At the first stage of transformation the key indicator of the positive dynamics for us is the like-for-like improvement. For the first time this year we see LFL trends changing. This improvement underlines that our customers respond positively to the implemented changes in assortment and approach to the promo activity.

We are already seeing cost improvements and continue to optimise our efficiency to maintain EBITDA margin.

Our transformation strategy shows first signs of recovery of consumer interest in our stores. We are confident that this is the solid base for further success of Magnit team”.

PJSC “Magnit” Announces Unaudited 3Q 2018 Results