M.Video-Eldorado’s Adjusted Net Profit Up 45% in 2019
The Group's EBITDA margin for the period under review reached 7.3%.
M.video PJSC, the largest Russian retailer dealing in electronics and household appliances and a member of Mikhail Gutseriev’s SAFMAR Group, disclosed its audited consolidated financials prepared according to the International Financial Reporting Standards (IFRS) for the twelve months ending December 31, 2019.
Revenues in 2019 increased by 3.6% to 365,216 million rubles. Gross profit for the reporting time increased by 4.8% year-on-year and amounted to 91,015 million rubles. Gross margin increased by 0.3 percentage points - up to 24.9% in 2019.
The Group's EBITDA increased by 18.1% year-on-year and reached 26,746 million rubles (46,617 million rubles under IFRS 16), while the EBITDA margin increased by 0.9 percentage points year-on-year, up to 7.3% (12.8% according to IFRS 16) in 2019.
The Group’s adjusted net profit increased by 44.8% year-on-year to 11,178 million rubles (9,089 million rubles under IFRS 16) in 2019.
President and Chairman of the Board for the M.Video-Eldorado Group Alexander Tynkovan emphasized: “Like everyone else, we are very concerned about the current epidemiological situation, and we wish health to those affected. As a company, we are responsible for protecting and supporting our employees and their families, as well as our customers and partners. We remain confident in the strength of our brands and our strategy, and believe that the results that we were able to achieve in 2019 laid a solid foundation for further development this year, which promises not to be simple.
Against the background of moderate dynamics in the Russian consumer electronics market, the M.Video-Eldorado Group showed a noticeable qualitative growth in key financial indicators - the EBITDA margin reached a record high from over the past few years of 7.3%, adjusted net profit increased to 11,178 million rubles.
The company’s financial success in 2019 is due to the fact that we successfully and in an unprecedentedly short time completely finished the integration of two retail chains after the purchase of Eldorado. In a little more than a year, the team of the M. Video-Eldorado Group was able to not only switch to a single legal entity and a common IT system, but also to restructure all key business processes from procurement to customer service, which gave us additional synergies. Based on the results of integration in 2018-2019 and the ensuing synergies, in December 2019 the company paid dividends in the amount of 6 billion rubles.”
Chief Executive Officer of the M.Video-Eldorado Group Enrique Fernandez noted: “The Group’s main objective in 2019 was completing all integration processes and creating an effective business model, within which each of our brands, each function has its own role. We have deployed our key projects: m_mobile digital zones in retail and stand-alone digital boutiques, as well as a mobile application for sellers (RTD).
These projects determine the Group’s current effectiveness and formed the basis of our plans for further business growth. Because all business processes were digitalized and customers were empowered not only on the site and through the mobile application, but also in stores, the group is developing as an online business. Our model is being transformed from Omni to ONE RETAIL, which is based not only on a single pricing, service, and assortment approach at all points of buyer contact with us, but also based on data analytics and personalizing promotional offers and, in the future, prices. The buyer’s interaction with the retailer occurs through a smartphone.
In 2020, despite the high level of uncertainty in the macroeconomic situation, our main focus remains unchanged, and we will continue to do what we do best: to serve our customers in the best way, providing the necessary technologies and devices for communication and work, cooking, home business, and entertainment."
The company’s message also notes that in 2019 the Group opened 97 stores, 61 of which were in the second half of the year, as a result of which rental costs under IAS 17 increased from 19,000 million rubles in 2018 to 21,335 million rubles in 2019, and as a percentage of revenue increased by 0.45 percentage points up to 5.8%; this dynamic was partially offset by optimization of rental rates.
As of December 31, 2019, the Group’s total debt amounted to 49,410 million rubles, and the company's debt obligations are fully denominated in rubles.
In 2019, the Group's total debt decreased by 17%, and the total debt/EBITDA ratio was 1.8x as of December 31, 2019, showing a decrease from 2.6x as of December 31, 2018. The net EBITDA ratio as of December 31, 2019 remains at a comfortable level of 1.7x.