UPDATE 1-Russia's X5 misses forecasts on charges

Tue Nov 20, 2012 4:00am EST

* Returns to Q3 net profit after year-ago loss

* Net profit at $12.1 mln vs $31.7 mln forecast

* Core profit, net sales miss market expectations

* Shares fall 2 percent

MOSCOW, Nov 20 (Reuters) - Russia's biggest food retailer, X5, returned to a quarterly profit after a year-ago loss but missed analysts' forecasts due to a higher-than-expected depreciation charge and lower gross profit.

X5, struggling with operational issues since changing its strategy last year to focus on organic expansion, said third-quarter net profit totalled $12.1 million, compared with a loss of $2.1 million in the same period a year earlier.

The profit number missed the average $31.7 million forecast of 13 analysts polled by Reuters.

Mikhail Krasnoperov, an analyst at Sberbank-CIB, said his $31 million net profit forecast suggested lower depreciation charges than those reported by X5.

"This is a one-off and we do not think it is very negative. But objectively, the results are not great," he said.

X5 said its earnings before interest, taxation, depreciation and amortisation (EBITDA) were unchanged year-on-year at $220 million, with a 6.1 percent margin, while the consensus forecast was $227 million and 6.2 percent.

Its gross margin fell to 22.8 percent from 23.1 percent a year ago, missing the 23.2 percent view.

"X5 has become the first publicly-traded Russian retailer which saw its gross margin contract in the third quarter. It appears that X5 is no longer able to increase its margin at the expense of its suppliers," said Ulyana Lenvalskaya at Renaissance Capital.

X5 last month halved its full-year sales growth forecast to 7-9 percent after releasing a weak third-quarter trading update.

Its quarterly net sales declined to $3.617 billion from $3.623 billion in the same period of 2011, in part due to a weaker rouble versus its reporting currency, the dollar.

Shares in X5 - part of billionaire Mikhail Fridman's Alfa-Group - fell 1.9 percent at the market open to be down by 10 percent since the beginning of November.

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