* To pay 25-35 pct of earnings in divs vs 14 pct in 2011
* Net income almost doubled in 2012
* 2013 capex seen at $1.8 bln vs $1.6-1.7 bln in 2012
* Raises 2013 sales growth guidance to 27-29 pct
* Shares close down 2.7 pct, backtrack after recent gains
By Maria Kiselyova
MOSCOW, Jan 22 Fast-growing Russian retailer
Magnit plans to raise its dividends as a proportion of
profits, allowing shareholders including Chief Executive Sergei
Galitskiy to benefit from the company's ambitious expansion.
The company plans to pay between 25 and 35 percent of net
profit to its investors in the next two or three years,
Galitskiy said on Tuesday, versus no more than 15 percent in
Russia's second-biggest retailer by revenue, Magnit nearly
doubled net profit last year to $803.9 million from $418.7
million in 2011, partly reflecting the company's growing size
allowing it to extract better terms from its suppliers.
It opened 1,575 stores during the year, bringing its total
network of convenience and cosmetics stores and hypermarkets to
"We are still in the process of winning market share and
therefore we will do our best to be highly aggressive,"
Galitskiy said in a statement.
Magnit, which has grown into the country's biggest retailer
by store count since Galitskiy founded it in 1998, has
outperformed rivals in sales growth and profitability thanks
partly to a lack of competition in the provincial towns where it
He said on a conference call that Magnit could grow revenue
by between 27 and 29 percent in rouble terms this year - an
upward revision of its previous 25 to 27 percent guidance and
compared with about 34 percent in 2012.
The growth expectations are based on plans to further expand
its retail empire with a 2013 capital spending programme
totalling around $1.8 billion, he said, having previously
forecast spending in a range of $1.6 to 1.8 billion this year
compared with $1.6 to 1.7 billion in 2012.
Magnit plans to open more than 1,100 convenience stores and
over 60 hypermarkets and 250 cosmetics stores, launch four
distribution centres and buy at least 1,200 trucks this year.
Its Moscow-traded shares closed down 2.7 percent, lagging
the broad market, with analysts attributing the fall to
profit-taking after a rally in the run-up to the expectedly
The stock has risen by around 10 percent over the past two
weeks. According to brokerage Otkritie, the company's GDRs
are trading on a multiple of 23.8 times forecast 2013
earnings - reflecting a premium to its Russian peers. X5
for instance trades on 13.9 times.
Galitskiy said on the conference call he expected a 2013
EBITDA margin of between 9.2 and 9.8 percent, adding that the
forecast was conservative and the margin was unlikely to fall
below 9.5 percent.
In the fourth quarter the EBITDA margin rose to a record
11.3 percent, above a 10.9 percent forecast given by analysts in
a Reuters poll. For the full year the profit margin rose to
10.56 percent from 8.22 percent.
Quarterly net income was $264 million, above the average
forecast of $219 million, while its full year EBITDA (earnings
before interest, taxation, depreciation and amortisation) grew
60 percent to $1.5 billion.
"Results are not just strong, they are outstanding compared
with both the Russian retail sector and global peers," said
Maria Kolbina, an analyst at VTB Capital, noting the key reason
behind the profitability improvement was better purchasing
Bigger rival X5, struggling with operational issues, earlier
reported an 8 percent rise in rouble sales to 490 billion
roubles ($16.2 billion).