August 27, 2018 / 11:08 AM / a month ago

Acquisitive Russian electronics retailer M.Video lifts guidance

MOSCOW, Aug 27 (Reuters) - Russia’s largest home appliances retailer M.Video raised its revenue and earnings forecasts on Monday as it reported an 88 percent jump in first-half net profit, helped by its merger with rival chain Eldorado.

M.Video merged with Eldorado at the end of April in an $800 million deal. In June, it also agreed to buy German consumer electronics group Ceconomy’s Russian business MediaMarkt.

The enlarged company expects to grow revenue to more than 500 billion roubles ($7.5 billion) by 2022 from a pro-forma 360 billion roubles in 2017, it said on Monday, having previously forecast revenue in excess of 475 billion roubles.

It also lifted guidance for 2022 core earnings, or earnings before interest, taxation, depreciation and amortisation (EBITDA), to more than 35 billion roubles from 33 billion roubles.

In the first half of 2018, its consolidated net revenue increased by 41.7 percent year-on-year to 118.1 billion roubles, including Eldorado results for May and June.

EBITDA almost doubled year-on-year to 9 billion roubles, while the EBITDA margin rose to 7.6 percent from 5.5 percent the year earlier. Net profit jumped to 4.7 billion roubles from 2.5 billion roubles in the same period of 2017.

Pro-forma revenue, which includes Eldorado results from H1 2017, was up 16.5 percent to 149.6 billion roubles in the first six months, and EBITDA soared 184 percent to 9.05 billion.

“The financial results demonstrate that a merger of the companies has been a well-weighted and proper step in terms of ... prospective return on capital,” said M.Video President Alexander Tynkovan.

The company’s business model envisages a payout of 50 percent of its 2018 net profit as dividends next year, Chief Financial Officer Ekaterina Sokolova told reporters.

Tynkovan said dividends were still subject to discussions. He said in June there were no plans to propose dividends for shareholders until 2020.

Shares in M.Video were up 1.1 percent by 1025 GMT, outperforming the broader market index which had added 0.8 percent. ($1 = 66.9725 roubles) (Reporting by Olga Sichkar; writing by Maria Kiselyova; Editing by Jan Harvey)

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