Lenta Company News - 1H 20 profitability boosted by better cost control
Yesterday, Lenta released strong 1H 20 IFRS results, which were ahead of our consensus estimates on EBITDA and net income mostly due to a higher than expected gross margin and better than anticipated SG&A cost control. The company managed to reduce its net debt/EBITDA to 1.9x thanks to positive FCF and an increase in EBITDA, yet the payment of dividends may be considered only in around a year from now. While the company so far sees July LFL sales in line with 2Q 20, it is cautious when it comes to the 2H 20e outlook due to macro risks. Following the results publication, Lenta held a conference call.Lenta is a hypermarket group based in Russia. Co. operates 87 hypermarkets in 50 cities across Russia and 16 supermarkets in the Moscow region with a total of approximately 571,328 sq.m. of selling space. Co. also operates four distribution centers for hypermarkets and one for supermarkets. operates three hypermarket formats: Standard, typically with approximately 7,000 sq. m. of selling space (smaller than many Western European hypermarkets) and 24,000 stock keeping unit (SKUs); Compact, typically with approximately 5,000 sq. m. of selling space and 20,300 SKUs; and Supercompact, typically with approximately 3,000 sq. m. of selling space and 15,000 SKUs.
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