Russian retailer Magnit may be able to return more money to shareholders through dividends even as it keeps the door open to acquisitions, CEO Jan Dunning told Reuters on Thursday.
Magnit, one of Russia's largest food retailers, earlier this month reported 2021 revenues of RUB 1.9 trillion (€22 billion), up 10.8% year-on-year when accounting for the purchase of rival Dixy, which bolstered its store network by 2,500.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 21.7% to RUB 133.1 billion (€1.5 billion) last year and Magnit now expects its EBITDA margin to steadily improve to 8% in the next few years from 7.2% now, surpassing 8% from 2025 even as it expands its e-commerce and discount store offering.
Speaking ahead of a capital markets day on Thursday, Dunning said financial models showed Magnit could in principle return more to its shareholders, but that the board of directors would ultimately decide.
"With the business development that we see, it is possible to increase the dividend," he said.
Open To Market Consolidation
Dunning said Magnit remained open to market consolidation, and would maintain its approach towards acquisitions it has had in the past two years.
"I expect that this year as well there still will be opportunities for us to take some businesses on our side," he said, referring to smaller deals than the RUB 97-billion (€1.1 billion) Dixy purchase.
Dunning also said there were still plenty of opportunities for organic growth. Magnit wants its e-commerce platform, virtually non-existent a year ago, to be capable of handling at least 5% of turnover by 2025.
It may also look at other formats of discount stores, building on the success of its 'My Price' pilot format.
"It is always good to develop new concepts and develop new niches where you think there might be potential in the market over time," Dunning said, explaining that being agile was crucial to success as consumer trends change ever faster.
Read More: Magnit Continues Expansion With Radezh Takeover In Volgograd
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