X5 eyes boost in investments in 2011
From: Reuters
X5, Russia's biggest food retailer by sales, wants to hike investment in new store openings next year in anticipation of a consumer spending recovery from the economic crisis.
"We will recommend our supervisory board approve a considerably more aggressive investment number for next year, allowing us to achieve a significantly higher rate of organic growth than we currently have," Chief Executive Lev Khasis told the Reuters Russia Summit on Wednesday.
X5, just under 50 percent owned by billionaire Mikhail Fridman's Alfa Group, plans capital expenditure of 18 billion roubles ($588 million) in 2010.
Khasis declined to provide an exact guidance for 2011 but said he believed X5 should be investing "nothing less" than any of its Russia market competitors.
Its nearest rival Magnit plans to spend $1.3 billion in 2011, up from $1.1 billion in 2010, VTB Capital analysts said on Tuesday citing the company's management.
However, Khasis reiterated he did not expect to see clear signs of Russian consumer spending recovery before the end of this year.
"People spend as much as they have been spending. If they spend more on one product they tend to spend less on another," he said.
ACQUISITIONS
Apart from organic growth, X5 has been active in acquisitions, and Khasis said the company "continues to carefully study M&A opportunities."
He said the planned acquisition of rival Kopeika -- already cleared by the anti-monopoly regulator -- would be financed with cash and debt and involve no equity component.
"It is premature to talk about the likelihood and timeframe of the deal but if we reach an agreement (with Kopeika's shareholders) there will be no need for additional share issue."
X5 has also been cleared to buy grocery chain Ostrov (Island), which runs a 19-store chain in Moscow and the Moscow region.
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