Magnit Expected to Post Jump in Net Profits

Russia's largest food retail chain, Magnit, is expected to post a 68 percent jump in first-half net profit, helped by inflation and booming sales, according to a survey of analysts Monday.

Net profit is expected to rise to $63.8 million from $38 million in the first half of 2007, according to the average forecast from eight analysts.

"Despite traditionally low seasonality, we expect 2Q '08 to be a strong quarter for Magnit given high food inflation, which typically benefits retailers operating in a discount format as they capture market share from higher-end competitors," said Goldman Sachs analyst Mlada Yegikyan.

"The resilience of Russian consumers -- having experienced a

30 percent growth in wages in 1H08 -- should further strengthen the company's 2Q performance," she said.

First-half revenue is expected to rise 50 percent to $2.46 billion driven by store openings, in line with the preliminary estimate the company announced in July. the poll showed.

Core earnings, or earnings before interest, tax, depreciation and amortization, are seen rising 83 percent to $152.1 million and the EBITDA margin is forecast to grow to 6.2 percent from 5.1 percent.

Gross profit is expected to increase 65 percent to $510.2 million, with an improvement in gross margin to 20.7 percent from 18.8 percent.