Russian food retailer X5 beat profit forecasts on Tuesday as it presses on with cost cutting and streamlining after losing its market lead to closest competitor Magnit.
X5 last month reported for the first time a smaller quarterly revenue than Magnit, after struggling for more than a year following a change in strategy.
Its shift of focus to organic expansion without acquisitions, coupled with major changes on the management board, has been turbulent, with like-for-like sales turning negative and revenue growth slowing sharply.
The company had said it hopes to stabilise its operations by the end of 2013 but analysts predict a bumpy road to recovery with possible setbacks amid increasing competition.
Its first-quarter net profit fell 1.8 percent, year-on-year, to $65.1 million, the company said in a statement, which was above the $51.1 million average forecast in a Reuters poll.
The fall was due mainly to a spike in finance costs by 12 percent, year-on-year, to $88.6 million. It said the weighted average effective interest rate on its debt increased to 8.8 percent from 8.5 percent for the first quarter of 2012.
On the operating side, the company also beat forecasts, posting a 3.7 percent rise in earnings before interest, taxation, depreciation and amortisation (EBITDA) to $284.2 million, ahead of a $281.4 million forecast.
The EBITDA margin fell to 6.8 percent from 7.1 percent, but was slightly better than the 6.7 percent expected.
X5, just under 50 percent owned by Russian billionaire Mikhail Fridman's Alfa-Group, has said it expects to sustain the margin at 7 percent this year and achieve revenue growth of at least 11 percent in rouble terms.
