MOSCOW (Reuters) - X5 (L:PJPq), Russia's second-biggest food retailer, more than doubled its second-quarter net profit as sales grew, sending its shares to a four-year high.
The company, ranked second by sales to Magnit (L:MGNTq), reported a net profit of 7.95 billion roubles (£95.13 million), up 107.5 percent on the same period last year.
That came on the back of a 46 percent rise in operating profit after selling, general and administrative costs decreased as a percentage of revenue by 1.1 percentage points to 16.5 percent as the firm's sales growth gathered pace.
"Despite price investments, an operating margin has increased ... thanks to high like-for-like sales and growing economy of scale," Marat Ibragimov, analyst at BCS, said.
He added the company was now "one step closer to the leading position, the gap with Magnit will disappear soon".
X5, majority owned by billionaire Mikhail Fridman's Alfa Group, had said it aimed to regain the No.1 spot on the market and double its business in the next few years.
In an investor presentation on Wednesday, it said sales in July and so far in August were up around 30 percent year on year, higher than in any of the months of the last quarter, as it focussed on taking market share.
Second-quarter revenue was up 26 percent at 252 billion roubles, driven mainly by its low-cost Pyaterochka shops which boosted sales 31 percent. Magnit earlier reported net sales of 266.2 billion roubles, up 13 percent year on year.
X5's earnings before interest, taxation, depreciation and amortisation rose 39 percent to 20 billion roubles and the profit margin increased to 8 percent, up from 7.2 percent a year ago and to the highest since the fourth quarter of 2012.
Gross margin however fell by 28 basis points to 23.8 percent as it lowered some prices to win price-conscious consumers struggling with inflation running at more than 7 percent.
X5's London-listed shares were up 9 percent at $24.8 by 1518 GMT, the highest level in four years.