Migros Ticaret A.s. · BIST:MGROS
Migros Ticaret A.s — Q1 2018 Earnings Presentation
36 slides from Migros Ticaret A.s's earnings presentation, 2018
Slide 1: Company Presentation 1Q 2018
Company Presentation 1Q 2018 P0
Slide 2: Agenda
Agenda 1 Migros in a snapshot 2 2 Operating environment 6 3 Review of historical financial performance & projections 27 P1
Slide 3: Migros at a Glance
Migros at a Glance 64th Year! Operating in 3 countries Geographical Footprint — Turkey (81 cities out of 81) — Macedonia and Kazakhstan 1,668 (supermarkets) 46 (upscale supermarkets) 162 (Supermarkets and Hypermarkets) 17 (wholesale and foodservice stores) 1,933 Stores1 40 (international
Slide 4: Ownership Structure
Ownership Structure JV Structure between BC Partners & Anadolu Group Current Shareholding Structure AG Anadolu BC Partners Grubu Holding A.Ş. & related funds MH Kenan Moonlight Perakendecilik Investments Free Float Capital S.A. ve Ticaret A.Ş. S.A. 26.8% 8.07% 50.00% 15.13% Migros Ticaret A.Ş. P3
Slide 5: Migros has been a leading supermarket operator since its foundation 64 years ago
Migros has been a leading supermarket operator since its foundation 64 years ago Migros was established in 1954 (as a joint venture between Swiss Migros & Istanbul Municipality/State Institutions). Throughout its history, the company had 5 different ownership structures. Ownership changes did
Slide 6: Agenda
Agenda 1 Migros in a snapshot 2 2 Operating environment 6 3 Review of historical financial performance & projections 27 P5
Slide 7: Operating Environment
Operating Environment A Attractive market with significant upside potential to support future growth F B #1 supermarket operator with Experienced management an outstanding reputation E C Flexible and efficient business Multi-channel synergistic model combined with state of offering with a footprint
Slide 8: Attractive market with significant upside potential to support future growth
A Attractive domestic market Attractive market with significant upside potential to support future growth Population (m) Total Grocery Spend per Capita ($) 81 83 3,520 3,156 3,164 2,954 65 66 61 46 1,922 38 1,753 1,290 Turkish Food Retail Market MGD Grocery Market Share (%) 83% 81% 81% Unorganized O
Slide 9: Market Share Evolution
B #1 supermarket operator with an outstanding reputation Market Share Evolution Market Share Gain FMCG Market Share Evolution (%) Migros improved its market share 16.1 by 210 bps in modern FMCG 14.0 market and 80 bps in total FMCG market y-o-y. 5.8 6.6 Migros accounts for 16.1% of FMCG sales in
Slide 10: With a clear strategy to organically and inorganically drive growth in the decades ahead
C Multi-channel synergistic offering with a footprint in all 81 Turkish cities and abroad With a clear strategy to organically and inorganically drive growth in the decades ahead Proven ability to launch new, successful formats and products, achieve business transformations Conversion of Tansas Laun
Slide 11: Multi-channel expertise anchored around large, full-service supermarkets
C Multi-channel synergistic offering with a footprint in all 81 Turkish cities and abroad Multi-channel expertise anchored around large, full-service supermarkets Sales Banner Key concept Supermarkets Large SPMs & HPMs Total # of stores area split (Target size) 40-800 sqm 800-7,000 sqm Core supermar
Slide 12: Migros
C Multi-channel synergistic offering with a footprint in all 81 Turkish cities and abroad Migros Migros, Largest National Supermarket Chain Number of stores: 1,668 including 447 5M, MMM & MM stores and 1,221 Migros Jet & M stores, Penetration: 81 cities ─ (40*-4,500) sqm / (1,800* – 18,000) SKUs
Slide 13: Kipa
C Multi-channel synergistic offering with a footprint in all 81 Turkish cities and abroad Kipa Focused on the Western regions of Turkey Number of stores: 162 Space optimization in 4 Kipa stores completed in 2017 Space optimization in 8 more stores completed so far in 2018, 6 more in 2018 pipel
Slide 14: Macrocenter
C Multi-channel synergistic offering with a footprint in all 81 Turkish cities and abroad Macrocenter Exclusive shopping Number of stores: 46 400 - 2,500 sqm / 10,000 SKUs ─ Upscale gourmet store ─ Strong brand loyalty ─ Wide product range in delicatessen, appetizers and spirits. Premium quality
Slide 15: Wholesale & Food Service
C Multi-channel synergistic offering with a footprint in all 81 Turkish cities and abroad Wholesale & Food Service Focus on Horeca Penetration Currently operating in 7 regions through dedicated sales team. Dedicated warehouses and customer delivery 17 Wholesale stores 31.03.2018 Penetration: 1
Slide 16: Online Business
C Multi-channel synergistic offering with a footprint in all 81 Turkish cities and abroad Online Business Turkey’s first and leading e-commerce web site in food retail Top-line growth is significantly higher than the Company average Improved operational efficiency through picking automation
Slide 17: International Operations
C Multi-channel synergistic offering with a footprint in all 81 Turkish cities and abroad International Operations Kazakhstan Macedonia 1.3% of consolidated sales from Kazakh operations 1.5% of consolidated sales from Macedonian operations Number of stores: 16, including 2 hypermarkets, 13 sup
Slide 18: Innovations
D Retail technology and innovation leadership Innovations Migros Mobile App & Personalized Self-Service Checkout+ Campaign Engine BKM E-Wallet & Self-Service Sales Over Checkout ‘pin-on-receipt’ Integration Technologies Mkolay Scan&Go Migros Intelligent Office Mi-Fi Me-Mobil Supplier Information Cen
Slide 19: Money Club & CRM
D Retail technology and innovation leadership Money Club & CRM 6 Life Style 75% Segments 10.3 Million of Loyalty Card Active Cards Sales Advanced Turkey’s Programme With Segmentation 48.0 Million largest loyalty Money Points Highest Customer Customer Value programme Interaction Model 1.7 Million 7.7
Slide 20: Self-service technologies
D Retail technology and innovation leadership Self-service technologies Self-service revolution in retail Mkolay – Scan&Go 2018: Turkey’s First In-store self scanning experience Million 250 stores Statistical fraud and security algorithm 3.5 transactions per month (860 SSCO1) Hassle free dir
Slide 21: Mi-Beacon, Migros mobile apps and Mi-Fi
D Retail technology and innovation leadership Mi-Beacon, Migros mobile apps and Mi-Fi Highlights of Mi-Beacon, Migros mobile apps Highlights of Mi-Beacon, Migros mobile apps Personalized – Customer Communication Channel Free wireless internet access during shopping – a At the right place– At t
Slide 22: Flexible / capital light model with preferred tenant status
E Flexible and efficient business model Flexible / capital light model with preferred tenant status Flexible / capital light model Capex as a percentage of sales 2017 (%)¹ Largely rented business model Flexible lease terms 6.9% ‒ Leases can be exited on average with a 1-3 month notice ‒ Terminat
Slide 23: Unparalleled capabilities in fresh categories
E Flexible and efficient business model Unparalleled capabilities in fresh categories Highlights Focusing on fresh products (vegetables, fruit, fresh meat, etc.) Renewed meat production facility Exclusive licensing from Ministry of Agriculture: “Good Agricultural Practice”, covering now poultr
Slide 24: Meat processing/production plants – Miget and Gebze
E Flexible and efficient business model Meat processing/production plants – Miget and Gebze 2 meat production plants, for meat processing Location Closed Area # of Employees Miget Meat Production Plant Izmir Torbali 11,356 m2 249 Gebze Meat Production Plant Kocaeli GOSB 3,632 m2 43 18,455 ton produc
Slide 25: Distribution centers and logistics - overview
E Flexible and efficient business model Distribution centers and logistics - overview 24 Distribution Centers (including 1 Kipa DC and 7 Fruit and Vegetable DCs) 19,000 active SKUs % of sales delivered centrally to the stores has reached 83% Continuing to improve round trip store distances
Slide 26: Best-in-class quality management and recognized excellence
E Flexible and efficient business model Best-in-class quality management and recognized excellence Annual records Selected awards 1,000+ supplier audits 30,000 product analysis 7,000 approvals of new products for sales 3,200 store audits CDP Turkey Capital “Climate Leadership Award” “Most Admire
Slide 27: Agenda
Agenda 1 Migros in a snapshot 2 2 Operating environment 6 3 Review of historical financial performance & projections 27 P26
Slide 28: Sales in 1Q 2018
Sales in 1Q 2018 Consolidated sales turnover increased by 26.5% and reached TL 3,940 million in 1Q2018 Strong sales performance of Migros stores continued 17.9% Domestic sales growth w/o Kipa operations Sales 1Q (TL million) Sales in 2017 (TL million) 3,940 15,344 3,114 11,059 Strong growth mome
Slide 29: Capital Expenditure & Working Capital
Capital Expenditure & Working Capital Capex (TL million) Capex as a Percentage 2.0% 2.0% 2.7% 2.6% of Sales 77 399 62 297 TL 400m Targeted consolidated capex in 2018 1Q 2017 1Q 2018 2016 2017 Domestic operations Working Capital in days (37) (37) (36) (36) 1Q 2017 1Q 2018* 2016 2017 (*) with Kipa P28
Slide 30: Consolidated Gross Profit in 1Q 2018
Consolidated Gross Profit in 1Q 2018 Consolidated Gross profit reached TL 1,077 million with an increase of 31.8% in 1Q 2018 2018 FY gross margin is expected to converge to historical averages Solid Gross Profit Gross Profit 1Q (TL million) Gross Profit in 2017 (TL million) Generation 1,077 4,08
Slide 31: Consolidated EBITDA(R) in 1Q 2018
Consolidated EBITDA(R) in 1Q 2018 EBITDA 1Q (TL million) EBITDA 2017 (TL million) 211 872 156 677 35.5% EBITDA increase in 1Q18 1Q 2017 1Q 2018 2016 2017 Margin 5.0% 5.4% Margin 6.1% 5.7% EBITDAR (TL million) EBITDAR 2017 (TL million) 11.5% EBITDAR 423 1,634 margin in 1Q18 317 1,231 w/o Kipa operati
Slide 32: Track Record of Deleveraging
Track Record of Deleveraging Migros 1Q 2018 Cash and Leverage Position Cash & Debt Items Total TL m TL m EUR m Cash & Cash equivalents 1,197 1,043 32 Financial Debt* 3,948 872 632 Net Debt 2,751 Net Debt / EBITDA LTM 3.0x * Based on amortised costing as indicated in financial statements Net debt/E
Slide 33: Performance Summary 2017
Performance Summary 2017 Performance Summary Performance Performance vs 2016 Target 2017 Indicator Guidance Expansion Program (Number of NEW Stores) 232 180+ 193 Top-Line Sales Growth 17.8% ~38% 38.7% EBITDA Margin 6.1% ~5.5% 5.7% Management Message for 2017 Consolidated shareholders’ equity
Slide 34: Expectations and Guidance
Expectations and Guidance 2018 Guidance [consolidated] Sales Growth 15-18% EBITDA Margin 5.5-6.0% Expansion Target 120-150 new stores Management Agenda in 2018 Merger of Migros & Kipa Total gross Euro debt decreased Focus on digitalization of Space optimisation in large by almost 6% in 1Q18
Slide 35: Summary of Income Statement – 1Q 2018
SUMMARY OF INCOME STATEMENT – 1Q 2018 IFRS Consolidated Income Statement Summary (TL Million) 1Q 2018 1Q 2017 Net Sales 3,940.1 3,113.6 Cost of sales -2,863.1 -2,296.3 Gross Profit 1,077.1 817.3 Operating Expenses -962.5 -742.1 Other Operating Income / (Expense) -59.7 -44.1 Operating Profit 54.9 31.
Slide 36: Summary of Balance Sheet – 1Q 2018
SUMMARY OF BALANCE SHEET – 1Q 2018 IFRS Consolidated Balance Sheet Summary (TL Million) 1Q 2018 2017 Current Assets 3,251.7 3,776.3 Non-current Assets 6,539.6 6,526.4 Total Assets 9,791.3 10,302.7 Current Liabilities 4,988.6 5,516.1 Non-current Liabilities 3,514.2 3,259.4 Total Liabilities 8,502.8 8