Migros Ticaret A.s. · BIST:MGROS
Migros Ticaret A.s — H1 2018 Earnings Presentation
35 slides from Migros Ticaret A.s's earnings presentation, 2018
Slide 1: Company Presentation 1H 2018
Company Presentation 1H 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 1,742 (supermarkets) 50 (upscale supermarkets) 161 (Supermarkets and Hypermarkets) 17 (wholesale and foodservice stores) 2,011 Stores1 41 (international
Slide 4: Ownership Structure
Ownership Structure JV Structure between BC Partners & Anadolu Group Shareholding Structure as of June 2018 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.
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 ($) 3,670 81 83 3,516 3,200 3,008 65 66 61 46 2,031 1,781 38 1,282 Turkish Food Retail Market MGD Grocery Market Share (%) 85% 82% 81% Unorganized O
Slide 9: Market Share Evolution
B #1 supermarket operator with an outstanding reputation Market Share Evolution Market Share Gain Migros FMCG Market Share Evolution (%) Migros on a consolidated basis 16.1 16.0 maintained its market shares in FMCG markets. However, Migros brand continued its market share gains. 6.8 6.8 1H17 1H1
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: 1,742 including 469 5M, MMM & MM stores and 1,273 Migros Jet & M stores, Penetration: 81 cities ─ (40*-4,500) sqm / (1,800* – 18,000) SKUs
Slide 13: Macrocenter
C Multi-channel synergistic offering with a footprint in all 81 Turkish cities and abroad Macrocenter Exclusive shopping Number of stores: 50 400 - 2,500 sqm / 10,000 SKUs ─ Upscale gourmet store serving with strong brand loyalty ─ Wide product range in delicatessen, appetizers and spirits. Prem
Slide 14: Kipa as of June 2018
C Multi-channel synergistic offering with a footprint in all 81 Turkish cities and abroad Kipa as of June 2018 Focused on the Western regions of Turkey Number of stores: 161 Space optimization in 4 Kipa stores completed in 2017 Space optimization in 8 more stores completed so far in 2018, 6 mo
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 Penetration: 12 cities P1
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 1.4% 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 1H 2018
Sales in 1H 2018 Consolidated sales turnover increased by 20.3% and reached TL 8,463 million in 1H2018 Domestic sales growth excluding Kipa was stronger in 2Q 2018 with 19.3% vs 17.9% in 1Q 2018 19.3% Domestic sales growth w/o Kipa operations in 2Q 2018 Sales in 2Q 2018 (TL million) Sales in 1H
Slide 29: Capital Expenditures
Capital Expenditures Capex (TL million) 12 Kipa stores Capex as a Percentage 2.2% 3.2% 2.7% 2.6% Space optimization of Sales 271 399 completed 297 154 TL 440m Targeted consolidated capex in 2018 1H 2017 1H 2018 2016 2017 Capex as a percentage of sales is expected to remain at 2017 level at the year
Slide 30: Consolidated Gross Profit in 1H 2018
Consolidated Gross Profit in 1H 2018 Consolidated Gross profit reached TL 2,338 million with an increase of 27.6% in 1H 2018 2018 FY gross profit margin expansion is expected to exceed the Company’s targets for the year Gross Profit 2Q (TL million) Gross Profit in 1H (TL million) Targets exceed
Slide 31: Consolidated EBITDA(R) in 1H 2018
Consolidated EBITDA(R) in 1H 2018 EBITDA 2Q (TL million) EBITDA 1H (TL million) 275 486 193 348 42.9% EBITDA increase in 2Q18 2Q 2017 2Q 2018 1H 2017 1H 2018 Margin 4.9% 6.1% Margin 5.0% 5.7% EBITDAR 2Q (TL million) EBITDAR 1H (TL million) 11.3% 512 936 EBITDAR 387 704 margin in 2Q18 2Q 2017 2Q 2018
Slide 32: Track Record of Deleveraging
Track Record of Deleveraging Migros 1H 2018 Cash and Leverage Position Cash & Debt Items Total TL m TL m EUR m Cash & Cash equivalents 1,359 1,238 23 Financial Debt* 4,092 865 608 Net Debt 2,733 Net Debt / EBITDA LTM 2.7x * Based on amortised costing as indicated in financial statements Net debt/E
Slide 33: Expectations and Guidance
Expectations and Guidance 2018 Guidance [Consolidated] 2018E Previous Guidance New Guidance Sales Growth 15-18% ~20% EBITDA Margin 5.5-6.0% 5.5-6.0% Expansion Target 120-150 200+ new stores new stores CAPEX Target TL 400 mn TL 440 mn Management Agenda in 2018 Merger of Migros & Kipa by the Total
Slide 34: Summary of Income Statement – 1H 2018
SUMMARY OF INCOME STATEMENT – 1H 2018 IFRS Consolidated Income Statement Summary (TL Million) 1H 2018 1H 2017 Net Sales 8,463.4 7,036.9 Cost of sales -6,125.4 -5,205.1 Gross Profit 2,338.0 1,831.9 Operating Expenses -2,054.7 -1,667.1 Other Operating Income / (Expense) -154.3 -111.9 Operating Profit
Slide 35: Summary of Balance Sheet – 1H 2018
SUMMARY OF BALANCE SHEET – 1H 2018 IFRS Consolidated Balance Sheet Summary (TL Million) 1H 2018 2017 Current Assets 3,623.0 3,776.3 Non-current Assets 6,684.7 6,526.4 Total Assets 10,307.8 10,302.7 Current Liabilities 5,778.3 5,516.1 Non-current Liabilities 3,512.7 3,259.4 Total Liabilities 9,291.0