Migros Ticaret A.s. · BIST:MGROS

Migros Ticaret A.s — Investor Presentation (April 2017)

32 slides from Migros Ticaret A.s's investor presentation, April 2017

  1. Slide 1: Investor Presentation April 2017

    Investor Presentation April 2017

  2. Slide 2: Disclaimer

    Disclaimer Migros Ticaret A.Ş. (the “Company”) has prepared this presentation for the sole purpose of providing information about its business, operations and financial results. The information in this presentation is subject to updating, revision and amendment. The information in this presentation,

  3. Slide 3: Today's Agenda

    Today’s Agenda I Business Snapshot and Update II. Key Investment Highlights and Strategy III. Overview of the Kipa Acquisition IV. Update on Financial Performance

  4. Slide 4: I. Business Snapshot and Update

    I. Business Snapshot and Update

  5. Slide 5: Migros at a Glance (1/2)

    Migros at a Glance (1/2) 63rd Year!  Operating in 3 countries Geographical Footprint — Turkey (73 cities out of 81) — Macedonia and Kazakhstan (39 stores)  1,533 (supermarkets)  39 (upscale supermarkets)  168 (Supermarkets and Hypermarkets) 1,794 Stores1  15 (wholesale and foodservice stores) w

  6. Slide 6: Migros at a Glance (2/2)

    Migros at a Glance (2/2)  Sales increased 17.8% to TL 11.1bn Sales (TLbn)  EBITDA increased 14.0% to TL 686m with an 11.1 EBITDA margin of 6.2%  Net Debt decreased to 2.7x EBITDA in 2016 6.5 2016 Full Year Results versus 2.9x in previous year 2012 2016  TL199m purchase price Sales Area (SQM ’000

  7. Slide 7: II. Key Investment Highlights and Strategy

    II. Key Investment Highlights and Strategy

  8. Slide 8: Key Investment Highlights

    Key Investment Highlights 6 5 Industry best-in- 4 class historical top line growth With a clear and cost 3 strategy to management organically and with strong cash Operations are inorganically supported by a flow generation drive growth in truly best-in- the decades class supply ahead 2 …And multiple

  9. Slide 9: Turkey is a large, attractive and resilient market with significant growth potential

    1 Turkey is a large, attractive and resilient market with significant growth potential specifically in food retail Turkey GDP ($bn)1 900 800 700 600 GDP ($bn) 1994 Economic 500 Crisis 1999 Marmara Earthquake 2009 World 10x 400 Economic Crisis larger economy 300 In 35 years 200 2001 Economic 100 Cris

  10. Slide 10: Migros is a leading operator in the organized market with consistent market share gains

    2 Migros is a leading operator in the organized market with a consistent track record of market share gains… Turkish Food Retail Market1 MGD Grocery Market Share (%) 2 84.4% 84.1% 83.7% Unorganized Organized 69.2% 30.8% 78.7% 54.5% 45.4% Food Retail Sector 30.8% [~ TL 316bn] 2016 Market Share of Org

  11. Slide 11: And multiple formats catering to an evolving consumer

    3 …And multiple formats catering to an “evolving” consumer  Core expertise with 1,533 stores1  Upscale offering with 39 stores1  Multiple format including M-JET, M, with strong brand loyalty MM, MMM and 5M (from 40 to 4,500  Operations in 5 cities sqm and 1,800 to 18,000 SKUs)  Sales area of 30

  12. Slide 12: Operations supported by best-in-class supply chain, IT and CRM infrastructure

    4 Operations are supported by a truly best-in-class supply chain, IT and CRM infrastructure  Serving 1,800+ stores through 23 Distribution Centres including Kipa Distribution  Automated picking and sorting system in Gebze, Istanbul DC  Central procurement for entire range  11 regional procuremen

  13. Slide 13: III. Overview of the Kipa Acquisition

    III. Overview of the Kipa Acquisition

  14. Slide 14: Overview of Kipa Acquisition

    Overview of Kipa Acquisition Transaction Overview Pro Forma Impact & Expectations • Migros acquired 95.5% of Tesco Kipa shares in March-2017 • Purchase value of TL 199 million Number of Sales • Implied estimated price per share of TL 0.15638 Stores - Total2 Densities3 • Acquisition is financed by ex

  15. Slide 15: Kipa Acquisition Operational Rationale

    Kipa Acquisition Operational Rationale Scale Benefits  Significant increase in market share & economics of scale  An important chance to increase Migros footprint in our priority regions (both in terms of consumer wealth and local production / farming capabilities) Accelerated  Achieve the optimu

  16. Slide 16: Kipa Acquisition Benefits to Our Stakeholders

    Kipa Acquisition Benefits to Our Stakeholders Consumers Suppliers  Economies of scale will enable us to give  Opportunity for suppliers to leverage Migros’ more value to our customers warehouse network and logistics  Products better in quality & freshness at  Scale opportunity for all suppliers

  17. Slide 17: Significant Real Estate Content Increases Operational Flexibility

    Significant Real Estate Content Increases Operational Flexibility  The total value of Kipa Real Estate assets is estimated to be higher than the current book value of ~TL700m  The company owns its main warehouse with a storage area of ~50k sqm (Torbalı Distribution Centre) Sizeable Asset Value 37

  18. Slide 18: And a Track Record of Deleveraging

    And a Track Record of Deleveraging Migros 2016 Cash and Leverage Position Cash & Debt Items Total TL m TL m EUR m Cash & Cash equivalents 1,157 967 51 Financial Debt 2,979 409 692 Net Debt 1,822 Net Debt / EBITDA 2.7x Additional debt due to acquisition1 ~500 ~500 Net debt / EBITDA with Kipa after ac

  19. Slide 19: Migros 2016 Results with Kipa Run-Rate Estimates (RRE)

    Migros 2016 Results with Kipa Run-Rate Estimates (RRE) Kipa offers an opportunity to deleverage the company faster w/o Asset Sales – 2016 RRE with Asset Sales1 - 2016 RRE TL million 2016 Migros Kipa Run-Rate2 Combined Kipa Run-Rate2 Combined 11,059 1,746 12,805 1,746 12,805 Sales EBITDA 686 132 818

  20. Slide 20: IV. Update on Financial Performance

    IV. Update on Financial Performance

  21. Slide 21: Key Financial Highlights

    Key Financial Highlights  232 New store openings in 2016  Strong long term top line and EBITDA growth Consistent Organic  5-Year Sales CAGR of 14.4% and EBITDA CAGR of 12.4% Growth  2016 Sales of TL 11,059mn, Gross Profit of TL 2,962mn and EBITDA of TL 686 mn Market Share Gains  Good near-term

  22. Slide 22: Industry best-in-class historical top line growth and cost management

    6 Industry best-in-class historical top line growth and cost management with strong cash flow generation Strong Long Term Growth, Last 5 Years (TLm) Number of Stores 168 1,773 1,605 1,410 1,190 Robust Domestic 1,004 882 Growth of 19.7% in 2016 Accelerated Sales 2012 2013 2014 2015 2016 KIPA Total Gr

  23. Slide 23: Industry best-in-class growth: EBITDA and EBITDAR

    6 Industry best-in-class historical top line growth and cost management with strong cash flow generation Strong Long Term Growth, Last 5 Years (TLm) EBITDA Margin 6.6% 6.6% 6.5% 6.4% 6.2% 686 EBITDA Targets Achieved 602 Consistently 469 532 430 Best in Class in 2012 2013 2014 2015 2016 Operational P

  24. Slide 24: Capex and working capital cash generation

    6 Industry best-in-class historical top line growth and cost management with strong cash flow generation (TLm) Capex Capex as a Percentage 3.2% 2.9% 3.0% 2.7% of Sales 297 281 226 232 Low Capex Business 2013 2014 2015 2016 Strong Cash Generation through Sustainable Cash Contribution from Working Cap

  25. Slide 25: Near-Term Momentum

    Near-Term Momentum 4Q15 vs 4Q16, TLm 2,901 2,378 Sales Margin 27.3% 26.1% 757 Gross Profit 649 Margin 11.6% 10.8% 313 EBITDAR 275 Margin 6.3% 5.8% 167 EBITDA 149 4Q 2015 4Q 2016 24

  26. Slide 26: Expectations and Guidance

    Expectations and Guidance  Domestic sales growth doubled in 3 years thanks to long-term effective strategies (2013 Growth: 10.2%, 2016 Growth: 19.7%)  Dilutive impact of employee cost and rent cost increases minimized in 2016 thanks to opex control and strong sales performance,  Kipa acquisation

  27. Slide 27: Appendix

    Appendix

  28. Slide 28: Migros, Largest National Supermarket Chain

    Migros Migros, Largest National Supermarket Chain • Number of stores: 1,533 including 424 5M, MMM & MM stores and 1,109 Migros Jet & M stores, • Penetration: 73 cities – (401-4,500) sqm / (1,8001 – 18,000) SKUs – Differentiated offering and service on fresh product categories – Wide branded assortme

  29. Slide 29: Macrocenter

    Macrocenter Exclusive Shopping • Number of stores: 39 • 400 - 2,500 sqm / 10,000 SKUs – Upscale gourmet store serving with strong brand loyalty – Wide product range in delicatessen, appetizers and spirits. Premium quality in fresh products – Complementary and premium non-food • Customized service su

  30. Slide 30: Online Business

    Online Business  Turkey’s first and leading e-commerce web site in food retail  Top-line growth is 2-3x higher than the Company average  Improved operational efficiency through picking automation  Direct delivery from stores ( 105 stores in 24 cities across Turkey) Turkey Has Strong E-commerce P

  31. Slide 31: Acquisition of Tazedirekt

    Acquisition of Tazedirekt Summary Business Overview  Acquisition of Tazedirekt, online fresh & natural food products sales  Important technology investment, which set the course for a pioneering online sales development of fresh and natural food product categories  Tazedirekt started as a stand-a

  32. Slide 32: Wholesale & Food Service

    Wholesale & Food Service Focus on Horeca Penetration • Currently operating in 7 regions through dedicated sales team. • Dedicated warehouses and customer delivery • 15 Wholesale stores Penetration: 11 cities 31

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