Migros Ticaret A.s. · BIST:MGROS
Migros Ticaret A.s — Q3 2018 Earnings Presentation
34 slides from Migros Ticaret A.s's earnings presentation, 2018
Slide 1: Company Presentation 3Q 2018
Company Presentation 3Q 2018 P0
Slide 2: Agenda
Agenda 1 Migros in a snapshot 2 2 Operating environment 7 3 Review of historical financial performance & projections 26 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 1,980 (supermarkets) 50 (upscale supermarkets) 18 (wholesale and foodservice stores) 42 (international stores) 2,090 Stores1 Migros Online — 1.7m member
Slide 4: 2018 At a Glance
2018 At a Glance Merger of Kipa under of Migros Ticaret A.Ş. Expansion Acquisition of Uyum/Makromarket stores (54 stores) Good progress on space optimization of Kipa-legacy hypermarkets Operations Physical store expansion continued as planned Debut of TL bond issuance Financing Reduction
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: Ownership Structure
Ownership Structure JV Structure between BC Partners & Anadolu Group Direct Shareholding Structure Indirect Shareholding Structure AG Anadolu Grubu Holding BC Partners A.Ş. & related funds AG Anadolu BC Partners Grubu Holding Free Float 100.00% A.Ş. & related funds 26.81% 50.00% 23.19% MH Kenan Moon
Slide 7: Agenda
Agenda 1 Migros in a snapshot 2 2 Operating environment 7 3 Review of historical financial performance & projections 26 P6
Slide 8: 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 9: 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 (%) 84% 81% 79% Unorganized O
Slide 10: Market Share Evolution
B #1 supermarket operator with an outstanding reputation Market Share Evolution Migros FMCG Market Share Evolution (%) Market Share Gain 16.9 16.9% 16.7 Migros’ market share in modern FMCG market in Turkey 7.0 7.1 7.1% Migros’ market share in total FMCG market in Turkey… 9M17 9M18 9M17 9M18 Total FM
Slide 11: 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 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: 1,980 including 1,153 Supermarkets. 58 Hypermarkets, and 769 Migros Jet stores, Penetration: 81 cities ─ (40*-4,500) sqm / (1,800* – 18,00
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: 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 18 Wholesale stores Penetration: 13 cities P1
Slide 15: 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 Data oriented, personalized customer experience & digital journey Top-line growth is significantly higher than the Company ave
Slide 16: 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 N
Slide 17: 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 18: Money Club & CRM
D Retail technology and innovation leadership Money Club & CRM 6 Life Style 73% Segments 11.5 Million of Loyalty Card Active Cards Sales Advanced Turkey’s Programme With Segmentation 62.3 Million largest loyalty Money Points Highest Customer Customer Value programme Interaction Model 2.1 Million 5.8
Slide 19: 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 3.7 transactions per month (860 SSCO1) Hassle free dir
Slide 20: Migros mobile apps and Mi-Fi
D Retail technology and innovation leadership 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 the right ti
Slide 21: 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 22: 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 23: 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 24: Distribution centers and logistics - overview
E Flexible and efficient business model Distribution centers and logistics - overview 25 Distribution Centers (including 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 Sorting and p
Slide 25: 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 26: Agenda
Agenda 1 Migros in a snapshot 2 2 Operating environment 7 3 Review of historical financial performance & projections 26 P25
Slide 27: Sales in 9M 2018
Sales in 9M 2018 Consolidated sales growth of 24.4% in 3Q 2018 A very good summer seasonal performance, Foreign subsidiaries performance exceeding expectations in 3Q 2018 The strong growth momentum Sales in 3Q 2018 (TL million) Sales in 9M 2018 (TL million) continued in 3Q 2018… 5,331 13,794 4
Slide 28: Capital Expenditures
Capital Expenditures Capex (TL million) Capex as a Percentage 2.2% 2.7% 2.7% 2.6% of Sales 370 399 We have over- achieved our 297 expansion target 253 Space optimization in large stores has been continuing as 9M 2017 9M 2018 2016 2017 projected 54 Uyum and Makro stores were converted into Migros b
Slide 29: Consolidated Gross Profit in 9M 2018
Consolidated Gross Profit in 9M 2018 Increase in consolidated gross profit was slightly higher than top-line growth in 3Q 2018 Merger synergies and new store acquisitions facilitated the strong gross profitability The more efficient Gross Profit 3Q (TL million) Gross Profit in 9M (TL million) su
Slide 30: Consolidated EBITDA(R) in 9M 2018
Consolidated EBITDA(R) in 9M 2018 EBITDA 3Q (TL million) EBITDA 9M (TL million) More than 388 874 297 646 7% EBITDA margin in 3Q18 driven by better sales performance 3Q 2017 3Q 2018 9M 2017 9M 2018 and strong gross Margin 6.9% 7.3% Margin 5.7% 6.3% profitability EBITDAR 3Q (TL million) EBITDAR 9M (T
Slide 31: Track Record of Deleveraging
Track Record of Deleveraging Migros 9M 2018 Cash and Leverage Position Cash & Debt Items Total TL m TL m EUR m Cash & Cash equivalents 1,858 1,579 40 Financial Debt* 5,192 916 615 Net Debt 3,334 Net Debt / EBITDA LTM 3.0x * Based on amortised costing as indicated in financial statements Deleveraging
Slide 32: Expectations and Guidance
Expectations and Guidance 2018 Guidance [Consolidated] 2018E Previous Guidance New Guidance Sales Growth ~20% ~22% EBITDA Margin 5.5-6.0% 6.0% + Expansion Target 200+ 230+ new stores new stores CAPEX TL 440 mn ~ TL 440 mn Management Agenda in 2018 Vigilant cost management Continued emphasis on p
Slide 33: Summary of Income Statement – 9M 2018
SUMMARY OF INCOME STATEMENT – 9M 2018 IFRS Consolidated Income Statement Summary (TL Million) 9M 2018 9M 2017 Net Sales 13,793.9 11,321.8 Cost of sales -9,967.0 -8,319.7 Gross Profit 3,826.9 3,002.1 Operating Expenses -3,243.6 -2,616.1 Other Operating Income / (Expense) -282.2 -170.1 Operating Profi
Slide 34: Summary of Balance Sheet – 9M 2018
SUMMARY OF BALANCE SHEET – 9M 2018 IFRS Consolidated Balance Sheet Summary (TL Million) 9M 2018 2017 Current Assets 4,136.8 3,776.3 Non-current Assets 6,682.4 6,526.4 Total Assets 10,819.2 10,302.7 Current Liabilities 6,180.3 5,516.1 Non-current Liabilities 4,380.8 3,259.4 Total Liabilities 10,561.1