Migros T icaret A.Ş. 1H 2019 Financial Results
CONTENTS Market Share Sales Evolution Capital Expansion Expenditures Ataşehir Migros Management Financial Overview Overview Financial Format Results Summary 1
Sales in 1H 2019 ▪ Sales growth improved to 28.4% in 2Q 2019 ▪ Increased momentum on sales with a strong performance at summer destinations Sales in 2Q19 (TL million) Sales in 1H19 (TL million) Improvement in sales momentum 5,808 10,731 in 2Q19… 4,523 8,463 2Q 2018 2Q 2019 1H 2018 1H 2019 28.4% 26.8% Sales Growth in 2Q 2019 Sales Growth in 1H19 2
Market Share Evolution Market Share Gain Migros FMCG Market Share Evolution (%) 17.1 ◼ 110 bps market share gain in 16.0 modern FMCG market. ◼ 110 bps market share gain in total FMCG market. 7.9 6.8 Source: Nielsen Note: FMCG stands for Fast Moving Consumer Goods; 1H 2019 1H 2018 1H 2019 1H 2018 Modern FMCG market and total FMCG market include all food-retail formats Total FMCG Market Share Modern FMCG Market Share 3
Expansion Net Sales Area Split By Banner - 1H 2019 Number of Stores - Total 68 +133 new store openings in 1H 2019 2,144 2,011 10 new store openings in July 2019 1H 2018 1H 2019 81 cities operating in every Space growth (m 2 ) 3.9% city in the Country Net Sales Area (2Q19) 1,515 K sqm 2,144 number of stores as of 2Q19 4
Capital Expenditures Capex (TL million) % of Sales 2.6% 2.6% 1.2% 2.7% 3.2% 488 271 399 297 Space optimization 130 continues in large stores, 2016 2017 2018 1H 2018 1H 2019 20 completed since Kipa acquisition (including 6 in the current year) 5
Consolidated Gross Profit in 1H 2019 Gross Profit in 1H (TL million) Gross Profit 2Q (TL million) Increased price competitiveness 1,562 2,918 mainly in fresh 1,540 2,879 lines & basics 1,168 2,166 Strong gross profitability in 2Q 2019 2Q 2018 2Q 2019 2Q 2019 1H 2018 1H 2019 1H 2019 [IFRS 16] [IFRS 16] Margin 25.8% 26.5% 26.9% Margin 25.6% 26.8% 27.2% 6
Consolidated EBITDA(R) in 1H 2019 EBITDA in 2Q (TL million) EBITDA1H (TL million) 587 1,076 6.8% 397 710 EBITDA margin in 2Q19, w/o IFRS 270 476 16 impact driven by better 2Q 2019 1H 2019 2Q 2018 1H 2018 2Q 2019 1H 2019 sales performance [IFRS 16] [IFRS 16] Margin 6.0% Margin 5.6% 6.8% 10.1% 6.6% 10.0% EBITDAR 2Q (TL million) EBITDAR 1H (TL million) 664 1,219 11.4% 486 886 EBITDAR margin in 2Q19 1H 2018 1H 2019 2Q 2018 2Q 2019 Margin 10.8% 11.4% Margin 10.5% 11.4% *EBITDA(R)= Operating Profit+Amortization+EmployeeTermination Benefits +Unused Vacation Provision-Other Income+Other Expenses+(Rent Expenses) 7
Deleveraging Migros 1H 2019 Cash and Leverage Position Gross Euro Debt (in million) Total TL m Cash & Debt Items Total TL m [w/ IFRS 16] Cash & Cash equivalents 2,154 2,154 692 TL m 1,586 1,586 672 EUR m 87 87 7,946 1 4,909 Financial Debt 611 517 TL m 1,524 4,561 460 EUR m 517 517 2,755 5,792 Net Debt 2,184 2 1,452 EBITDA LTM 1.9x 2.7x Net Debt / EBITDA LTM 2016 2017 2018 1H19 2019E 1 Includes capitalized costs of lease contracts over their maturity Total gross Euro debt decreased to € 460 mn as of July 2019 2 IFRS 16 was implemented since 01.01.2019. Includes the IFRS 16 LTM rent cost impact which was extrapolated based on 1H19 rent cost. (TL 365.9 x 2 = TL 731.8 mn) Deleveraging Profile - Net Debt / EBITDA LTM 3.2x 2.9x 2.7x 2.7x 2.6x 2.3x 1.9x 2014 2015 2016 2017 2018 1H18 1H19 Euro/TL 3.7099 2.8207 3.1776 4.5155 6.0280 5.3092 6.5507 Currency Change: + 23% Note: Net debt / EBITDA ratios without IFRS 16 8
Expectations and Guidance 2019 Guidance [Consolidated] 2019E Previous Guidance New Guidance 23-25% Sales Growth ~20% EBITDA Margin 6-6.5%* ~6%* 100 100 Expansion Target new stores new stores CAPEX TL 300 mn TL 300 mn * excluding IFRS 16 impact Management Agenda in 2019 Growth & Operational Profitability Online Business Deleveraging • Our 2Q 2019 trading suggests Recalibrating our online channel • Gross Euro debt was decreased again a strong top line growth by introducing two new sub- by 25% this year so far with an leading to an upward guidance channels; early down payment of €57 mn revision in July 2019 • Migros Hemen concept aiming • Vigilant cost management, a “delivery time of 30 minutes” • Asset divestitures reached in three cities TL 482 mn [TL 271 mn in • Cautious stand in capex plans 2019] continues… • Increasing online catchment area to entire country through a new logistics channel 9
Financials & Format Summary - Financials - Operations
Summary of Income Statement – 1H 2019 IFRS Consolidated Income Statement Summary 1H 2019 1H 2018 (TL Million) Net Sales 10,731 8,463 Cost of sales -7,813 -6,297 Gross Profit 2,918 2,166 Operating Expenses -2,329 -1,894 Other Operating Income / (Expense) -240 -154 Operating Profit 349 119 Income / (Expense) from Investment activities 8 0 Operating Income Before Finance Income / (Expense) 358 119 Financial Income / (Expense) -742 -632 Income/Loss Before Tax From Continuing Operations -385 -513 Tax Income / (Expenses) -1 -38 Deferred Tax Income 5 11 Net Profit / Loss -381 -540 Net Profit / Loss - Non-controlling interest 0 -3 Net Profit / Loss - Equity holders of parent -381 -536 EBITDA 710 476 EBITDA (with IFRS 16 impact) 1,076 - EBITDAR 1,219 886 11
Summary of Balance Sheet – 1H 2019 IFRS Consolidated Balance Sheet Summary 1H 2019 2018 (TL Million) Current Assets 5,039 4,474 Non-current Assets 9,236 6,411 Total Assets 14,275 10,885 Current Liabilities 7,416 6,675 Non-current Liabilities 6,593 3,575 Total Liabilities 14,009 10,250 Equity 265 635 Total Liabilities and Equity 14,275 10,885 12
Migros at a Glance 65 th Year! ◼ Operating in 3 countries — Turkey (81 cities out of 81) Geographical Footprint — North Macedonia and Kazakhstan (45 stores) ◼ 2,024 (supermarkets) ◼ 54 (upscale supermarkets) ◼ 21 (wholesale and foodservice stores) ◼ 45 (international stores) 2,144 Stores 1 ◼ Migros Online — 2m members and 60% mobile orders — Tazedirekt ◼ 5.8m loyal households Money Club Card Innovation, Loyalty & 38% 80% +100 of HH Customer Service of HH ◼ Introduced more than 100 innovations for the retail market ◼ Only retail company in the “BIST Sustainability Index” ◼ Included Corporate Governance Index since 2015 Sustainability and ◼ 32,037 employees of which 40% are women Corporate Governance ◼ Best retailer of the country 15 years in a row 2 1 as of June 30, 2019 2 Capital Business magazine. 13
Three-year Summary Consolidated Sales (TL million) 18,717 15,344 11,059 9,390 Consolidated sales & EBITDA 2015 2016 2017 2018 doubled in 3 years Consolidated EBITDA (TL million) 1,217 872 677 602 2015 2016 2017 2018 14
Migros Migros, Largest National Supermarket Chain ◼ Number of stores: 2,024 including 1,154 Supermarkets. 56 Hypermarkets, and 814 Migros Jet stores, ◼ Penetration: 81 cities ─ (40*-4,500) sqm / (1,800* – 18,000) SKUs ─ Differentiated offering and service on fresh product categories ─ Wide branded assortment of FMCG products ─ Consistent Every Day Low Pricing on commodity Private Label products ─ Fashionable, complementary and seasonal non-food selection Focus on proximity supermarkets ◼ Migros Jet and M Migros ◼ Proximity Stores, (40*-300) sqm, ◼ 1,800* – 3,000 SKUs Loyalty Program ◼ CRM applications for different customer segments ─ Customized & Differentiated Offering for Money Club Card holders ─ Club Card Loyalty Program for 18 years (*): including Migros Jet stores and Migros Jet 7/24 forecourt stores as of June 30, 2019 15
Macrocenter Exclusive shopping ◼ Number of stores: 54 ◼ 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 such as banquet ready meal delivery Penetration: 6 cities 16
Wholesale & Food Service Focus on Horeca Penetration ◼ Currently operating in 7 regions through dedicated sales team. ◼ Dedicated warehouses and customer delivery ◼ 21 Wholesale stores Penetration: 16 cities 17
Enhancing online penetration.. Four online channels ▪ Same day delivery, ▪ For over 28,000 SKUs, ▪ Service in 35 cities, Migros Online ▪ Night delivery between 22:00-24:00 in selected regions ▪ Click-collect option for customers Taze Customer Macro ▪ A new logistics channel direkt Online to increase online catchment area Migros Now ▪ Delivery within 30 minutes only ▪ Same prices with Migros stores ▪ For over 1,700 SKUs 18
International Operations Kazakhstan North Macedonia ◼ 1.2% of consolidated sales from Kazakh operations ◼ 1.5% of consolidated sales from Macedonian operations ◼ Number of stores: 18 , including 2 hypermarkets and ◼ Number of supermarkets: 27 16 supermarkets. ◼ Owns 1 shopping mall in Almaty ◼ Owns 1 shopping mall in Skopje ◼ Total sales area of 24,491 sqm ◼ Total sales area of 22,568 sqm Serving in the cities of Almaty and Astana in a large ─ country ◼ Operations started in 2005 ◼ Operates in multi-format since 1999 1 Shopping Mall 2 Hypermarkets 16 Supermarkets 1 Shopping Mall 27 Supermarkets 19
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