Migros T icaret A.Ş. 2018 Financial Results
CONTENTS Market Share Sales Evolution Capital Expansion Expenditures Ataşehir Migros Management Financial Overview Overview Financial Format Results Summary 1
Sales in 2018 Consolidated sales growth of 22.4% in 4Q 2018 Sales performance of Migros stores was strong last year Strong consolidated Sales in 4Q 2018 (TL million) Sales in 2018 (TL million) growth in 2018… 4,923 18,717 4,022 15,344 … despite dilutive impact of former large Kipa stores 4Q 2017 4Q 2018 2017 2018 Sales Growth in 4Q18 22.4% Sales Growth in 2018 22.0% * Kipa’s financial results are consolidated since 01 March 2017. 2
Market Share Evolution Market Share Gain Migros FMCG Market Share Evolution (%) 40 bps market share gain in 16.7 16.3 modern FMCG market. 30 bps market share gain in total FMCG market. 7.1 6.8 Source: Nielsen Note: FMCG stands for Fast Moving Consumer Goods; 2017 2018 2017 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 - 2018 Number of Stores - Total 238 new store openings in 2018 +206 2,103 81 cities 1,897 operating in every city in the Country 2,103 2017 2018 stores as of 2018 Space growth (m 2 ) 5.7% Net Sales Area (2018) 1,497K sqm 4
Capital Expenditures Capex (TL million) % of Sales 3.0% 2.7% 2.6% 2.6% 488 399 297 Conversion of Kipa, 281 Uyum and Makro stores into Migros format completed 2015 2016 2017 2018 Space optimization in large stores continues 5
Consolidated Gross Profit in 2018 Consolidated gross profit improved versus last year Merger synergies and new store acquisitions lead to an improvement in gross profitability Increased price Gross Profit 4Q (TL million) Gross Profit in 2018 (TL million) competitiveness 1,422 5,249 1,080 4,082 High gross margin of 2018 is expected to normalize in 2019 4Q 2017 4Q 2018 2017 2018 Margin 26.8% 28.9% Margin 26.6% 28.0% 6
Consolidated EBITDA(R) in 2018 EBITDA in 4Q18 (TL million) EBITDA 2018 (TL million) 7% EBITDA 344 1,217 226 872 margin in 4Q18 driven by better sales performance 4Q 2017 4Q 2018 2017 2018 and strong gross Margin 5.6% 7.0% Margin 5.7% 6.5% profitability EBITDAR in 4Q18 (TL million) EBITDAR 2018 (TL million) 11.7% 599 2,186 433 1,634 EBITDAR margin 2018 4Q 2017 4Q 2018 2017 2018 Margin 10.8% 12.2% Margin 10.7% 11.7% *EBITDA(R)= Operating Profit+Amortization+Employee Termination Benefits +Unused Vacation Provision-Other Income+Other Expenses+(Rent Expenses) 7
Overview - Balancing growth with deleveraging - Expectations going forward
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 9
Deleveraging Deleveraging Profile - Net Debt / EBITDA Migros 2018 Cash and Leverage Position Total TL m TL m EUR m 4,0x Cash & Debt Items 3,2x 1,769 1,470 50 Cash & Cash equivalents 2,9x 2,7x 2,6x 2,3x 4,588 907 611 Financial Debt* Net Debt 2,819 2.3x Net Debt / EBITDA 2013 2014 2015 2016 2017 2018 Euro/TL : 4.5155 6.0280 * Based on amortised costing as indicated in financial statements Change: + 33% Gross Euro Debt (in million) Shift to TL efforts Asset Divestiture • TL Bond issuances • Asset divestitures worth of TL 396 mn in worth of TL 388mn 692 3 tranches in the past 9 (since Dec. 2017) months 672 611 5years TL capex loan • <500 amounting TL370mn from EBRD with 4 years average maturity 2016 2017 2018 2019E 10
Performance Summary 2018 Performance Summary Performance Performance vs 2017 Target 2018 Indicator Guidance Expansion Program 238 193 230+ (Number of NEW Stores) 22.0% Top-Line Sales Growth 38.7% ~22% EBITDA Margin 5.7% 6.0%+ 6.5% Management Message for 2018 Migros achieved its operational targets in 2018, Successful integration of Kipa, Uyum and Makro stores into Migros formats, Strong free cash flow generation continued 11
Enhancing online penetration.. Same day delivery, For over 28,000 SKUs, Service in 28 cities, Migros Online Night delivery between 22:00-24:00 in selected regions Click-collect option for customers Taze Customer Macro direkt Online Migros Now Delivery within 30 minutes only Same prices with Migros stores For over 1,500 SKUs 12
Expectations and Guidance 2019 Guidance [consolidated] 20% Sales Growth ~6%* EBITDA Margin 100 new stores Expansion Target TL 300 m CAPEX Guidance * excluding IFRS 16 impact Management Agenda in 2019 Growth Operational Profitability Deleveraging • Space growth is expected to be • Vigilant cost management, • Free cash flow generation, almost flat due to space • Asset divestitures, • Increased focus on personnel optimization in large stores cost, energy cost & logistics • Absolute amount of Euro debt • Increased focus on Migros’ is expected to decrease by online business together with almost 20% in 2019 omni-channel experience 13
Financials & Format Summary - Financials - Operations
Summary of Income Statement – 2018 IFRS Consolidated Income Statement Summary 2018 2017 (TL Million) Net Sales 18,717.4 15,344.0 Cost of sales -13,468.8 -11,262.1 Gross Profit 5,248.5 4,082.0 Operating Expenses -4,399.8 -3,554.0 Other Operating Income / (Expense) -407.7 -225.1 Operating Profit 441.1 302.8 Income / (Expense) from Investment activities -136.8 1,092.8 Operating Income Before Finance Income / (Expense) 304.3 1,395.6 Financial Income / (Expense) -1,351.5 -792.9 Income/Loss Before Tax From Continuing Operations -1,047.3 602.7 Tax Income / (Expenses) -32.4 -83.2 Deferred Tax Income 244.2 -10.5 Net Profit / Loss -835.4 509.0 Net Profit / Loss - Non-controlling interest 0.1 -3.7 Net Profit / Loss - Equity holders of parent -835.6 512.7 EBITDA 1,217.4 871.9 EBITDAR 2,186.2 1,634.3 15
Summary of Balance Sheet – 2018 IFRS Consolidated Balance Sheet Summary 2018 2017 (TL Million) Current Assets 4,474.3 3,776.3 Non-current Assets 6,410.6 6,526.4 Total Assets 10,884.9 10,302.7 Current Liabilities 6,674.9 5,516.1 Non-current Liabilities 3,574.9 3,259.4 Total Liabilities 10,249.8 8,775.5 Equity 635.1 1,527.1 Total Liabilities and Equity 10,884.9 10,302.7 16
Migros at a Glance 64 th Year! Operating in 3 countries — Turkey (81 cities out of 81) Geographical Footprint — Macedonia and Kazakhstan (44 stores) 1,989 (supermarkets) 51 (upscale supermarkets) 19 (wholesale and foodservice stores) 44 (international stores) 2,103 Stores 1 Migros Online — 2m members and 60% mobile orders — Re-launch of 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 28,990 employees of which 40% are women Corporate Governance Best retailer of the country 15 years in a row 2 1 as of December 31, 2018 2 Capital Business magazine. 17
Migros Migros, Largest National Supermarket Chain Number of stores: 1,989 including 1,157 Supermarkets. 56 Hypermarkets, and 776 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 December 31, 2018 18
Macrocenter Exclusive shopping Number of stores: 51 400 - 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 19
Wholesale & Food Service Focus on Horeca Penetration Currently operating in 7 regions through dedicated sales team. Dedicated warehouses and customer delivery 19 Wholesale stores Penetration: 14 cities 20
Online Business Turkey ’s first and leading e-commerce web site in food retail Improved operational efficiency through picking automation Night-time delivery system in high-potential regions Direct delivery from stores ( 139 stores in 28 cities across Turkey) Healty Organic Natural Fresh 21
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