Migros T icaret A.Ş. Q1 2011 Financial Results May 13, 2011
CONTENT P1 1) Financial Highlights 2) Expansion 3) Performance of Supermarkets and Hypermarkets 4) Performance of Discount Operations 5) Cost Management 6) Conclusions
Financial Highlights 1 Consolidated sales 9.8% higher in Q1 2011 vs. Q1 2010 P2 Performance of Supermarket and Hypermarket formats meets the expectations Şok lagging behind the other Group formats due to its repositioning into hard discount format Kazakhstan driving the 32% international sales growth. International operations generated TL 80.2m sales in 1Q11 Azerbaijan operations sold to a Dubai based company on attractive valuation terms. The sale was due to limited expansion possibilities in the country Consolidated Sales (TL millions) Construction 6,365 5,711 5,074 4,438 1,575 1,434 2007 2008 2009 2010 1Q 10 1Q 11 Impact of Şok repositioning into Hard Discount Gross margin levels maintained Gross margin in 1Q11 (24.7%) in line with the margin realised Natural margin compression as a result of the on-track in 1Q10 (24.9%) , which is best in class among its peers Şok repositioning Gross Profit EBITDA (TL millions) (TL millions) 1,584 1,433 397 384 1,307 357 1,078 301 390 357 81 76 2007 2008 2009 2010 1Q 10 1Q 11 2007 2008 2009 2010 1Q 10 1Q 11 Margin 24.3% 25.8% 25.1% 24.9% 24.9% 24.7% Margin 6.8% 7.6% 7.0% 5.6% 5.6% 4.8%
Expansion 2 P3 Discounts (Turkey) Tansaş to Migros Planned Conversions are finalised in Q1 2011 Number of stores Selling area ('000 sqm) In 4Q10, 49 Tansaş stores and in 1Q11, 9 5 Tansaş stores were converted to Migros 242 239 1500 250 173 Tansaş now operating in 8 cities in the west coast of the 1200 200 118 900 150 country with 169 stores 85 68 60 980 1,254 1,259 600 100 300 652 50 Tansaş conversion to contribute to the economies of 311 357 460 0 0 scale of Migros stores Supermarkets (Turkey)* 05A 06A 07A 08A 09A 10A 1Q 11A Number of stores % of total Selling area ('000 sqm) selling area Store Openings 700 700 565 609 600 27% 512 600 600 467 In 1Q11, total store openings amounted to a total of 32 422 500 500 65% Şok, 1 Tansaş, 2 Migros and 1 Hypermarket 400 400 260 8% 579 637 627 300 300 517 475 30 Şok stores closed during the period due to their 200 200 438 100 100 191 incompatibility with the hard discount concept 0 0 05A 06A 07A 08A 09A 10A 1Q 11A Hypermarkets (Turkey) Number of stores Selling area ('000 sqm) International operations 76 70 12 100 3 Ramstores in Azerbaijan sold in March 2011 80 9 44 39 60 6 25 12 23 23 11 40 No new openings in Kazakhstan and Macedonia 7 3 6 3 3 3 20 0 0 05A 06A 07A 08A 09A 10A 1Q 11A * 2 Tansas stores are in conversion process as of 31.03.2011
Performance of Supermarkets and Hypermarkets 3 P4 Close to double-digit top line growth Uplift in Supermarket and Hypermarket sales reflected in positive like-for-like sales growth owing to: — New pricing implemented in fresh categories — Improvement in the private label assortment with aggressive pricing Solid gross profit and margins Historical gross margins are maintained despite: — Aggressive pricing in fresh categories — Reduced private label pricing Strong EBITDA generation Positive operating leverage from the conversion of Tansaş to Migros Scale advantage and improved supply chain Cost saving initiatives Strong financial discipline
Structural Changes in Şok 4 Expansion to achieve economies of scale on track P5 In the last two years, nearly doubled the number of stores, reaching 1,259 by the end of 1Q11 — Net opening of 607 new Şok stores In 1Q2011, 32 new stores were opened and 30 stores were closed due to their incompatibility with the new discount concept Product assortment scaled down Targeting 900 SKUs by the end of 2Q11, scaled down from 2,000 SKUs in 2009 Store layout and shelves are simplified Store layout, shelves and products display are being modified to facilitate access by both customers and by store employees for ease of re-fill. Target completion of the store conversion is 3Q11 Outcome of the on-going transformation As a result of the on- going transformation program, Şok implemented an aggressive pricing mainly through increase in private labels At this stage of the transformation decline in gross margin of Şok due to new pricing strategy — The basket size declined versus last year due to new product mix and new pricing strategy After the completion of transformation targeted within 3Q11, traffic and basket size are expected to increase steadily from 4Q11 — Better pricing — Improved store layout — Increased support behind consumer communication
Cost Management 5 P6 Improvement in cost base through efficiencies Cost increases are contained, through cost saving initiatives, efficient supply chain and in-store improvements — Nominal increase in electricity costs is kept at 5%, lower than physical growth — Head Office staff costs are 1% lower versus last year through internal synergies. Increase in the TL value of forex liabilities due to TL depreciation Turkish lira lost 6.5% versus EUR by the end of March 2011 since the beginning of the year resulting in net foreign exchange non-cash loss of approximately 131m TL .
Conclusions 6 P7 Expansion plan progressing as planned Tansaş format conversions to Migros completed Supermarket and Hypermarket performance meets the expectations Cost cutting initiatives on G&A accomplished Şok restructuring progressing as planned and better store contribution targeted
Recommend
More recommend
