Migros Ticaret A.Ş. 2020 1Q Financial Results
Contents Covid-19 Impact Sales Market Share Evolution Expansion Financial Overview Management Overview Financial Results
Covid-19 Measures Encouraging the use Sanitizer dispensers 1.5 meters of contactless cards in the store Social distancing entrance – checkouts & online distribution vehicles Sanitization of working areas 5 times a day All employees Limitation on # of s trictly enforcing customers Shopping carts • Shopping baskets • (1 person / 10 m²) hygiene routines POS terminals • Checkouts • 3
Covid-19 Impacts on Physical Stores Temporarily Service Hours Basket Size Customer Traffic Shift Optimization Closed Stores Limitations Malls: 12pm - 8pm 69 Stores: 9am - 9pm 33 in malls 4
Online Business After Covid-19 Online Orders Online Orders # of # of Online 60+ Customers Service Stores Aged Customers x4 x3 x4 x2 90% 5
Online Business After Covid-19 Expansion Channel Personnel Diversification Apr ’20 vs Dec ’19 • 76 cities from 58 +4,000 employees Relaunching Click & Collect • 408 stores from 193 Darkstore expansion: 10 Call center agents x4 Phone ordering from 2 Micro fullfilment: 17 Chat-bot ordering Picking automation (mini-darkstore) from 3 6
Online Service Channels 4 7 76 81 Istanbul cities cities cities cities +30,000 SKU +2,000 SKU +13,000 SKU +2,300 SKU Direct from farm to consumers 292 districts 52 districts 55 districts Available for courier %53 Same day delivery Delivery within 30 mins FMCG Focus 7
Covid-19 Impact on Business & Financials Improvements Challenges Sales Turnover Foreign exchange losses Home consumption • Consumers stocking up • Covid-19 costs Inventory turnover + + Support to small enterprises Cash flow generation 8
Sales – 1Q 2020 Strong growth; Sales 2019 Sales 1Q 2020 (TL million) (TL million) Online business 23.9% 30.7% 23,191 6,433 Basic food categories 18,717 4,923 Cleaning products F&V, meat, delicatessen 1Q 2019 1Q 2020 2018 2019 9
Market Share Evolution Migros FMCG Market Share Evolution (%) 40 bps 17.0 18 16.6 16 14 80 bps 12 10 8.8 8.0 8 6 4 2 0 1Q 2019 1Q 2020 1Q 2019 1Q 2020 Total FMCG Modern FMCG Source: Nielsen 10 Note: FMCG: Fast Moving Consumer Goods, Modern and total FMCG market include all food-retail formats
Expansion Number of Stores Online Service Stores (Total) (Total) +131 +199 Sales Area 2, 2,231 231 (K sqm) 350 350 2,100 2, 100 2.6% 1, 1,541 541 1, 1,501 501 151 151 1Q 2019 1Q 2020 1Q 2019 1Q 2020 1Q 2019 1Q 2020 215 new online service stores in 4M‘20 62 new stores in 4M’20 11
CAPEX (TL million) % of Sales % of Sales 0.9% 0.9% 1.5% 2.6% 2.6% 488 61 399 ~400 341 42 1Q 2019 1Q 2020 2017 2018 2019 2020E Expansion continues despite pandemic conditions 12
Consolidated Gross Profit (TL million) – 1Q 2020 Normalized Gross Profit Gross Profit* [w/ IFRS 16] [w/ IFRS 16] Gross Profit 27.0% 37.9% [w/o IFRS 16] 1,772 1,722 1,285 1,356 26.8% 1,698 1,339 1Q 2019 1Q 2020 1Q 2019 1Q 2020 [w/ IFRS 16] 1Q 2019 1Q 2020 27.5% 26.8% Margin 26.1% 26.8% Margin 27.2% 26.4% Margin 13 *1Q 2019 Normalized Gross Profit with current (actual) imputed interest rates
Consolidated EBITDA (TL million) – 1Q 2020 Normalized EBITDA EBITDA* [w/ IFRS 16] [w/ IFRS 16] EBITDA 16.7% 36.3% 571 571 [w/o IFRS 16] 490 419 18.6% 372 314 1Q 2019 1Q 2020 1Q 2019 1Q 2020 [w/ IFRS 16] 1Q 2019 1Q 2020 9.9% 8.9% Margin 8.5% 8.9% Margin 6.4% 5.8% Margin *1Q 2019 Normalized EBITDA with current (actual) imputed interest rates 14 **EBITDA = Operating Profit + Amortization + Employee Termination Benefits + Unused Vacation Provision - Other Income + Other Expenses
Overview – Deleveraging – Expectations
Cash Position & Leverage Without IFRS 16 With IFRS 16 (Total TL mn) 1Q 2019 1Q 2020 1Q 2019 1Q 2020 1,632 2,549 1,632 2,549 Cash & Cash Equivalents TL 1,322 1,749 1,322 1,749 EUR 49 111 49 111 4,762 4,422 7,622¹ 7,520¹ Financial Debt TL 1,508 1,994 4,368 5,093 EUR 515 336* 515 336* 3,130 1,873 5,990 4,971 Net Debt 1,325 1,589 2,028² 2,318 EBITDA LTM 2.4x 1.2x 3.0x 2.1x Net Debt / EBITDA LTM * € 73 mn early down-payment in April 2020 1 Includes capitalized costs of lease contracts over their maturity 16 2 Includes the IFRS 16 LTM rent cost impact which was extrapolated based on 1Q19 rent cost. (TL 175.8 mn x 4 = TL 703.4 mn)
Deleveraging Total Net Debt (TL mn) Gross Euro Debt (mn) 2020 € 0 611 2,819 2021 2.3x 2,059 430 € 0 1,873 336 1.3x 263* <250 2022 1.2x € 163 mn 2018 2019 1Q 2020 2018 2019 1Q 2020 April '20 2020 E 2023 € 99 mn * € 73 mn early down-payment in April 2020 *without IFRS 16 **Net debt / EBITDA ratios [2018: 2.3x, 2019:1.3x, 1Q 2020:1.2x] without IFRS 16 17
2020 Guidance (Consolidated) Sales Growth CAPEX EBITDA Margin Expansion Target . 120 ~TL 400 19-21%* 8-8.5%** mn new stores from 16-18% maintained maintained maintained * Sales growth expectation based on 4 months actual sales and 8 months budgeted sales for 2020 ** with IFRS 16 impact 18
Appendix - I − Operations − Sustainability
Migros at a Glance 2,231 Stores The only food retailer listed BIST Sustainability CDP Turkey TL 23 Climate Leader Index for the in all 81 cities 6 years in a row 33,227 billion 1,500+ employees suppliers 2019 CDP Grade: sales Included BIST Corporate International Operations Governance Index in 2 countries since 2015 th 66 year Turkey’s biggest integrated meat-processing plan 62,000 tons production capacity 8m loyal households Introduced more than Best retailer of the 100 innovations for the Money Card country 16 years retail market 20 20 in a row
Sales Area Split – 1Q 2020 3,500 sqm – 9,500 sqm 200 sqm – 1,600 sqm 40 sqm - 3,500 sqm 250 sqm – 2,000 sqm 200 sqm – 3,500 sqm Supermarkets Hypermarkets Macrocenter Wholesale Ramstore 76% 1% 3% 17% 3% 2,052 55 20 59 45 21
International Operations North Macedonia Kazakhstan ◼ 1.3% of consolidated sales ◼ 1.0% of consolidated sales ◼ 29 Supermakets ◼ 2 hypermarkets, 14 supermarkets ◼ 1 shopping mall in Skopje ◼ 1 shopping mall in Almaty ◼ Total sales area of 23,621 sqm ◼ Total sales area of 20,885 sqm ◼ Since 2005 ◼ Since 1999 22
Store Portfolio 31 March 2019 31 March 2020 Sales area Sales area 2,052 # of stores # of stores (th sqm) (th sqm) Supermarkets Migros 1,153 969.4 1,209 1,002.9 (M, MM,MMM) 55 Migros Jet 775 152.2 843 171.7 Hypermarkets 5M 56 284.4 55 268.9 Wholesale 20 11.2 20 11.5 59 Macrocenter 51 36.6 59 41.0 Macrocenter Domestic Total 2,055 1,453.8 2,186 1,495.9 45 Ramstores 45 47.1 45 44.5 Ramstore Grand Total 2,100 1,500.8 2,231 1,540.4 23
Migros Better Future Plan Waste management Combating climate and circular economy change Preventative Consistent and rapid solutions for pollution flow of product data Efficient use of Innovative resources implementations Value added Compliance with activities to raise human rights and awareness equal opportunities Environmental impact Conservation of assessments before biodiversity new operations Creating shared Improving life value with cycle of products stakeholders 24
Sustainability by 2023: Carbon Footprint Water Consumption 25% 5% (2018: - 19.5%) (2018: - 1.1%) Score: A- Score: B by 2030: Food Waste Gender Equality Energy Consumption 17% (in executive management) 23% 50% (2018: - 10.4%) (Baseline: 18%) 25 *2019 data hasn’t been independently verified yet. 2018 data calculated based on GHG protocol and verified on the basis of ISO 14064-3 standard.
Waste Management & Biodiversity Conservation Combating Food Waste Combating Plastic Waste Plastic bags: 74% Day-end clearance on perishables: 4,956 tons of food 327 tons less plastic on PL products Food Donation: Good Agricultural Practices 4,029,533 meals 65% of F&V - GAP certified Fresh Leftovers Donation: 100% GAP certified poultry products 1,896 tons of food 317 checkpoints 26
Appendix - II − Financials
IFRS Consolidated Income Statement Summary – 1Q 2020 1Q 2020 1Q 2019 (TL million) Net Sales 6,433 4,923 Cost of sales -4,711 -3,567 Gross Profit 1,722 1,356 Operating Expenses -1,414 -1,114 Other Operating Income / (Expense) -71 -100 Operating Profit 237 142 Income / (Expense) from Investment activities -1 -5 Operating Income Before Finance Income / (Expense) 236 138 Financial Income / (Expense) -382 -360 Income/Loss Before Tax From Continuing Operations -146 -222 Tax Income / (Expenses) -33 -1 Deferred Tax Income 43 -8 Net Profit / Loss -136 -231 Net Profit / Loss - Non-controlling interest 0 0 Net Profit / Loss - Equity holders of parent -136 -231 EBITDA (with IFRS 16 impact) 571 490 EBITDA 372 314 EBITDAR 671 556 28
IFRS Consolidated Balance Sheet Summary – 1Q 2020 1Q 2020 2019 (TL million) Current Assets 5,889 5,277 Non-current Assets 8,860 9,184 Total Assets 14,748 14,461 Current Liabilities 8,018 7,544 Non-current Liabilities 6,568 6,594 Total Liabilities 14,587 14,138 Equity 162 323 Total Liabilities and Equity 14,748 14,461 29
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