Migros T icaret A.. 1H 2019 Financial Results CONTENTS Market - - PowerPoint PPT Presentation

Migros Ticaret A.Ş.

1H 2019 Financial Results

Sales

CONTENTS

Management Overview

1

Expansion Format Summary Financial Overview Financial Results

Ataşehir Migros

Market Share Evolution Capital Expenditures

Improvement in sales momentum in 2Q19…

▪ 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)

2

Sales in 1H 2019

5,808 4,523

2Q 2018 2Q 2019

Sales in 1H19 (TL million) 10,731 8,463

1H 2018 1H 2019

Sales Growth in 2Q 2019

28.4%

Sales Growth in 1H19

26.8%

Market Share Evolution

3

Market Share Gain Migros FMCG Market Share Evolution (%)

6.8 16.0

7.9 17.1

Total FMCG Market Share Modern FMCG Market Share 1H 2018

◼ 110 bps market share gain in

modern FMCG market.

◼ 110 bps market share gain in total

FMCG market.

Source: Nielsen Note: FMCG stands for Fast Moving Consumer Goods; Modern FMCG market and total FMCG market include all food-retail formats

1H 2019 1H 2018 1H 2019

4

Expansion

Net Sales Area Split By Banner - 1H 2019

Space growth (m2) 3.9% Net Sales Area (2Q19)

1,515 K sqm

1H 2018 1H 2019

Number of Stores - Total

2,011 2,144 +133

68

new store

• penings in

1H 2019

10

new store

• penings in July

2019

81 cities

• perating in every

city in the Country

2,144

number of stores as of 2Q19

Capital Expenditures

5

Capex (TL million)

% of Sales

Space optimization continues in large stores,

20 completed since

Kipa acquisition (including 6 in the current year)

271 130

1H 2018 1H 2019

3.2% 1.2% 297 399 488

2016 2017 2018

2.7% 2.6% 2.6%

Increased price competitiveness mainly in fresh lines & basics Strong gross profitability in 2Q 2019

Gross Profit 2Q (TL million) 1,562

Margin 26.9% 25.8% 26.5%

1,540 1,168

2Q 2018 2Q 2019 2Q 2019

[IFRS 16]

6

Consolidated Gross Profit in 1H 2019

Gross Profit in 1H (TL million) 2,918

Margin 27.2% 25.6% 26.8%

2,879 2,166

1H 2018 1H 2019 1H 2019

[IFRS 16]

7

Consolidated EBITDA(R) in 1H 2019

*EBITDA(R)= Operating Profit+Amortization+EmployeeTermination Benefits +Unused Vacation Provision-Other Income+Other Expenses+(Rent Expenses)

6.8%

EBITDA margin in 2Q19, w/o IFRS 16 impact driven by better sales performance

11.4%

EBITDAR margin in 2Q19 EBITDA1H (TL million) EBITDA in 2Q (TL million) EBITDAR 1H (TL million)

Margin 11.4% 10.5%

1,219 886 EBITDAR 2Q (TL million)

Margin 11.4% 10.8%

664 486

2Q 2018 2Q 2019 1H 2018 1H 2019

Margin 10.0% 5.6% 6.6%

1,076 476 710

1H 2019

[IFRS 16]

1H 2019 1H 2018

Margin 10.1% 6.0% 6.8%

587 270 397

2Q 2019

[IFRS 16]

2Q 2019 2Q 2018

Migros 1H 2019 Cash and Leverage Position

1 Includes capitalized costs of lease contracts over their maturity 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)

Gross Euro Debt (in million) 692 672 611 517 460 2016 2017 2018 1H19 2019E Deleveraging Profile - Net Debt / EBITDA LTM

3.2x 2.9x 2.7x 2.6x 2.3x 2014 2015 2016 2017 2018

Euro/TL Currency

2.8207 3.1776 3.7099 4.5155 6.5507

Change:+23%

6.0280 5.3092

Deleveraging

Cash & Debt Items Total TL m Total TL m

[w/ IFRS 16]

Cash & Cash equivalents

2,154 2,154

TL m 1,586 1,586 EUR m 87 87

Financial Debt

4,909 7,9461

TL m 1,524 4,561 EUR m 517 517

Net Debt

2,755 5,792

EBITDA LTM

1,452 2,1842

Net Debt / EBITDA LTM

1.9x 2.7x

8

2.7x 1H18 1.9x 1H19

Total gross Euro debt decreased to € 460 mn as of July 2019

Note: Net debt / EBITDA ratios without IFRS 16

9

Management Agenda in 2019

Growth & Operational Profitability Online Business

• Our 2Q 2019 trading suggests

again a strong top line growth leading to an upward guidance revision

• Vigilant cost management,
• Cautious stand in capex plans

continues…

Deleveraging

Recalibrating our online channel by introducing two new sub- channels;

• Migros Hemen concept aiming

a “delivery time of 30 minutes” in three cities

• Increasing online catchment

area to entire country through a new logistics channel

• Gross Euro debt was decreased

by 25% this year so far with an early down payment of €57 mn in July 2019

• Asset divestitures reached

TL 482 mn [TL 271 mn in 2019]

* excluding IFRS 16 impact

Expectations and Guidance

2019 Guidance [Consolidated]

2019E Previous Guidance New Guidance

Sales Growth

~20%

23-25%

EBITDA Margin

~6%*

6-6.5%*

Expansion Target

100 new stores

100

new stores CAPEX

TL 300 mn

TL 300 mn

• Operations

Financials & Format Summary

• Financials

IFRS Consolidated Income Statement Summary

Summary of Income Statement – 1H 2019

11

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 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

• 3

Net Profit / Loss - Equity holders of parent

• 381
• 536

EBITDA 710 476 EBITDA (with IFRS 16 impact) 1,076

• EBITDAR

1,219 886

(TL Million)

1H 2019 1H 2018

IFRS Consolidated Balance Sheet Summary

Summary of Balance Sheet – 1H 2019

12

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

(TL Million)

1H 2019 2018

Geographical Footprint

◼ Operating in 3 countries

— Turkey (81 cities out of 81) — North Macedonia and Kazakhstan (45 stores)

2,144 Stores1

◼ 2,024

(supermarkets)

◼ 54

(upscale supermarkets)

◼ 21

(wholesale and foodservice stores)

◼ 45

(international stores)

◼ Migros Online

— 2m members and 60% mobile orders — Tazedirekt

Innovation, Loyalty & Customer Service

◼ 5.8m loyal households Money Club Card ◼ Introduced more than 100 innovations for the retail market

Sustainability and Corporate Governance

◼ Only retail company in the “BIST Sustainability Index” ◼ Included Corporate Governance Index since 2015 ◼ 32,037 employees of which 40% are women ◼ Best retailer of the country 15 years in a row2

Migros at a Glance

80%

• f HH

+100

38%

• f HH

65th Year!

1 as of June 30, 2019 2 Capital Business magazine.

13

14 Consolidated Sales (TL million) 9,390 11,059 15,344 18,717 2015 2016 2017 2018

Consolidated sales & EBITDA doubled in 3 years

Consolidated EBITDA (TL million) 602 677 872 1,217 2015 2016 2017 2018

Three-year Summary

◼ 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

Migros

Migros, Largest National Supermarket Chain

15

Focus on proximity supermarkets

◼ Migros Jet and M Migros ◼ Proximity Stores, (40*-300) sqm, ◼ 1,800* – 3,000 SKUs ◼ CRM applications for different customer segments

─ Customized & Differentiated Offering for Money Club Card holders ─ Club Card Loyalty Program for 18 years

Loyalty Program

(*): including Migros Jet stores and Migros Jet 7/24 forecourt stores as of June 30, 2019

Macrocenter

Exclusive shopping

Penetration: 6 cities

◼ 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

16

◼ Currently operating in 7 regions through dedicated sales

team.

◼ Dedicated warehouses and customer delivery ◼ 21 Wholesale stores

Penetration: 16 cities 17

Wholesale & Food Service

Focus on Horeca Penetration

Enhancing online penetration..

▪ Same day delivery, ▪ For over 28,000 SKUs, ▪ Service in 35 cities, ▪ Night delivery between 22:00-24:00 in selected regions ▪ Click-collect option for customers ▪ A new logistics channel to increase online catchment area

Macro Online Migros Now

Taze direkt Migros Online

Customer Four online channels

▪ Delivery within 30 minutes

• nly

▪ Same prices with Migros stores ▪ For over 1,700 SKUs

18

Kazakhstan North Macedonia

19

◼ 1.2% of consolidated sales from Kazakh operations

◼ Number of stores: 18, including 2 hypermarkets and

16 supermarkets.

◼ Owns 1 shopping mall in Almaty ◼ Total sales area of 24,491 sqm

─

Serving in the cities of Almaty and Astana in a large country

◼ Operates in multi-format since 1999

◼ 1.5% of consolidated sales from Macedonian operations

◼ Number of supermarkets: 27 ◼ Owns 1 shopping mall in Skopje ◼ Total sales area of 22,568 sqm ◼ Operations started in 2005

International Operations

1 Shopping Mall 2 Hypermarkets 16 Supermarkets 1 Shopping Mall 27 Supermarkets

20

Store Portfolio

1,968

Supermarkets

(incl. 814 Migros Jet stores)

56

Hypermarkets

54

Macrocenter stores

Upscale format

45

Ramstores

North Macedonia & Kazakhstan

June 30, 2018 June 30, 2019

# of stores Sales area

(th sqm)

# of stores Sales area

(th sqm)

Migros (M, MM,MMM) 1,039 852.2 1,154 972.0 Migros Jet 680 128.5 814 164.8 5M 23 102.7 56 280.4 Wholesale 17 10.0 21 12.0 Macrocenter 50 35.9 54 38.1 Kipa 161 282.8

• Domestic Total

1,970 1,412.1 2,099 1,467.4

Ramstores 41 45.3 45 47.1

Grand Total 2,011 1,457.4 2,144 1,514.5

Ownership Structure

Direct Shareholding Structure

Migros Ticaret A.S.

AG Anadolu Grubu Holding A.Ş. 50.00% Free Float 26.81% Migros Ticaret A.Ş. BC Partners & related funds 23.19%

Indirect Shareholding Structure

Kenan Investments S.A. 14.88% MH Perakendecilik ve Ticaret A.Ş. 49.18% Free Float 26.37% Moonlight Capital S.A. 7.94% Migros Ticaret A.Ş. AG Anadolu Grubu Holding A.Ş. 100.00% Migros Ticaret A.Ş.* 1.64% BC Partners & related funds (*): Migros purchased its own shares due to the merger in 2018 in accordance with relevant CMB legislation Note: Anadolu Group maintains its 50% stake in Migros

21

Disclaimer Statement

22

Migros Ticaret A.Ş. (the “Company”) has prepared this presentation for the sole purpose of providing information about its business, operations and financial results. The informaation in this presentation is subject to updating, revision and amendment. The information in this presentation, which includes certain information drawn from external sources, does not purport to be comprehensive and has not been independently verified. No reliance may be placed for any purpose whatsoever on the information contained in this presentation or any assumptions made as to its completeness. No representation or warranty, express or implied, is given by the Company, any of its subsidiaries or any of its advisers, officers, employees or agents, as to the accuracy, reliability or completeness of the information or opinions contained in this presentation or in any revision of the presentation or of any other written or oral information made or to be made available to any interested party or its advisers. Save in the case of fraud, no responsibility or liability is accepted (and all such liability is hereby excluded for any such information or opinions). No liability is accepted by any of them for any such information or opinions (which should not be relied upon) and no responsibility is accepted for any errors, misstatements in or omissions from this presentation or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents. The information and opinions contained in this document are provided as at the date

• f this presentation and are subject to change without notice.

To the extent available, the industry, market and competitive position data contained in this presentation come from official or third party sources. Third party industry publications, studies and surveys generally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. While the Company believes that each of these publications, studies and surveys has been prepared by a reputable source, the Company has not independently verified the data contained therein. In addition, certain of the industry, market and competitive position data contained in this presentation come from the Company’s own internal research and estimates based on the knowledge and experience of the Company’s management in the markets in which the Company operates. While the Company believes that such research and estimates are reasonable and reliable, they, and their underlying methodology and assumptions, have not been verified by any independent source for accuracy or completeness and are subject to change without notice. Accordingly, undue reliance should not be placed on any of the industry, market

• r competitive position data contained in this presentation.

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• therwise be lawfully distributed. This presentation is being distributed outside the United Kingdom only to persons to whom this presentation may lawfully be distributed

pursuant to any applicable legal requirements. Persons to whom this presentation may not lawfully be distributed should return this presentation immediately to the Company and in any event, must not act or rely upon the information contained in this presentation. By reading this presentation or attending or listening to any relevant meeting, conference call or podcast organized by the Company, each person is deemed to confirm, warrant and represent that they are persons to whom this presentation may lawfully be distributed. This presentation contains “forward looking statements” which may relate to, without limitation, the Company’s plans, objectives, goals, strategies, future operational performance, and anticipated developments in the Turkish retail market and the Turkish economy. These forward looking statements are characterized by words such as “anticipate”, “estimate”, “believe”, “intend”, “plan”, “predict”, “may”, “will”, “would”, “should”, “continue”, “expect” and similar expressions, but these expressions are not the exclusive means of identifying such statements. Such forward looking statements involve risks, uncertainties and other important factors that could cause circumstances or the Company’s actual results, performance or achievements to be materially different from any future circumstances, results, performance or achievements expressed or implied by such statements. Relevant risks and uncertainties include, among others, economic slowdown, sector consolidation, consumer demand, competitive pricing and activities. There can be no assurance that actual results will not differ materially from expectations, and, therefore, readers are cautioned not to place undue reliance on such statements. Any forward-looking statement in this presentation speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. Further details of the principal risks and uncertainties affecting the Company are provided in the Company's filings with the Istanbul Stock Exchange, including the Company's most recent annual report. By reading this presentation or attending or listening to any relevant meeting, conference call or podcast organized by the Company you agree to be bound by the above provisions.