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

Migros Ticaret A.Ş.

2019 Financial Results

Sales

CONTENTS

Management Overview

1

Expansion Format Summary Financial Overview Financial Results Market Share Evolution Capital Expenditures

Strong growth;

Sales in 4Q 2019 (TL million)

2

Sales in 2019

Sales in 2019 (TL million) 23,191 18,717

2018 2019

5,997 4,923

4Q 2018 4Q 2019

Sales Growth in 4Q19

21.8%

Sales Growth in 2019 23.9%

▪ Migros recorded 23.9% consolidated sales growth in 2019

Online business Enriched fresh lines Competitive prices

7.1 16.7

7.8 17.4

Market Share Evolution

3

Market Share Gain Migros FMCG Market Share Evolution (%)

Total FMCG Market Share Modern FMCG Market Share

2018

• 70 bps

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

2019 2018 2019 market share gain in both modern

& total FMCG market.

Supermarkets Hypermarkets Macrocenter Ramstore

2018 2019

Number of Stores - Total

2,103 2,198

4

Expansion

Net Sales Area Split By Banner - 2019

Space growth (m2) 2.6%* Net Sales Area (2019)

1,536 K sqm

* Hypermarket space optimization (m2) impact: 90 bps

137

new stores in 2019

32

new stores in 2 months

• f 2020

Capital Expenditures

5

Capex (TL million)

% of Sales 297 399 488 341 ~400 2016 2017 2018 2019 2020E 2.7% 2.6% 2.6% 1.5%

Capex prioritization

• n online

penetration Space

• ptimization

almost completed ~9,000 sqm right-sizing projected in 2020

1,515 1,493 1,327

4Q 2018 4Q 2019 4Q 2019

[IFRS 16]

Gross Profit 4Q (TL million)

6

6,205

Margin 26.8% 26.1% 26.4%

6,121 4,881

2018 2019 2019

[IFRS 16]

Margin 25.3% 27.0% 24.9%

Consolidated Gross Profit in 2019

Competitive prices in fresh lines & basics

*IFRS 16 differential in Gross Profit is driven by DC rent capitalization

Gross Profit in 2019 (TL million)

EBITDA Normalized EBITDA

with 2019 actual imputed interest rates 7

Consolidated EBITDA in 2019

EBITDA 2019 (TL million) EBITDA in 4Q (TL million)

Margin 9.6% 6.5% 6.6%

2,236 1,217 1,531

2019

[IFRS 16]

2019 2018

Margin 7.7% 7.3% 5.3%

462 359 317

4Q 2019

[IFRS 16]

4Q 2019 4Q 2018

Normalized EBITDA 2019 (TL million) Normalized EBITDA in 4Q (TL million)

Margin 9.6% 6.7% 6.6%

2,236 1,258 1,531

2019

[IFRS 16]

2019 2018

Margin 7.7% 6.4% 5.3%

462 314 317

4Q 2019

[IFRS 16]

4Q 2019 4Q 2018

*EBITDA= Operating Profit+Amortization+Employee Termination Benefits +Unused Vacation Provision-Other Income+Other Expenses

• Online business

Overview

• Balancing growth with deleveraging
• Expectations going forward
• Sustainability

9

Enhancing Online Penetration

69 % Same day delivery

60 cities +30,000 SKU 40 districts 3 cities +2,000 SKU

Delivery within 30 mins

Focus

since 1997

Fresh & FMCG

Available for courier shipping

81 cities

+2,300 SKU

49 districts 5 cities

+13,000 SKU Direct from farm to consumers FMCG Focus

213 districts

Launched in 2019 Launched in 2019

Partnership with

*Note: FMCG: Fast Moving Consumer Goods

Migros 2019 Cash and Leverage Position

1 Includes capitalized costs of lease contracts over their maturity 2 IFRS 16 since 01.01.2019. Includes the IFRS 16 rent cost impact of TL 705 mn.

Gross Euro Debt (in million) 672 611 430 336* <300 2017 2018 2019 Jan '20 2020 E Deleveraging Profile - Net Debt / EBITDA

3.2x 2.9x 2.7x 2.6x 2.3x 1.3x

2014 2015 2016 2017 2018 2019

Euro/TL Rate 2.8207 3.1776 3.7099 4.5155 6.6506 6.0280

Deleveraging

Cash & Debt Items Total TL m Total TL m

[w/ IFRS 16]

Cash & Cash equivalents

2,348 2,348

TL m 1,702 1,702 EUR m 105 105

Financial Debt

4,407 7,5251

TL m 1,748 4,865 EUR m 430 430

Net Debt

2,059 5,177

EBITDA

1,531 2,2362

Net Debt / EBITDA

1.3x 2.3x

10

*Migros made €94 mn early down-payment in Jan. 2020

Note: Net debt / EBITDA ratios without IFRS 16

Performance Indicator 2018 Target 2019 Performance vs Guidance

Expansion Program

(Number of NEW Stores)

238

125+ 137

✓

Top-Line Sales Growth 22.0%

23-25% 23.9%

✓

EBITDA Margin* 6.5%

6.0-6.5% 6.6%

✓

CAPEX TL 488 mn

~TL 320 mn TL 341 mn

✓

Performance Summary 2019

11

Management Message for 2019

Migros achieved its operational targets

* excluding IFRS 16 impact

Strong growth in online business: 67% Strong free cash flow generation Migros doubled its revenues in 3 years (110%)

12

Management Agenda in 2020

Growth & Operational Profitability Online Business Deleveraging

* with IFRS 16 impact

Expectations and Guidance

2020 Guidance [Consolidated]

2020E Guidance

Sales Growth (New Guidance)

16-18%

EBITDA Margin

8-8.5%*

Expansion Target

120

new stores CAPEX

~TL 400 mn

Coverage 2020E: 81 cities Sales growth expectation: ~75% Growth guidance upwards Normalization in IFRS based EBITDA margin in 2020 Gross Euro Debt: 2019 : ~30% y-o-y decrease 2020E: ~30% y-o-y decrease Deleveraging will continue

✓

Carbon Footprint

Target: 25% until 2023 Current: 19.5% reduction so far*

Score:A- Energy Consumption

Target: 17% until 2023 Current: 10.4% reduction so far*

Food Waste Reduction

2019

Target: Halving food waste until 2030 Discounted sales of ripened vegetables & fruits Automated ordering system Reduced

Gender Equality

Target: 23% in female representation in executive management until 2023 40% Female of All Employees

*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.

Water Consumption

Current: 1.1% reduction so far*

Score:B

Target: 5% until 2023

• Financials
• Operations
• Migros Better Future Plan

Financials & Format Summary

Summary of Income Statement – 2019

15

IFRS Consolidated Income Statement Summary

(TL million)

2019 2018

Net Sales 23,191 18,717 Cost of sales

• 16,986
• 13,837

Gross Profit 6,205 4,881 Operating Expenses

• 4,884
• 4,032

Other Operating Income / (Expense)

• 516
• 408

Operating Profit 805 441 Income / (Expense) from Investment activities

• 30
• 137

Operating Income Before Finance Income / (Expense) 775 304 Financial Income / (Expense)

• 1,242
• 1,352

Income/Loss Before Tax From Continuing Operations

• 468
• 1,047

Tax Income / (Expenses)

• 3
• 32

Deferred Tax Income

• 21

244 Net Profit / Loss

• 492
• 835

Net Profit / Loss - Non-controlling interest Net Profit / Loss - Equity holders of parent

• 492
• 836

EBITDA 1,531 1,217 EBITDA (with IFRS 16 impact) 2,236

• EBITDAR

2,614 2,104

Summary of Balance Sheet – 2019

16

IFRS Consolidated Balance Sheet Summary

(TL million)

2019 2018

Current Assets 5,277 4,474 Non-current Assets 9,184 6,411 Total Assets 14,461 10,885 Current Liabilities 7,544 6,675 Non-current Liabilities 6,594 3,575 Total Liabilities 14,138 10,250 Equity 323 635 Total Liabilities and Equity 14,461 10,885

Geographical Footprint

◼ Operating in 3 countries

— Turkey (81 cities out of 81) — North Macedonia and Kazakhstan (45 stores) 2198 Stores1

◼ 2074

(supermarkets)

◼ 58

(upscale supermarkets)

◼ 21

(wholesale and foodservice stores)

◼ 45

(international stores)

◼ Migros Online

— 4.8m members — Tazedirekt Innovation, Loyalty & Customer Service

◼ 7m loyal households Money Card ◼ Introduced more than 100 innovations for the retail

market Sustainability and Corporate Governance

◼ Member of “BIST Sustainability Index” ◼ Included Corporate Governance Index since 2015 ◼ 32,253 employees of which 40% are women ◼ Best retailer of the country 16 years in a row2

Migros at a Glance

80%

• f HH

+100

38%

• f HH

65th Year!

1 as of December 31, 2019 2 Capital Business magazine.

17

◼ Number of stores: 2074 including 1194 Supermarkets, 56 Hypermarkets,

and 824 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

18

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 Card holders

─

Money Loyalty Program for 19 years

Loyalty Program

(*): including Migros Jet stores and Migros Jet 7/24 forecourt stores as of December 31, 2019

Macrocenter

Exclusive shopping

Penetration: 6 cities

◼ Number of stores: 58 ◼ 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

19

◼ Currently operating in 7 regions through dedicated

sales team.

◼ Dedicated warehouses and customer delivery ◼

21 Wholesale stores

Penetration: 16 cities 20

Wholesale & Food Service

Focus on Horeca Penetration

Kazakhstan North Macedonia

21

◼ 1.1% of consolidated sales from Kazakh

• perations

◼ Number of stores: 16, including 2 hypermarkets

and 14 supermarkets.

◼ Owns 1 shopping mall in Almaty ◼ Total sales area of 20,885 sqm ◼ Operates in multi-format since 1999

◼ 1.4% of consolidated sales from Macedonian

• perations

◼ Number of supermarkets: 29 ◼ Owns 1 shopping mall in Skopje ◼ Total sales area of 23,621 sqm ◼ Operations started in 2005

International Operations

1 Shopping Mall 2 Hypermarkets 14 Supermarkets 1 Shopping Mall 29 Supermarkets

22

Store Portfolio

2018 2019

# of stores Sales area

(th sqm)

# of stores Sales area

(th sqm)

Migros

(M, MM,MMM)

1157 967.5 1194 998.1 Migros Jet 776 150.1 824 166.5 5M 56 286.0 56 274.0 Wholesale 19 10.7 21 12.0 Macrocenter 51 36.6 58 40.4

Domestic Total 2059 1,450.9 2153 1,491.0

Ramstores 44 46.4 45 44.5

Grand Total 2103 1,497.3 2198 1,535.5

2018

Supermarkets

56

Hypermarkets

58

Macrocenter

45

Ramstores

Ownership Structure

Direct Shareholding Structure

Migros Ticaret A.S.

AG Anadolu Grubu Holding A.Ş. 50.00% Free Float 38.04% Migros Ticaret A.Ş. BC Partners & related funds 11.96%

Indirect Shareholding Structure

Kenan Investments S.A. 11.77% MH Perakendecilik ve Ticaret A.Ş. 49.18% Free Float 37.41% 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

23

Private label products contain 327 tons less plastic

Reduction in the use of plastic bags by 74%

Fresh Leftovers Donation: 1,896 tons of food

Saving food amounting to total revenues of 12 MigrosJet stores’ through discounted sales of ripened vegetables & fruits

Respecting Food Project: Supported 4,029,533 meals to be delivered to those in need so far

Combating Food Waste Combating Plastic Waste Good Agricultural Practices

100% of our poultry products are GAP certified including 317 checkpoints 65% of our fruits and vegetables are Good Agricultural Practices (GAP) certified: 812,114 tons

Migros Better Future Plan

Waste management and circular economy Preventative solutions for pollution Efficient use of resources Value added activities to raise awareness Conservation of biodiversity Creating shared value with stakeholders Compliance with human rights and equal opportunities Consistent and rapid flow of product data

Innovative implementations Combating climate change

Environmental impact assessments before new operations

Improving life cycle of products

Disclaimer Statement

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 of 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 or competitive position data contained in this presentation. This document is not intended for potential investors and does not constitute a financial promotion or other invitation or inducement to engage in investment activity. In particular, this document does not constitute or form part of any offer to sell or issue or invitation to purchase or subscribe for, or any solicitation of any offer to purchase or subscribe for, any securities of the Company, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision. The information, statements and opinions contained in this document do not constitute any advice or recommendation regarding the securities of the Company or other financial

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