Migros T icaret A.. 2018 Financial Results CONTENTS Market Share - - PowerPoint PPT Presentation

Migros Ticaret A.Ş.

2018 Financial Results

Sales

CONTENTS

Management Overview

1

Expansion Format Summary Financial Overview Financial Results

Ataşehir Migros

Market Share Evolution Capital Expenditures

Strong consolidated growth in 2018… … despite dilutive impact of former large Kipa stores

• Consolidated sales growth of 22.4% in 4Q 2018
• Sales performance of Migros stores was strong last year

2

Sales Growth in 4Q18 22.4% Sales Growth in 2018 22.0%

Sales in 2018

Sales in 4Q 2018 (TL million) 4,923 4,022

4Q 2017 4Q 2018

Sales in 2018 (TL million) 18,717 15,344

2017 2018

*Kipa’s financial results are consolidated since 01 March 2017.

Market Share Evolution

3

Market Share Gain Migros FMCG Market Share Evolution (%)

6.8 16.3

7.1 16.7

Total FMCG Market Share Modern FMCG Market Share 2017 2018 2018 2017

 40 bps market share gain in

modern FMCG market.

 30 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

4

Expansion

Net Sales Area Split By Banner - 2018

238

new store

• penings in 2018

81 cities

• perating in every

city in the Country

2,103

stores as of 2018

2017 2018

Number of Stores - Total

+206

2,103 1,897

Space growth (m2)

5.7%

Net Sales Area (2018)

1,497K sqm

Capital Expenditures

5

Capex (TL million)

% of Sales

281 297 399 488

2015 2016 2017 2018

3.0% 2.7% 2.6% 2.6%

Conversion of Kipa, Uyum and Makro stores into Migros format completed Space optimization in large stores continues

6

Consolidated Gross Profit in 2018

Increased price competitiveness High gross margin

• f 2018 is expected

to normalize in 2019

• Consolidated gross profit improved versus last year
• Merger synergies and new store acquisitions lead to an improvement in gross profitability

Gross Profit 4Q (TL million) 1,422 1,080

4Q 2017 4Q 2018 Margin 28.9% 26.8%

Gross Profit in 2018 (TL million) 5,249 4,082

2017 2018 Margin 28.0% 26.6%

7

Consolidated EBITDA(R) in 2018

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

7% EBITDA

margin in 4Q18

driven by better sales performance and strong gross profitability

11.7%

EBITDAR margin 2018

EBITDA 2018 (TL million)

Margin 6.5% 5.7%

1,217 872

2017 2018

EBITDA in 4Q18 (TL million)

Margin 7.0% 5.6% 4Q 2017 4Q 2018

344 226 EBITDAR 2018 (TL million)

Margin 11.7% 10.7%

2,186 1,634

2017 2018

EBITDAR in 4Q18 (TL million)

Margin 12.2% 10.8% 4Q 2017 4Q 2018

599 433

• Balancing growth with deleveraging

Overview

• Expectations going forward

9 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

Deleveraging

Migros 2018 Cash and Leverage Position Cash & Debt Items Total TL m TL m EUR m

Cash & Cash equivalents

1,769 1,470 50

Financial Debt*

4,588 907 611

Net Debt

2,819

Net Debt / EBITDA

2.3x

Deleveraging Profile - Net Debt / EBITDA 4,0x 3,2x 2,9x 2,7x 2,6x 2,3x

2013 2014 2015 2016 2017 2018

10

* Based on amortised costing as indicated in financial statements Euro/TL :

4.5155 6.0280

Change: + 33%

Gross Euro Debt (in million) 692 672 611 <500 2016 2017 2018 2019E Shift to TL efforts

• TL Bond issuances

worth of TL 396 mn in 3 tranches in the past 9 months

• 5years TL capex loan

amounting TL370mn from EBRD with 4 years average maturity

Asset Divestiture

• Asset divestitures

worth of TL 388mn (since Dec. 2017)

Performance Indicator 2017 Target 2018 Performance vs Guidance

Expansion Program

(Number of NEW Stores)

193 230+

238



Top-Line Sales Growth 38.7% ~22%

22.0%



EBITDA Margin 5.7% 6.0%+

6.5%



Performance Summary 2018

11

Performance Summary 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

Enhancing online penetration..

12

• Delivery within 30 minutes
• nly
• Same prices with Migros

stores

• For over 1,500 SKUs
• Same day delivery,
• For over 28,000 SKUs,
• Service in 28 cities,
• Night delivery between

22:00-24:00 in selected regions

• Click-collect option for

customers

Macro Online Migros Now Taze direkt Migros Online

Customer

Expectations and Guidance

13

Management Agenda in 2019

2019 Guidance [consolidated] Sales Growth

20%

EBITDA Margin

~6%*

Expansion Target

100 new stores

CAPEX Guidance

TL 300 m

Growth Operational Profitability

• Space growth is expected to be

almost flat due to space

• ptimization in large stores
• Increased focus on Migros’
• nline business together with
• mni-channel experience

Deleveraging

• Vigilant cost management,
• Increased focus on personnel

cost, energy cost & logistics

• Free cash flow generation,
• Asset divestitures,
• Absolute amount of Euro debt

is expected to decrease by almost 20% in 2019

* excluding IFRS 16 impact

• Operations

Financials & Format Summary

• Financials

IFRS Consolidated Income Statement Summary

Summary of Income Statement – 2018

15

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

(TL Million)

2018 2017

IFRS Consolidated Balance Sheet Summary

Summary of Balance Sheet – 2018

16

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

(TL Million)

2018 2017

Geographical Footprint

 Operating in 3 countries

— Turkey (81 cities out of 81) — Macedonia and Kazakhstan (44 stores)

2,103 Stores1

 1,989 (supermarkets)  51 (upscale supermarkets)  19 (wholesale and foodservice stores)  44 (international stores)  Migros Online

— 2m members and 60% mobile orders — Re-launch of 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  28,990 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

64th Year!

1 as of December 31, 2018 2 Capital Business magazine.

17

 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

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 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 December 31, 2018

Macrocenter

Exclusive shopping

Penetration: 6 cities

 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

19

 Currently operating in 7 regions through dedicated sales

team.

 Dedicated warehouses and customer delivery  19 Wholesale stores

Penetration: 14 cities 20

Wholesale & Food Service

Focus on Horeca Penetration

 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)

Online Business

21

Natural Fresh Organic Healty

Kazakhstan Macedonia

22

 1.3% 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: 26  Owns 1 shopping mall in Skopje  Total sales area of 21,919 sqm  Operations started in 2005

International Operations

1 Shopping Mall 2 Hypermarkets 16 Supermarkets 1 Shopping Mall 26 Supermarkets

23

Store Portfolio

1,933

Supermarkets

(incl. 776 Migros Jet stores)

56

Hypermarkets

51

Macrocenter stores

Upscale format

44

Ramstores

Macedonia & Kazakhstan

2017 2018

# of stores Sales area (th sqm) # of stores Sales area (th sqm) Migros (M, MM,MMM) 982 819.1 1,157 967.5 Migros Jet 632 116.7 776 150.1 5M 21 94.7 56 286.0 Wholesale 17 10.0 19 10.7 Macrocenter 44 32.6 51 36.6 Kipa 162 299.1

• Domestic Total

1,858 1,372.1 2,059 1,450.9

Ramstores 39 44.3 44 46.4

Grand Total 1,897 1,416.4 2,103 1,497.3

Ownership Structure

Direct Shareholding Structure

JV Structure between BC Partners & Anadolu Group

24

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 accordance with relevant CMB legislation Note: Anadolu Group maintains its 50% stake in Migros

Disclaimer Statement

25

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.

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 instruments. The content of this presentation has not been approved by an authorized person within the meaning of the Financial Services and Markets Act 2000 of the United Kingdom. In the United Kingdom, this presentation is only being distributed to persons who are reasonably believed to be persons who fall within Articles 19 (Investment professionals) or 49 (High net worth companies etc.) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 or to other persons to whom this presentation may

• 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.