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

Migros Ticaret A.Ş.

1Q 2019 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 1Q19…

▪ Consolidated sales growth of 24.9% in 1Q 2019 ▪ Solid sales performance of existing Migros stores

2

Sales Growth in 1Q 2019

24.9%

Sales Growth in 2018 22.0%

Sales in 1Q 2019

Sales in 1Q 2019 (TL million) 4,923 3,940

1Q 2018 1Q 2019

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 (%)

6.6 15.8

7.7 16.7

Total FMCG Market Share Modern FMCG Market Share 1Q 2018

 90 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

1Q 2019 1Q 2018 1Q 2019

4

Expansion

Net Sales Area Split By Banner - 1Q 2019

Space growth (m2) 5.0% Net Sales Area (1Q 2019)

1,501K sqm

1Q 2018 1Q 2019

Number of Stores - Total

1,933 2,100 +167

19

new store

• penings in

1Q 2019

17

new store

• penings in April

2019

81 cities

• perating in every

city in the Country

2,100

number of stores as of 1Q 2019

Capital Expenditures

5

Capex (TL million)

% of Sales

297 399 488

2016 2017 2018

2.7% 2.6% 2.6%

Space optimization continues in large stores,

17 completed since

Kipa acquisition so far (including 3 this year) and 1 is under construction

77 42

1Q 2018 1Q 2019

2.0% 0.9%

Increased price competitiveness mainly in fresh lines Strong gross profitability in 1Q 2019

▪ Consolidated gross profit increased by 34.1% y-o-y despite price investments ▪ Merger synergies and new store acquisitions lead to an improvement in gross profitability

6

Consolidated Gross Profit in 1Q 2019

Gross Profit 1Q 2019 (TL million) 1,356

Margin 27.5% 25.3%

Gross Profit in 2018 (TL million)

5,249 4,082

2017 2018 Margin 28.0% 26.6% 27.2%

1,339 998

1Q 2018 1Q 2019 1Q 2019

(IFRS 16)

7

Consolidated EBITDA(R) in 1Q 2019

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

6.4%

EBITDA margin in 1Q19, w/o IFRS 16 impact driven by better sales performance and strong gross profitability

11.3%

EBITDAR margin in 1Q19, excluding IFRS 16 EBITDA2018 (TL million)

Margin 6.5% 5.7%

1,217 872

2017 2018

EBITDA in 1Q 2019 (TL million)

Margin 9.9% 5.2%

EBITDAR 2018 (TL million)

Margin 11.7% 10.7%

2,186 1,634

2017 2018

6.4%

490 206 314

1Q 2019

(IFRS 16)

1Q 2019 1Q 2018

EBITDAR 1Q 2019 (TL million)

Margin 11.3% 10.2%

556 400

1Q 2018 1Q 2019

Migros 1Q 2019 Cash and Leverage Position

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

which was extrapolated based on 1Q19 rent cost. (TL 175.8 x 4 = TL 703.4 mn)

Gross Euro Debt (in million) 692 672 611 515 <500 2016 2017 2018 1Q19 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 6.3188

Change:+30%

6.0280 4.8673

(IFRS 16)

Deleveraging

Cash & Debt Items Total TL m Total TL m

(w/ IFRS 16)

Cash & Cash equivalents

1,632 1,632

TL m 1,322 1,322 EUR m 49 49

Financial Debt

4,762 7,6221

TL m 1,508 4,368 EUR m 515 515

Net Debt

3,130 5,990

EBITDA LTM

1,325 2,0282

Net Debt / EBITDA LTM

2.4x 3.0x

8

2.4x 3.0x 3.0x 1Q18 1Q19 1Q19

9

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

• There has been an upside

potential for the 2019 FY top- line growth guidance, considering Company’s 1Q19 growth performance,

• Increased focus on Migros’
• nline business together with
• mni-channel experience

Deleveraging

• Vigilant cost management,
• Increased focus on staff cost,

rent 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

Expectations and Guidance

• Operations

Financials & Format Summary

• Financials

IFRS Consolidated Income Statement Summary

Summary of Income Statement – 1Q 2019

11

Net Sales 4,922.7 3,940.1 Cost of sales

• 3,566.9
• 2,941.6

Gross Profit 1,355.8 998.5 Operating Expenses

• 1,113.8
• 889.2

Other Operating Income / (Expense)

• 99.5
• 59.7

Operating Profit 142.5 49.6 Income / (Expense) from Investment activities

• 4.7
• 3.3

Operating Income Before Finance Income / (Expense) 137.7 46.3 Financial Income / (Expense)

• 359.8
• 283.0

Income/Loss Before Tax From Continuing Operations

• 222.1
• 236.7

Tax Income / (Expenses)

• 0.7
• 15.3

Deferred Tax Income

• 8.0

6.1 Net Profit / Loss

• 230.8
• 245.9

Net Profit / Loss - Non-controlling interest 0.0

• 2.2

Net Profit / Loss - Equity holders of parent

• 230.9
• 243.7

EBITDA (with IFRS 16 impact) 489.7

• EBITDA

313.8 205.8 EBITDAR 555.5 399.9

(TL Million)

1Q 2019 1Q 2018

IFRS Consolidated Balance Sheet Summary

Summary of Balance Sheet – 1Q 2019

12

Current Assets 4,431.1 4,474.3 Non-current Assets 9,167.1 6,410.6 Total Assets 13,598.1 10,884.9 Current Liabilities 6,695.3 6,674.9 Non-current Liabilities 6,491.5 3,574.9 Total Liabilities 13,186.8 10,249.8 Equity 411.3 635.1 Total Liabilities and Equity 13,598.1 10,884.9

(TL Million)

1Q 2019 2018

Geographical Footprint

 Operating in 3 countries

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

2,100 Stores1

 1,984

(supermarkets)

 51

(upscale supermarkets)

 20

(wholesale and foodservice stores)

 45

(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  31,504 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 March 31, 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: 1,984 including 1,153 Supermarkets. 56 Hypermarkets,

and 775 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 March 31, 2019

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

16

 Currently operating in 7 regions through dedicated sales

team.

 Dedicated warehouses and customer delivery  20 Wholesale stores

Penetration: 15 cities 17

Wholesale & Food Service

Focus on Horeca Penetration

Enhancing online penetration..

18

▪ Same day delivery, ▪ For over 28,000 SKUs, ▪ Service in 31 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 Four online channels

▪ Delivery within 30 minutes

• nly

▪ Same prices with Migros stores ▪ For over 1,500 SKUs

Kazakhstan Macedonia

19

 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: 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

1,928

Supermarkets

(incl. 775 Migros Jet stores)

56

Hypermarkets

51

Macrocenter stores

Upscale format

45

Ramstores

Macedonia & Kazakhstan

1Q 2018 1Q 2019

# of stores Sales area

(th sqm)

# of stores Sales area

(th sqm)

Migros (M, MM,MMM) 1,002 830.5 1,153 969.4 Migros Jet 645 120.9 775 152.2 5M 21 94.7 56 284.4 Wholesale 17 10.0 20 11.2 Macrocenter 46 34.5 51 36.6 Kipa 162 294.3

• Domestic Total

1,893 1,384.9 2,055 1,453.8

Ramstores 40 44.8 45 47.1

Grand Total 1,933 1,429.7 2,100 1,500.9

Ownership Structure

Direct Shareholding Structure

JV Structure between BC Partners & Anadolu Group

21

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

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.

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.