Migros results for 2Q 2016

18-08-2016




Store Network
2Q 2016: + 90 new stores, total of 1,528 stores
1H 2016: +142 new stores


Financial Highlights
Migros reported domestic sales growth of 18.6% in 2Q 2016 preserving the momentum in the previous quarter. (1Q 2016: 18.7%) The consolidated sales in the first half of the year exceeded TL 5 billion with 16.2% growth. A pleasant Migros shopping experience coupled with competitive pricing and rich product offering continued to help to attract more customers. Mainly the strong sales performance of existing stores and new stores have been the drivers of outstanding top-line growth in Turkey.

The consolidated gross profit increased by 18.6% in 2Q 2016 with supportive efficiency gains. The consolidated EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) was TL 163m, with a 19.6% increase in 2Q 2016. The EBITDA margin improved from 5.9% in 2Q 2015 to 6.1% in 2Q 2016, despite dilutive impact of minimum wage increase y-o-y. EBITDA margin was 6.1% in 1H 2016 same as in 1H 2015, in line with the full year guidance of 6.0% to 6.5%. EBITDAR (EBITDA before rent) rose by 17.0%, representing a margin of 11.2% in 2Q 2016. (2Q 2015: 11.1%) The Company’s operational profitability is undermined by FX losses and one-off charges resulting in a net loss of TL 53 million in 1H 2016.

Operational Highlights
In the six months of the year, 142 new stores, including 1 Ramstore in Macedonia, were added to the store network. With the additional 25 stores opened in July, the total number of stores reached to 1,551 as of July 31, 2016. Migros signed a Share Purchase Agreement with Tesco Overseas Investment Ltd. for 95.5% of the shares of Tesco-Kipa on 10 June 2016. Currently, the Companies have been waiting for the regulatory approval to effect the deal. In 2Q 2016, the consolidated sales grew by 16.2% and EBITDA increased by 19.6% despite the impact of the minimum wage hike at the beginning of the year. Resilient top-line growth especially for domestic operations and strong vigilance over costs and working capital management are expected to enable Migros to deliver a stable operating performance during the rest of the year. Migros aims to open 150 to 200 new stores and maintain double digit top-line growth in 2016. The EBITDA margin is expected to be within the range of 6.0%-6.5%.

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