CORPORATE PRESENTATION BIST: BIZIM

Transcription

1 CORPORATE PRESENTATION BIST: BIZIM 1

2 DISCLAIMER AND NOTES This presentation contains forward-looking statements which are based on certain expectations and assumptions at the time of publication of this presentation and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in these materials. Many of these risks and uncertainties relate to factors that are beyond BIZIM TOPTAN s ability to control or estimate precisely, such as future market and economic conditions, the behavior of other market participants, the ability to successfully integrate acquired businesses and achieve anticipated cost savings and productivity gains as well as the actions of government regulators. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this presentation. BIZIM TOPTAN does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these materials. This presentation merely serves the purpose of providing information. It neither represents an offer for sale nor for subscription of securities in any country including Turkey. This presentation does not include an official offer of shares; an offering circular will not be published. This presentation is not allowed to be reproduced, distributed or published without permission agreement of BIZIM TOPTAN. The figures in this presentation are rounded to provide a better overview. The calculation of deviations is based on figures including fractions. Therefore rounding differences can occur. 2

3 COMPANY OVERVIEW BIST: BIZIM 3

4 BIZIM AT-A-GLANCE Turkey s 49th largest company based on net sales* Turkey s largest cash & carry company based on number of stores and geographic reach The only cash & carry company listed on the Borsa İstanbul Sales revenue of 2014 TL 2,279 million, with main category** sales revenue CAGR of 17.2% ( ) EBITDA CAGR of 14.4% ( ) *According to Fortune Magazine Survey 2014 **Excluding tobacco products 4

5 A HISTORY OF STRONG GROWTH CAGR Tobacco 2,0% Main Category (*) 17,2% Total 11,9% 23.7% 15.6% % 2,7% % % % 25.6% Revenues (MTL) Number of Stores Main Category Growth (*) Excluding tobacco 5

6 KEY INVESTMENT HIGHLIGHTS Operates Within The Fast Growing Turkish FMCG Wholesale Market Cash & Carry: The Fastest Growing FMCG Channel Fast Growth BIZIM: Leading Cash & Carry Wholesaler With Very Strong Organic Growth Proven Business Model With High Flexibility And Scalability Demonstrated Financial Track Record Strong Cash Generation Increasing Profitability 6

7 TURKISH FMCG WHOLESALE MARKET FAST GROWING HIGHLY FRAGMENTED TL bn 150 SUPPLIERS Wholesalers & Distrubutors (>7.000) Cash & Carry Players (<10) c. 94% of FMCG wholesale market dominated by traditional wholesalers and distributors c estimated number of total wholesalers and distributors in Turkey HORECA Corporates, Offices, Small Companies Retailers Bakkals, Markets Only three Cash & Carry players of size in cash & carry market: Metro, Bizim and Tespo with sales revenues* of 2,9; 2,3 and 0,6 btl respectively Significant opportunity for Cash & Carry to professionalize and consolidate the wholesale market, which is estimated TL127bn END USER All numbers and estimates are from Frost &Sullivan (*) Bizim s estimation for the year

8 Demand Supply TURKISH CASH & CARRY MARKET FASTEST GROWING FMCG CHANNEL KEY GROWTH DRIVERS TL bn 8 6 7,2 6,4 5,6 4 5,0 4,4 3,5 3, OUTPACES WHOLESALE AND RETAIL CAGR 15% 10% 5% 0% 12,9% 9,6% 10,0% FMCG Wholesale FMCG Retail Cash & Carry Wholesale market consolidation Increased demand for larger network and end-user coverage Price stability and system standardization Membership format: Ability to track customer behaviour One-stop shopping, reasonable prices with payment facilities Addresses all customer types Underpenetrated segments, HORECA & Corporates Need for greater convenience and flexibility All numbers and estimates are from Frost and Sullivan 8

9 BIZIM: THE LEADING CASH & CARRY WHOLESALER IN TURKEY c. 5x STORE BASE OF LARGEST COMPETITOR EXTENSIVE NETWORK ACROSS TURKEY # of Stores (as of December 31, 2014) BIZIM Metro Tespo National footprint provides extensive end-user coverage Network covers 65 cities out of 81, currently a total of 21 stores in İstanbul, whereas the nearest competitor covers 20 cities of Turkey with 8 stores in İstanbul Local penetration provides convenience and proximity 9

10 PROVEN BUSINESS MODEL WITH HIGH FLEXIBILITY AND SCALABILITY HIGHLY FLEXIBILE Three Store Formats Tailored SKU Offering HIGHLY SCALABLE Low Startup Costs, Short Payback Low Working Capital Adjustable Store Layout Fast Decision Making Cost-Efficient Real Estate Adaptable Distribution Capacity Customers Products Stores Marketing Distribution Operating Excellence Price leadership and convenience Diversified mix tailors to different needs Develop and maintain close relationship c SKUs regionally tailored c. 95% branded products Three adjustable and scalable store formats Low start-up costs & short payback periods 100% leased-based In-depth customer insights Strong CRM capabilities Loyalty card: BIZIM Professionel Card Outsourced Adaptable capacity 0 cost model Low / negative working capital Low opex /capex Self financed 10

11 DIVERSIFIED AND GROWING CUSTOMER BASE DIVERSIFIED CUSTOMER BASE KEY TRENDS AND OBSERVATIONS Share of Customer Segments in Total Revenues * 4% 13% 6% 29% 9% 26% 14% 10% 45% 45% 29% % 10% 6% 29% % 11% 8% Diversified Cash & Carry customer base with all customer segments expected to grow significantly Limited concentration risk Feeds off multiple growth opportunities HORECA & Corporates & Individuals are leading segments in terms of growth potential 48% 49% Franchising system: New channel & first in B2B market (*) 2014 revenue excludes sales from franchising system 11

12 GROWTH OPPORTUNITIES IN HORECA & CORPORATE SEGMENTS Turkish C&C Market Customer Segments (1) CAGR # of Hotels & Rooms in Turkey (1) ( ) HORECA Households HORECA 15,5% 19,9% Corporates 14,4% Wholesalers Mom & Pops 10,5% 9,0% # of establishments # of rooms 0 Turkish HORECA & Corporates market is estimated to be around 18 bn Euros (2) More than 95% of this market is dominated by traditional players (Wholesalers, Distributors, Supermarkets etc) Sizeable players are: Metro Turkey (around 400 mn Euros) G2M (around 250 mn Euros) Bizim (around 200 mn Euros) Significant opportunity for organized players to consolidate the market (1) Frost & Sullivan (2) Company sources 12

13 BIZIM s HORECA OPERATIONS: A PROMISE FOR HIGH GROWTH STRATEGY Aggressively increase share of HORECA and Corporates segments in total revenues and become a major player in this segment ORGANIZATION Established dedicated HORECA stores and sales team and offers delivery services where necessary 2014 STATUS Share of HORECA & Corporates & individual segment on total sales reached to 29% in 2014 from 26% in 2013, vs 22% in 2012 and 18% in 2011 Operates 18 HORECA-centric stores 63.5% increase in number of active HORECA & Corporate & individual customers in 2014 vs 2013 Bizim Professional Card in place to increase HORECA sales and customer loyalty (c.c cards as of 2014) 13

14 BRANDED PRODUCTS STRATEGY 12% 25% % SALES MIX 12% 24% % STRATEGY ~9.000 SKUs regionally tailored with average of SKUs per store as of 31 December, /50 split between domestic and international products mix 14% Food Beverage Tobacco 26% % 29% 15% 17% Household Products, Personal Care & Chemicals Other Tobacco expected to decrease as a proportion of total sales in the future (20-22 % in the long run) VALUE PROPOSITION One-stop-shop experience driving customer traffic Competitive pricing 12% 15% 18% Private label and exclusive products representing ~5% of total sales and ~6,5% of main category sales (10-12% of total sales in the long term) 14

15 SUMMARY OF 2014 EARNINGS RESULTS BIST: BIZIM 15

16 TOP-LINE AND LIKE-FOR-LIKE SALES GROWTH TOP-LINE SALES (MTL) LFL MAIN CATEGORY SALES GROWTH vs GDP GROWTH Although topline growth was affected by credit card regulation and tough market conditions in B2B market, strong main category sales momentum continued with a CAGR of 15.9% from Increasing penetration on main category sales Tobacco growth is negative by -2.4% and expected to decrease as a proportion of total sales to the level of below 20% in the long run Due to credit card regulation and B2B market conditions LFL growth was temporarily affected negatively Main actions: increase number of customers and traffic Effective tools eg. Horeca friendly stores, launch of fresh fruit and meat categories, CRM, customer representative visits, promotions, category management, exclusive products offerings and launch of franchising system 16

17 GROSS PROFIT AND EBITDA PERFORMANCE GROSS PROFIT (MTL) OPERATIONAL EXPENSES OPEX (MTL) Gross Margin 8,4% 8,6% 8,5% 8,7% 8,8% 9,5% OPEX/ Sales 5,4% 5,4% 5,4% 5,7% 6,3% 7,5% Opex/Sales was mainly affected by limited utilization of operational leverage mainly due to low level of sales revenue growth, one-off store closing expenses (7 stores in 2014) and costs of franchising organization -Optimized merchandising mix (lower tobacco, increase focus on higher-margin products) -Focus on growing and profitable HORECA & Corporate & Individual segments -Limited employment for new stores, more decentralized management structure for increasing organizational efficiency -Leverage economies of scale in opex (*): Excluding other income/(expenses) Adjusted EBITDA Margin(*) ADJUSTED EBITDA (MTL) 3,6% 3,8% 3,6% 3,5% 3,1% 2,7% 17

18 SOLID CASH FLOW GENERATION & NEGATIVE WORKING CAPITAL NET INCOME (MTL) NET WORKING CAPITAL (MTL) Net Margin 1,5% 2,0% 1,7% 1,3% 1,8% 0,5% EPS (TL) 0,47 0,71 0,75 0,65 1,00 0,27 CAPITAL EXPENDITURES CAPEX (MTL) CASH FLOW FROM OPERATIONS (MTL) Existing Stores New Stores

19 2015 THIRD QUARTER AND NINE MONTHS RESULTS BIST: BIZIM 19

20 SALES REVENUES (MTL) Topline growth continues, also stimulated by franchising Q3 Top-Line Growth Tobacco 37.4% Main Category (exc.tobacco) Main Category (exc.tobac.&sugar) 1.1% 8.0% Total 9.9% Q3 LFL Growth Tobacco 35.5% Main Category (exc.tobacco) Main Category (exc.tobac.&sugar % 30.2% 75.8% 69.8% 1.0% 7.4% Total 8.8% 9M2015 Top-Line Growth Tobacco 34.4% Main Category (exc.tobacco) Main Category (exc.tobac.&sugar) 5.0% 11.0% Total 11.4% 1, % 9M 2015 LFL Growth Tobacco 30.6% Main Category (exc.tobacco) Main Category (exc.tobac.&sugar) 3.7% 9.2% Total 9.5% 1, % 78.3% 73.8% 2014 Q Q3 Main Category Tobacco Although after election period continued to affect consumer confidence negatively and therefore, consumer confidence was weak compared to the first half of the year in addition to the negative base effect of Ramadan and Greater Eid, the company was able to show 9.9% growth compared to the last year The company s strategic focus on profitable product sales led to lower profitable bulk sugar sales and if the bulk sugar sales are excluded, main category growth will jump up to 8.0% level and LFL main category growth will reach to 7.4%, Government s strict control on cross border and illegal tobacco trade continued to stimulated tobacco demand in 3Q2015 as in 1H2015, Franchising operation continued to stimulate revenue growth by generating TL 34.7 million sales revenue during the 3Q2015 9M M 2015 Although the weather conditions were tough in Q12015 and consumer confidence was weak due to the post election period in Q32015, the company was able to show double digit top-line growth in line with its forecasts. Main category growth continued with mid single digit levels and tobacco demand was quite high as a result of strict government controls on cross border tobacco trade. New strategic initiative-franchising system affected top-line positively by generating around TL 87.2 million sales revenue. If the low profitable bulk sugar sales are excluded, main category growth reached around 11% and LFL main category growth increased to 9.2% The company s strategic focus on profitable product sales and channel based strategies as well as the new franchising system will secure sustainable and profitable double-digit growth levels for the future periods 20

21 GROSS PROFIT (MTL) Sustainable gross margin uplift in main categories Q Gross Margins Q Gross Margins 9M2014 Gross Margins 9M2015 Gross Margins Tobacco 2.2% Tobacco 1.7% Tobacco 2.9 % Tobacco 2.0% Main Category (Exc.Tobacco) 11.4% Total 9.2% Main Category (Exc. Tobacco) 11.8% Total 8.7% Main Category (Exc. Tobacco) 11.5% Total 9.6% Main Category (Exc. Tobacco) 11.8% Total 9.2% Q Q Gross Margins 9.2% 8.7% 9M M 2015 Gross Margins 9.6% 9.2% Channel based customer management strategically focused on Horeca, Corporates and Individual segment penetration and profitable product sales focus continued to deliver more visible results at profitability side on a sustainable basis. As a consequence of the positive returns of the strategic focus, gross profit has continued to remain strong especially in main categories. Total gross margin mainly affected by product mix change on behalf of the tobacco (around 60bps in Q2 and 40bps in 9M respectively). Lack of tobacco inventory gain diluted GM around 20bps in 9M as well After all, Bizim Toptan s gross margin performance in main categories was outstanding as in the previous quarters. Showing 40bps and 30 bps improvement in 3Q and 9M respectively 21

22 OPEX (MTL) Significant performance in Q3, thanks to strict cost control initiatives % % % 0.9% 5.9% 5.7% 6.2% 6.1% OPEX Margins 2014 Q Q3 Sales&Marketing Headoffice 6.9% 6.6% Opex over sales ratio continued to show significant improvement vs not only the previous quarter but also the same period of last year, Opex increased by only 4.2% in 3Q2015 vs last year despite personnel expense increased by regular wage increases, Thanks to company management s effective cost management actions, opex to sales in 3Q 2015 declined to 6.6% by improving 50 bps on quarterly basis and 30 bps on yearly basis 9M M 2015 Sales&Marketing Headoffice OPEX Margins 7.2% 7.3% Opex increased by 12.6% on year on year mainly due to; Minimum wage personnel s wage increases Additional personnel related franchising system and 2 new distribution center Company management showed tremendous efforts to mitigate the increasing cost level by initiating major cost improvements such as limited employment, logistics cost optimization and car expenses Latest trend in opex/sales shows that operational leverage, which promises higher contribution into profitability in the coming quarters, has already started and will continue 22

23 ADJUSTED EBITDA (MTL) Visible rebound continued although product mix and temporary dilution effect of franchising operations shadowed better performances Q Q3 Adj.EBITDA 2.9% 2.8% Margins 9M M 2015 Adj.EBITDA 3.1% 2.6% Margins Adjusted EBITDA margin continues to show strong and visible performance over the quarters although it is still shadowed by temporary cases, Product mix and temporary dilution effect of franchising operations affected the EBITDA margin. However, thanks to the management tremendous efforts on opex side, dilutive effects were completely offset EBITDA margin was only 5bps lower than the same period of last year The franchising operations generated positive EBITDA in 3Q2015 by delivering positive results earlier than expected, EBITDA margin was lower than same period of the last year due to; product mix change on behalf of tobacco (40bps) lower tobacco inventory gain (20bps), unlevered franchising system effect (10bps), Improving sales revenue, sustaining gross margin performance in main category and effective cost management plans of the company management are very promising for the following quarters EBITDA performance 23

24 NET INCOME (MTL) Tremendous improvement in net income vs 2Q2015 and 3Q , ,0 NET Margins 2014 Q Q3 9M M % 0.7% 0.9% 0.5% NET Margins Visible improvement in net income over the quarters, stimulated by improving sales revenue, outstanding gross margin performance in main categories and higher operational leverage obtained by sales revenue increase and cost savings, Financial expenses show a declining trend as a result of improvement in operating profit and working capital requirement. Net income increased by 35% and 11.1% on quarterly and yearly basis respectively Net Income was in 9M 2015 compared to the same period of 2014 mainly due to; lower tobacco sales gain compared to same period of the last year, (20bps) higher percentage of tobacco sales this year (40bps), temporary dilution of the franchising system (10bps), higher financial expenses However, improving sales performance, outstanding gross margin performances in main categories and tremendous efforts of company management on opex improvement mark out better net margin performances in the coming periods, as foreshadowed by net margin improvements over the last quarters 24

25 CAPEX (MTL) Reached 155 stores, new store formats under trial , , Q Q3 9M M 2015 # New Stores # Relocations # New Stores # Relocations Company reached 155 stores in 66 cities of Turkey out of 81, 1 new store opening as planned, 2 wholesale-retail and 3 wholesale-retail-horeca format stores trial process continue, Net sales area increased by 1% vs 2Q2015 and reached 162Ksqm Capex was mostly related to the new store, which was financed through leasing by letting additional cash in flow In 9M2015 Bizim Toptan opened 2 new store, relocated 2 existing ones and opened 2 new distribution centers, Bizim Toptan aims to open 1 more new stores by the end of the year and postpone remaining 2 new stores opening to the next year due to external reasons, Company continues to secure new store locations of 2016 as well 25

26 WORKING CAPITAL & NET DEBT (MTL) Negative working capital to be sustained MTL 9M2014 9M2015 Trade Receivables Inventory Trade Payables Strict Working Capital Average Days (*) 9M2014 9M2015 Trade Receivables Inventory Trade Payables Strict Working Capital (*) Calculated based on net sales MTL Q2015 Financial Debt Short-term Long-term Cash and cash equivalents Net Debt Extended terms of corporate credit cards and Bizim Professional card and also franchising operations led to increase in days in receivables, In order to compensate it, on trade payable side, prepayments were reduced and payment terms were extended throughout negotiations byleading solid cash generation, With the positive contribution of 2 new distribution centers inventory days improved, For the upcoming periods; by pulling further down inventory levels, the company management aims to further improve negative working capital and cash inflow position, Capex for new stores was made through leasing by letting additional cash flow in, 26

27 FRANCHISING SYSTEM New blood into system: improving performance continued; breakeven EBITDA level is reached in 3Q2015, earlier than the expectations Actuals Company Outlook July 2014 (Acquisition) End of Q Year 1 Year 4 Number of stores Number of stores Revenue (MTL) Revenue forecast (MTL) ~120 ~800 Franchisees procurement ratio (%)* ~ Franchisees procurement ratio (%) * Procurement ratio shows the average of the period 27

28 QUARTERLY PERFORMANCE EVOLUTION OF MAIN FINANCIAL KPIs 28

29 FRANCHISING SYSTEM BIST: BIZIM 29

30 THE FRANCHISING SYSTEM Main rationale is to deliver sustainable growth and penetration in market channel by capitalizing on Bizim s procurement strength and high value proposition TL30m + VAT was paid to acquire the franchising system with its 196 stores in July 2014 Franchising system is similar to peers in developing countries like symbol /franchising groups Operational model is soft (white) where the high level of entrepreneurship will be kept The franchising stores are operated by the franchisee under the franchising umbrella Bizim Toptan provides a branded shop fascia, advantageous buying terms, access to own brand ranges, IT and logistical support, marketing and promotional programs, professional guidance and advice Target: Supermarkets over 150 sqm 30

31 HIGHER VALUE PROPOSITION TO FRANCHISEES Value proposition Other suppliers Bizim Toptan Branded shop - «UCZ Sysyem» Delivery Target bonuses Discount on store pick up # of SKUs Limited with their agreements Average distance to warehouse/store Payment terms Marketing support (CRM, promotions, inserts etc.) n.m. Open account (collection in 5-20 days) 21km Letter of guarantee, open account & instalments with BPC (*) Operational support (Helpdesk, online purchase order, cashier & POS management etc.) Better value offerings should lead higher sales to franchisees (*) Bizim Professional Card 31

32 REGIONAL FOCUS OF THE FRANCHISE SYSTEM WITH ITS NEW FASCIA Edirne Kırklareli Tekirdağ Çanakkale Balıkesir İzmir Aydın Manisa Muğla İstanbul Yalova Bursa Kütahya Uşak Denizli Kocaeli Bilecik Burdur Düzce Sakarya Bolu Antalya Eskişehir Afyon Isparta Bartın Kastamonu Zonguldak Karabük Ankara Konya Kırıkkale Karaman Nevşehir Aksaray Mersin Sinop Niğde Kayseri Adana Samsun Çankırı Amasya Ordu Çorum Tokat Kırşehir Yozgat Osmaniye Hatay Sivas K.Maraş Gaziantep Kilis Artvin Trabzon Rize Giresun Gümüşhane Bayburt Erzurum Malatya Adıyaman Erzincan Elazığ Tunceli Ş.Urfa Bingöl Muş Bitlis Ardahan Kars Ağrı Diyarbakır Siirt Batman Şırnak Mardin Iğdır Van Cities where Bizim Toptan operates Cities where Bizim Toptan has no store Cities where franchise stores operate Hakkari We focus on Western part of Turkey, as classic C&C business is already strong and growing in the East, logistics infrastructure has already been in place in the West obtain benefit from Western s higher population and per capita income A new brand name, UCZ Sistem, well-known and promising brand in convenience stores* High value proposition to customers: Competitive pricing, more SKUs with branded and strong exclusive products, convenience and high service & product quality 32

33 SALES & PROFITABILITY CONTRIBUTION OF THE FRANCHISING SYSTEM KEY HIGHLIGHTS What we invested is not solely an established franchising operation but also a platform on which we are going to develop and grow Development and growth will be based on two drivers: Increasing purchase level of franchising markets New markets addition into system The number of franchisee is projected to rise up to 600 stores by the end of 2018 Bizim Toptan will offer higher value proposition to franchisee to improve their purchases from Bizim Toptan According to franchise agreements, franchisees are to buy 80% of their goods from franchisor and we are projecting to reach up to this ratio by the end of 2018 At the end of 2015, system is estimated to generate positive EBITDA level In 3 year period, system is projected to exceed 3% EBITDA level and pay back in 4th year 33

34 APPENDIX Turkey's Leading Cash & Carry Wholesaler 34

35 APPENDIX INCOME STATEMENT* MTL 3Q Q M M 2015 Revenue YoY Growth 5.5% 9.9% 1.6% 11.4% Gross Profit Gross Margin 9.2% 8.7% 9.6% 9.2% Mark., Sales and Distr. Expenses Gen. & Adm. Expenses Other Income / (Expenses) Related to Operating Activities Operating Profit Income/Expense Related to Investing Activities Profit Before Finance Expence Financial Income / (Expenses) Profit Before Tax Tax Expense Net Income Net Income Margin 0.7% 0.7% 0.9% 0.5% Adjusted EBITDA(*) Adjusted EBITDA Margin(*) 2.9% 2.8% 3.1% 2.6% EPS

36 APPENDIX BALANCE SHEET ASSETS(*) MTL Current Assets Cash and Cash Equivalents Trade Receivables Other Receivables Inventory Prepaid Expenses Current Income Tax Assets Other Current Assets Non Current Assets Other Receivables Prop., Plant and Equipment Intangible Assets Prepaid Expenses Total Assets

37 APPENDIX BALANCE SHEET LIABILITIES AND EQUITY (*) MTL Current Liabilities Short-Term Financial Liabilities Trade Payables Employee Benefits Deferred Income Deferred Tax Liabilities Short-Term Provisions Other Current Liabilities Non Current Liabilities Long-Term Financial Liabilities Provision for Empl. Benefits Deferred Tax Liabilities Equity Paid in Capital Other comprehensive income/expense Restricted Reserves Appropriated from Profits Retained Earnings Net Profit for the Year Total Liabilities and Equity

38 APPENDIX SHAREHOLDER STRUCTURE ( ) 49%* 51% Yıldız Holding Public (*): According to Central Registration Agency free loat data as of

39 CONTACT INFORMATION INVESTOR RELATIONS Işıl Bük Investor Relations Manager website: 39

40 APPENDIX STORE PICTURES 40

41 APPENDIX WAREHOUSE PICTURES 41