Company Presentation

Turkey
Company Presentation
«Re-engineering retail»
DECEMBER 2014
0
Agenda
I. Bimeks at a Glance
II. Consumer Electronics Retail Market
III. Company Overview
IV. Financial Highlights
V. Strategy and Conclusion
1
At a glance
 First electronics retailer of Turkey, 25 years of solid track record
 Only retailer having a ‘business engineering and software development team’
 First and only electronics retailer integrating offline and online channels
 First electronics retailer having ‘delivery within-the-hour’ capability
 140 stores in 58 provinces
 111.000 sqm net selling space & 27.000 SKU
 2,7 million visitors per month with %16 conversion rate
 Sales Growth YoY (9M2014) : % 90 (*)
 Sales Growth L-f-L (9M2014) : % 9,4
 Online Sales Growth YoY (9M2014): % 119
(*) :
This growth is mainly from EW and Darty acquisitions
2
Agenda
I. Bimeks at a Glance
II. Market
III. Company Overview
IV. Financial Highlights
V. Strategy and Conclusion
3
Market: Technical Consumer Goods (TCG)
Consistent Growth
Growth Drivers
TECHNICAL CONSUMER GOODS
2013
2016E
CAGR
(%)
 Share of organized retail
%27
32%
%6
 PC Sales
2.040
2.600
8,4
 LED TV Sales
5.270
7.500
12,5
 Mobile Phone Sales
12.000
15.000
7,7
 Internet usage
21.900
26.000
5,9
million TL
(000 units)
35.000
30.000
25.000
20.000
15.000
10.000
21.500
25.100
29.800
31.000
5.000
-
2011
2012
2013
2014E
Turkey
 2011-2013 CAGR: % 18
 2014-2017 CAGR (E) : %13
 Urbanization and wealth trigger the demand
Source: GfK Group, International Data Corporation (IDC),
Information & Communications Technologies Authority of Turkey(ICTA), TÜİK, Eurostat
4
EU (28)
 Computer penetration
50%
78%
 Internet penetration
49%
79%
 Mobile phone
penetration
93%
125%
Market: Technology SuperStores (TSS)
Attractive
Market
Growthtransformation
Growth
driven
by market
TECHNOLOGY SUPERSTORES
million TL
 CAGR 2010-2013 of Technology Superstores
is 38%.
9.000
8.000
7.000
 Expected CAGR of TSS in 2015-2017 is 20%
6.000
5.000
8.050
4.000
3.000
2.000
8.800
 Transition from traditional channels to retail
chains triggers the growth
5.900
4.200
1.000
 Online shopping trends favor omni-channel
retail chains
-
2011
2012
2013
2014E
Source: GfK Group
5
Market: TSS within TCG
Technology Superstores gaining market share...
Transition from one-brand dealers and corner shops to multi-brand organized retailers
2011
Mass
Computer
Merchandiser Resellers
s
4,1%
12,4%
Consumer
Electronics
Shops
42,4%
Telecom
Shops
20,9%
2013
2012
Mass
Merchandisers
13,9%
Computer
Resellers
3,1%
Consumer
Electronics Shops
39,4%
Mass
Merchandisers
12,6%
Computer
Resellers
3,1%
Consumer
Electronics Shops
35,2%
Telecom Shops
22,1%
Telecom Shops
20,0%
Technology
Superstores
20%
Technology
Superstores
23,6%
 TSS Share is expected to reach to 40 % in 5 years
Source: GfK Group
6
Technology
Superstores
27,0%
Market: TSS within TGC
Becoming a convenience store
100%
90%
80%
70%
60%
TSS expand the product range :
44%
52%
75%
84%
96%
50%
40%
30%
48%
20%
10%
0%
56%
25%
16%
4%
White and
Brown
Goods
Telecom
Consumer
Electronics
Computers &
components
Technology Super Stores
•
Domestic appliances
•
Kitchenware
•
Personal care
•
Sport equipments
Small
Appliances
Potential
New categories provide better profit margins, with diversified and ‘more female’ customer base
Source: GfK Group
7
Market vs.Bimeks
Sustainable growth at a progressive market
BİMEKS & MARKET SHARE
million TL
1.600
14%
1.400
1.200
1.000
14,0%
9,4%
12,0%
8,4%
8,7%
10,0%
800
8,0%
1.280
600
400
200
16,0%
396
495
6,0%
4,0%
697
2,0%
-
0,0%
2011
2012
BIMEKS
2013
2014E
BIMEKS/TSS %
• Changes in consumer behavior sustains the growth of TSS Market.
• Expected CAGR of TSS within 3 years is 20%.
• Bimeks continues to gain market share following the takeover of EW and Darty stores.
Source: GfK Group
8
Agenda
I. Bimeks at a Glance
II. Consumer Electronics Retail
Market
III. Company Overview
IV. Financial Highlights
V. Strategy and Conclusion
9
Company Overview
Bimeks Snapshot
Shareholding Structure
 Strong brand awareness : % 93 brand recognition
 140 stores in 58 cities,
 Total sales area (net) of 111,000 m2
 Acquisition of ElectroWorld and Darty Turkey
 Omnichannel strategy : E-Store
 Unique franchising model : Store-based Partnerships
 Wider product range: 27,000 SKUs
*SPV and Bimeks Bilisim is
owned by Akgiray Family
 1.700 employees as of December 2014
10
Company Overview
•Efficiency in market penetration by multi-format store sizes.
Store Breakdown by Sales Area
Store Format
Small
Standard
Standard+
Bigbox
Size (m2)
< 300
300-600
600-1.000
>1.000
Number
29
36
34
41
140
Sales Area
6.174
12.604
20.740
71.784
111.302
%
6%
11%
19%
64%
58 provinces ( 81 provinces until end 2015)

Omnichannel convenience

Landmark effect with ample number of stores

Stores used as “inventory and delivery hub ” for online sales
11
Company Overview
Improving Profit Margin with better product mix
SALES BY PRODUCT CATEGORIES
%
2012
2013
2014/9
2014
CE
IT
Mobile
Peripherals
MDA+ SDA
Accessories+Convenience
Personal Care
Digital Game
Service
Other
29
39
18
5
2
2
1
32
29
21
6
4
2
1
1
4
4
24
24
25
6
12
3
2
1
2
1
24
22
25
6
12
4
2
1
2
2
-
Increasing share in categories with higher gross margin
Widening the product mix with better display areas
Product mix evolving from discretionary to basic needs
12
Acquisition of Electro World & Darty Turkey
ELECTROWORLD
 October 2013:The closing of EW acquisition
 22 stores with 50.000 m2 sales area converted to Bimeks stores.
DARTY
 January 2014: Signing of Agreement with Kesa UK - Darty France
 May 2014: 21 stores with 26.000 m2 sales area converted to Bimeks stores
Benefits of EW & Darty:
 Network expansion : becoming a landmark
 Immediate revenue growth : Accomplishing growth targets two years earlier
 Wider display areas : Shop in Shop and display revenues
 Strong market share in MDA&SDA ,Personal Care, Accessories
 Presence in premium locations.
 Increasing leverage for procurement.
 Enhancement of omnichannel strategies: More delivery and inventory hubs
13
Business Strategy
Four pillars of our business strategy
 Increasing online sales with omnichannel strategy
Combining store network with online sales
Stores as fulfillment centersSame inventory,same logistics
 Increasing geographical reach to enhance omnichannel capacity
Strong and fast penetration with ‘Store-based Partnerships’
 Multi-format stores management
Geographically optimized products portfolio by store clusters
 Algorithmic management of inventory and product price
In-house development of software with artificial intelligence tools
14
Business Strategy-1  Omnichannel Perspective
Multi channels, One business model
 New era in retail: multiple sales channels
 Convergence of offline and online retail
 Bimeks stores used as “fulfillment centers ”
for online sales. New logo
100%
 In-house developed,sophisticated software
systems running omnichannel processes.
 Constantly optimizing costs
80%
60%
40%
2009
2011
Stores
15
2013
2015
Multichannel
2017
2019
Pure Online
Business Strategy-1  Growth in Online
Increasing online sales with omni-channel strategy
 Convenient business model for multichannel
 % 6,4 of total sales (1H2014)
 % 91 increase in online sales (YoY)
 Expected % 60 CAGR growth in online sales
 Same-day delivery service:
Unique «integrated» fast delivery in TSS
within-the-hour delivery
16
Business Strategy-2  Geographical Reach
Hybrid franchise system: Store-based Partnership - SbP
 Launched in 2010.
 55 Sbps as of December2014
Kırklareli
BartınKastamonu
(1)
Zonguldak
Edirne
(1) Tekirdağ (2)İstanbul
(30)
Balıkesir
Çanakkale (1)
Kocaeli (4)
Düzce (1)
Yalova (1)
Sakarya
Bolu (2)
(2)
Sinop (1)
(1)
Çankırı (1)
Çorum (1)
Ankara (7)
Manisa (5)
Uşak (1)
Kıışehir
Konya (4)
(2)
Kayseri (1)
(1)
Aksaray (1)
Isparta
Burdur
Burdur
Antalya (6)
Kahraman
Maraş Adıyaman (1)
Niğde
Mersin (1)
Batman
Diyarbakır (2)
(1) Siirt (1)
Şırnak
(2)
Adana (1)
Karaman
Ağrı
Erzincan
Bingöl
Tunceli
Muş (1)
Tunceli
Bingöl
(1)
Elazığ (2)
Bitli
Bitlis
Malatya (1)
Nevşehir
Afyon
İzmir (7)
Denizli
Sivas (1)
Kırşehir
Kütahya
Iğdır (1)
Erzurum (1)
Erzincan (1)
Yozgat (2)
Kütahya (2)
Kars
Ağrı
Kırıkkale
Eskişehir (1)
Muğla (4)
Gümüşhane
Bayburt
Tokat (1)
Bilecik
Bursa (3)
Bursa
Bilecik
Aydın (4)
Rize
Ord
Ordu (2)Giresun Trabzon (1)
Amasya
o No inventory risk for
franchisee,
Artvin
Artvin
Samsun (3)
Mardin (1)
Osmaniye Gaziantep Şanlıurfa (2)
(1)
Kilis
(2)
Hatay
(2)
17
Van
(2)
Hakkari (1)
o Fast geographical
expansion
o Controlling cash flow
o Reducing Opex
o Managing inventory and
logistics
Business Strategy - 3  Multi-format Store Management
Geographically optimized products portfolio by store clusters
 Diversity in store sizes : 250 m2 to 3.000 m2
 Optimizing the inventory by using ‘products portfolios’ , based on store clusters
 Enabling the customer reach to more variety of products
.
18
Business Strategy-4  In-house development of software
Algorithmic management of inventory and price
 Process engineering ability
 Optimization of gross margins by using algorithmic price mechanisms
 Efficient inventory management with artificial intelligence (AI) tools
 Fully automated procurement processes
 Real-time optimization of inventory in stores
19
Agenda
I. Bimeks at a Glance
II. Consumer Electronics Retail Market
III. Company Overview
IV. Financial Highlights
V. Strategy and Conclusion
20
Consistent profitability
Strong Revenue Growth focusing on steady profit margins
EBITDA Q O Q
20
5,9%
5,4%
million TL
15
4,0%
16
12
11
18
3,0%
2,0%
1,0%
0
0,0%
2013 Q4
2014 Q1
2014 Q2
EBITDA mn.TL
2014 Q3
9 MONTHS
800
3,9
600
875
400
437
1,3
0,3
2012 9 MO
2013 9MO
SALES mn TL
 Sales: 308 mn TL
 EBITDA Margin: % 5,9
2014 9 months:
5,0
 Sales: 875 mn TL
4,0
 Gross Profit Margin: % 19
3,0
337
2014 Q3 :
 Sales Growth YoY : % 100
1000
0
 Increasing Net Profit YoY
 Net Profit Margin: % 0,7
EBITDA %
SALES & NET PROFIT-
200
 Steady Improvement in EBITDA
5,0%
10
5
6,0%
4,3%
4,1%
7,0%
NET PROFIT mn TL
2014 9 MO
21
2,0
 EBITDA Margin: % 5,2
1,0
 Sales Growth YoY : % 100
-
 Sales Growth like-for-like : % 9,4
 Net Profit Margin : % 0,5
Recovery in Opex and inventory turnover
Reducing Working Capital Requirement
OPEX / SALES - Y O Y
18,0%
16,0%
15,6%
14,0%
12,0%
10,0%
16,4%
14,1%
12,4%
8,0%
6,0%
 Operational Expenses,
increased due to EW and
Darty implementation
process, returning to
normal ranges
 Rent /Sales expected to
even out around 3-3,5%
4,0%
2,0%
0,0%
1
2
3
4
INVENTORY DAYS
150
145
140
135
130
125
146
135
120
129
115
125
110
2013 Q4
2014 Q1
2014 Q2
2014 Q3
22
 Inventory turnover
gradually improving,
through new
procurement and
inventory management
software
Robust growth in online sales
Consistent EBITDA Margins in next years with omnichannel model
80
3.230.000
70
 Online sales growth: % 119
%119
2900000
40
68
30
2.705.000
2800000
2700000
2600000
31
10
2500000
0
2400000
2013 9MO
ONLINE SALES
 Single visitor growth : % 20
3000000
50
2014 9MO
SINGLE VISITOR/MONTH
Visitor
sales mn TL
3200000
3100000
60
20
 Online sales/ Total sales: % 7,7
3300000
 Omnichannel implementation
completed
 Combination of offline and online
channels completed
 Inventory in stores unlocked for
online sales
 Online shopping with mobile devices
launched (Appstore&Android)
23
Financial Highligts
2013/9
437
77
2014/9
875
170
Gross Profit %
17,6%
19,4%
EBITDA
EBITDA %
Net Profit
Net Profit %
26
5,9%
1,2
0,3%
46
(million TL)
Net Sales
Gross Profit
(million TL)
Trade Receivables
Inventories
Total Fixed Assets
Net Debt
100%
121%
77%
5,2%
3,9
225%
0,5%
2013/9
19
232
81
110
2014/9
33
409
117
174
24
74%
76%
44%
58%
Growth Drivers
Consistent EBITDA Margin in next years with omnichannel model
2015
2016
2017
CAGR 2014-2017
Total Sales (mn TL)
1.570 - 1.650
1.700 - 1.850
1.900 - 2.100
21%
Online Sales (mn TL)
170-200
250 - 300
320 - 380
60%
Gross Profit %
17,5 - 18
17 - 18
16 - 17
EBITDA %
4,8 - 5,3
4,8 - 5,4
4,8 - 5,5
1 - 1,4
1,3 - 1,6
Net Profit %
Sales Area ( m2)
0,8 - 1,2
118.000-128.000 128.000-135.000 130.000-136.000
Number of stores
145-155
150-160
160-165
Number of Provinces
65-70
70-81
81
3%
 We foresee a decelerating gross margin, due to the convergence of online and
online channels in 3 years
 Keeping up with optimization processes, the decrease in opex will continue
 Increasing proportion of online sales helps the company lowering opex margin
25
Future Prospects & Value Drivers
Increasing the company value
First mover in omnichannel model

Stores combined with online sales => Stores as fulfilment centers

Same-day delivery taken to the next level=> within-the-hours

Targeting to increase online sales up to 30 % in total sales in 5 years
In-house software development

Integrated algorithmic software with omnichannel (ERP-CRM-Logistics)

Efficiency in cost management

Realtime procurement&inventory management (Artificial Intelligence)
Growth driven by Acquisitons and StoreBasedPartnerships

Increasing market share to 15-20 %

Better positioning in a competitive environment
Better product mix

Enhancing profit margins
26
Disclaimer
This presentation and the accompanying slides (the “Presentation”) which have been prepared by Bimeks Bilgi Islem ve Dis Ticaret A.S. (“Bimeks” or the
“Company”) do not constitute any offer or invitation to purchase or subscribe for any securities, and shall not form the basis for or be relied on in
connection with any contract or binding commitment whatsoever. They are only being furnished to you and may not be photocopied, reproduced or
distributed to any other persons at any time without the prior written consent of the Company. This Presentation has been prepared by the Company
based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied,
whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This
Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents
of or any omission from this Presentation is expressly excluded.
Certain matters discussed in this presentation may contain statements regarding the Company’s market opportunity and business prospects that are
individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to
known and unknown risks, uncertainties and assumptions that are difficult to predict. The Company’s actual results, levels of activity, performance or
achievements could differ materially and adversely from results expressed in or implied by this Presentation, including, amongst others: whether the
Company can successfully penetrate new markets and the degree to which the Company gains traction in these new markets; the sustainability of recent
growth rates; the anticipation of the growth of certain market segments; the positioning of the Company’s products and services in those segments; the
competitive environment; and general market conditions. The Company assumes no obligation to update any forward-looking information contained in
this presentation.
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