Esteemed business partners and other stakeholders:

Welcome to our company’s annual general assembly meeting for 2018. It gives me pleasure to have this opportunity to meet and share with you our company’s goals and strategies, how we are positioning Migros in its sector, and what our growth plans are.

Economic and Sectoral Review

Higher exchange rates experienced in the second half of 2018 increased the cost of producing goods and services in our country. With companies behaving more cautiously in their investment strategies, economic growth fell as compared with previous years. We are now in the early months of 2019 and while there has been an increase in unemployment figures, the volatility band of exchange rate movements narrowed, year-on-year inflation has begun to subside, and we have embarked upon a process of economic restabilization. Assuming we left the worst behind us, we remain expectant that the process immediately ahead of us will be one of increased appetite for investment, improvements in growth, and a reduction in inflation. A climate of confidence nourished by policies that focus on our country’s economic issues will help revive investment, reestablish strong growth, and reduce unemployment. Only when that happens will the potential for the high growth that our youthful and dynamic country deserves be restored.

At the international level, there was certain evidence of economic recovery in the United States and other developed countries. Notwithstanding its occasional market volatilities, 2018 was a generally positive year in which expectations improved.

Strategies and Operational Performance

Here at Migros we have completed a year that was positive for the company’s growth. Exceeding our targets that we set for the year, we opened 238 new stores in 2018. Our total investment outlays in 2018 reached TRL 488 million. As a result of those investments there are no provinces in Turkey, missing Migros shopping experience, Migros quality, confidence, Migros friendly service and care. The legal formalities entailed by our merger with Kipa were completed. Every former Kipa store has been converted into an appropriate Migros format in order to improve their sales performance and make them more productive. In a similar way, all of the Makromarket and Uyum stores that we took over last year have also been converted to a Migros format. In addition, we also continued to invest in making improvements in existing Migros stores.

With the inclusion of the premises of its international subsidiaries, the total number of stores in Migros’ portfolio reached 2,103. Owing both to new store openings and to strong performance by existing ones, Migros’ consolidated sales in 2018 topped TRL 18.7 billion, a figure that corresponds to a 22.0% rate of year on growth. Our consolidated operational profit was also up year-on and indeed grew by more than our company’s sales. Consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 39.6% year-on and topped TRL 1.2 billion. Our EBITDA margin, which was 5.7% in 2017, improved and reached 6.5% in 2018. However despite Migros’ strong operational performance, the depreciation of the Turkish lira against the euro in particular exacerbated the company’s exchange rate losses and, as a result of the associated financing expenses that were booked, the company showed a net consolidated loss of TRL 835 million in 2018.

The outlook for the future


In the period ahead, our goals as Migros will be to reduce the company’s euro denominated debt, continue to pursue growth, and improve operational profitability. Over the last three years, our company’s consolidated sales have risen from TRL 9,390 million to TRL 18,717 million while its consolidated EBITDA has increased from TRL 602 million to TRL 1,217 million.

So when we step back and take a look at the big picture, we see that both Migros’ consolidated sales during the most recent three years and the EBITDA that it generated during the same period have doubled. Our efforts now are focusing on achieving the same sort of growth in the course of the next three to four years.

These targets are high and achieving them is certainly not going to be easy. We are certainly going to have to work harder than ever in order to do so. And certainly the support of you, our stakeholders, is going to be just as important as ever. However just as the words “quality”, “service”, and “family-budget-friendly” come to mind whenever the Migros name is mentioned in our country and just as customers prefer our brand because “If it’s Migros you can trust it”, my own way of thinking is very much the same.

That’s because when I look at Migros’ employees I know I can trust Migros the same way that our customers do.

I offer my love and respect to you all.

Tuncay Özilhan
Chairman of the Board of Directors