Esteemed stakeholders,

Welcome to Migros’ general meeting for 2017. On this occasion I am pleased to have this opportunity to present you with a review of last year and to tell you about our expectations and plans for the year ahead. Once again let me bid you all welcome.

Economic and sectoral review

Valued Migros partners, we are embarking upon the new year with new hopes. We have completed a year in which other developed and developing countries’ markets performed relatively better than was the case in previous years. Inflation in the United States and Euro area remained fairly subdued. The world’s stock exchanges broke new records in response to expectations of corporate profits and real growth. Here in our own country, Borsa İstanbul registered its best performance ever and reached record highs. Although Turkey certainly has geopolitical and economic problems of its own, they are issues that can be resolved. It is also true that our country is located in a difficult part of the world but its people have repeatedly demonstrated how they can come together and act with one purpose when they must.

Last year Turkey’s economy grew by 7.4%. That was higher than the growth rates achieved by any EU, G20, or OECD country. Although low base effects certainly contributed to this economic growth, the performance was undeniably enhanced by the infusion of resources into the real sector through the effective use of such channels as the Credit Guarantee Fund. New employment opportunities were created and businesses’ confidence was given a refreshing new boost. We witnessed signs of improvements in tourism. Of course it will henceforth be important to ensure the continuity of this growth in the future as well. That is because the sustainability of our gains as a country is extremely crucial. On the other hand inflation remained in the double-digit range last year, though that was partly due to exchange rates. I anticipate that inflation will return to single-digit figures in the period ahead. I believe that sooner or later Turkey will achieve its goal of having strong growth combined with low inflation. This country’s problem with inflation is the result of issues that can be addressed through structural reforms, the right incentives, and the right investments. For our own part we will do what we need to do: we will continue investing and work even harder.

Strategies and operational performance

Valued Migros partners, when I spoke to you last year I said that we had just completed a year in which we gave new direction to Migros’ strategies. In 2017 we made one of those strategic moves with our acquisition of Kipa. In the ensuing process we took every possible cost-focused measure in order to restore Kipa to profitability. Kipa’s business processes were improved. Employing our technological capacity in many different areas such as supply chain, logistics, quality, store management, and headquarters operations, Kipa was restructured in line with Migros’ own customer-focused point of view. At the same time, Migros continued to undertake new investments of its own all year long. In 2017 we opened 193 new stores. With the inclusion of the stores taken over as part of our Kipa acquisition, the number of new additions to our stores portfolio topped 350 while the total number of stores when Migros’ domestic and international subsidiaries are taken into account reached 1,897. Thanks to strong growth, our company’s consolidated sales surpassed TRL 15.3 billion while the year-on increase in our sales was 38.7%. The company’s operational profitability was also up as compared with the previous year.

Expectations for the future

More growth and increased operational profitability will once again be on Migros’ agenda in 2018. We will expand our domestic footprint and soon there will be no province in which we do not have at least a presence, which means that we will be serving customers everywhere in the country. Another of our 2018 goals will be to merge the operations of Migros and Kipa, thereby increasing productivity and creating synergies.

As we do these things, we will also be asking the question “How can we serve our customers better?” Customer focus has become the most important element of how we do business today. I have even greater confidence than ever in Migros’ future and success. I sincerely believe that, backed by the confidence of all of our stakeholders, Migros will continue to grow even more soundly in the years ahead and will become one of the world’s foremost regional food retailers.

Very truly yours,

Tuncay Özilhan
Chairman of the Board of Directors