Investor Presentation
January 2018 Disclaimer 2
• This presentation contains information and analysis on financial statements and is prepared for the sole purpose of providing information relating to Ülker Bisküvi Sanayi A.Ş. (“Ülker”) • 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 Ülker’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. Ülker 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 This presentation does not include an official offer of shares; an offering circular will not be published • This presentation is not allowed to be reproduced, distributed or published without permission or agreement of Ülker • The figures in this presentation are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 may occur • Neither Ülker nor any of its managers or employees nor any other person shall have any liability whatsoever for any loss arising from the use of this presentation Agenda
Company Overview
Domestic Operations
International Operations
Strategy
The impact of UI Mena & IBC Acquisition
Financial Highlights
Appendix
3 Leader confectionery company in the region 4
Net Sales by segment - 2017
Over 70+ years of experience in Turkey 9,6% 2,3%
Producer of biscuits, chocolates, chocolate covered products, crackers, wafers and cakes 40,5% 47,6%
Leader in Turkey with 36% market share as of 2017 Chocolate Biscuit Cake Non-Conf
Extensive sales & distribution capabilities Net Sales by region - 2017
30,0% A gateway to the Middle East, Northern Africa and Central Asia 70,0%
41.5% - Free Float & 58.5% pladis and Ulker family members Domestic International
EBITDA by region - 2017 Key figures – TL mn 9M 2017 28,1% Sales Volume (Tonnes) 389.237 Net Sales 3.358 71,9% EBITDA 468.5 EBITDA Margin % 14.0% 4 Domestic International Continuous focus in value 5
Gathering all chocolate and cake businesses under Ülker Bisküvi Ülker Biskuvi acquired 30% minority and starting disposals of 6 non-core assets stake in Biskot
Simplified traditional channel distribution SKU optimization in biscuits 502 SKUs vs. 330 SKUs in 2014 Cancellation of privileged shares and founder shares 2013
2012 2014
Free Float reached 40% after Yıldız Holding’s block sale
New dividend policy – minimum 70% of distributable income
Our restructuring history between 2012-2014
5 6 First phase of international acquisitions completed
Hi Food İstanbul Gıda FMC Hamle (Egypt) (Export out of Turkey) (Saudi Arabia) (Kazakhstan)
March 2016 June 2016 March2017
Stake: 55.0% Stake: 51.4% Stake: 100.0% Stake: 100.0% 9M’17 Net Sales: USD c.96 mn 9M’17 Net Sales: USD c.30 mn 9M’17 Net Sales: USD c.115 mn 9M’17 Net Sales: USD c.20 mn 9M’17 EBITDA : USD c.12.7 mn 9M’17 EBITDA : USD c.1.3 mn 9M’17 EBITDA: USD c.8 mn 9M’17 EBITDA : USD c. 0.9 mn
6 Growing our regional footprint 7
Covered Territory
c610 mn Population
GDP per c7,689 USD Capita
21 mn km² Total Area
Confectionery 13,3 bn USD Market
Brand Positioning
Turkey Saudi Arabia #1 in Total Confectionery #2 in Biscuits
Egypt Kazakhstan
#3 in Chocolate Countline Covered Territories #3 in Biscuits 7 Solid top line growth coupled with enhancing 8 profitability despite challenging times
2012 2013 2014 2015 2016 Sept’17 CAGR LTM % Volume (‘000tons) 422 478 480 514 501 528 4,6
13,6% 5.000,0 Net Sales EBITDA EBITDA Margin 16,0% 4.517,9 4.500,0 13,1% 12,6% 14,0% 3.921,7 4.000,0 3.793,7 11,5% 11,5% 12,0% 3.500,0 9,3% 2.891,2 10,0% 3.000,0 2.748,4
2.500,0 2.340,6 8,0%
2.000,0 6,0% 1.500,0 4,0% 1.000,0 613,7 478,5 512,7 331,9 2,0% 500,0 218,3 315,2 - 0,0% 2012 2013 2014 2015 2016 2017 LTM
2015-2016 figures do not include Hamle acquisition impact
Note: EBITDA and Net Sales are expressed in million Turkish Lira 8 Largest production capacity in the region 9 with strategically located plants
Production in 4 countries at 9 facilities Total Production Capacity of 920K tons
Turkey Egypt Saudi Arabia Kazakhstan
Istanbul- Topkapı Chocolate Istanbul Capacity: 195k Gebze tonnes/year Ankara
Istanbul- Silivri
Chocolate, chocolate Karaman covered biscuit Capacity: 45k tonnes/year Istanbul- Hadımkoy Cake Capacity: 50k tonnes/year Ankara Biscuit Karaman Capacity: 151k Hi-Food FMC Hamle Biscuit, cake, tonnes/year Gebze Biscuit & Chocolate & Biscuit & Chocolate & Cake cracker & chocolate The largest biscuit Biscuit Biscuit & cracker Cake Capacity: 214k manufacturing facility in Capacity:44k Capacity: 47k tonnes/year Capacity: 57k tonnes/year the Middle East Capacity: 119k tonnes/year tonnes/year tonnes/year 9 Strong brand equity leveraging 10 70 years of heritage
Brand Ülker perception study Recognition
Ülker – Always «most recognized» and «closest to consumers» In its own category, Ülker is the most beloved brand name of all.
Source : AC. Nielsen & Mediacat Source: Ipsos 2015
Brand Ivestments Made in 2016
Ülker address to youth Ülker present happiness Dynamic brand Social «more adressing to youth» «Only we provide joy & «becoming more dynamic «Consumers find Ülker more happiness» every day» social» +16 pp, reached 43 Since +11 pp, reached 45 Since +22 pp, reached 45 Since +18 pp, reached 42 Since Nov Nov 2015 Nov 2015 Nov 2015 2015
Source: BHT Araştırması /GFK-Nov 2017 10 Well structured route to market system 11
30% International
• 95 distributors
Traditional Independent • # of points visited: 180k out Channel Distributors of 200k available points • % of invoice issued by visit: 90%
Domestic 70% National Retailers • Directly distributing to main Modern Cash & Carry warehouses Channel • # of points visited: c25k with Discounters c99% coverage
Decreased logistics expense
More efficient route to sales points
Single joint sales & distribution network Enhanced distribution profit
Better and faster execution capability
Stronger distributors with higher nominal gains 11 12
Domestic Operations
12 #1 in total confectionery with 36% 13 market share
Turkey
#2 Biscuits – 36% Market Share (1) #1 Chocolate – 38% Market Share (1) #2 Cake – 28% Market Share (1)
# 1 in Creamy Biscuits # 1 in Petit Beurre 4 out of Top 5 in Chocolate Covered #1 in Family Cake
# 1 in Special Biscuits # 1 in Cracker #2 in Portion Muffin Coated Cake #1 in Solid Chocolate
# 1 in Sandwich Biscuits # 2 in Chocolate Biscuit #2 in Spread Chocolate #2 in Wet Cake ______(1) Source: AC Nielsen&Ipsos – LTM Quarterly Market Share Development, Value Based – Q2’17 vs Q3’17
Biscuits 36,6% Chocolate Cake 36,6% 36,6% 35,0% 28,2% 27,4%
ULKER ULKER ULKER
Q2’17 Q3’17
*Source: AC Nielsen 13 Branded Sales Contribution of 14 Synergy Products & New Launches
2017 Synergy Products 2017 New Product Launches
Biscuits
2016 Synergy Products
Cakes
Chocolates
14 Domestic Operations Strong Growth in financial and operational metrics in Q3 2017
Sales Volume Net Sales (TL m) (thousand tons) Gross Profit (TL m) EBITDA (TL m)
745,6 21,6% 21,9% 15,2% 14,9% 82,7 90,5 631,9 136,3 163,2 111,1 96,3
Q 3 2 0 1 6 Q 3 2 0 1 7 Q 3 2 0 1 6 Q 3 2 0 1 7 Q 3 2 0 1 6 Q 3 2 0 1 7 Q3 2016 Q3 2017
Branded volume continue Branded revenue up by 20% Gross Profit up by 19,8% EBITDA was reported as with a good performance and TL111m representing 15,5% - Effective pricing strategy Gross Profit margin was up by 12,3% thanks to growth with the support of - Mix impact parked at 21,9% thanks to - New product launches effective cost management ATL/BTL expenses - New launch - Marketing investments despite rising input costs Total price per tonnes Overall volume increased improved by 7,9% by 9,4% Overall revenue up by 18%
15 Domestic Operations Strong Growth in 9M 2017
Sales Volume Net Sales (TL m) Gross Profit (TL m) EBITDA (TL m) (thousand tons)
23,2% 21,9% 14,8% 14,3% 2.350,4 478,6 515,3 286,6 336,9 272,6 2.065,5 306,5
9M2016 9M 2017 9 M 2 0 1 6 9 M 2 0 1 7 9 M 2 0 1 6 9 M 2 0 1 7 9 M 2 0 1 6 9 M 2 0 1 7
Branded sales continue with Branded revenue up by Gross Profit up by 7,7% EBITDA was reported as TL a good performance and up 16,1% 336.9m, representing 14,3% Gross Profit margin by of sales - Effective pricing strategy impacted due to 8,5 % thanks to - Saving in operating - Mix impact - Rising input costs expenses - New product launches - New launch Marketing investments - Total price per tonnes Overall volume increased improved by 8,2% by 5.2% Overall revenue up by 13,8%
16 Increased branded sales boosted by 17 synergies
In line with our strategy, we focused on branded product sales and continue to enjoy significant contribution improvement at the operational front.
Branded & Non-Branded Volume Breakdown Branded & Non-Branded Revenue Breakdown
9M 2016 9M 2017 9M 2016 9M 2017
Non Non Non Non Branded Branded Branded Branded 5% 11% 8% 7%
+3 pp +2 pp
92% 89% 93% 95%
Branded Branded Branded Branded
17 18
International Operations
18 Egypt – To become #1 in biscuits, 19 #2 in cake & in top 5 in chocolate
Snapshot of Egypt (2017) Market structure (2017) Dominant trade channel: traditional Population 90m Dominant segment: Chocolate & Biscuit
Population Growth Rate (1) c2.0%
(2) GDP GBP253bn Biscuit Chocolate 38% Size of Confectionery Market GBP390mn 40%
Cake 22%
Financial Review(3) 9M 2016 9M 2017 Change %
Sales Volume (tonnes) 20.698 21.727 5,0%
Net Sales (EGP x000) 297.358 539.687 81.5%
EBITDA (EGP x000) 32.332 24.466 -24.3%
EBITDA Margin 10.9% 4.5%
Despite heavy economic environment, our business in Egypt has grown rapidly in terms of volume and value with support of new launches and marketing investments.
Drop in EBITDA mainly driven by the new marketing plan that covers our most selling SKU’s after the takeover.
______(1) Source: Worldbank – 2006-2016 CAGR. (2) Source: IMF – 2010-2015 CAGR. * (3)Source:2016 9MWorldbank EGP/TRY average– 2006: 0,3411-2016 2017 CAGR 9M EGP/TRY average : 0,2011 19 ** Source: IMF – 2010-2015 CAGR Saudi Arabia – To become a strong challenger 20 in the biscuit & confectionery market
Snapshot of Saudi Arabia (2017) Market structure (2017)
Dominant trade channel: organized Population 32m Dominant segment: chocolate
Chocolate Population Growth Rate (1) c2.3% 54%
GDP (2) GBP520bn Biscuit Size of Confectionery Market GBP1.0bn 32%
Cake 14%
Financial Review(3) 9M 2016 9M 2017 Change %
Sales Volume (tonnes) 18.909 27.293 44.3%
Net Sales (SAR x000) 244.383 361.732 48,0%
EBITDA (SAR x000) 29.038 48.058 65,5%
EBITDA Margin 11.9% 13.3%
In line with our acquisition plan, our company has started to distribute McVities & Rana products in Saudi. The total contribution of this change to the volume is 5.6 ktons and 93 M SAR in terms of revenue. Along with McVities and ULKER brands our business has grown tremendously year over year. ______(1) Source: Worldbank – 2006-2016 CAGR. (2) Source: IMF – 2010-2015 CAGR. (3) 2016 9M SAR/TRY average : 0,7814 2017 9M SAR/TRY average : 0,9582 * Source: Worldbank – 2006-2016 CAGR 20 ** Source: IMF – 2010-2015 CAGR Kazakhstan– A bridge from East to West 21
Snapshot of Kazakhstan (2017) Market structure (2017)
Population 17.8m Dominant trade channel: Traditional Dominant segment: chocolate Population Growth Rate (1) c.1.4% 4% (2) GDP GBP117bn Chocolate 1% 4% 64% 1% 24% Size of Confectionery Market GBP1.0bn 1% 1% 26% 26% 71% 69% 70% Biscuit 24% Cake 12%
Financial Review(3)
9M 2016 9M 2017 Change
Sales Volume (tonnes) 9.178 8.119 -11.5%
Net Sales (KZT x000000) 6.689 6.479 -3,1%
EBITDA (KZT x000000) 411 260 -36,7%
EBITDA Margin 6,1% 4,0%
After acquisition of the company, SKU optimization project has been started in order to attain sustainable growth and expand the profitability strategy. Within the scope of this project, low profitable products are started to be delisted.
______(1) Source: Worldbank – 2006-2016 CAGR. (2) Source: IMF – 2010-2015 CAGR. (3) 2016 9M KZT/TRY average : 0,0085 2017 9M KZT/TRY average : 0,0111
* Source: Worldbank – 2006-2016 CAGR 21 ** Source: IMF – 2010-2015 CAGR Strong brand recognition in operating 22 territories
Continue to gain market share in Operating territories Egypt Saudi Arabia* Kazakhstan
#3 #2 #3 Biscuits – 13.8% Market Share Biscuits – 13.4% Market Share Chocolate– 8.8% Market Share
# 4 in countline # 1 in Plain # 1 in Filled # 1 in Filled (Biskrem and Tamr brands)
# 4 in Sandwich #1 in Coated # 1 in Biscuits with filling
# 2 in Plain (Teabiscuits and Finger biscuits) # 3 in Wafer
Market Share Development, Value Based (1)
13,8% 13,4% 8,8% 8,8% 13,3% 13,2%
2016 2017 2016 2017 2016 2017
______(1) Source: AC Nielsen-LTM (*) After UI Mena acquisition our market share will be %19.4 which is presented on page 35 22 2017 New Launches & Synergy Products 23
EGYPT KAZAKHISTAN
SAUDI ARABIA SYNERGY PRODUCTS
23 Strong performance prevailed in Q3 2017 24 with profitability focus
Confectionary Net Sales Confectionary Sales Gross Profit* (TL m) EBITDA* (TL m) Volume (thousand tons) (TL m)
20,4% 26,4% 6,4 % 9,7 % 30,5 264,0 70,4 25,8 25,6 42,8 182,2 13,4
Q 3 2 0 1 6 Q 3 2 0 1 7 Q 3 2 0 1 6 Q 3 2 0 1 7 Q 3 2 0 1 6 Q 3 2 0 1 7 Q 3 2 0 1 6 Q 3 2 0 1 7
Accelerated branded Gross Profit was up by Branded sales volume up by EBITDA growth by 92,4% revenue growth by 55,6% 64,4% 29,1% and margin improvement of Overall revenue was up by Continued gross margin 3,3 pp to %9,7 Overall volume was up by 44,9% in Q3 2017 thanks to increased to 26,4%, gains of 18,7 % 6 pp thanks to - Effective pricing strategy - New Launches, - New initiatives - Distribution of McVities - Effective Cost &Rana in Saudi Management - FX impact - New Initiatives- Distribution of McVities - New Ulker launches &Rana in Saudi - Improved raw material ______sourcing * Includes non-confectionary Gross Profit / EBITDA • Includes non-confectionery Gross Profit & EBITDA
24 Excellent contribution to both sales and 25 profitability in 9M 2017
Confectionary Net Sales Confectionary Sales Gross Profit* (TL m) EBITDA* (TL m) Volume (thousand tons) (TL m)
24,4% 28,6% 10,7% 13,1%
102,6 930,2 98,8 701,7 288,6 131,6 198,9 87,4
9 M 2 0 1 6 9 M 2 0 1 7 9 M 2 0 1 6 9 M 2 0 1 7 9 M 2 0 1 6 9 M 2 0 1 7 9 M 2 0 1 6 9 M 2 0 1 7
Accelerated branded Gross Profit was realized as Branded sales volume up by EBITDA growth by 50,5 % revenue growth by 37,6% 28,6% 10,4% and margin improvement of Overall revenue was up by Continued gross margin 2.4 pp to %13,1 Overall volume was up by 32,6% in 9M 2017 thanks to increased with a gains of 4.2 3,8% in 9M 2017 pp thanks to - Effective pricing strategy - New Launches, - FX impact - Effective Cost - New Distribution of Management McVities &Rana in Saudi - New Initiatives- - New launches Distribution of McVities &Rana in Saudi - Improved raw material ______sourcing * Includes non-confectionary Gross Profit / EBITDA
25 Strategy to focus in branded 26 confectionery products
Confectionery Branded & Non-Branded Volume Confectionery Branded & Non-Branded Revenue Breakdown Breakdown
9M 2016 9M 2017 9M 2016 9M 2017
Non Non Non Non Branded Branded Branded Branded 30% 26% 23% 20% +4 pp +3 pp 74% 77% 80% 70% Branded Branded Branded Branded
26 27
Strategy
27 Solid strategies for continued profitable 28 growth across the region
Saudi Arabia & Egypt & North Kazakhstan & Turkey Middle East Africa Central Asia
Regain market leader To become #1 in biscuits and To become #1 in biscuits, #2 To become #3 position position in all biscuits a strong challenger in the in cake & in top 5 in in biscuits & segments confectionery market chocolate Confectionary market» Biscuits Creating a production hub Creating a production for the whole Middle East hub for the whole North Production hub for market African market Central Asia, the Maintain undisputed Urumqi region, and leadership in the chocolate Leveraging on Ülker's Room for organic growth certain regions of segment know-how in the cake & chocolate Russia segments
Chocolate Introduce new formats in Strengthen position in the market Entry to the wafer chocolate category in Broaden the portfolio and segment different occasions & become strong #2 Improving distribution formats
Cake network in modern sales Increase traditional trade channel business share Balanced portfolio of packed and bulk Focus to grow share in Deeper penetration in the Deeper penetration in products traditional trade and ensure traditional channel the traditional channel «in-store excellence» Optimization of cost
Market across the value chain Continue to maintain cost advantages
28 29
The impact of UI Mena & IBC acquisitions
29 We have recently finalized phase II of the 30 acquisitions
UI MENA IBC
December 2017(*)
Stake: 100.0% Stake: 100.0% Net Sales: USD c.56 mn Net Sales: USD c.37 mn Net Sales Contribution: USD c.39 mn Net Sales Contribution: USD c.21 mn EBITDA: USD c.16.7 mn EBITDA: USD c.5.9 mn
Share Purchase Agreement and other agreements signed on 15 December 2017 Share transfer for UI MENA was completed For IBC, share transfer will be completed following the Sagia approval
(*) UI MENA & IBC figures represents 2017 year end estimated figures. 30 UI MENA operations in a nutshell 31
Overview Purpose of acquisition
Ülker acquired UI MENA which owns Amir Global Develop, import, manufacture, sale and distribution (the owner of McVitie’s distribution / production rights of McVitie’s in MENA rights in MENA and Saudi Arabia along with sales company in Egypt)
Sales operations in Egypt (Ülker Egypt) Includes current and future brands of UB
Some of the main markets: Saudi Arabia, UAE, Lebanon, Qatar, Kuwait, Jordan, Egypt Improve market position of Ülker in MENA countries
Consolidate all MENA operations
Decrease cost to serve in the region Key metrics (*)
USD 56 mn USD 39 mn USD 16,7 mn 29.8 % USD 159 mn 9.5x Net Sales Contribution to EBITDA EBITDA Enterprise Value EV / EBITDA Net Sales Margin
(*) UI MENA figures represents 2017 year end estimated figures. 31 IBC in a nutshell 32
Overview Purpose of acquisition
Manufacturing and selling biscuits Consolidate FMC and IBC’s operations and decrease the costs
Procurement, production and distribution Main brands: McVitie’s & Rana (local brand) synergies
1 factory in Riyad Make KSA a local production hub forME
Multiproduction :Ülker, McVitie’s & Rana Strong sales in domestic market Large presence in modern channel and visibility in shelf space Ülker acquired 100% of IBC Decrease cost to serve in the region
Logistics advantage Key metrics (*)
USD 37 mn USD 21 mn USD 5,9 mn % 15.9 USD 56 mn 9.5x Net Sales Contribution to EBITDA EBITDA Enterprise Value EV / EBITDA Net Sales Margin
(*) IBC figures represents 2017 year end estimated figures. 32 Recent acquisitions boost Ülker’s sales and distribution 33 capabilities with combined route to market in KSA
Distributor merge for Ülker and McVitie’s Direct reach to groceries and mini markets
84 17 89 Cash Vans Cash vans Cash vans 11.000 2.781 12.790 Reduction in «cost to serve» customers customers customers
Direct coverage of wholesalers* 233 600 641 wholesalers wholesalers Betterment in negotiation power wholesalers 2 6 8 29 30 8 27 23 SUP SR MER 8 SUP1 SR MER SUP SR MER
97% coverage of key 91% coverage of key accounts accounts Increasing merchandising efficiencies and store level visibility 648 599 561 points points points
(*) Abbrv: SUP : Supervisor, SR: Sales Representative, MER: Merchandisers
33 Extending brand portfolio with new acquisitions 24 34
Saudi Arabia Egypt
34 UB MENA and IBC acquisitions will 24 35 substantially strengthen our MENA operations
25
Biscuit market KSA Lebanon Jordan UAE Qatar Kuwait Egypt share, 9M2017(*)
#2 #1 #11 #6 #9 #15 #3
13.4% 12.7% 3.7% 3.4% 3.3% 1.4% 13.8%
6.0% 5.6% 6.1% 8.8% 11.0% 10.9% 0.3%
#1 #1 #2 #4 #2 #2 #3 1 1 1 After Acquisiton +19.4% +18.3% +9.6% +12.2% +14.3% +12.3% +14.1%
Main 13.9% 11.5% 10.0% 19.4% 18.5% 18.4% 18.1% Competitor
Undisputed market leader position in KSA and Lebanon
High scale business base in Egypt, Jordan, Qatar and Kuwait
(*) Nielsen Sept’17 MAT 35 Resulting synergies of recent acquisitions 24 36
Gain market share by increased numeric & weighted distribution additional 3.500 – 4.000 customers at grocery level to all of our brands
Saving USD 2.5 mn in procurement, production and distribution synergies
Organizational saving USD 1mn in G&A
Having global, regional and local brands in the portfolio
36 37
Financial Highlights
37 Consolidated Performance Highlights
Excellent growth in confectionary business by 24 % in Q3 2017
TL ('000) Q3 2016 Q3 2017 % 9M 2016 9M 2017 %
Confectionary Volume (Ton) 108.388 120.956 11,6% 371.474 389.237 4,8%
Revenue 842.027 1.012.542 20,3% 2.879.910 3.358.199 16,6%
Confectionary 814.177 1.009.679 24,0% 2.767.228 3.280.599 18,6%
Non-Confectionary 27.849 2.863 -89,7% 112.682 77.600 -31,1%
Confectionary Price Increase 11,1 % 13,1 %
Gross Profit 179.088 233.681 30,5% 677.495 803.938 18,7%
Gross Profit Margin 21,3% 23,1% 23,5% 23,9%
EBITDA 109.660 136.965 24,9% 393.951 468.552 18,9%
EBITDA Margin 13,0% 13,5% 13,7% 14,0%
In line with our strategy, non-confectionary business has been divested
38 Structure after UI Mena & IBC acquisition
ÜLKER BİSKÜVİ
Ülker Biskot Atlas(%100) İstanbul HI-FOOD Hamle UI MENA(*) IBC (**) Çikolata FMC(%55) (%73.9) Gıda(%100) (%91.7) Reform(%100) (%51.4) (%100) (%100) (%100)
AMIR FMCD(%52.3) GLOBAL (%100)
ULKER EGYPT (%100)
*UI MENA will be consolidated under Ülker Bisküvi as of 31 December 2017 **Due to legal (Sagia) approval process, IBC is expected to be consolidated under Ülker Bisküvi commencing from early 2018
39 The impact of UI MENA & IBC acquisition
Sept.2017 After Sept.2017 Before Sept.2017 After UI MENA&IBC Acquisition UI MENA Acquisition Acquisition
Net Sales (TLmn) 3.358,2 3.466,7 3.521,1
EBITDA (TLmn) 468,6 509,3 530
EBITDA (%) 14% 14,7% 15,1%
40 Effective Cash Cycle and Net Debt 41 Management
Average Working Capital Days
TL 665m TL 675m . Cash Cycle of 43 days in 9M 2017 (49 days in 9M 70 2016) 60 65 62 50 66 58 . Working capital requirement over sales ratio was 47 40 15,0% in 9M 2017 and 16,5% in 9M 2016 41 30 20 10 . Net debt stands at TL 773 mn as of Sept 30, 2017 0 9M 2016 9M 2017 . Net debt to EBITDA is 1,26x in 9M 2017 and 1,22x as of 31 December 2016 A/R A/P Inv Net Debt (TL m)
800 773 . Maturity breakdown as of September 30, 2017: 700 657 600 . Short term 62,0% 500 . Long term 38,0% 400 300 200 100 0 2016 2017
41 Net FX Position 42
Sept.2017 (Million TL/$/€/£) TL USD EURO GBP
Cash and Cash Equivalents 3.278,2 447,5 402,2 0,6 Trade Receivables 128,4 26,1 7,7 0,7 Total Assets 3.406,7 473,6 409,9 1,3
Other Non Current Assets 0,1 0,0 - -
Total Assets 3.406,7 473,6 409,9 1,3
Financial Liabilities 2.356,6 379,7 240,4 - Trade Payables 108,2 18,5 9,6 0,4 Other 10,7 3,0 - 0,0 Current Liabilities 2.475,5 401,2 250,0 0,4
Financial Liabilities 1.446,9 132,9 232,5 - Non Current Liabilities 1.446,9 132,9 232,5 -
Total Liabilities 3.922,4 534,1 482,5 0,4
Net Position (515,6) (60,5) (72,7) 0,9
Derivative Transactions 537,8 128 19,8 0
Net Position after derivative transactions 22,2 67,5 (52,9) 0,9
The FX net position of B/S has been minimized through derivative instruments 42 43
Appendix
43 pladis: Promise happiness to the world 44 with every bite
Yıldız Food
44 pladis: Promise happiness to the world with 45 every bite
Previously 31.12.2017(*)
Yıldız Yıldız Holding Holding
100% 100% 28,9% pladis pladis
21,0% 100% 51,0% 100% 100%
Ulker United Ulker United Star Brands Biskuvi Biscuits Biskuvi Biscuits
(*) In line with Yıldız Holding’s strategy of gathering all confectionary business under pladis umbrella and transform the structure of pladis as a pure confectionary company consolidating the assets like Ülker Bisküvi, United Biscuits and Star brands, on 29th of December Yıldız Holding transferred the remaining Ülker shares to pladis. After the transaction, pladis holds 51% of Ülker Bisküvi shares.
45 Synergies via pladis will boost operational 46 capabilities
Creating business Efficiencies in potential and focus direct & indirect MENAT Operations on value added procurement products
Pladis synergies
New export Having global & opportunities regional & local through pladis R&D Capabilities brands, network widening competitive edge product umbrella
46 Corporate Governance – In the heart of the 47 company
Board of Directors 3 independent board members out of 9 board members, complying Capital Markets Board regulations
Formed by 2 independent members Meet 4 times in a year Audit Committee Main duties are; • Audit to ensure that periodic financial statements and their footnotes comply with the current legislation and international accounting standards • More to be found at http://ulkerbiskuviinvestorrelations.com/_assets/pdf/charterofaudit.pdf
Formed by 2 independent members Early Detection of Meet 6 times in a year Main duties are; Risks Committee • Identify the company's current and potential financial, operational and external risks, and provide advice on taking the necessary measures • More to be found at http://ulkerbiskuviinvestorrelations.com/_assets/pdf/riskcommittee.pdf
Formed by 2 independent members + 2 company officials Corporate Meet 4 times in a year Governance Main duties are; Committee • Work to create a transparent system to identify, assess and train appropriate candidates for the Board of Directors, and to establish policies and strategies in this regard • More to be found at http://ulkerbiskuviinvestorrelations.com/_assets/pdf/charterofgover.pdf
47 Sustainability – This is our world 48
6 key issues are Innovation Environmental Value Social identified Sustainability Chain Responsibility Employees Responsibility
First Sustainability Released in 2016
Sustainability Practices Second Sustainability Released in 2017
Listed for the first time in 2015 and become the first listed food Sustainability Index company ever in sustainability index
Detailed commitments are available at http://ulkerbiskuviinvestorrelations.com/en/ sustainability/sustainability-approach/our- commitments.aspx
48 Steady improvement in operational front 49
3,8% 13,6%
1,7% 3,9%
2011 EBITDA Margin Distribution Category Mix Effect Better Cost & Opex 2017 LTM Restructuring Management EBITDA Margin
49 Income Statement
3Q 2016 9M 2016 Income Statement(TL mn) Restated 3Q 2017 Restated 9M 2017 Sales Revenues 842,0 1.012,54 2.879,9 3.358,20 Growth (%) 20,3% 16,6% GROSS PROFIT 179,1 233,7 677,5 803,9 Growth (%) 30,5% 18,7% Gross Profit Margin 21,3% 23,1% 23,5% 23,9%
Marketing, Sales & Distribution Expenses (64,2) (87,9) (251,5) (307,4) General Administration Expenses (26,1) (32,1) (89,3) (96,0) Research Expenses (1,4) (3,2) (5,7) (9,5) OPERATING PROFIT 87,4 110,5 331,1 391,0 Other Operating Inc/Exp, net 3,9 (0,1) 8,9 4,4 OPERATING PROFIT INCLUDING OTHER INCOME/EXPENSE 91,4 110,4 340,0 395,4 Income from Investments 67,7 141,7 115,5 276,8 Operating Profit before Financial Inc/Exp 159,1 252,1 455,5 672,2 Finance Inc/Exp, net (91,5) (167,5) (138,8) (336,0) Profit Before Taxation 67,6 84,6 316,7 336,2 Tax Charge from Continued Operations (12,2) (10,0) (60,8) (54,3) PROFIT FOR THE PERIOD 55,4 74,6 255,9 281,9 Non – Controlling Interests 1,1 10,9 21,6 35,3 Equity Holders of the Parent 54,3 63,7 234,3 246,6 EBITDA 109,7 136,9 393,9 468,5 Ebitda Margin 13,0% 13,5% 13,7% 14,0%
50 51
Market Growth Potentials
51 Operating in fast growing economies 52
Fast growing economies 12,0% )
Avg growth between 2011-2016; 10,0% local Turkey – 6,4% 8,0% Turkey Saudi Arabia – 4,6% Saudi Arabia constant 6,0% Egypt Egypt – 2,9% (in Kazakhstan 4,0%
Kazakhstan – 4,1% EU Growth
US – 2,0% 2,0% US GDP EU – 2,4% 0,0% 2011 2012 2013 2014 2015 Source: Worldbank -2,0%
These economies will continue to grow ) 7,0% faster local 6,0%
Avg growth between 2015-2018; 5,0%
Turkey constant Saudi Arabia Turkey – 4,0% (in 4,0% Saudi Arabia – 2,2% Egypt 3,0% Kazakhstan
Egypt – 4,3% Forecast EU Kazakhstan – 2,0% 2,0% US
US – 2,4% Growth 1,0% GDP EU – 1,7% 0,0% 2015 2016 2017 2018 Source: Worldbank 52 High potential of these markets underpins 53 growth
EU Avg: 0,3%
Kazakhstan 1,5%
High population growth rates in Egypt 2,0% operational countries
Saudi Arabia 2,2%
Turkey 1,4%
0,0% 0,5% 1,0% 1,5% 2,0% 2,5% Source: Euromonitor EU Avg: 39,5% Kazakhstan 56,0%
Demographics Egypt 71,0% Sub 35 years Saudi Arabia 63,0%
Turkey 61,0% Source: Worldbank Urbanization 0,0% 40,0% 80,0% More women in the workforce Change in trend & consumption behavior 53 Rapid growth in biscuits & chocolate 54 consumption, contrary to mature markets
Biscuits consumption (kg per person) Chocolate consumption
Turkey 2,9 kg Turkey 2,1 kg
Egypt 3,7 kg Egypt 0,4 kg
Saudi Arabia 1,6 kg Saudi Arabia 2,4 kg
Kazakhstan 3,7 kg Kazakhstan 3,8 kg
UK 7,6 kg UK 7,7 kg
US 4,0 kg US 4,4 kg
EU 4,0 kg EU 4,1 kg
Western Europe 5,7 kg Western Europe 7,3 kg
Central Europe 3,4 kg Central Europe 5,0 kg Source: Euromonitor Source: Euromonitor
c4% CAGR growth in per c7% CAGR growth in per capita biscuits consumption in capita chocolate consumption Turkey & Saudi Arabia and 5% in Turkey & Saudi Arabia and in Egypt in the last 5 years 6% in Egypt in the last 5 years
54 55
Godiva Global Premium Chocolate Producer
55 Godiva – A Valuable Financial Asset 56
• Leading premium chocolate producer with significant Geographical presence of Godiva as of 2016 brand equity worldwide year-end including franchise stores
• Entry into China, S.Korea, Indonesia, S. Arabia, Thailand 203 stores in 31 stores in and Turkey since the acquisition the US & Europe Canada • Strong further growth potential through
• investing in store expansion, especially in the Far 45 stores in East, Middle East
• increasing on-line presence and development of 473 stores the FDM(1) busines s in partnership with pladis in Asia
• product portfolio innovation,
• entry into new geographies.
• Godiva plans to open 50 new stores per annum.
Evolution of Company Owned Stores
Year U.S. Japan China Pac Rim Belgium Others 2008 262 99 - 32 8 21 2014 191 136 47 36 5 29 2015 189 274 63 40 6 29 2016 187 282 100 48 3 26 Godiva store in Harrods, London
(1) Food/Drug/Mass Marketing 56 ÜLKER BİSKÜVİ A.Ş. Investor Relations Tel : +90 216 524 25 26 @ : [email protected]
Verda Beste Taşar Head of Investor Relations Tel: +90 216 524 2556 [email protected]
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