BIM Birlesik Magazalar AS
IST:BIMAS.E
US |
Fubotv Inc
NYSE:FUBO
|
Media
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
US |
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
|
CN |
NIO Inc
NYSE:NIO
|
Automobiles
|
|
US |
Fluor Corp
NYSE:FLR
|
Construction
|
|
US |
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
|
US |
TopBuild Corp
NYSE:BLD
|
Consumer products
|
|
US |
Abbott Laboratories
NYSE:ABT
|
Health Care
|
|
US |
Chevron Corp
NYSE:CVX
|
Energy
|
|
US |
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
|
US |
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
|
US |
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
|
US |
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
|
US |
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
292.25
625.5
|
Price Target |
|
We'll email you a reminder when the closing price reaches TRY.
Choose the stock you wish to monitor with a price alert.
Fubotv Inc
NYSE:FUBO
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
C
|
C3.ai Inc
NYSE:AI
|
US |
Uber Technologies Inc
NYSE:UBER
|
US | |
NIO Inc
NYSE:NIO
|
CN | |
Fluor Corp
NYSE:FLR
|
US | |
Jacobs Engineering Group Inc
NYSE:J
|
US | |
TopBuild Corp
NYSE:BLD
|
US | |
Abbott Laboratories
NYSE:ABT
|
US | |
Chevron Corp
NYSE:CVX
|
US | |
Occidental Petroleum Corp
NYSE:OXY
|
US | |
Matrix Service Co
NASDAQ:MTRX
|
US | |
Automatic Data Processing Inc
NASDAQ:ADP
|
US | |
Qualcomm Inc
NASDAQ:QCOM
|
US | |
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Earnings Call Analysis
Q2-2024 Analysis
BIM Birlesik Magazalar AS
In the second quarter of 2024, BIM Birlesik Magazalar reported a notable revenue increase of 8% year-on-year in real terms, reaching TRY 109 billion. When adjusted for inflation, the growth spikes to an impressive 86% as sales totaled TRY 107 million for the quarter. This upward trend reflects the company's ongoing expansion and robust consumer traffic. Over the first half of 2024, total revenue growth reached an astounding 90%. Despite this momentum, the company anticipates a gradual normalization as inflation rates decrease, while maintaining guidance for a 75% growth rate for the year.
BIM's gross profit increased dramatically by 99% year-on-year when not accounting for inflation, resulting in a gross margin of 19.9%, an increase of 140 basis points from the previous year. Including inflation accounting, the gross margin was reported at 16.8%, up by 110 basis points. The company anticipates that the benefits from advance payments will continue to assist in gross margin expansion throughout the second half of the year. The expectation is for margins to stabilize, returning to levels seen earlier, as inflation pressures ease.
The operational expenses (OpEx) rose to 16.8% of sales in the second quarter partly due to increased personnel costs. Notably, this includes the impact of minimum wage hikes and an accelerated hiring pace to support store expansions. Personnel expenditures were the key driver of these rising costs. Despite these increases, efficient energy management through solar initiatives helped control utility expenses. Looking forward, the company expects operational leverage improvements, aiming to normalize their EBITDA margin, which is currently pegged at a range of 7.5% to 8% for the full year.
When examining EBITDA, BIM reported figures of TRY 3.7 billion with an EBITDA margin of 3.3% when including inflation. Excluding inflation, EBITDA reached TRY 7 billion with a margin of 6.5%. Net income after inflation accounting was TRY 4.5 billion, corresponding to a net margin of 4.1%, assisted by a one-off revaluation gain from an acquisition. Year-over-year, net income saw a significant increase of 46%. This demonstrates BIM's resilience and ability to maintain profitability even amidst rising expenses.
During the second quarter, BIM aggressively opened 333 new stores, demonstrating strong execution of its expansion strategy. This includes 284 new stores in Turkey, alongside international endeavors with new locations in Morocco and Egypt. As of the end of the quarter, the total store count rose to 13,124. The company aims to open up to 100 stores in Morocco by the year's end, showcasing an optimistic outlook for international markets as well.
Capital expenditures (CapEx) during the quarter were noted at TRY 4.5 billion, comprising 4.1% of net sales with significant investments earmarked for real estate development, new store launches, and solar energy projects. This proactive approach in infrastructure suggests BIM is prioritizing sustainable, long-term growth strategies, crucial for maintaining a competitive edge in the increasingly competitive retail landscape.
A focus on employee satisfaction saw the implementation of a 10% wage increase effective July 2024, alongside additional benefits worth TRY 300 million introduced earlier in the second quarter. These measures aim to mitigate employee turnover amidst rising living costs, reflecting BIM's commitment to workforce stability. The management has conveyed ongoing vigilance concerning operational costs while balancing the need for competitive employee remuneration.
Despite the underlying economic challenges such as inflation and shifting consumer behavior, BIM maintains a cautiously optimistic outlook. The management is firm on their guidance for operational improvements and revenue growth, emphasizing strategies that align with evolving market conditions. They advocate for a steady positive growth trajectory in revenues combining customer traffic and average basket growth, guiding expectations closely monitoring inflation developments as a critical determinant of performance.
Dear analysts and investors, welcome to BIM Birlesik Magazalar Second Quarter 2024 Financial Results Webcast. This is Akif Dasiran, BIM's Investor Relations and Sustainability Manager. Today, we are together with our CFO, Fatih Meriç. We hope you have managed to download our Investor Presentation on our website. Please note that in this presentation, we are providing both inflation adjusted and unadjusted figures to enable partly comparison for investors. I now give the floor to Mr. Meriç for introduction and highlights of the quarter.
Thank you, Akif. Hello, everyone. We will first look at our highlights for the second quarter. Before I start giving details, please note that all the figures here in this slide are inflationary adjustments.
Our quarterly net sales were TRY 109 billion, reflecting 8% year-on-year growth. Our ongoing store expansion program and positive traffic growth continued to support sales figures. Our EBITDA margin was 3.3% in Q2 2024. On the other hand, without inflation accounting, the margin stood at 6.5%. Net income was TRY 4.5 billion with a corresponding 4.1% margin. In the second quarter, we opened 333 new stores. In line with increased pace of store openings, capital expenditures was 4.1% of our revenues. We will be elaborating the details in the coming slides.
Moving on to the operational performance.
Please note that all numbers are without the inflationary adjustment here. Like-for-like sales increased by 68% in the second quarter, while Like-For-Like Basket size increased by 62%. In addition, in the second quarter, our internal inflation was 66%. Despite with a lower pace, positive momentum in traffic continued in the second quarter and Like-For-Like Customer Traffic increased by 3.5%.
Looking at the revenue breakdown by format and geography, BIM TĂĽrkiye forms 87% of total sales while FILE's share in consolidated revenues increased to 8%. The remaining 5% is coming from our foreign operations.
In TĂĽrkiye, we can see that our private label share has declined to 58%, mainly due to SKU expansion and more offerings in -- more offerings in a large category. I would like to emphasize that there is no change in our PL strategy, and we still continue to work hard to improve our PL offerings in our stores.
Moving on expansion details. In the second quarter of this year, we have opened 284 new BIM stores and 10 new FILE stores in TĂĽrkiye. And we have opened 23 new stores in Morocco and 16 new stores in Egypt. In total, we had consolidated number of 13,124 stores by the end of Q4. Our store expansion program was in line with our plan so far.
When we come to CapEx slide, our CapEx with inflation accounting was TRY 4.5 billion in the second quarter, corresponding to 4.1% of net sales. Excluding inflation accounting, quarterly CapEx was TRY 4.3 billion, corresponding to 4% of net sales. Real-estate acquisitions for future warehouse development, strong store openings, solar energy investments and ongoing capacity investments for our biscuit and chocolate factory were the main pillars of our capital expenditures in the second quarter.
This is end of my part in this presentation, and I'm handing over to Akif for the financial performance task.
Thank you very much, Fatih bey. Starting with sales progression. Our revenues increased by 8% in real terms in the second quarter. If you look at the sales without inflation accounting, sales grew by 86% in the second quarter, reaching to TRY 107 million. In the first half, the top line growth reached 90%. Currently, we maintain our guidance of 75% [ line ] growth. We target real positive growth at the remainder of the year. However, the top line growth momentum will gradually come back due to lower inflation in the coming quarters.
Gross profit and gross margin progression, including inflation accounting, our gross margin reached 16.8% in the second quarter which is 110 bps higher than the same quarter last year. Excluding inflation accounting, our gross profit increased by 99% in the second quarter when compared to last year's same quarter, and our gross margin reached 19.9%, which is 140 bps higher than the same quarter previous year. Benefits from advanced payments supports gross margin expansion. We expect that such benefits will continue in the second half of this year and to normalize next year.
The next slide shows quarterly trend of OpEx. OpEx to sales ratio increased to 16.8% in the second quarter and excluding the inflation accounting, the ratio was 15.2%. We will go in detail in the next slides.
Here, the graph shows the change in operating expenses as a percentage of revenues by item. As you can see on the graph, personnel expense was the major contributor to the increase in OpEx items. In addition to high minimum wage hikes at the beginning of the year, accelerated personnel hiring due to store expansion plan and increased site benefits to employees further increased personnel expenses in the quarter. On the other hand, utility expense continued to contribute positively. Ongoing energy efficiency projects and our own electric production from solar plants keep utility expenses under control.
Now let's look at our quarterly EBITDA. Including inflation accounting, EBITDA was TRY 3.7 billion, and EBITDA margin was 3.3% in the second quarter. Excluding inflation accounting, EBITDA was TRY 7 billion, and EBITDA margin was 6.5% in the second quarter. Higher operating expenses mainly stemming from employee costs put some pressure on EBITDA margin temporarily in the second quarter. We expect the normalization in EBITDA margin in the second half. Thus, we maintain our EBITDA guidance for the full year.
Moving on to net income slide. Including inflation accounting, our quarterly net income was TRY 4.5 billion, corresponding net margin of 4.1%. We had TRY 260 million one-off revaluation gain after [indiscernible] acquisition in the quarter. Excluding inflation accounting, net income increased by 46% year-on-year to TRY 4.50 billion in the second quarter.
Moving on to quarterly free cash flow. On this slide, we want to show a more detailed picture of cash flow movements in the second quarter without inflation accounting. Including short-term financial assets, our cash position was TRY 9.1 billion at the end of second quarter. Advance payments and higher CapEx were offset by some cash flow from operations in the quarter.
On FILE side, we opened 10 new stores in the second quarter and number of FILE stores reached 254. FILE's online sales account for 5% of FILE's total sales. FILE's share in total consolidated sales reached 8% in the second quarter compared to 5.5% previous year same quarter, thanks to its robust performance.
If we look at foreign operations, we opened 23 new stores in the second quarter in Morocco. And our total number of stores reached 734 in this country. For the warehouse of BIM Maroc -- BIM Marrakesh, opened in March. Our plan is to open 100 stores in Morocco this year.
In Egypt, we continue to open new stores. We opened 16 new stores in the second quarter and the number of stores in this country reached 381. The operation is not full cash positive yet, but progression is good. So we still continue opening stores in Egypt this year.
Now this is the end of our presentation. We may take your questions, if any. Please note that if you want to ask a question, raise the hand, and we will open the floor to you.
[Technical Difficulty]
Please note that if you want to ask a question, raise the hand -- we have Zoom, and we will open the floor to you. Thank you.
[Technical Difficulty]
Sorry for the inconvenience, we have a technical problem, and we cannot see the raising hands, unfortunately. Can you please send us an e-mail through to IR contact or myself with your questions, and we will answer here in this meeting, we will read your question and answer. Again, sorry, for this inconvenience. We have a technical problem. We cannot see the raising hands, unfortunately.
And we have -- yes, we have a question. And the question is regarding CapEx details.
And as I said, actually, in the last -- in the second quarter, we have and the warehouse developments. And so we have real estate acquisitions for future warehouse developments. And also we have strong store openings. As you know, 333 stores opened. And also, we had solar energy investments. And on top of this, we have the ongoing capacity investments for the biscuit and chocolate factory.
And regarding -- and so we had another question regarding wage increase.
And so we had -- and in the second quarter, we -- and in addition to minimum wage hikes in the last 2 months and accelerated personal hiring due to store expansion plan increased side benefits to employees, further increased our personnel expenses in the quarter and employee satisfaction is an important aspect of this company, as you know. And due to the erosion in purchasing power, the management decided to increase the side benefits to our employees. And in the second quarter, there were two religious holidays, and we have provided nearly TRY 300 million worth of additional site benefits to our employees. And as a result of such initiatives, employee turnover had started to decrease and in the [ third ] quarter.
And on top of this and starting from July, we have initiated 10% wage increase and -- for the time being.
And regarding, do you plan to offer the products you offer for sale in BIM stores, through BIM's online channel?
For the time being, there is no plan. And as you know, and we are very near to our customers, actually. And so just -- and therefore, the timing the current situation will continue.
[indiscernible] bey is asking, are you planning to open new stores abroad? Do you have the plans to open stores abroad, other than Morocco and Egypt.?
No, we don't have nothing on the table. We are just focusing on the current operations at the moment.
And there's also a question from [indiscernible]. There's a strong shift in your gross margin expectations. What are the drivers behind the optimism? Is there any downside risk?
On the operating cost, employee staff seem to be the main reason of the pressure in the second quarter. Pressure is higher than first quarter.
Is there any one-off payments in the second quarter, how much wage adjustment is done in July?
We have already said actually. So in July, we have made 10% wage increase. And so we will continue this 10%. And so this will -- until the year-end, actually. So at the end of year, so there will be new actually -- so wage increase, but for the timing, it's not certain yet.
Do you plan to cut your private label share further in the rest of the year?
No, there is no. So this is -- and our focus on private label strategy is still ongoing on. So as we mentioned during the presentation, this was a temporary that was in and out and volume increase in the last 2 quarters. So that's why our PL -- profit label share seems decreased, but in the upcoming periods. And so there is no change in our strategy actually. So we will keep our NPL share most likely around [ 6.70 ] above [ 6.60 ].
There are also questions from [indiscernible]. Can you explain how the EBITDA margin will expand in the second half? Did you make rate adjustments in the third quarter?
It is interesting that the percentage of private label is lower even when the purchasing power is lower. How do you explain it?
OpEx to sales share is a bit higher versus previous year. And this is the case for the whole sector and we knew wage hikes resulted in higher personnel costs to sales in the sector. And however, we are least affected one in the sector actually. Remainder of the year, we expect improvement in margins and maintain our EBITDA margin guidance of 7.5% and 8% for the time being.
You already mentioned about our strategy on private label.
Yes.
And a question from [ Conroy ]. How do you see pressure on OpEx evolving in the second quarter?
In presume, it's about employee costs, and we already -- already mentioned this.
Yes.
Question from [ Max ]. Third quarter trend. Can you confirm that margins have improved versus second quarter? Regarding the comments on gross margin, should we expect gross margin closer to 20s in the second half in line with the second quarter.
Do you expect the results in full year 2024 closer to the lower end of the guidance considering second quarter results.
Yes.
So far, what we observed in the third quarter trends, we are more confident that we can -- we are in line with the -- with our EBITDA guidance for the full year. We cannot quantify the gross margin evolution or the quantified numbers at the moment, but we can give a color that with the current margin evolution. We are consistent on our full year EBITDA guidance. I think this could give a color on this question.
We already answered this.
And also we answered the midyears salary adjustment.
And Bey [indiscernible] is asking about working capital management. Do you expect normalization?
And in the second quarter, so repayments and advanced payments -- and maybe -- and make the net working capital change actually. So this was the reason actually, so we had positive net working capital. And -- but in the last couple of months, actually to say, as a top management, we have decided to decrease the inventory days. So we had already seen the improvement in net working capital and in this month, I will say.
And so in the upcoming period, we will continue to decrease inventory days. So we will see the improvement in the net working capital till the year-end.
There are two questions from Sultan. Other peers have talked about having to increase salaries for their lowest salaries employees beyond the minimum wage. Have you had to do that too and if so, by how much?
We already explained about our wage increases.
Another one is on the Like-For-Like, the BIM inflation and basket growth numbers imply that you are selling less volume Like-For-Like? Is that true? If so can you elaborate on what products are customers buying more or less over the last quarter?
It's not necessarily true because it's also mix changes also may result in this situation. Therefore more detailed analysis needed to come up to this result.
Murat [indiscernible] is asking -- there are three questions. How much did you increase personnel expense in the third quarter?
We already explained.
[indiscernible] in net working capital in the second quarter? I would like to know why?
And do you think this will continue in third quarter? Fatih bey already mentioned this.
Does the strong trend in customer traffic continue despite the economic cool down in the third quarter?
Murat bey As you know, there might be some transition between Like-For-Like Basket and Traffic from time to time. And that for just Traffic trends might be misleading, but we can give a color that we aim always positive real growth in revenues. Is a combination of Basket and Traffic growth and we expect the same for the next quarters.
[ Victor ] is asking the margin outlook for the second half.
We already mentioned that we maintain our guidance.
[indiscernible] is asking again the risk to guidance, but we already mentioned.
[indiscernible] is asking with 10% additional increase in personnel expense in July is not it too aggressive to maintain your guidance? In which cost items, particularly you expect operational leverage advantage should [indiscernible] further?
Of course, it is 10% for the third quarter, but for the remainder of the year, the operating leverage will continue to elaborate on margins. And -- this is already what we -- this is already in line with our additional plans. And currently, what we observe in the -- what we see in the current trends.
We don't see a major risk on the guidance.
[ Arkam ] bey is asking do you think inflation accounting will be continued in 2025 and beyond?
It is under discussion -- it means there are several noises about that. But we will see the regulatory part will be deciding on that.
Bey [indiscernible] is asking can you clarify that apart from 10% wage increase in July, can there be extra increases in the second half?
We don't see any, actually. So, for the timing being.
We have seen the turnover ratio decreasing actually, yes, in the last months.
[indiscernible] is asking, can you please comment on comparative -- competitive environment and pricing dynamics?
With the easing inflation, of course, the price-based competition is, again, there are aggressive campaigns in the market. But as you know, we have choose to compete or react to such environment. And currently, the trends are -- again, as I said, the price-based competition is still. But in Turkey, especially in the food retail industry. The competition is always -- we already observed this in the last year, as well in 2023. Especially in the first half, we observed similar cases.
But again, with the decline in purchasing power of people and some easing inflation, yes, there is more stiff environment nowadays, but there is no major stiff or change in trends in the environment.
I think we touched all of the questions. Again, sorry for the inconvenience for a technical issue in this meeting. We appreciate your attendance and for your understanding. But if there are any unanswered questions, please let us know, you can always contact us and we will answer them accordingly. Fatih bey, do you have any final remarks?
Thank you for the participation. And So, see you in the next quarter results session.