Release Date: March 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bim Birlesik Magazalar AS (BMBRF, Financial) achieved a 10% year-over-year growth in annual net sales, reaching TRY520 billion.
- The company successfully opened 1,101 new stores in 2024, expanding its presence significantly.
- EBITDA margin met expectations at 7.5% despite challenges, indicating strong cost management.
- The company is investing heavily in sustainability, with plans to allocate TRY4 billion to sustainability projects in 2025.
- Bim Birlesik Magazalar AS (BMBRF) maintained a strong cash position, with net cash increasing to TRY8.2 billion by the end of the year.
Negative Points
- Traffic numbers remained negative in the fourth quarter, with consumer spending declining due to no secondary minimum wage hike.
- The company did not benefit from the shift to modern retailers in tobacco and alcoholic beverage categories, impacting traffic negatively.
- Operating expenses increased, with personnel expenses being the main driver, affecting the OpEx to sales ratio.
- The effective tax rate increased in the fourth quarter, negatively impacting net income.
- There are ongoing investigations by competition authorities, which could pose potential risks to the company.
Q & A Highlights
Q: What is the main reason for spinning off FILE operations? Are you preparing this company for an IPO or is it an acquisition target? Also, do you continue with advanced payments in the first quarter to maintain your gross margin over 20%?
A: The spin-off of FILE operations is purely operational, with no change in strategy. FILE will continue under a separate company structure, but there are no plans for an IPO or acquisition. Regarding advanced payments, there was a temporary increase in the fourth quarter, but normalization is expected in the first quarter, which may affect gross margins.
Q: Could you elaborate on the reasons behind the traffic decline in the last two quarters? Are there changes in consumer trends, and what actions are you taking to increase traffic?
A: The traffic decline is due to several factors, including a base effect from strong numbers last year and no secondary minimum wage hike affecting consumer spending. Additionally, BIM does not sell tobacco and alcoholic beverages, which saw a shift to modern retailers. This low-quality traffic did not impact our profitability, and we are not concerned about it.
Q: Could you comment on the competition authorities' latest investigation for food retailers? Is there a single investigation towards BIM?
A: There are two separate investigations communicated to us, but no definitive violation has been identified. These investigations focus on potential violations under Article 4 of the law, involving agreements or information exchange between competitors. None of the investigations are solely targeting BIM.
Q: How much expansion do you target for international operations in 2025?
A: For 2025, we expect to maintain a similar pace of expansion as last year across all operations, with no major changes in our expansion plans.
Q: What could be the upside or downside risks to margin guidance?
A: Upside or downside risks to margin guidance are influenced by inflation levels. Lower or higher inflation can affect EBITDA margins, impacting both nominal revenue growth and profitability. However, our operations have been stable, and we expect to maintain profitability levels.
Q: Do you plan to apply to AGM for a buyback authorization given the distortion to your share price following the news of investigations?
A: Our strategy for capital allocation prioritizes cash dividend payments. Buyback programs are considered only if there are sharp fluctuations in share price. Generally, our preference is for cash dividend distribution.
Q: Could you give some color for the first quarter? Is it in line with your guidance from traffic growth and margin perspective?
A: The first quarter is in line with our guidance. We expect the base effect on traffic figures to be valid in the first half but to reverse in the second half. Our guidance reflects these expectations.
Q: Do you see any changes in consumer behavior during the Ramadan period?
A: The Ramadan period is traditionally the strongest month for our operations, and this year is no different. We observed stronger sales and demand during this period, consistent with past trends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
