Dear analysts and investors, we are very pleased to welcome to our first quarter results for 2023. I'm Serkan Savas, Reporting and Investor Relations Director. I hope you have managed to download our presentation on our website, and I now invite you to have a look at first quarter results. I will be taking your questions at the end of the call. We will first look at our highlights for the first quarter in page four. Of course, this is this first quarter. not an ordinary quarter, which was affected by one-off expenses. you know, actually, for example, the earthquake and early retirement scheme and the evaluation of the Egyptian lira had negative impact on our profitability in this quarter. The good news is we fully reflected these issues to our numbers in the quarter. We don't expect any significant additional negativity in the reminder of the year, remaining of the year. We will discuss these issues in the detail in the following pages. On quarterly net sales were 51.3 billion TRY reflecting 88% year-on-year growth. High inflation environment a little bit continues to support our top line. Inflation is a little bit easing. Still it's high. EBITDA margin was 6.1%, representing 36% year-on-year growth. Excluding one-offs, as I mentioned before, excluding one-offs, our EBITDA margin would be 6.9%, which is a good start for the year considering the first impact of rising costs. For example, minimum wage increase, you know, 55%. At the beginning of the last year there any, 35% increase. 6.9 is the actually a good start for the year, actually, in the rising costs. Actually, in coming quarters, margins likely improving by benefiting from operating leverage, we expect. Net income was TRY 1.4 billion corresponding 2.7% margin, net income margin. Excluding one-offs, our net income margin would be 3.9%. CapEx was 3.2% of our revenues in first quarter as expected, it's expected level. In terms of expansion, the store expansion this year, this quarter, we opened 240 new stores for all operations, including abroad and FILE. Also, as you know that we also had to close 225 stores because of the earthquakes. Looking at the total number of the locations across all operations, we had 11,525 stores at the end of the first quarter. Those are the highlights. Now we are moving on to operational performance and starting with the like-for-like sales slides. Like-for-like sales increased by 79% in the first quarter. Like-for-like basket increased by 86% which is almost in line with our internal inflation, which is around 90%. Like-for-like traffic decreased by 3.5% this quarter due to a high base of the last year. As you know, the last year our, as you see in our presentation in the page, we had 11% traffic growth in the last quarter for the first quarter of the last year. There's very high base. But although there is a higher base in the second quarter, actually there is no any further deterioration in our traffic numbers, the post Q1. Next on store sites. In the first quarter, we are now in the expansion page seven. On the store site, in the first quarter of this year, we have opened 207 new BIM stores and nine FILE stores in Turkey. As we mentioned before, we had 225 closings because of the earthquake. Even though we had 225 closures because of the earthquake and store growth was down to 7% in this quarter, store growth expansion rate was 7% this quarter. We are confident to maintain our 9%-10% expansion rate for the full year as usual. You know that in the previous years we had 9%-10% expansion rate. We are confident to keep that maintain this level at the end of the year. Regarding the abroad expansion, we have opened 14 stores in Morocco and 10 new stores in Egypt. In total, we had, as I said, 11,525 stores by the end of first quarter, consolidated all across our operations. A number of mini stores are going up. Those are 100, 150 square meter selling space they have. Today we have, as of first quarter, we have 169 BIM mini stores. We are also opening these mini stores, which is progressing well. CapEx progression. CapEx was TRY 1.6 billion in the quarter, corresponding to 3.2% of net sales. What we have done in this quarter, we have acquired some lands in the west side of the country to improve our logistic infrastructure. For example, Çanakkale, Manisa, we acquired some lands, and we will be starting construction in a few months time. Second, our dispute and chartered subsidiary plant construction still continuing in Esenkent also. To sum up, we maintain our 3.5% CapEx sales expectation for the full year as we maintain our appetite for investments. Those are general operational performance. Let's look at financial performance of the first quarter. The sales. Let's start with the sales progression. Sales grew by 88% in the first quarter, reaching TRY 51.3 billion, which is in line with our year-end outlook. We are not revising our year-end outlook and prefer to follow post-election macro conditions and how the inflation will continue going forward. In terms of gross profit and gross margin, our gross profits has increased to TRY 9.2 billion with 18% margin. Because of the earthquake, you know, we have lost around TRY 300 million worth of inventories. TRY 300 million worth of inventories because of the earthquake. Those are not insured. This of course has some impact, negative impact on our gross margin, but this is less than our expectation, which we predict in the last quarter call. As you know, we announced that 0.25% we predict for the full year. This is a little bit less than our expectation. Excluding this one-off negative impacts, our gross margin will be around 18.5% in the quarter. In terms of gross margin, what's going on after the first quarter is also progressing well. This is over 18% gross margin we have, maybe close to 18.5% is progressing after first quarter. Revenue breakdown and by geography and formats in slide 11. We provide the breakdown of our revenues. BIM Turkey operations still has major share in total revenues. FILE is also contributing much better compared to last year and reached 5.5% share in the first quarter. As you know, it used to be 4.2% last year, now it is the 5.5%, it's progressing well. FILE operation is increasing its share in total sales. BIM Egypt and BIM Maroc's contributions are all nearly the same as the previous year's ends. BIM Egypt progressing well also as we announced before. Due to several devaluations in Egypt, Egyptian pounds, Turkish the equivalence of the sales remains at the same level. In the following pages, we will talk more a little bit about Egypt. It's also a bit of positive in the first quarter. It's progressing well. Sales progression of the product categories, private label share decreased to 64% from 67% when compared to last year same quarter, which was significantly high due to rush to basic products, including private labels products during the war between Ukraine and Russia. Base is very strong in terms of private label. People are rushed to edible oil, other basic commodities last year in the first quarter. Generally speaking, we are still seeing positive demand to private labels due to high inflation and deteriorated purchasing power. We see that it's a good chance for us. Actually, we are, we have a chance, opportunity to recognize our private labels to some people, maybe high-income people. We are also seeing that high income level people also visiting more, our stores more than the past. It's a good chance for us to recognize our private label to some maybe new commerce. Next, on the next slide, we provide the evaluation of the operating expenses on quarterly basis. Actually, due to several hikes in the wages in the last 12 months, personal expenses more than doubled year-on-year. Of course, this put some pressure on the OpEx this quarter. Actually, this quarter will be maybe highest impact. Early retirement scheme also increased other expenses in the quarter. Whereas the cash outflow from early retirement scheme is TRY 400 million in this quarter. This is just the cash flow. The workflows effect was only TRY 90 million since the remaining has already provisioned previously. Of course, this is the actually TRY 90 million plan have impact. Going forward, there will be some new joining to early retirement family, but this will be very, very gradually and we don't expect any significant one-off impact like this quarter. The worst is over in terms of early retirements. Please keep in mind that one-off expenses and rising operating costs in Q1 likely to be offset throughout the year by operating leverage. We are seeing the signs of this in April and May. Of course, I'm ignoring any potential second minimum wage hike. There are some rumors, as you know that, we also don't put this our outlook, and we are ignoring this. If this is the case, of course, this will have some positive impact on consumption as well. The first quarter OpEx management will be the highest impact, so we benefit from operating leverage going forward in the coming quarters. Let's look at our EBITDA and EBIT figures. EBITDA was TRY 3.1 billion Turkish lira, and EBITDA margin was 6.1% in the quarter. As I said before at the headline page, excluding the one-off impact of the earthquake and early retirement scheme, our EBITDA margin would be 6.9%. Quarterly EBIT was TRY 2.2 billion, and the margin of 4.3%. Excluding one-off impact of earthquake and early retirements, our EBIT margin would be 5%. We kept our EBITDA margin guidance as is. Although there are some signs for upside risks in after the first quarter in April and May, we prefer to be on the safe side and follow macroeconomic conditions in the post-election periods. Moving on to net income slides. Our net income was TRY 1.4 billion in the first quarter. Net margin was 2.6%. Below EBITDA line and EBIT line as well, there we have some one-off expenses, like for example, donations. Because of the earthquake, we have some donations. You can easily TRY 883 million, you can put in our footnotes, you can observe it. Second, the fixed asset loss for damaged stores. Those are the one-offs below EBIT line. Excluding the all one-offs, our net margin would be 3.6% in the first quarter. Additionally, there's another impact on net income. It's not one-off, but depreciation on the buildings. For example, last year, as you know that we have revalued our fixed assets, buildings and lands. Actually our land and buildings increased by TRY 10 billion last year. This actually quarter, the depreciation base is increased. We have around 100 million TRY more depreciation this quarter because of this revaluation of buildings last year. Moving on to quarter free cash flow. On this slide, we wanted to show more detailed picture of the cash flow moments in Q1. Despite the impact of earthquake and donations, we had strong cash flow from operations in the quarter. Grant expenses to sales ratio remains at historic lows, at 1.5% in first quarter. Contribution from net working capital is still negative since last year after Russian-Ukraine war and high inflation environment, we are still seeing. We deliberately invest in our net working capital through advanced payments and securing more stocks. That negative cash cycle from net working capital is already expected and under control. As of course, at the end of March is just prior to Ramadan period. We had stockpiles because prepared for the Ramadan period at the end of March. This is why our inventory amount is a little bit high. There's another reason. Regarding cash flow, as I said before, for early retirement scheme, we had one of TRY 400 million cash outflow in terms of cash flow. This is not a P&L effect, but TRY 400 million we had cash outflow in the first quarter. Next page about our FILE operations, which I said we were progressing well. We have opened nine FILE stores in Q1, and number of FILE stores reached 211 stores. Now FILE is expanding in the Aegean and Mid-Anatolia side of Turkey. FILE online shopping platform, which was launched in May 2021, now available in 26 cities in Turkey. In a short period of time, FILE online sales reached the 5% of the FILE total sales. In terms of FILE sales, FILE share in total consolidated sales exceeded 5%, thanks to its better performance in the first quarter. If you look at the foreign operations in the next page. We have opened 14 new stores in the quarter in Morocco, and our total number of stores reached 641 in this country. Fourth warehouse of BIM Maroc in Marrakech City will be opened in June or July. We are also working on finding various locations for the fifth warehouse in the north of the country. In Egypt, we continue to open new stores. We opened 10 new stores in first quarter, and number of stores in Egypt reached 221. Operational improvement continues in Egypt. We have experienced operational profitability lately in the last three months in the first quarter. We will continue store openings in Egypt for the rest of the year. About the foreign contributions to sales and EBITDA in the next page. The remaining contribution of foreign operations was TRY 2.6 billion, 5% of our total sales. While EBITDA contribution was TRY 157 million in the first quarter. This corresponds 5% of our total EBITDA. The good thing is that, as I said before, TRY 40 million of, out of TRY 157 million EBITDA is coming from the Egypt. TRY 40 million is coming from the Egypt. This is all my presentation. As I said before, to sum up, this is a quarter which, its starting point is the one-offs and higher rising costs. Hopefully the worst is over. We believe that, in the coming quarters we will have more benefiting from operating leverage. It's time to take your question, if any, and please raise your hands if any questions, then we will be giving you to floor. Gorkem Bey, the floor is yours. egarding the developments on your customer traffic front. You said there is no further deterioration in the second quarter so far. Could you please quantify in numerical terms as, should we compare it with the second quarter of last year or first quarter of this year? I mean, are we talking about 560 customer per store or 600 levels? Thank you. Yes. Thank you Gorkem. Actually, I mentioned that, in terms of growth, traffic growth, it's, as I said, we have 3.5% decline in traffic growth in the first quarter. The base is still growing daily. From first quarter to second quarter base is growing. Base is stronger. As I... actually I've mentioned that, decline, the growth or is almost the same as the first quarter. 3.5%, 3%, 3.5% is in as of April. In May and June, there will be some kind of improvements going forward. It's around, 540, 550 levels. Okay, now it's more clear. I mean, it seems a bit little weakness when compared to your previous performance. Could you attribute this as market share losses to your main competitors or are there anything playing behind that? Gorkem, actually, last year, the first quarter, as you remember, we realized 75% top line growth, which is far away from very, for other competitors. Also this is also a strong base we had. This is maybe one of the reason. There's of course some kind of this quarter, some kind of minimal market share, very minimal market share losses. Maybe it's flat. We can say almost flat the last year. Last year it was 16.8% market share we have. This quarter 16.5%, something like that, we have in FMCG side. Last year also was a very strong quarter in terms of top line and also traffic levels. This is the one of the reason, we can elaborate on this. Thank you very much. You're welcome. Hanzade Kılıçkıran from J.P. Morgan, the floor is yours. Serkan Bey, thank you very much for the presentation. I just want to understand the second quarter and the rest of the year trends, actually. You sound positive and give the message that you have the capacity to offset this rising OpEx pressure. Sorry. Is it possible to run over the internal inflation trends currently? Sorry, I keep receiving messages. Okay, now I think it sounds better. Sorry for taking your time with this stupid stuff. Okay. Okay. I just want to understand the internal inflation, and whether you can reflect this into the basket in the second quarter. How should we think about your EBITDA margin progress on a quarterly basis so that you can. I mean, do you see any downside risk on your EBITDA margin guidance for the full year? Thank you, Hanzade Kılıçkıran. Internal inflation, as I said, around 90% levels in the first quarter. It's because of the base, it's a little bit in April, it is running, coming to 80% levels. 80% is a little bit. Of course, this is still higher than the announced, disclosed, food inflation by the Turkish Statistical Institute. It's a little bit running to 80% levels in April. We are still facing some kind of cost pressures from suppliers. Maybe after we have to follow after the election period, we cannot say anything post-election periods. There will be some kind of price, actually cost pressures on somewhere. Today, as of April, we can say that it's running around 80% internal inflation. We are able to pass to our product prices because as I said, our growth margin is also evolving around more than 18%, close to 18.5% in April. There is not any dilution. In our gross margin after first quarter. EBITDA margin, you can actually make your model through this. Actually, in the second quarter, in the following quarters, we don't expect any significant one-offs EBITDA line. Actually, staff costs, employee costs, we are benefiting from the operating leverage. As of April, energy prices down 15% by the government, we will have some kind of energy down prices, actually, cost savings as well in the second and following quarters. April also, May, we are facing some operating leverage. Signa strongly works in our sites this quarter. EBITDA margin guidance, we are keeping 7%-7.5% between. As I said in our presentation, actually, there is I personally, I don't expect any downside risks. In opposite, I expect the upside risks in terms of EBITDA margin. At today's point, actually, it's better to be on the safe side than actually follow the post-election periods and macro conditions. In the following quarters, we may more elaborate on this. Okay, thank you very much. I mean, what could drive the upside risk? I mean, do you think that growth will be the main indicator for the upside risk, or you are looking for a cut in the OpEx? Both actually. Both. I can actually say that. OpEx will be maybe operating leverage, and gross margin progression will contribute more maybe. Growth is also sometimes contributing because inflation is still high, and maybe post-election periods, it will be a little bit maybe higher. Operating leverage will work, and one-offs also will be missing going forward. All right. Okay, thank you very much, Serkan Bey. Welcome. Next question is from Cemal Demirtaş Ata Yatırım. Cemal Bey, please go ahead. Thank you for the presentation, Serkan Bey. My first question is about the market conditions that you know, mentioned, the, you know, about the market share, some maybe, you know, slight losses, but you don't see any as far as I know. Do you see any trend change on your side? Because during the last two quarters, we see a little bit, you know, slower pace of growth on your side versus other listed, you know, national food retailers. I would like to understand, you know, do you see any specific reason besides the base effect? You know, that's my first question. The second question is about the financial lease expense side. As you mentioned, due to asset revaluation, we see increase in that front. Could we expect that amount to decelerate going forward, depending on the interest rates or other factors? Just could you give us some color about that, the depreciation side? Should we expect the expense to stabilize, increase, or maybe some decline during the following quarters? Thank you. Actually, first of all, for first question, there is no change in trend. Actually, as I said, last quarter, same quarter last year, we have strong sales. This is one of the reasons. Maybe in the competitive environment, there will be some kind of temporary actions, promotions, more, very short-term promotions, would be in the case. To grab some sales, this will be the case, in the competitive environment. Actually, maybe this will be some temporary, but there's not any trend change in the markets. We actually. Sometimes in some quarters, we may have some kind of some flat market shares or, flat traffic growth or negative traffic growth, but then we recovered, immediately. This has Today, the modern retailers especially BIM has still getting market share from the traditional part, there is long way to go. As I said, we still continue expansion, 9%, 10% expansion. In the following years, actually, we would like to keep that. The trend, there's no change. There's big potential in the markets, BIM will be continue the biggest winner in the market in terms of trends. In some quarters, there will be some kind of changes, immediately recover going forward. Which we expect in the coming quarters. Financial lease expense, financial losses, I think you mean the interest expense from lease payments, I think, right? Yes. Yes, yes. Yeah. Actually, financial expense lease, there's no we don't have any interest rate change in our calculations. As we open more stores, there is more contribution from financial lease. This is As you know, this is IFRS 16 calculation. This is not a real interest rate. There's not any cash outflow from this interest. Main cash outflow is the lease payments. This is 1.5%. It's historic low levels. We are just looking that. We are not looking the financial expenses because this is if future use expenses, which doesn't have any cash outflow. Going forward, this would be almost stabilized. The growth rate would be in line with growth rates of this financial expenses first. Actually, the expansion rate, because as we open more stores, more lease payments will be on the table. Of course, the pay, lease, inflation hike or hike of in rent costs in this segment. There are two components. Those are all at historic low levels. We don't expect any downside risk in this financial expenses. Thank you. Serkan Bey, as a follow-up, regarding the earthquake effect, you mentioned about some cost impact. Did you see any revenue impact or, you know, did you have any calculation on that? 'Cause you have much more stores in that region maybe compared to peers. Could we say that you as the biggest player, are you affected more from this earthquake, both on the revenue side and the cost side? Could you give us any number for, you know, just a rough number or percentage for any revenue loss in the region? Thank you. Actually, Canbay, it's very difficult to give some numbers. Generally speaking, I can say that, of course, we have lost 225 stores, and the population in earthquake cities decreased too much. Maybe 30%, 40% population now kept in this city. The remaining stores also sales decreased somewhat today, in the this earthquake cities. The people moved to other cities, other western parts, other cities, offset more than our loss. For some, in the first weeks of the after the earthquake, we have seen a jump in our sales because people try to donate, buy something from BİM and donate to earthquake, send to the actually earthquake people regions. After, we are facing that, the other regions' sales going up and offsetting the losses in the earthquake region. It's very difficult to give numbers. In general, as all BİM Turkey, we are all in line with our expectations and outlook, which we defined before the earthquake. Thank you, Serkan Bey. You're welcome. Is there any question, please, if you have, raise your hands. Gökhan Bey, please go ahead. It's not a large number, but just to clarify, there is a sizable increase in your deferred income stemming from this gift cards income, close to TRY 1 billion. Not very usual when compared to previous periods. Is it something to do with the earthquake or any different subject? Yes, you are right. You are right, it's earthquake. From some foundations, they are actually BİM Kart. They are actually demanding BİM Kart and then providing to the earthquake regions. As soon as they actually realize in our BİM stores, it is recognized, and it's deducted from this line and then recorded to sales. It's actually, as of end of March, is not a Ramadan period, and it is likely to actually provide it during the Ramadan period to the earthquake region. It's not fully used. Going forward in the maybe second quarter and third quarter, you will see that it is much more deduction, and it is more reflected to our sales in our sales. This is just an accounting. Yes, this is mostly earthquake and some foundations demanded BİM cards to provide the earthquake region. Great. Thank you. Hanzade Hanım, please, floor is yours. Serkan Bey, I just want to gather some sort of update on FILE. It is now materially important because it's over 5.5% of your revenues. I mean, is the EBITDA share similar to revenue or they generate higher EBITDA on your consolidated numbers? Could this also be trigger on your gross margin in the rest of the year? Because I presume they may have higher gross margin than a typical BİM store. Thank you. Actually, in terms of gross margin, is higher than the BİM because their cost is much higher. It's actually, of course, this is making a higher gross margin than BİM. In terms of EBITDA level, it is almost a bit, same as BİM, in terms of EBITDA margin levels. In the first quarter, it's almost around 6%, EBITDA margin level it has. Of course, this is not an expected level. We still room to go because as you know, the FILE operation is a CapEx value to actually, a very high CapEx and ROE value to business. We prefer higher, EBITDA, margins, for FILE going forward. Of course it takes time because we are still opening stores. New stores are cannibalizing the old stores. It's on progress and progressing well, I can say that. Better than our expectation, it's going to well. Today it's almost the same as BIM EBITDA margin, but going forward, expected to exit the BIM EBITDA margin in midterm. You said that it is cannibalizing to old stores. I mean, is there a cannibalization in FILE? It's just. I mean, you are just ramping up on this expansion. No, I'm not cannibalizing, it's diluting. Sorry, I used the wrong word. Diluting the old stores of the FILE, of course. It dilutes a bit. Oh, all right. New store, of course, new store in BIM as well, in the FILE, in all operations, new stores have a little bit lower performance in the first years. It's diluting the. The younger stores are generating low- Of course, younger, yes. Yeah. All right. It's offset by some. It's not diluting BIM. There's not any evidence for that. All right. Thank you very much. Thank you. I think Cemal Bey has another follow-up question. Please go ahead, Cemal Bey. Serkan Bey, you mentioned about the upside risks to the EBITDA margin. Do you also see any upside or downside risks to your top line growth guidance, considering the trends in the second quarter? Actually, second quarter is almost in line with our expectations, with our outlook today. We have to actually follow the post-election macro conditions. Inflation, we have to follow up going forward. In April as well, it's in line with our full year outlook, which is 70%-75%, as you know. Maybe after in the second half, there will be some kind of upside risk. Depends on inflation. Thank you. You're welcome. I think there is no question, further questions. Thank you for participating our call today. As I said, this is the it's not an ordinary quarter. Loss of one-off expenses and rising costs. Hopefully, the worst is over, worst is behind, going forward. Hopefully, we will have new, we'll join you, meet you in the next calls with better results. Thank you very much, and have a nice day.