THE RESULTS OF 2017

President of Astana Group Nurlan Smagulov met with reporters and summed up the results of the past year. He also talked about plans for 2018.

Production of cars in Kazakhstan in 2017 increased threefold compared to 2016 and exceeded 19 thousand cars. In the past year, the decline in sales slowed down, and the market fell to its lowest point. In the middle of the year, the automotive market began to show the first signs of recovery, and by the end of the year, 49,052 cars were sold (including commercial vehicles). Of these, the sales of Astana Motors KMC amounted to 8,600 cars, and the company's share in the market was 18%.

During the same time period, over 1,500 cars were exported. Hyundai Trans Auto was a leader in the export of trucks. It exported over 200 units. This trend will continue in 2018.

It is worth noting that there has been an increase in sales of new cars under the Trade-in program. In the last year alone, Astana Motors KMC sold 16% of the total car sales, which amounted to 1,360 cars. In 2018, sales are expected to grow up to 20% of the total sales under the Trade-in program and will amount to 2,200 cars.

With regard to the growth of car loans, the share of car sales on credit in Astana Motors KMC was 44% last year, and according to the forecast in 2018, the share of car sales on credit will increase by a further 13% to a total of 57%. This year, on the part of the state, a tranche of 8 billion tenge is expected for preferential loans for locally assembled cars. The dealers also actively participate in loan programs, subsidizing loan rates.

«We are developing those brands that give us confidence in the future, the so-called promising brands, which are very technological and innovative such as Jaguar Land Rover and Volvo. Regarding Volvo, we will not make any profit in the mid-term perspective. However, this brand may be one of the leaders of a rapidly changing world since all Volvo cars will be equipped with electric motors or hybrid motors from 2019. Other measures we have taken during this crisis include increasing revenues from maintenance service, sales of spare parts, and developing a Trade-in service (a mechanism that optimizes the purchase of a new car instead of an old one). We did not operate a Trade-in service in the past; we also did not deal with financial services, we did not develop insurance, and we did not provide service and replace spare parts on credit. Today we are all doing this because we are looking for new sources to raise profitability. We are reducing the level of our expenses. When the market grows, many companies work in a more relaxed manner. Profit is formed due to the mechanical growth of sales, and when sales fall, it is still necessary to pay salaries to people, pay loans, and fill warehouses, so then the companies face obvious challenges. Fortunately, we have managed to deal with the challenges: we found expense items that could be cut, and we found new sources of income. This has allowed us to be profitable in 2017, despite the low level of demand in the market. Even in such conditions we generate profit. We have a one-to-one formula according to which if the auto center has not sold a single car, it must cover all its costs due to spare parts and service. We had the following situation with Lexus cars; in one month we did not sell any cars as they simply were not in stock. Despite this fact, the auto center made a profit for three months without selling a single car. This is a very healthy evaluation system. Within the framework of this system, we evaluate each dealership center as to what extent the costs are covered without selling new cars due to maintenance service and spare parts. Our Toyota centers, for example, have a coefficient level of 1.2, and these services exceed costs by 20%. In other words, we are not dependent on the sale of new cars. For a long time America and Europe have been earning money, offering financial products, leasing, Trade-in and maintenance because there is no profit for new cars. We are preparing for this kind of situation,” ­Nurlan Smagulov stated.

The forecast of Astana Motors KMC for 2018 is as follows: the sales in the automotive market will be around 54,000 cars. The sales plan for Astana Motors KMC for 2018 is 11,783 cars that equals to 21% market share.

In addition, Astana Motors became one of the largest taxpayers in the automobile industry of the Republic of Kazakhstan in 2017. According to the audit, tax and customs deductions to the state budget amounted to 11.8 billion tenge or US$36.2 million. The gross turnover of the company for 2017 amounted to over 111.5 billion tenge or US$340.6 million according to the audit.

MEGA shopping and entertainment center chain

The average number of visitors to the MEGA shopping and entertainment center chain is 36 million people per year, with 1.3 million people per month at Mega Alma-Ata, 750 thousand people at Mega Park, and 1 million people at Mega Silk Way. The number of visitors to the Mega shopping and entertainment center chain has increased by 5% compared to 2016.

In 2017, the turnover of the shopping and entertainment center chain grew 8% and amounted to 16.7 billion tenge. Tax deductions in the past year were 3.3 billion tenge.

In 2017, over 50% of tenants signed agreements on a transfer to a percentage from the turnover (83% of commercial areas of the shopping and entertainment center chain). In 2017, the turnover of tenants throughout the MEGA shopping and entertainment center chain on average has increased by 20% (Mega Alma-Ata — 16%, Mega Park — 26%).

The number of new stores in 2017 was 226 (Mega Alma-Ata — 21, Mega Park — 14, Mega Silk Way — 191).

The entertainment/shopping ratio: on average, 41% of the area in the shopping and entertainment center chain is reserved for restaurants, fast food, cafes, entertainment, and educational projects (Mega Alma-Ata — 43%, Mega Park — 46%, Mega Silk Way — 35%). In 2017, over 500 social, entertainment and educational events were conducted throughout the MEGA shopping and entertainment center chain.

The MEGA Alma-Ata Shopping Mall’s area is 100% leased.

Extension of MEGA Alma-Ata by 10 790 m² is planned in March 2018. After completion of the construction, the area of Mega Alma-Ata will increase to 175,000 m² from a current 164,500 m².

The cinema in Mega Alma-Ata will be the largest in Kazakhstan, and the area will increase 2.5 times; while now there are 8 halls with 1,500 seats with a total area of 3,475 m², after the planned extension there will be 15 halls with 2,136 seats, with a total area of 8,570 m². The largest cinema-concert hall to be opened will have 380 seats, a 26×20.55 m screen and an area of 700 m².

The area of ​​the food court will increase 2 times from 1,800 m² to 3,660 m², and the number of seats will increase from 470 to 1,010.

The MEGA Park Shopping Mall’s area is 98% leased.

The number of visitors is around 750 thousand people per month. In 2018, the opening of ZARA is planned with an area of ​​3,000 m². The opening date will be March 1, 2018.

The MEGA Silk Way Shopping Mall’s area is 97% leased.

The number of visitors in 2017 was over 1 million people per month. At the end of January, the 10 millionth visitor is expected to visit the shopping and entertainment center. In May 2018, a launch of a loyalty program is planned for MEGA Silk Way. The start of the project throughout the whole MEGA chain is scheduled for September 2018.