VESTEL ELEKTRONİK SANAYİ VE TİCARET A.Ş.

Regulatory Filings • Dec 2, 2024

Corporate Credit Rating

☐New ☒Update

Sector: Consumer Durables Publishing Date: 29/11/2024 Team Leader Elif Kırlangıç Keçeli +90 212 352 56 73 elif.keceli@jcrer.com.tr

Senior Analyst

Adem Çengel

+90 212 352 56 73 adem.cengel@jcrer.com.tr

R A T I N G S		Long Term	Short Term
ICRs (Issuer Credit Rating Profile)	National ICR	A (tr)	J1 (tr)
	National ICR Outlooks	Negative	Stable
	International FC ICR	BB	-
	International FC ICR Outlooks	Stable	-
	International LC ICR	BB	-
	International LC ICR Outlooks	Stable	-
ISRs (Issue Specific Rating Profile)	National ISR	-	-
	International FC ISR	-	-
	International LC ISR	-	-
Sovereign*	Foreign Currency	BB (Stable)	-
	Local Currency	BB (Stable)	-

* Assigned by JCR on May 10, 2024

EBITDA Margin (%)

2022 2023

0

VESTEL ELEKTRONİK SANAYİ VE TİCARET ANONİM ŞİRKETİ

JCR Eurasia Rating has evaluated "Vestel Elektronik Sanayi ve Ticaret A.Ş." in the investment grade category with high credit quality and affirmed the Long-Term National Issuer Credit Rating at 'A (tr)' but revised the outlook from 'Stable' to 'Negative', and affirmed the Short-Term National Issuer Credit Rating at 'J1 (tr)' with 'Stable' outlook. On the other hand, the Company's Long-Term International Issuer Credit Ratings were assigned as 'BB/Stable' in line with the sovereign ratings and outlooks of the Republic of Türkiye.

Vestel Elektronik Sanayi ve Ticaret A.Ş. ("Vestel Elektronik", "the Group" or "the Company") was established as a legal entity in 1983. With the acquisition made in 1994, the Zorlu Family has possessed the controlling interests of the Company. The Group operates mainly in the household appliances, and consumer and mobility electronics segments. It has also added the mining & metallurgy, defense industry, and software segments through its investments/affiliates valued by the equity method. Moreover, the Company is a partner of the leading domestic institutions for Türkiye's national automobile project ("TOGG").

Vestel Elektronik is headquartered in İstanbul but conducts its manufacturing activities principally in Vestel City which is a single location in the Manisa province of Türkiye with a total area of 1.3mn m². As of 30.09.2024, the Group had a staff force of 19,500 people. The Group has annual production capacities of 10mn units in TVs and 16.1mn units in major household appliances as of November 2024. Vestel Elektronik consistently takes place in "Türkiye's Top 500 Industrial Enterprises Survey" of the İstanbul Chamber of Industry since at least 2006. The Company ranked 35 th in the 2023 survey. Moreover, Vestel Elektronik took the 20 th place in 2023 in the "Fortune 500 Türkiye" study. The Group has an export-oriented growth strategy. In 9M2024, 57.77% of the Group's gross revenue originated from export sales (FY2023: 63.04%). Thanks to its export power, the subsidiary company Vestel Ticaret A.Ş. ranked 7th in the 2023 list of 'Türkiye's Top 1000 Exporters' while being awarded as the industry export champion of the electricelectronics sector for 26 consecutive years.

Zorlu Holding A.Ş. was the principal shareholder with a 52.77% share in the capital as of 30.09.2024, while the remaining shares were publicly traded on the Borsa İstanbul Stock Exchange (BIST). The shares of Vestel Elektronik have been traded on the BIST since 1990 with the 'VESTL' ticker. The Company is currently included in several indices, including 'BIST Stars Index', 'BIST Corporate Governance Index', and 'BIST Sustainability Index'.

Key rating drivers, as strengths and constraints, are provided below.

Strengths	Constraints
• Maintained gross profit and EBITDA margins	• Heightened leverage profile in 9M2024,
despite cost pressures,	following a recovery in FY2023,
• Noteworthy cash conversion cycle performance	• Weak interest coverage,
in FY2023,	• Operating and bottom-line losses along with a
• Hard-currency income generation capacity	retreatment in sales in 9M2024,
thanks to the export-driven revenue base,	• Sizable working capital deficits throughout the
• Predominantly collateralized receivables	analyzed periods,
leading to asset quality as proven by the low	• Ongoing high level of other receivables from
level of doubtful receivables,	related parties,
• Top-tier market positions in Türkiye and Europe	• Substantial contribution of non-cash
supported by well-established sales and after	revaluation gains in equity,
sales network,	• In the shadow of geopolitical risks, leading
• Economies of scale through centralized	economic indicators point to continued
production in Vestel City,	weakness in global demand conditions,
• Robust adherence to corporate governance	whereas actions for a soft-landing are at the
principles, as evidenced by its inclusion in the	forefront.
Borsa İstanbul Corporate Governance Index.

Considering the aforementioned points, the Company's Long-Term National Issuer Credit Rating has been affirmed at 'A (tr)'. On the other hand, the outlook for the Long-Term National Issuer Credit Rating has been revised from 'Stable' to 'Negative' considering the Company's gross profit and EBITDA margins, cash conversion cycle, export capacity, asset quality, sectoral positions in key markets, cost advantages, and corporate governance profile along with leverage metrics, bottom-line profitability and sales performance in 9M2024, equity structure, and deterioration in local and global macroeconomic conditions. The Company's sales, profit margins, leverage and coverage profile, liquidity and cash flow metrics, and cost management capabilities will be closely monitored by JCR Eurasia Rating in the upcoming periods. The macroeconomic indicators at national and international markets, as well as market conditions and the legal framework of the sector will be monitored.

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