ARÇELİK A.Ş. — Annual Report 2016

Feb 2, 2016

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Arçelik

2015 Financial Results

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4Q15 developments

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Key developments

• Strong growth in international sales, both organic and FX related

• Record breaking monthly international sales in October and November

• Good YoY performance in Arcelik domestic sales (up 16%)

• Improved EBITDA levels driven by gross profit

• Improved working capital levels, achieved by measures on receivables and inventory management

• Improved Net Debt / EBITDA

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4Q15 developments

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• Overall growth in international markets

• European appliance markets overall robust, especially Spain, UK, Germany, Austria, Poland and Romania

• Change in France’s retail channel landscape, putting pressure on prices

• Continuing weakness in Russia /Ukraine (c.31% / 41% decline in 11M15)*

• Continuing weakness in South Africa (macro, store closures, credit constraints)

• Middle East still negatively impacted by regional instability; Iran a potential catalyst for the region after sanction liftoff

• Arçelik continued to strengthen its international presence*

• Beko holds 2[nd] rank MDA6 total Europe

• Beko; maintaining the leading brand position in MDA6 free-standing total Europe

• Beko; top winning brand in total Europe in 2015

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*Source: GFK

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4Q15 developments

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Key factors impacting revenues

Domestic white goods, TV and SDA sales

FX gains from international sales

International volumes

Strong performance across all product segments 16% YoY growth

c.9% positive impact on consolidated revenues in 4Q15 (4% in 2015)

MDA6: Top market share winning brand in Europe in terms of sales units*. Record-breaking sales in October and November (€278m)

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*Source: GFK

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4Q15 developments

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Key factors impacting margins

Commodity prices FX rate Improved GPM YoY

OPEX flat YoY

Commodity prices continued to support white goods margins further in 4Q15 EUR/USD still down around 1.10 levels=> Stable QoQ

White goods GPM improved by 2.1pp YoY supported by commodity cost declines and price actions, especially in the domestic market. Electronics margins up by 1.1pp YoY supported by TV and cash register sales despite unfavorable EURUSD.

OPEX/sales ratio (including net other operating income) worse by 0.2pp YoY

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4Q15 developments

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Other developments

• Arçelik received R&D Leadership and Leadership in Technology Development

awards at Innovation Week.

• Test production started in Thailand factory as planned.

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4Q15 developments

Domestic market monthly progression

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mn units
0.9 30%
28%
0.8 25%
0.7
20%
0.6 16%
15%
0.5 13%
10%
0.4
7% 6%
5% 5%
0.3 1% 3% 2%
0%
0.2 -2%
-3%
0.1 -5% -5%
0.0 -10%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
13 14 15 YoY (RHS)
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Domestic market in 2015

in 000's	2015	2014	YoY
Refrigerator Freezer Washing mach. Dryer Dishwashers Ovens	1,976 571 2,026 82 1,483 951	1,908 535 1,897 64 1,435 868	4% 7% 7% 27% 3% 10%
Total	7,090	6,706	6%

Domestic market in 4Q15

in 000's	4Q15	4Q14	YoY
Refrigerator	473	469	1%
Freezer	45	50	-10%
Washing mach.	510	531	-4%
Dryer	35	31	12%
Dishwashers	373	370	1%
Ovens	217	223	-3%
Total	1,653	1,675	-1%

Source: TURKBESD

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4Q15 developments

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EUR/USD development Raw material market price index
105
1.5
100
1.4
95
1.3
90
1.2 85
1.1 80
75
1.0
70
0.9
65
0.8
60
Annual Avg. EUR/USD Annual average RM price index (market)
Raw material price index for appliances category
8
13 Q1 13 Q2 13 Q3 13 Q4 14 Q1 14 Q2 14 Q3 14 Q4 15 Q1 15 Q2 15 Q3 15 Q4 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15
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Sales performance

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Sales by region

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				Δ%	Δ%			Δ%
TL mn	2015 Q4	2014 Q4	2015 Q3	YoY	QoQ	2015	2014	YoY
Total Revenue	4,067	3,402	3,877	20	5	14,166	12,514	13
Turkey	1,532	1,326	1,543	16	-1	5,724	4,850	18
International	2,535	2,076	2,334	22	9	8,442	7,664	10

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39.0%
45%
40% 37.7%
35.0%
33.4%
35%
30%
25%
20%
13.4% 13.2%
15%
8.7% 7.7%
10%
2.5% 2.6% 2.9% 3.8%
5%
0%
Turkey Western CIS&Eastern Africa Middle East Other
Europe Europe
2014 Q4 2015 Q4
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50%
40.4%
45%
38.8%
40% 33.4%
32.8%
35%
30%
25%
20%
13.4%
15% 12.5%
8.5%
8.0%
10% 3.1% 3.5%
2.8% 2.8%
5%
0%
Turkey Western CIS&Eastern Africa Middle East Other
Europe Europe
2014 2015
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Sales bridge

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16,000
TL mn
560
874
14,000
218
12,000
10,000 8,442
7,664 Impact on Rev
8,000
International
6,000
Turkey
4,000
5,724
4,850
2,000
-
2014 Organic Int. Organic TR FX impact 2015
2015 Organic Currency effect Total
% International Growth 3% 7% 10%
% Consolidated Growth 9% 4% 13%
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Financial performance

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Income statement

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				Δ%	Δ%			Δ%
TL mn	2015 Q4	2014 Q4	2015 Q3	YoY	QoQ	2015	2014	YoY
Revenue	4,067	3,402	3,877	20	5	14,166	12,514	13
Gross Profit	1,322	1,050	1,260	26	5	4,536	3,979	14
margin	32.5	30.9	32.5			32.0	31.8
EBIT *	371	263	330	41	13	1,157	1,024	13
margin	9.1	7.7	8.5			8.2	8.2
Profit Before Tax	243	187	241	30	1	785	732	7
margin	6.0	5.5	6.2			5.5	5.8
Net Income**	212	176	214	21	-1	893	638	40
margin	5.2	5.2	5.5			6.3	5.1
EBITDA*	465	351	423	32	10	1,527	1,370	11
margin	11.4	10.3	10.9			10.8	11.0

• EBIT was calculated by deducting the impact of foreign exchange gains and losses arising from trade receivables and payables, credit finance income and charges and cash discount expense and adding income and expenses from sale of property plant and equipment.

** Net income before minority

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Revenue and gross profit by segment

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				Δ%	Δ%			Δ%
TL mn	**2015 Q4 **	**2014 Q4 **	2015 Q3	YoY	QoQ	2015	2014	YoY
Consolidated
Revenue	4,067	3,402	3,877	20	5	14,166	12,514	13
Gross Profit	1,322	1,050	1,260	26	5	4,536	3,979	14
Gross Profit %	32.5	30.9	32.5			32.0	31.8
White Goods
Revenue	2,915	2,434	2,947	20	-1	10,299	9,069	14
Gross Profit	1,024	803	1,038	27	-1	3,578	3,080	16
Gross Profit %	35.1	33.0	35.2			34.7	34.0
Consumer Electronics
Revenue	649	552	465	18	40	1,966	1,829	7
Gross Profit	157	127	101	23	56	433	442	-2
Gross Profit %	24.2	23.1	21.6			22.0	24.2
Other
Revenue	503	416	466	21	8	1,901	1,616	18
Gross Profit	142	120	122	18	16	524	457	15
Gross Profit %	28.2	28.8	26.2			27.6	28.3

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Balance sheet

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TL mn	31.12.2015	31.12.2014		31.12.2015	31.12.2014
Current Assets	9,406	8,472	Current Liabilities	5,236	4,431
Cash and Cash Equivalents	2,168	1,621	ST Bank Borrowings	2,185	1,803
Trade Receivables	4,791	4,434	Trade Payables	2,090	1,781
Inventories	2,140	2,125	Provisions	335	264
Other	308	292	Other	627	583
Non-current Assets	4,332	3,923	Non-current Liabilities	3,826	3,566
Property, Plant and Equipment	2,056	1,813	LT Bank Borrowings	3,269	2,965
Financial Investments	749	894	Other	557	601
Other	1,528	1,217	Equity	4,676	4,399
Total Assets	13,739	12,395	Total Liabilities	13,739	12,395

	31.12.2015	30.09.2015	30.06.2015	31.12.2014	31.12.2013
Net Financial Debt/Equity	0.70	0.89	0.92	0.72	0.72
Total Liabilities/Total Assets	0.66	0.67	0.66	0.65	0.64

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Working capital

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TL mn	FX Basis	TL Basis	31.12.2015		FX Basis	TL Basis	Total
ST Trade Rec.	2,038	2,753	4,791	ST Trade Payables	798	1,292	2,090
Other Receivables	29	33	62	Other Payables	248	44	292
Inventory	1,035	1,105	2,140	Working Capital	2,057	2,554	4,611

TL mn	FX Basis	TL Basis	31.12.2014		FX Basis	TL Basis	Total
ST Trade Rec.	1,994	2,440	4,434	ST Trade Payables	884	897	1,781
Other Receivables	27	32	59	Other Payables	246	58	304
Inventory	1,219	906	2,125	Working Capital	2,110	2,423	4,533

Working capital /sales

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41.8%
33.3% 38.9% 39.2% 39.1% 38.7% 36.2% 37.2% 39.3%
40%
32.5%
30%
20%
10%
0%
Dec-12 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
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Debt profile

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3,000 TL mn
2,000
1,000 416
905 1,317 1,174 1,741 1,267 1,621 2,168
0
-839
-1,000 -1,915 -1,924 -1,629 -2,144 -1,673 -1,803 -2,185
-1,218
-2,000
-1,528
-3,000 -1,577 -188 -1,859 -2,581
-2,965
-4,000 -3,269
-5,000
-6,000
2008 2009 2010 2011 2012 2013 2014 2015
Cash and cash equivalent Short term debt Long term debt
3,076
3,500 3,146 3,286 6
2,988
3,000 5
2,500 2,263
1,983 4
2,000
3
1,500 1,207
1,000 5.1 740 2.3 2.2 2.6 2.3 2.2 2
1
500
1.3
0.9
0 0
2008 2009 2010 2011 2012 2013 2014 2015
Net Debt (TL mn) Net Debt/EBITDA
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|||||
|---|---|---|---|
|Debt profile (as of 31 Dec 2015)|
|Effective|mn Original|TL mn|
|Interest Rate p.a. (%)|Currency|Equivalent|
|TRY|11.5%|2,021|2,021|
|EUR|1.6%|191|608|
|ZAR|9.1%|750|142|
|RUB|8.7%|904|36|
|CNY|4.4%|110|49|
|GBP|1.6%|4|19|
|USD|1.5%|1|2|
|SEK|1.3%|2|1|
|Other|1|
|Total Bank Borrowings|2,878|
|USD|5.1%|503|1,461|
|EUR|4.0%|351|1,115|
|Total Eurobond|2,576|
|Total|5,454|
|Debt maturity profile|
|2023|
|27%|
|2016|
|40%|
|2017|
|2021|11%|
|20%|
|2018-19|
|2%|

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Cash flow*

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TL mn	2015	2014
Beginning Balance	1,621	1,266
Net Operational Cash Flow	1,723	1,003
CapEx	-642	-453
Acquisition of minority interest	-282	0
Fixed Asset Sales	19	4
Dividend Paid	-350	-354
Dividends Received	24	27
Changes in Bank Borrowings	230	-522
Bonds Issued	0	991
Other Financial & Investing Activites	-330	-274
Differences due to FX Conversion	153	-67
Changes in Cash	546	355
Ending Balance	2,166	1,621

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2014 figure reclassified

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2016 expectations

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2016 expectations

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Stable or higher market share Market share in key regions Turkey : 3 to 5 %, Turkey : 3% - 5% White goods volume growth International : > 6c.2 % Revenue growth c.> 10% in TL EBITDA margin (2016) c.11% Long-Term EBITDA margin c. 3511 %

• 5 main products, in compliance with WGMA data.

**EBITDA margin calculations are inline with the methodology used in calculation of historical values

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www.arcelikas.com

Contacts for Investor Relations

Polat Şen Hande Sarıdal Orkun İnanbil CFO Finance Director Investor Relations Manager Tel: (+90 212) 314 34 34 Tel: (+90 212) 314 31 85 Tel: (+90 212) 314 31 14

investorrelations@arcelik.com

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Disclaimer

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This presentation contains information and analysis on financial statements as well as forward-looking statements that reflect the Company management’s current views with respect to certain future events. Although it is believed that the information and analysis are correct and expectations reflected in these statements are reasonable, they may be affected by a variety of variables and changes in underlying assumptions that could cause actual results to differ materially.

Neither Arçelik nor any of its managers or employees nor any other person shall have any liability whatsoever for any loss arising from the use of this presentation .

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