ARÇELİK A.Ş. — Interim / Quarterly Report 2016

Apr 22, 2016

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Arçelik

2016 Q1 Financial Results

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1Q16 Key Results

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• Strong growth in both in domestic and international sales

• Keeping leading position in domestic market

• Increasing unit market share across all Europe, accompanied by increasing price index

• Improved gross and EBITDA margin driven by favorable EUR:USD parity and commodity prices

• Improved working capital level, achieved by continuing measures on receivables and inventory

management

• Improved leverage (Net Debt/EBITDA)

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1Q16 Market Performance - International

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• Overall growth in international MDA markets

• European sell-out markets overall robust, especially UK, France, Spain, Germany and Romania

• First signs of picking up in Russia (9% increase in Jan-Feb 2016)

• Continuing weakness in South Africa and Ukraine

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

• Arçelik continues to strengthen its international presence

• Beko holds 2[nd] rank in total market and leading position in free-standing segment in Europe.

Beko Unit Market Share in Europe (MDA6)

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
J-F
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Europe Market by Product Group (MDA6)

in 000's	1Q16	1Q15	YoY
Refrigerator	2.747	2.648	4%
Freezer	643	630	2%
Washing mach.	3.586	3.410	5%
Dryer	927	849	9%
Dishwashers	1.631	1.541	6%
Ovens	2.070	1.966	5%
Total	11.603	11.044	5%

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1Q16 Market Performance - Turkey

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• Overall growth in domestic market

• Strong MDA sell-in market (12% in 1Q2016)

• Relatively flat sell-out market both for MDA and TV (Retailers building inventory for the high season in Q2)

• Cash register sales performing high due to existing deadlines in 2016

Turkish MDA6 Total Market – Monthly Figures

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mn units
0.9 18%
17%
0.8 16%
0.7 14%
0.6 12%
11%
0.5 10%
9%
0.4 8%
0.3 6%
0.2 4%
0.1 2%
0.0 0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
14 15 16 YoY (RHS)
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Turkish Market by Product Group (MDA6)

in 000's	1Q16	1Q15	YoY
Refrigerator	418	367	14%
Freezer	82	82	-1%
Washing mach.	484	453	7%
Dryer	27	20	33%
Dishwashers	375	291	29%
Ovens	176	178	-1%
Total	1.562	1.391	12%

Source: TURKBESD

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1Q16 Sales Performance

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Key factors impacting revenues

Domestic white goods and CE sales

Double-digit sales growth in major product segments (24% YoY growth), more than doubling sales in cash registers

International Growth

Asia-Pacific starts contributing to growth strategy mainly in China.

FX gains from international sales

(c.4% negative impact in 1Q15)

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1Q16 Margins

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Key factors impacting margins

Raw Material Prices

FX Rate

Improved GP Margin

OPEX slightly high

Raw material and panel prices continued to support white goods and TV margins in 1Q16 .

EUR/USD parity was, in average, stable around 1.10 level.

White goods GPM improved by 3 pp YoY supported by raw material cost declines, favorable EUR:USD parity and price actions.

Electronics margins up by 8.5 pp YoY supported by low panel prices, TV and cash register sales, and reclassification of cash register service fee.

OPEX/sales ratio (excluding net other operating income) slightly worse, largely due to investments in marketing and distribution for both new and existing markets

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1Q16 Margins

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EUR/USD Development Raw material Market Price Index
105
1.5
100
1.4
95
1.3 90
85
1.2
80
1.1
75
1.0
70
0.9
65
0.8 60
Annual average RM price index (market)
Annual Avg. EUR/USD
Raw material price index for appliances category
7
13 Q1 13 Q2 13 Q3 13 Q4 14 Q1 14 Q2 14 Q3 14 Q4 15 Q1 15 Q2 15 Q3 15 Q4 16 Q1 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 Jan-16 Mar-16
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1Q16 Other Developments

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• Mass production started at Thailand refrigerator plant.

• Sales subsidiary became operational in the U.S.A..

• S&P affirmed Arçelik’s 'BB+‘ long-term corporate credit rating and revised the recovery rating upward to '3' from '4‘ on senior unsecured notes.

• Arçelik A.Ş. received 6 awards at IF Design 2016, including the Golden Award for the Turkish Coffee Machine with Capsule System.

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Sales Performance

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Sales by Region

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				Δ%	Δ%			Δ%
TL mn	2016 Q1	2015 Q1	2015 Q4	YoY	QoQ	2015	2014	YoY
Total Revenue	3.527	2.867	4.067	23	-13	14.166	12.514	13
Turkey	1.456	1.178	1.532	24	-5	5.724	4.850	18
International	2.071	1.689	2.535	23	-18	8.442	7.664	10

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41,3%
41,1%
33,0%
33,1%
11,2%
11,4%
7,6%
6,5% 3,6% 4,8%
3,6%
3,0%
Turkey Western CIS&Eastern Africa Middle East Other
Europe Europe
2015 Q1 2016 Q1
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Sales Bridge

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4.000
TL mn
241
3.500
279
141
3.000
2.500 2.071
Impact on Rev
2.000 1.689
International
1.500
Turkey
1.000
1.456
1.178
500
-
2015 Q1 Organic Int. Organic TR FX impact 2016 Q1
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2016 Q1	Organic	Currency effect	Total
% International Growth	8,4%	14,3%	22,6%
% Total Growth	14,6%	8,4%	23,0%

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Financial Performance

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Income Statement

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				Δ%	Δ%			Δ%
TL mn	2016 Q1	2015 Q1	2015 Q4	YoY	QoQ	2015	2014	YoY
Revenue	3.527	2.867	4.067	23	-13	14.166	12.514	13
Gross Profit	1.194	872	1.322	37	-10	4.536	3.979	14
margin	33,9	30,4	32,5			32,0	31,8
EBIT *	323	181	371	79	-13	1.157	1.024	13
margin	9,2	6,3	9,1			8,2	8,2
Profit Before Tax	154	122	243	27	-36	785	732	7
margin	4,4	4,2	6,0			5,5	5,8
Net Income**	157	141	212	11	-26	893	638	40
margin	4,4	4,9	5,2			6,3	5,1
EBITDA*	421	270	465	56	-10	1.527	1.370	11
margin	11,9	9,4	11,4			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	**2016 Q1 **	**2015 Q1 **	2015 Q4	YoY	QoQ	2015	2014	YoY
Consolidated
Revenue	3.527	2.867	4.067	23	-13	14.166	12.514	13
Gross Profit	1.194	872	1.322	37	-10	4.536	3.979	14
Gross Profit %	33,9	30,4	32,5			32,0	31,8
White Goods
Revenue	2.463	2.031	2.915	21	-16	10.299	9.069	14
Gross Profit	889	671	1.024	32	-13	3.578	3.080	16
Gross Profit %	36,1	33,1	35,1			34,7	34,0
Consumer Electronics
Revenue	576	430	649	34	-11	1.966	1.829	7
Gross Profit	171	92	157	87	9	433	442	-2
Gross Profit %	29,8	21,3	24,2			22,0	24,2
Other
Revenue	489	406	503	20	-3	1.901	1.616	18
Gross Profit	133	109	142	22	-6	524	457	15
Gross Profit %	27,3	26,8	28,2			27,6	28,3

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Balance Sheet

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TL mn	31.03.2016	31.12.2015		31.03.2016	31.12.2015
Current Assets	9.546	9.406	Current Liabilities	5.623	5.236
Cash and Cash Equivalents	2.491	2.168	ST Bank Borrowings	2.508	2.185
Trade Receivables	4.491	4.791	Trade Payables	1.958	2.090
Inventories	2.255	2.140	Provisions	335	335
Other	309	308	Other	822	627
Non-current Assets	4.322	4.332	Non-current Liabilities	3.649	3.826
Property, Plant and Equipment	2.091	2.056	LT Bank Borrowings	3.084	3.269
Financial Investments	740	749	Other	565	557
Other	1.490	1.528	Equity	4.596	4.676
Total Assets	13.868	13.739	Total Liabilities	13.868	13.739

	31.03.2016	31.12.2015	31.12.2014	31.12.2013
Net Financial Debt/Equity	0,67	0,70	0,72	0,72
Total Liabilities/Total Assets	0,67	0,66	0,65	0,64

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Working Capital

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TL mn	FX Basis	TL Basis	31.03.2016		FX Basis	TL Basis	Total
ST Trade Rec.	1.680	2.811	4.491	ST Trade Payables	911	1.047	1.958
Other Receivables	39	48	87	Other Payables	161	125	286
Inventory	1.084	1.171	2.255	Working Capital	1.731	2.858	4.589

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

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%
30,9%
30%
20%
10%
0%
Dec-12 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16
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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 2.491
0
-839
-1.000 -1.915 -1.924 -1.629 -2.144 -1.673 -1.803 -2.185 -2.508
-1.218
-2.000
-1.528
-1.577
-3.000 -188 -1.859 -2.581
-2.965
-4.000 -3.269 -3.084
-5.000
-6.000
2008 2009 2010 2011 2012 2013 2014 2015 16 Q1
Cash and cash equivalent Short term debt Long term debt
3.076
3.500 2.988 [3.146] [3.286] [3.100] 6
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
1,8
1
500
1,3
0,9
0 0
2008 2009 2010 2011 2012 2013 2014 2015 16 Q1
Net Debt (TL mn) Net Debt/EBITDA
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Debt maturity profile Debt profile (as of 31 Mar 2016) Effective mn Original TL mn Interest Rate p.a. (%) Currency Equivalent TRY 11,6% 2.251 2.251 EUR 1,7% 166 533 ZAR 9,1% 750 142 RUB 8,9% 475 20 CNY 4,4% 110 48 GBP 1,6% 5 18 USD 1,4% 1 2 Other 0 Total Bank Borrowings 3.014 USD 5,1% 509 1.442 EUR 4,0% 354 1.136 Total Eurobond 2.578 Total 5.592 2016 42% 2017 10% 2018-19 3% 2021 20% 2023 25%

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Cash Flow

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TL mn	2016 Q1	2015 Q1
Beginning Balance	2.166	1.621
Net Operational Cash Flow	351	149
CapEx	-143	-116
Fixed Asset Sales	2	9
Dividends Received	13	11
Changes in Bank Borrowings	130	-21
Other Financial & Investing Activites	-47	-47
Differences due to FX Conversion	18	38
Changes in Cash	324	24
Ending Balance	2.490	1.644

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2016 Expectations

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2016 Expectations

White goods market volume growth

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Market Share
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Turkey* : 3% - 5% International : c.2%

Stable or higher market share in key regions

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Revenue Growth >10% in TL

EBITDA Margin (2016) c.11% Long-Term c.11% EBITDA margin****

• 6 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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