ARÇELİK A.Ş. — Interim / Quarterly Report 2017

Oct 20, 2017

==> picture [469 x 105] intentionally omitted <==

2017 9-Month Financial Results

October 20, 2017

Sensitivity: Public

2017 Q3 Summary

• Record quarter sales in domestic market before the SCT-break ends, coupled with the strongest quarter (YTD) in international sales

• Despite the ongoing high raw material prices, improvement in gross margin compared to Q2 thanks to sourcing and pricing measures

• Slight improvement in European MDA retail market compared to first half

Net Sales

TRY 5.4 bln.

EBITDA Margin

10.0%

• Price adjustments in domestic market

WC / Sales

• Improving EUR/USD parity

33.5%

• Strong sales in Turkey continues to pressure working capital need

• Leverage remained around June 2017 level

Leverage 2.6X

==> picture [66 x 14] intentionally omitted <==

2Sensitivity: Public

2017 Q3 Sales Performance

Key Factors Impacting Revenues

==> picture [85 x 289] intentionally omitted <==

SCT Cut

CurrencyImpact

Dawlance Consolidation

International Growth*

POS Cash Register

Strong domestic demand before the deadline at the end of September 2017 TRY’s YoY depreciation against hard currencies (€, $, £) and some emerging market currencies (PLN, ZAR, RUB)

Consolidation of Pakistan based Dawlance

Slightly improving growth in Western Europe, strong performance in Eastern Europe, positive signals in South Africa and political turmoil affecting demand in ME

Weak demand as the deadline remains as the end of 2017

==> picture [66 x 14] intentionally omitted <==

* Based on January-August 2017 retail sales data

Sensitivity: Public 3

2017 Q3 Margin Performance

Key Factors Impacting Margins

==> picture [85 x 289] intentionally omitted <==

CurrencyImpact Appreciation of EUR against USD during the quarter (QoQ)

Pricing Price hikes in domestic market Dawlance High margin Pakistani operations Consolidation

No further worsening due to reflection of Q2 procurements in Q3 financials and longer term positioning in the steel market, easing prices in open cell market

Raw Material Cost

Increase (QoQ) in opex-to-sales ratio stemming from sales related costs (i.e. logistics, guarantee)

OPEX

==> picture [66 x 14] intentionally omitted <==

4Sensitivity: Public

2017 Q3 Performance - Turkey

• Slower growth in MDA market compared to Q1 and Q2, but still quite solid just before the SCT-break deadline (Q1: 36% - Q2: 20% - Q3: 16%)

Market

• More rational pricing environment in the market

• Accelaration in A/C market mainly due to low base of 3Q16. (Q3: 77% – H1: 25%)

• MDA and A/C figures are based on BESD data.

==> picture [154 x 26] intentionally omitted <==

----- Start of picture text -----

Turkish MDA6 Total Market
YoY Change
----- End of picture text -----

==> picture [325 x 179] intentionally omitted <==

----- Start of picture text -----

50%
42%
40% 40% 39%
30%
25% 25%
20% 21%
17%
10%
7%
6%
0%
-10%
2015 2016 2017
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
----- End of picture text -----

Turkish Market by Product Type (MDA 6)

('000 Units) 3Q17 3Q16 YoY	('000 Units) 3Q17 3Q16 YoY	('000 Units) 3Q17 3Q16 YoY	('000 Units) 3Q17 3Q16 YoY
Refrigerator Freezer Washing M. Dryer Dishwasher Oven	708 306 640 43 489 323	615 303 557 17 385 278	15%
			1%
			15%
			147%
			27%
			16%
Total	2,508	2,155	16%

==> picture [66 x 14] intentionally omitted <==

Sensitivity: Public 5

2017 Q3 Performance - Turkey

• Sales performance in MDA6 slightly above the market average during the quarter (Market: +16% YoY, Arcelik +18% YoY)

Arçelik A.Ş.

• Flat TV market share YoY around 27%* with c.9% YoY unit growth in 3Q17

• POS Cash Registers unit sales remain weak (down 66% YoY in 3Q17)

* The market share data for TV is based on retail panel.

==> picture [267 x 257] intentionally omitted <==

----- Start of picture text -----

Underperformers Outperformers
3Q17 Domestic
Revenue Growth
(YoY): +31.8%
POS CR
Sales
SDA Sales Free-Standing Built-in TV
Sales Sales Sales
77%
41%
38%
24%
-32%
----- End of picture text -----

==> picture [66 x 14] intentionally omitted <==

Sensitivity: Public 6

2017 Q3 Performance - International

• Slightly better growth in Europe in 8M period due to improvement in demand in W. Europe

==> picture [109 x 119] intentionally omitted <==

----- Start of picture text -----

Market
----- End of picture text -----

• UK turned green, Germany stays sluggish, France rebounded strong, Italy and Spain are still robust in July-August period

• Despite the slight slowdown, high growth goes on in E. Europe, Russia and Romania in particular

• Higher growth in built-in segment in all across the region

• Political developments in Middle East affects the market negatively

• Positive outlook at the end of Q2 improved further in S. Africa as market turns green in 8M

Market Unit Growth in Major Markets (%) (MDA 6)

European Market Growth by Product Type (8M17) (%)

==> picture [654 x 200] intentionally omitted <==

----- Start of picture text -----

-5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 5%
Eastern Europe 4%
Russia 3% 3%
Poland 3% 3%
Romania 2%
Ukraine
1%
Western Europe
United Kingdom
Germany
France
Italy -2%
Spain
South Africa
6M 8M
Washing M. Dryer Dishwasher Cooler Freezer Oven TOTAL Free Standing Built-in
----- End of picture text -----

==> picture [66 x 14] intentionally omitted <==

7Sensitivity: Public

2017 Q3 Performance - International

• Beko continues to be the runner-up brand in total Europe

• Beko takes the lead again in FS segment in 8M as market share loss slows down in July-August

• In terms of market share gain in BI segment, Beko is among the Top 3 players in Europe

Arçelik A.Ş.

• Grundig MDA continues to grow in premium segment with sales growth over 70% in Q3

• Flat TV sales (YoY) following a weaker performance in 1H17 as key markets rebounded

• In line with expanding distribution, Beko reached a unit market share of 0,8% in cooling by August 2017 in Asia 9.*

Beko Unit Market Share in Europe (%)

==> picture [339 x 205] intentionally omitted <==

----- Start of picture text -----

(MDA 6)
8
6
4
2
0
Total Free-standing Built-in
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
----- End of picture text -----

==> picture [10 x 6] intentionally omitted <==

----- Start of picture text -----

10
----- End of picture text -----

==> picture [310 x 215] intentionally omitted <==

----- Start of picture text -----

Underperformers Outperformers
3Q17 International
Revenue Growth (YoY):
+34.2%
Freezer Washing Built-in SDA Grundig MDA
Sales Machine Sales Sales Sales
Sales
71%
43%
37%
24%
18%
----- End of picture text -----

• Hong Kong, Indonesia, Myanmar, Philippines, Singapore, Thailand, Taiwan, South Korea, Vietnam

==> picture [66 x 14] intentionally omitted <==

Sensitivity: Public 8

Trends in Raw Material Prices

Metal Prices Index - Market

Plastic Prices Index - Market

==> picture [714 x 253] intentionally omitted <==

----- Start of picture text -----

Despite the increase in Q3, our
long term positioning at the end of
Q2 secures most of our +18%
110 130
consumption in Q3 and Q4
100 +20% 120
90 110
80 100
70 90
60 80
50 70
40 60
Annual Average 9M Average Metals Price Index (Market) Annual Average 9M Average Plastics Price Index (Market)
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17
----- End of picture text -----

Source: Steel BB, Steel Orbis Index includes: CRC, HRC, Galvanized Steel, Stainless Steel, Copper, Aluminium

Source: ICIS - Chemical Industry News & Chemical Market Intelligence Index includes: ABS, Polystyrene, Polyurethane, Polypropylene

Metal Prices Index Quarterly Average - Market

2Q16	3Q16	4Q16	1Q17	2Q17	3Q17
73	71	74	82	83	85

Plastic Prices Index Quarterly Average - Market

2Q16	3Q16	4Q16	1Q17	2Q17	3Q17
103	101	103	119	117	119

==> picture [66 x 14] intentionally omitted <==

Sensitivity: Public 9

2017 Q3 Other Developments

• In September 2017, Arçelik A.Ş. participated IFA, the largest appliance fair in Europe, with its Beko and Grundig brands.

• Performance of Arçelik A.Ş. in sustainability has been recognized by two achievements in the quarter:

• Arçelik A.Ş. has become the first and only manufacturing company to join the DJ Sustainability Emerging Markets Index from Turkey.

• Chosen as one of the world's top nine sustainable companies, Arçelik A.Ş. was awarded the Ökovision Sustainability Leadership Award by ÖkoWorld, one of Europe's most well-established sustainability funds.

• An Arçelik flagship store was opened in Istinye Park Mall, Istanbul, equipped with high-end retailing technologies allowing interactive customer experience. (Please click for an 360° tour)

==> picture [161 x 98] intentionally omitted <==

==> picture [154 x 63] intentionally omitted <==

==> picture [73 x 72] intentionally omitted <==

==> picture [190 x 127] intentionally omitted <==

==> picture [66 x 14] intentionally omitted <==

Sensitivity: Public 10

==> picture [720 x 68] intentionally omitted <==

Sales Performance

==> picture [66 x 14] intentionally omitted <==

11Sensitivity: Public

Sales by Region

==> picture [314 x 451] intentionally omitted <==

----- Start of picture text -----

+33%
5,440
4,083
3,240
+34%
2,414
2,200
1,669
+32%
2016 Q3 2017 Q3
+31%
15,135
11,570
8,913
6,721 +33%
6,222
4,849 +28%
2016 9M 2017 9M
Turkey International
----- End of picture text -----

==> picture [315 x 214] intentionally omitted <==

----- Start of picture text -----

2017 Q3
[4%]
2% [3%]
6%
7% [3%][5%]
40%
14% 14% 41%
2016 Q3
31%
29%
Turkey Western Europe CIS&Eastern Europe
Africa Middle East Pakistan
Other
----- End of picture text -----

2017 9M

==> picture [316 x 199] intentionally omitted <==

----- Start of picture text -----

5% [4%]
3%
6%
6% [3%][5%]
41%
13% 42%
12% 2016 9M
31%
28%
Turkey Western Europe CIS&Eastern Europe
Africa Middle East Pakistan
Other
----- End of picture text -----

==> picture [66 x 14] intentionally omitted <==

12Sensitivity: Public

Sales Bridge

==> picture [684 x 316] intentionally omitted <==

----- Start of picture text -----

TL mn
6,000
185
585
5,000 57
530
4,000
3,240
3,000
2,414
5,084
2,000
2,200
1,000
1,669
-
2016 Q3 TR - Organic INT - Organic INT - FX Impact Acquisition 2017 Q3
Turkey International Impact on Rev
----- End of picture text -----

2017 Q3	Organic	Currency Effect	Acquisition	TOTAL
Domestic Growth	31.8%	0.0%	0.0%	31.8%
International Growth	2.4%	24.2%	7.6%	34.2%
Total Growth	14.4%	14.3%	4.5%	33.2%

==> picture [66 x 14] intentionally omitted <==

Sensitivity: Public 13

==> picture [720 x 68] intentionally omitted <==

Financial Performance

==> picture [66 x 14] intentionally omitted <==

14Sensitivity: Public

Income Statement

				Δ%	Δ%			Δ%
TL mn	2017 Q3	2016 Q3	2017 Q2	YoY	QoQ	2017 9M	2016 9M	YoY
Revenue	5,440	4,083	5,061	33	7	15,135	11,570	31
Gross Profit	1,725	1,361	1,554	27	11	4,757	3,908	22
margin	31.7	33.3	30.7			31.4	33.8
EBIT *	409	375	361	9	13	1,123	1,029	9
margin	7.5	9.2	7.1			7.4	8.9
Profit Before Tax	258	283	214	-9	21	709	1,093	-35
margin	4.8	6.9	4.2			4.7	9.4
Net Income**	258	264	257	-2	0	755	1,074	-30
margin	4.7	6.5	5.1			5.0	9.3
EBITDA*	546	484	496	13	10	1,527	1,346	13
margin	10.0	11.9	9.8			10.1	11.6

• EBIT w as 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

==> picture [66 x 14] intentionally omitted <==

Sensitivity: Public 15

Change in Sales (YoY) (QoQ)

Revenue and Gross Profit by Segment

==> picture [370 x 182] intentionally omitted <==

----- Start of picture text -----

Consolidated
34.0
5,440
33.3 5,061 33.0
(33%)
32.0 (7%)
4,083
31.7 31.0
30.7 30.0
29.0
28.0
27.0
26.0
25.0
2016 Q3 2017 Q2 2017 Q3
----- End of picture text -----

Revenue Gross Margin (%)

==> picture [720 x 233] intentionally omitted <==

----- Start of picture text -----

White Goods (35%) Consumer Electronics (43%) Other (14%)
(13%) (14%) (-20%)
90030.0
4,097 70039.0 677 85028.0 836
3,630
28.5 596 34.4
37.0 80026.0
600
3,027 75024.0
35.0
35.6 500 473 70022.0 666
33.0 65020.0 29.5
33.2 33.1 40031.0 20.8 60018.0 583
30029.0 17.0 55016.0 25.2
50014.0
200
27.0 45012.0
10025.0 4 0010 .0
2016 Q3 2017 Q2 2017 Q3 2016 Q3 2017 Q2 2017 Q3 2016 Q3 2017 Q2 2017 Q3
Revenue Gross Margin (%) Revenue Gross Margin (%) Revenue Gross Margin (%)
Sensitivity: Public
16
----- End of picture text -----

Balance Sheet

TL mn	30.09.2017	31.12.2016		30.09.2017	31.12.2016
Current Assets	13,599	10,986	Current Liabilities	8,646	6,606
Cash and Cash Equivalents	1,983	2,442	ST Bank Borrowings	3,216	2,251
Trade Receivables	7,010	5,295	Trade Payables	3,870	3,086
Inventories	3,945	2,762	Provisions	439	412
Other	660	487	Other	1,122	857
Non-current Assets	6,307	5,924	Non-current Liabilities	4,715	4,299
Property, Plant and Equipment	2,926	2,750	LT Bank Borrowings	3,767	3,407
Intangible Assets	2,430	2,304	Other	948	892
Financial Investments	263	239
Other	688	630	Equity	6,545	6,005
Total Assets	19,906	16,909	Total Liabilities	19,906	16,909

	30.09.2017	31.12.2016	31.12.2015	31.12.2014
Net Financial Debt/Equity	0.76	0.54	0.70	0.72
Total Liabilities/Total Assets	0.67	0.64	0.66	0.65

==> picture [66 x 14] intentionally omitted <==

17Sensitivity: Public

Change 9% 12% 12% 7%

Working Capital

==> picture [540 x 181] intentionally omitted <==

----- Start of picture text -----

3,945
3,538
6,587
6,181
640
516 7,010
6,454
3,870
3,442
2016 - Assets 2017 Q2 2016 - Liabilities 2017 1Q - Assets 2017 Q3 20171Q - Liabilities
----- End of picture text -----

Trade Rec. Inventory Other Rec. Trade Payables Other Pay. Working Capital

Working Capital / Sales

==> picture [513 x 156] intentionally omitted <==

----- Start of picture text -----

39.1% 41.8%
38.7%
39.3% 32.5%
36.2% 37.2%
30.9% 33.8% 33.5%
30.3% 30.8% 29.3% 32.2%
----- End of picture text -----

Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17

==> picture [66 x 14] intentionally omitted <==

Sensitivity: Public 18

Debt Profile

Debt profile (as of Sep 30 2017)

==> picture [330 x 177] intentionally omitted <==

----- Start of picture text -----

4,000 TL mn
2,000
1,317 1,174 1,741 1,267 1,621 2,168 2,491 2,467 2,722 2,442 2,886 2,038 1,983
0
-839
-1,629 -2,144 -1,673 -1,803 -2,185 -2,508 -2,078 -2,370 -2,251 -2,770 -2,922 -3,216
-2,000 -1,218
-1,528
-1,859 -2,581 -2,965
-4,000 -3,269 -3,084 -3,078 -2,843 -3,407
-3,980 -3,874 -3,767
-6,000
-8,000
2010 2011 2012 2013 2014 2015 16 Q1 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3
Cash and cash equivalent Short term debt Long term debt
----- End of picture text -----

	Effective	mn Original	TL mn
	Interest Rate p.a. (%)	**Currency **	Equivalent
TRY	12.9%	2,737	2,737
EUR	1.5%	121	507
ZAR	9.8%	750	198
CNY	4.4%	54	29
GBP	0.9%	7	32
USD	1.9%	0	0
PKR	6.3%	6,170	207
Total Bank Borrowings			3,709
USD	5.1%	510	1,812
EUR	4.0%	349	1,461
Total Eurobond			3,274
Total			6,983

Debt maturity profile

==> picture [325 x 170] intentionally omitted <==

----- Start of picture text -----

6,000 3.0
5,000
5,000 4,758 2.5
2.6 2.5 2.6
3,863
4,000 2.3 2.2 2.3 2.0
2,988 3,146 [3,286] 2.2 3,100 3,216 2.1
3,000 1.8 2,689 2,491 1.8 1.5
1,983 2,263 1.5
1.4
2,000 1.0
1,000 740 0.5
0 0.0
2010 2011 2012 2013 2014 2015 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3
0.9
Net Debt (TL mn) Net Debt/EBITDA
----- End of picture text -----

==> picture [181 x 168] intentionally omitted <==

----- Start of picture text -----

2017
10%
2023
25%
2018
37%
2021
21%
2020
2019
3%
4%
----- End of picture text -----

==> picture [66 x 14] intentionally omitted <==

Sensitivity: Public 19

Cash Flow

==> picture [51 x 46] intentionally omitted <==

----- Start of picture text -----

2017
9M
----- End of picture text -----

==> picture [50 x 46] intentionally omitted <==

----- Start of picture text -----

2016
9M
----- End of picture text -----

==> picture [599 x 220] intentionally omitted <==

----- Start of picture text -----

TLmn
----- End of picture text -----

==> picture [600 x 221] intentionally omitted <==

----- Start of picture text -----

TLmn
----- End of picture text -----

==> picture [66 x 14] intentionally omitted <==

Sensitivity: Public 20

==> picture [720 x 68] intentionally omitted <==

2017 Expectations

==> picture [66 x 14] intentionally omitted <==

21Sensitivity: Public

2017 Expectations

White goods market volume growth

==> picture [114 x 36] intentionally omitted <==

----- Start of picture text -----

Market Share
----- End of picture text -----

Revenue Growth

Turkey* : c.10% International : c.2%

Stable or higher market share in key regions c.25% in TRY

EBITDA Margin (2017)** c.10% (previous c.10.5%)

Long Term EBITDA margin** c.11%

• 6 main products, in compliance with WGMA data.

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

==> picture [66 x 14] intentionally omitted <==

22Sensitivity: Public

==> picture [720 x 68] intentionally omitted <==

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

Investor Relations App

==> picture [149 x 46] intentionally omitted <==

==> picture [149 x 45] intentionally omitted <==

www.arcelikas.com

investorrelations@arcelik.com

==> picture [66 x 14] intentionally omitted <==

Sensitivity: Public 23

Disclaimer

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 .

==> picture [66 x 14] intentionally omitted <==

24Sensitivity: Public