ARÇELİK A.Ş. — Interim / Quarterly Report 2017

Jul 31, 2017

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2017 6 Month Financial Results

July 31, 2017

2017 Q2 Summary

• A lower paced growth in domestic MDA market compared to 1Q17

• Low single-digit growth in European MDA market at retail level

• Lagging impact of steel, plastic and large panel prices on profit margins

• Further improvement in opex-to-sales ratio

• Seasonal rise in WC/Sales ratio due to increasing share of Turkey sales.

• Increasing net debt to finance working capital need

Net Sales TRY 5.1 bln.

EBITDA Margin 9.8%

WC / Sales 34%

Leverage 2.5X

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2017 Q2 Sales Performance

Key Factors Impacting Revenues

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SCT Cut in Turkey Strong domestic demand, albeit at a slower pace than 1Q17

Weak demand as the deadline was extended until POS Cash Register the end of 2017

International Growth*

Slowing demand in Western Europe, strong performance in Eastern Europe and positive signals in South Africa

TRY’s depreciation against hard currencies (€, $, £) and some emerging market currencies (PLN, ZAR, RUB)

CurrencyImpact

Dawlance Consolidation

Consolidation of Pakistan based Dawlance

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* Based on January-June 2017 retail sales data

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2017 Q2 Margin Performance

Key Factors Impacting Margins

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Raw Material Cost Lagging reflection of the peak in material prices in Q1 to Q2

Higher share of A/C sales which have slightly lower Product Mix profitability and lower share of domestic white goods sales Incentives Decreasing contributionfrom brand support programme

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

260bps(YoY) improvement in opex-to-sales ratio as opex OPEX grew slower than net sales Dawlance High margin Pakistani operations Consolidation

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2017 Q2 Performance - Turkey

• Slowing growth in MDA market following the extension of SCT-break (2Q17: 20% - 1Q17:36%)

Market

• Pricing competition, limiting adjustments needed due to changes in FX and raw material

• Pick-up in sell-in A/C market after a lackluster 1Q. (2Q17: +30% YoY – 1Q17: +9% YoY)

• • Shrinking TV market* in 2Q17 (-9%)

• MDA and A/C figures are based on BESD data. The data for TV is based on retail panel.

Turkish Market by Product Type (MDA 6)

Turkish MDA6 Total Market YoY Change	Turkish Market by Product Type (MDA 6)
25% 42% 40% 39% 17% 7% -10% 0% 10% 20% 30% 40% 50% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 2016 2017
	('000 Units) 2Q17 2Q16 YoY
	Refrigerator Freezer Washing M. Dryer Dishwasher Oven	607 337 589 21 472 306	527 205 538 10 394 263	15%
				64%
				9%
				97%
				20%
				16%
	Total	2,332	1,939	20%

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2017 Q2 Performance - Turkey

(1Q17: +45% vs 2Q17: +12%)

Arçelik A.Ş.

• Growth in A/C in line with 1Q17 (+9%)

• Flat TV market share YoY around 27%*

• POS Cash Registers unit sales remain weak (down 65% YoY in 2Q17)

* The data for TV is based on retail panel.

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Underperformers Outperformers
2Q17 Domestic
Revenue Growth
(YoY): +19.7%
POS CR
Sales
SDA Sales Free-Standing Built-in TV
Sales Sales Sales
61%
24% 29%
14%
-26%
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2017 Q2 Performance - International

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Market
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• Strong growth in Italy and Spain mitigated by the declining UK and German markets

• Significant performance in Eastern Europe, Russia and Romania in particular

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

• Signs of a turn-around in South Africa in May and June, still negative in 6M17

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

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-5.0% 0.0% 5.0% 10.0% 15.0% 20.0%
Russia
Poland
Romania
Ukraine
United Kingdom
Germany
France
Italy
Spain
South Africa
2Q 6M
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European Market Growth by Product Type (2Q17) (%)

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5% 5%
3%
3%
2%
1% 2%
0%
-7%
Washing M. Dryer Dishwasher Cooler Freezer Oven TOTAL Free Standing Built-in
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2017 Q2 Performance - International

• Arçelik Group continuing to strenghten its position in international markets

• Slight market share losses for Beko in FS segment in Europe

Arçelik A.Ş.

• Gains continue in more profitable built-in segment.

• Decreasing TV sales due to focus on margins and shrinking French market on last year’s high base (~-50%)

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Beko Unit Market Share in Europe (%)
(MDA 6)
10
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
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Underperformers Outperformers

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2Q17 International
Revenue Growth (YoY):
+34.1%
TV Sales
SDA Built-in Free-Standing Grundig MDA
Sales Sales Sales Sales
50%
37%
36%
16%
-13%
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Trends in Raw Material Prices

Metal Prices Index - Market

Plastic Prices Index - Market

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+18%
110 130
100 +19% 120
90 110
80 100
70 90
60 80
50 70
40 60
Annual Average 1H Average Metals Price Index (Market) Annual Average 1H Average Plastics Price Index (Market)
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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

1Q16	2Q16	3Q16	4Q16	1Q17	2Q17
65	73	71	74	82	83

Plastic Prices Index Quarterly Average - Market

1Q16	2Q16	3Q16	4Q16	1Q17	2Q17
96	103	101	103	119	117

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2017 Q2 Other Developments

• Construction of washing machine plant in Romania, which will be the first Industry 4.0 plant of Arcelik, has started.

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• Beko expands into Latin America with launches in Paraguay and Argentina

• Arçelik won three Red Dot Design Awards with Grundig Bluetooth Speaker, Grundig Orion Bagless Vacuum Cleaner and Grundig Fourever Refrigerator.

• Arçelik A.Ş. was granted the grand prize in 3 different categories at the finals of the Contact Center World Awards, one of the most prestigous award for Call Center Management

• Beko US Inc. was awarded the U.S. Environmental Protection Agency’s (EPA) 2017 ENERGY STAR® Partner of the Year

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2017 Q2 Other Developments – JV in India

Why India?

Details on the Deal

• Huge population: 1.3 bn people / 248 mn households

• Expected closure in September-October2017

• Capital of USD100mn

• Expected GDP growth in 2016-21 is 7.8% CAGR

• Total CAPEX of USD155mn for 10 years

• Estimated Annual Market: 12mn units refrigerators and 6.5mn units Washing Machines

• A refrigerator plant to become operational by 2018 end

• Low penetration for home appliances

• Other products will be largely outsourced from Arcelik plants

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Koç Holding
1%
Ardutch BV
49%
New Co
Voltas
49%
TICL
1%
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• Strategy: Leverage Arcelik’s technology knowhow/European brand image (Beko) and Voltas’s local expertise and wide sales network

• Co-Brand: Voltas-Beko

• Business Targets in Year 10

• Net Sales: ~USD1.0bn

• Capacity: 3 million units

• EBITDAMargin: ~11%

• Market Share ~10%

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Sales Performance

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Sales by Region

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+28%
5,061
3,960
2,998
+34%
2,236
2,063
1,724 +20%
2016 Q2 2017 Q2
Turkey International
+29%
9,695
7,487
5,673
+26%
4,307
4,022
3,180
+32%
2016 1H 2017 1H
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Turkey International

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2017 Q2
5%
6%
3%
4% [4%]
7% 6%
41%
12% 44%
12% 2016 Q2
30%
27%
Turkey Western Europe CIS&Eastern Europe
Africa Middle East Pakistan
Other
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2017 H1

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4%
5%
3%
6% 4% [5%]
6%
41%
12% 42%
11% 2016 H1
31%
28%
Turkey Western Europe CIS&Eastern Europe
Africa Middle East Pakistan
Other
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Sales Bridge

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TL mn
6,000
302
5,000 487
339 -26
4,000
2,998
3,000
2,236
4,733
2,000
1,000 2,063
1,724
-
2016 Q2 TR - Organic INT - Organic INT - FX Impact Acquisition 2017 Q2
Turkey International Impact on Rev
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2017 Q2	Organic	Currency Effect	Acquisition	TOTAL
Domestic Growth	19.7%	0.0%	0.0%	19.7%
International Growth	-1.2%	21.8%	13.5%	34.1%
Total Growth	7.9%	12.3%	7.6%	27.8%

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Financial Performance

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Income Statement

				Δ%	Δ%			Δ%
TL mn	2017 Q2	2016 Q2	2017 Q1	YoY	QoQ	2017 6M	2016 6M	YoY
Revenue	5,061	3,960	4,634	28	9	9,695	7,487	29
Gross Profit	1,554	1,353	1,478	15	5	3,032	2,547	19
margin	30.7	34.2	31.9			31.3	34.0
EBIT *	361	331	354	9	2	715	654	9
margin	7.1	8.4	7.6			7.4	8.7
Profit Before Tax	214	656	237	-67	-10	450	810	-44
margin	4.2	16.6	5.1			4.6	10.8
Net Income**	257	653	241	-61	7	498	810	-39
margin	5.1	16.5	5.2			5.1	10.8
EBITDA*	496	441	485	12	2	981	862	14
margin	9.8	11.1	10.5			10.1	11.5

• 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

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Change in Sales (YoY) (QoQ)

Revenue and Gross Profit by Segment

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Consolidated
35.0
34.2 5,061 34.0
4,634 (28%)
33.0
(9%)
3,960 32.0
31.9 31.0
30.7 30.0
29.0
28.0
27.0
26.0
25.0
2016 Q2 2017 Q1 2017 Q2
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Revenue Gross Margin (%)
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White Goods (33%) Consumer Electronics (18%) Other (15%)
(8%) (5%) (19%)
750 90035.0
3,630
39.0 836
3,362 850
700
37.0 37.0 31.7 80030.0
2,727 28.7 29.5
65035.0 750 729
703
25.0
34.9 596 700
60033.0
569
33.2 650
31.0 20.0
550 18.1 600 25.2
29.0
503 17.0 55015.0
500
27.0 500
45025.0 451 0 . 0
2016 Q2 2017 Q1 2017 Q2 2016 Q2 2017 Q1 2017 Q2 2016 Q2 2017 Q1 2017 Q2
Revenue Gross Margin (%) Revenue Gross Margin (%) Revenue Gross Margin (%)
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Balance Sheet

TL mn	30.06.2017	31.12.2016		30.06.2017	31.12.2016
Current Assets	12,663	10,986	Current Liabilities	7,790	6,606
Cash and Cash Equivalents	2,038	2,442	ST Bank Borrowings	2,922	2,251
Trade Receivables	6,454	5,295	Trade Payables	3,442	3,086
Inventories	3,538	2,762	Provisions	473	412
Other	632	487	Other	953	857
Non-current Assets	6,171	5,924	Non-current Liabilities	4,822	4,299
Property, Plant and Equipment	2,819	2,750	LT Bank Borrowings	3,874	3,407
Intangible Assets	2,395	2,304	Other	948	892
Financial Investments	251	239
Other	707	630	Equity	6,222	6,005
Total Assets	18,834	16,909	Total Liabilities	18,834	16,909

	30.06.2017	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

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Working Capital

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3,538
3,255
6,181
5,536
516
376 6,454
5,672
3,156 3,442
2016 - Assets 2017 Q1 2016 - Liabilities 2017 1Q - Assets 2017 Q2 20171Q - Liabilities
Trade Rec. Inventory Other Rec. Trade Payables Other Pay. Working Capital
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Change 14% 9% 9% 12%

Working Capital / Sales

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39.2% 39.1% 38.7% 36.2% 37.2% 39.3% 41.8%
32.5% 32.2% 33.8%
30.9% 30.3% 30.8% 29.3%
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Mar- 14 Haz- 14 Eyl- 14 Ara- 14 Mar- 15 Haz- 15 Eyl- 15 Ara- 15 Mar- 16 Haz- 16 Eyl- 16 Ara- 16 Mar- 17 Haz- 17

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Debt Profile

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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
0
-839
-1,629 -2,144 -1,673 -1,803 -2,185 -2,508 -2,078 -2,370 -2,251 -2,770 -2,921
-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
-6,000
-8,000
2010 2011 2012 2013 2014 2015 16 Q1 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2
Cash and cash equivalent Short term debt Long term debt
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5,000 4,758 3.0
4,500
3,863 2.5
4,000
3,500 2.3 2.2 2,988 2.6 3,146 2.3 3,286 3,100 3,216 2.5 2.0
3,000 2.2 2,689 2.1
2,491
2,500 2,263 1.8 1.8 1.5
1,983
2,000 1.5
1.4
1.0
1,500
1,000 740 0.5
500
0 0.0
2010 2011 2012 2013 2014 2015 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2
0.9
Net Debt (TL mn) Net Debt/EBITDA
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Debt profile (as of Jun 30 2017)

	Effective	mn Original	TL mn
	Interest Rate p.a. (%)	**Currency **	Equivalent
TRY	12.2%	2,652	2,652
EUR	1.5%	124	495
ZAR	9.9%	750	203
CNY	4.4%	73	38
GBP	0.9%	5	22
USD	2.0%	0	0
PKR	6.3%	5,562	185
Total Bank Borrowings			3,594
USD	5.1%	504	1,767
EUR	4.0%	359	1,435
Total Eurobond			3,202
Total			6,796

Debt maturity profile

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2017
2023 19%
26%
2018
27%
2021
21%
2019-20
7%
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Cash Flow

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2017
H1
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TLmn
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2016
H1
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TLmn
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2017 Expectations

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2017 Expectations

White goods market Turkey : c.10% (previous c.5%) volume growth* International : c.2%

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Market Share
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Stable or higher market share in key regions

Revenue Growth c.25% in TRY (previous >20%)

c.10.5% Margin (2017) (previous c.11%) Long Term EBITDA margin**** c.11%

EBITDA Margin (2017)**

• 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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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

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www.arcelikas.com

investorrelations@arcelik.com

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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 .

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