ARÇELİK A.Ş. — Interim / Quarterly Report 2017

Apr 24, 2017

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2017 3 Month Financial Results

April 24, 2017

2017 Q1 Summary

• Accelerated growth in domestic MDA market due to SCT cut

Net Sales TRY 4.6 bln.

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

• Pressure from rising steel, plastic and large panel prices on profit margins

• Consolidation of higher margin Dawlance operations

• Improvement in opex-to-sales ratio stemming from increasing scale

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

EBITDA Margin 10.5%

Leverage 2.1X

• Increasing net debt to finance working capital need

• Depreciation of TRY against hard currency and other EM currencies

WC / Sales 32%

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2017 Q1 Sales Performance

Key Factors Impacting Revenues

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Spike in both sell-in and sell-out sales after the removal of SCT on white goods until the end of September.

SCT Cut in Turkey

Weak demand as the deadline was extended until the end of 2017

POS Cash Register

International Slowing demand in Western Europe, continuation of decline in Growth* South Africa, flat market in Russia.

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-February 2017 retail sales data

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2017 Q1 Margin Performance

Key Factors Impacting Margins

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Cost increase in steel, plastic derivatives and large size panels (49-55 inches)

Raw Material Cost

Strong USD against both hard currencies (€, £) and main CurrencyImpact market currencies (PLN, ZAR, RUB, RON)

Loss of income arising from the change in Turquality incentive program

Incentives

110bps improvement in opex-to-sales ratio as opex grew slower than net sales

OPEX

Dawlance Consolidation

High margin Pakistani operations

PriceAdjustments

Price adjustments in major markets (Turkey, UK)

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2017 Q1 Performance - Turkey

Market

• Substantial growth in MDA market, largely a pull-forward demand, boosted by SCT cut

• • A relatively lower growth (9%) in A/C market

• Flat TV market* in 2M17 (-0,5%), where import brands’ market share slightly declined

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

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Turkish MDA6 Total Market
YoY Change
50%
42%
40% 40%
30%
25%
20%
10%
0%
-10%
2015 2016 2017
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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Turkish Market by Product Type (MDA 6)

('000 Units) 1Q17 1Q16 YoY	('000 Units) 1Q17 1Q16 YoY	('000 Units) 1Q17 1Q16 YoY	('000 Units) 1Q17 1Q16 YoY
Refrigerator Freezer Washing M. Dryer Dishwasher Oven	468 247 608 37 486 253	410 81 472 27 371 176	14%
			204%
			29%
			35%
			31%
			44%
Total	2,099	1,538	36%

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2017 Q1 Performance - Turkey

• Above market-average unit growth (+43% vs. 36%) in MDA-6 market

• ~9% growth in unit sales for A/C products, similar to the market

Arçelik A.Ş.

• Flat TV market share YoY around 25%*

• Weak POS cash register demand due to base effect and legal deadline extension; however, continuing revenue contribution from service fee

* The data for TV is based on retail panel.

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Underperformers Outperformers
Domestic Growh:
+35%
POS CR
Sales
AC Built-in SDA TV Dryer Iron
Sales Sales Sales Sales Sales Sales
158%
104%
62%
46%
40%
23%
-84%
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2017 Q1 Performance - International

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

• Significant performance in Eastern Europe, except for Russia

• Increasing share of private labels in European market (esp. in FS segment)

• A dismal S. African market, down 7% YoY, in 2M17

Market Unit Growth in Major Markets (2M17) (%) (MDA 6)

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W. Europe
France
Germany
Italy
Spain
UK
E. Europe
Poland
Romania
Russia
Ukraine
S. Africa
-7% -2% 3% 8% 13% 18%
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European Market Growth by Product Type (2M17) (%)

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4%
3%
2%
2%
1% 1%
0% 0%
-3%
Washing M. Dryer Dishwasher Cooler Freezer Oven TOTAL Free Standing Built-in
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2017 Q1 Performance - International

• Arçelik Group continuing to strenghten its position in international markets

• Growth curve flattening for Beko in FS segment in European market

Arçelik A.Ş.

• Beko; among the the Top 3 Winners in terms of market share gain in built-in segment

• Decreasing TV sales due to focus on profitable sales

• Slow start to the year in Air-Conditioner business

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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
International Growh:
+29%
TV Sales
AC Grundig Built-in SDA
Sales MDA Sales Sales Sales
61%
47%
34%
15%
-9%
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Trends in Parity and Raw Material Index

EUR/USD Development

Raw Material Index * - Market Price

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1.50
1.40
1.30
1.20
1.10
1.00
Annual Average EUR/USD
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 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17
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110
100
90
80
70
60
50
40
Annual Average RM Price Index (Market)
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 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17
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* Raw material price index for appliances category

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2017 Q1 Other Developments

• Arçelik has become the main sponsor of Turkish National Football Team.

• Eskisehir Refrigerator Plant received «TPM World Clas Award» by the Japan Institute of Plant Maintenance, the highest award in this area.

• Grundig has been named CES (Consumer Electronics Show) 2017 Innovation Awards Honoree for VUX (Virtual User eXperience).

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Sales Performance

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Sales by Region

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+31%
4,634
2017 Q1
9%
3,527 3%
2,675 6% 3% [5%]
6%
+29%
42%
11%
2,071 41%
11% 2016 Q1
33%
+35% 1,959
1,456
28%
2016 Q1 2017 Q1
Turkey Western Europe CIS&Eastern Europe
Africa Middle East Other
Turkey International
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Sales Bridge

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TL mn
5,000
227
4,500 489
-113
503
4,000
3,500
2,675
3,000
2,500 2,071
4,294
2,000
1,500
1,000 1,959
1,456
500
-
2016 Q1 TR - Organic INT - Organic INT - FX Impact Acquisition 2017 Q1
Turkey International Impact on Rev
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2017 Q1	Organic	Currency Effect	Acquisition	TOTAL
Domestic Growth	34.5%	0.0%	0.0%	34.5%
International Growth	-5.4%	23.6%	11.0%	29.2%
Total Growth	11.1%	13.9%	6.4%	31.4%

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Financial Performance

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Income Statement

				Δ%	Δ%			Δ%
TL mn	2017 Q1	2016 Q1	2016 Q4	YoY	QoQ	2016	2015	YoY
Revenue	4,634	3,527	4,526	31	2	16,096	14,166	14
Gross Profit	1,478	1,194	1,432	24	3	5,340	4,536	18
margin	31.9	33.9	31.6			33.2	32.0
EBIT *	354	323	301	9	17	1,331	1,157	15
margin	7.6	9.2	6.7			8.3	8.2
Profit Before Tax	237	154	108	53	118	1,202	785	53
margin	5.1	4.4	2.4			7.5	5.5
Net Income**	241	157	230	54	5	1,304	893	46
margin	5.2	4.4	5.1			8.1	6.3
EBITDA*	485	421	423	15	15	1,769	1,527	16
margin	10.5	11.9	9.3			11.0	10.8

• 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
4,634 35.0
4,526
33.9 (31%) 34.0
33.0 (2%)
3,527
32.0
31.9 31.0
31.6
30.0
29.0
28.0
27.0
26.0
25.0
2016 Q1 2016 Q4 2017 Q1
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Revenue Gross Margin (%)

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White Goods (36%) Consumer Electronics (5%) Other (38%)
(0%) (-5%) (29%)
750 75035.0 3
39.0
3,368 3,356 32.1
700 30.2 70030.0 674 3
37.0
36.1 29.8 3
2,463 65035.0 634 650
604 25.0 2
34.3 60033.0 600
576
32.6 31.0 20.0 27.3 27.0 2
550 550 525
2
29.0 18.2
15.0
500 500 489
2
27.0
45025.0 4 5010 .0 2
2016 Q1 2016 Q4 2017 Q1 2016 Q1 2016 Q4 2017 Q1 2016 Q1 2016 Q4 2017 Q1
Revenue Gross Margin (%) Revenue Gross Margin (%) Revenue Gross Margin (%)
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Balance Sheet

TL mn	31.03.2017	31.12.2016		31.03.2017	31.12.2016
Current Assets	12,406	10,986	Current Liabilities	7,613	6,606
Cash and Cash Equivalents	2,886	2,442	ST Bank Borrowings	2,771	2,251
Trade Receivables	5,672	5,295	Trade Payables	3,156	3,086
Inventories	3,255	2,762	Provisions	425	412
Other	592	487	Other	1,261	857
Non-current Assets	6,173	5,924	Non-current Liabilities	4,915	4,299
Property, Plant and Equipment	2,801	2,750	LT Bank Borrowings	3,980	3,407
Intangible Assets	2,428	2,304	Other	935	892
Financial Investments	239	239
Other	706	630	Equity	6,052	6,005
Total Assets	18,579	16,909	Total Liabilities	18,579	16,909

	31.03.2017	31.12.2016	31.12.2015	31.12.2014
Net Financial Debt/Equity	0.64	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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Change
3,255
2,762 7%
5,536
4,719
18%
358 376 2%
5,672
5,295
3,086 3,156 17%
2016 - Assets 2016 2016 - Liabilities 2017 1Q - Assets 2017 Q1 20171Q - Liabilities
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Trade Rec. Inventory Other Rec. Trade Payables Other Pay. Working Capital

Working Capital / Sales

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39.2% 41.8%
39.1% 39.3%
38.7% 37.2%
36.2%
32.5%
30.9% 30.8% 32.2%
30.3% 29.3%
Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17
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Debt Profile

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Debt profile (as of Mar 31 2017)
4,000 TL mn Effective mn Original TL mn
Interest Rate p.a. (%) Currency Equivalent
2,000 TRY 11.8% 2,468 2,468
1,317 1,174 1,741 1,267 1,621 2,168 2,491 2,467 2,722 2,442 2,886 EUR 1.5% 145 566
0 -839 ZAR 9.9% 750 212
-1,629 -2,144 -1,673 -1,803 -2,185 -2,508 -2,078 -2,370 -2,251 -2,770 CNY 4.4% 95 50
-2,000 -1,218
GBP 0.9% 4 20
-1,528
-1,859 -2,581 -2,965 USD 2.0% 0 1
-4,000 -3,269 -3,084 -3,078 -2,843 -3,407
PKR 6.3% 5,522 191
-3,980
Total Bank Borrowings 3,507
-6,000
USD 5.1% 510 1,856
EUR 4.0% 355 1,387
-8,000
2010 2011 2012 2013 2014 2015 16 Q1 16 Q2 16 Q3 16 Q4 17 Q1 Total Eurobond 3,243
Cash and cash equivalent Short term debt Long term debt Total 6,750
Debt maturity profile
4,500 3.0
3,864
4,000
2.5
3,500 2,988 2.6 3,146 3,286 3,100 3,216 2023
3,000 2.3 2.2 2.3 2,689 2.0 27% 2017
2.2 2,491 2.1 30%
2,500 2,263
1,983 1.8 1.8 1.5
2,000 1.5
1.4
1,500 1.0
1,000 740
0.5
500
2018
0 0.0 2021 18%
2010 2011 2012 2013 2014 2015 16Q1 16Q2 16Q3 16Q4 17Q1 20%
2019-20
0.9
Net Debt (TL mn) Net Debt/EBITDA 5%
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Cash Flow

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1
13
102 Dividends Fixed 129 2.886
Differences Received Asset Sales 66
2017 CAPEX
Q1 934 Conversiondue to FX Financial & Other +444 Changein Cash
Investing
410 Change in Activities
Bank 2.442
2.442
Borrowings
Net
Operational
CF
Beginning Ending
Balance Balance
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2
13
18 Dividends Fixed 143
Received Asset Sales
130 Differences
due to FX CAPEX 47 2.490
Conversion
Change in
351 Bank Other +324 Change
2016 Borrowings Financial & Investing in Cash
Net
Q1 Operational Activities
2.166 CF 2.166
Beginning Ending
Balance Balance
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2017 Expectations

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2017 Expectations

White goods market Turkey : c.5% (previous c.3%) volume growth* International : c.2%

Stable or higher market share Market Share in key regions Revenue Growth >20% in TRY EBITDA Margin (2017) c.11% 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

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www.arcelikas.com

Contacts for Investor Relations

Polat Şen Hande Sarıdal CFO Finance Director Tel: (+90 212) 314 34 34 Tel: (+90 212) 314 31 85

Orkun İnanbil Investor Relations Manager Tel: (+90 212) 314 31 14

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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