ARÇELİK A.Ş. — Interim / Quarterly Report 2018

Oct 26, 2018

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2018 9-Month Financial Results

October 26, 2018

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2018 Q3 Summary

Net Sales

• Despite the weak demand in Turkey, international sales and TRY depreciation led to all-time record quarterly revenue.

• Price increases in major markets helped to improve profitability.

• Depreciation of TRY also helped margins through sale of inventory with higher FX rates.

TRY 7.7 bln.

EBITDA Margin

10.2%

• Earlier share gains were protected in FS and BI segments in Europe.

WC / Sales

• High-interest rate environment continued to pressure the bottomline.

35.1%

• WC/Sales ratio increased mainly due to TRY depreciation.

• Leverage stayed flat thanks to strong EBITDA generation during the quarter.

Leverage

3.2x

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2018 Q3 Sales Performance

Key Factors Impacting Revenues

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International Organic growth (~10%) continued in 3Q18 thanks to strong Growth performance in Europe, ASEAN and MENA

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

CurrencyImpact

Demand in domestic market was sluggish due to high base of 2017 and weakening consumer sentiment

Domestic Demand

Mainly due to macro developments, markets were weaker in South Africa and Pakistan

EM Weakness

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2018 Q3 Margin Performance

Key Factors Impacting Margins

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TRY Depreciation

Price Increases

Raw Material

Sales Mix

TRY depreciationhelped margins as pre-purchased inventory was sold at higher FX rates

Cost or currency-basedprice adjustments were done in Turkey, Pakistan and MENA region while promotional activity was reduced in some countries.

Both plastic and metal prices continued to stabilize during the quarter

Despite the narrowing profitability gap between the domestic and international sales, lower share of Turkey had a slightly negative impact on margins

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2018 Q3 Performance - Turkey

• Due to high base of 2017 and weakening consumer sentiment, MDA6 market was down by 20% in 3Q18 (1Q: -19% 2Q: -7%)

Market*

• A/C demand contracted sharply by 46% in 3Q18 (6M: +20%)

• Retail demand for TV decreased by 14% in the quarter (6M: +0,9%)

Turkish MDA6 Total Market YoY Change

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50%
42%
40% 40% 39%
30%
25% 25%
20% 21%
17%
10% 9% 7% 6%
0% 3%
-5%
-10% -8%
-16% -17% -16%
-20% -23% -20% -22% -20%
-30%
-40% -38%
-50%
2016 2017 2018
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) 3Q18 3Q17 YoY	('000 Units) 3Q18 3Q17 YoY	('000 Units) 3Q18 3Q17 YoY	('000 Units) 3Q18 3Q17 YoY	3Q16 vs. 3Q16	3Q16 vs. 3Q16
Refrigerator Freezer Washing M. Dryer Dishwasher Oven	574 224 535 26 385 261	708 306 640 43 489 323	-19%	615 303 557 17 385 278	-7%
			-27%		-26%
			-16%		-4%
			-38%		53%
			-21%		0%
			-19%		-6%
Total	2,005	2,508	-20%	2,155	-7%

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

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TV figures are based on retail panel of a market research company for Jan-Sep ‘18 period

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2018 Q3 Performance - Turkey

• Topline growth remained limited at 5% mainly due to fragile demand environment

• In MDA, unit sales was in line with the market in 3Q18 (Market: -20%, Arcelik -19%)

Arçelik A.Ş.

• Despite a stronger performance than the market, A/C unit sales declined considerably (3Q: -33%)

• In TV segment, the company continued to enjoy second position with almost 25% share.

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Underperformers Outperformers
3Q18 Domestic
Revenue Growth
(YoY): +5.2%
Air- Consumer
Conditioner Electronics
Sales Sales
SDA Cooler Washing
Sales Sales Machine
Sales
26%
13%
4%
-16%
-26%
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2018 Q3 Performance - International

• West Europe did not improve while East remained robust.

• UK remains weak, Germany stays negative, France is still in red, Spain is the only growing one

• Poland grows slower, Romania improved significantly while Russia enjoys another strong quarter

Market*

• Built-in continued to outperform free-standing sales

• S. Africa cooled off in 3Q18 on the back of macro deterioration.

• Market slowed down in Q3 in Pakistan due to religious & national holidays, monsoon season and economic conditions.

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

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-10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0%
Russia
Poland
Romania
Ukraine
United Kingdom
Germany
France
Italy
Spain
South Africa
6M 9M
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European Market Unit Growth by Product Type (8M18) (%)

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1.6%
1.4% 1.4%
1.3%
1.2%
0.9%
0.7%
0.3%
-0.2%
Washing M. Dryer Dishwasher Cooler Freezer Oven TOTAL Free Standing Built-in
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• Figures are based on retail panel of a market research company.

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2018 Q3 Performance - International

• TRY depreciationand organic growth led to ~65% increase in international sales.

• Share of built-in hovers around 20% of international MDA sales in 3Q18.

Arçelik A.Ş.

• Grundig sales more than doubled in TRY terms.

• SDA segment stood out with 86% revenue growth.

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Underperformers Outperformers
3Q18 International
Revenue Growth (YoY):
+66.1%
TV Built-in Free Standing SDA Grundig MDA
Sales Sales Sales Sales Sales
105%
% 86%
9
6
64%
22%
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2018 Q3 Performance - International : Europe

• Arçelik Group maintained its market share in 9M18 compared to 6M18.

Arçelik A.Ş.

• TRY depreciation continues to support competitiveness and margins. • Promotional activity was reduced in some markets to focus on profitability. Arçelik Group Unit Market Share Gains (YoY) (points) - MDA 6[*]

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3.6
1.6
1.1
0.9
0.7 0.7 0.7
0.6 0.6
0.4 0.4
-0.1
UK Spain Italy France Germany Romania Poland Russia Ukraine EU23 EU23 EU23
Total F/S B/I
Market
21.2 7.8 8.3 7.4 5.4 42.0 16.1 5.6 5.4 10.1 11.2 7.0
Share (%)
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* Figures are based on retail panel of a market research company for Jan-Sep 18 except EU23 region, which is based on Jan-Aug

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2018 Q3 Performance – International : Asia & Africa

S. Africa & Sub-Sahara

• In line with slowing market, Defy had a mid-single digit increase in topline in Q3.

Arçelik A.Ş.

• Expansion into Sub-Sahara continued amid challenging environment and forex shortages.

ASEAN

• Sales in ASEAN region reached ~USD40mn in 3Q18. (USD118mn YTD)

• Refrigerator productionin Thailand was ~275 K units, up by 30%.

• Market share in cooling and washing machine segment in Thailandreached 2% by Sept.

• (1,2% in Sept.‘17)

Pakistan

• In line with sluggish market conditions, Dawlance recorded low single digit revenue growth in local currency

• Price adjustments were done in some categories such as laundry, A/C and MWO.

India

• The groundbreaking ceremony for the refrigerator plant was held in September.

• With the initial product launch, sales to the JV reached more than TRY 97 million YTD.

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Trends in Raw Material Prices

Metal Prices Index - Market

Plastic Prices Index - Market

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+2%
110 140
+6%
100 130
120
90
110
80
100
70
90
60
80
50
70
40 60
3Q Average Metals Price Index (Market) 3Q Average Plastics Price Index (Market)
Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18
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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

2Q17	3Q17	4Q17	1Q18	2Q18	3Q18
83	85	90	94	93	90

Plastic Prices Index Quarterly Average - Market

2Q17	3Q17	4Q17	1Q18	2Q18	3Q18
117	119	123	128	125	121

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2018 Q3 Other Developments

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• Arçelik signed an agreement with the European Investment Bank (EIB) for a loan of EUR 68 million to Arctic, the Romanian subsidiary, to finance the investment for the new washing machine plant featuring advanced manufacturing technologies and automation efficiency.

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• Arçelik was once again listed as the only Turkish industrial company in the Dow Jones Sustainability Index (DJSI) in the Emerging Markets Category.

• Arçelik became the second most-reputable brand in Turkey (following Koc Holding) in 2017 according to the results of Turkey Reputation Index Survey, which has been conducted since 2011.

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• Arçelik participated in Europe’s largest appliance expo IFA with its Beko and Grundig brands.

• Arçelik A.S. applied to the Capital Market Board to issue bonds or bills up to TRY1 billion.

• Existing TV factory in Istanbul has been moved to its new location in Cerkezkoy.

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Sales Performance

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Sales by Region

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+41%
7,696
5,440
+66% 5,383
3,240
2,200 +5% 2,313
2017 Q3 2018 Q3
+29%
19,490
15,135
12,909
8,913 +45%
6,222 6,581
+6%
2017 9M 2018 9M
Turkey International
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2018 Q3

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3.3%
6.7%
2.5%
4.5% 30.1%
7.2%
6.4%
2.1% [3.4%] 40.4%
13.9%
2017 Q3
17.4%
29.3%
32.8%
Turkey Western Europe CIS&Eastern Europe
Africa Middle East Pakistan
Other
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2018 9M
4.7%
5.9%
2.3%
4.5%
6.9% 33.8%
6.4%
2.8% [4.7%] 41.1%
12.3%
2017 9M
15.0%
28.3%
31.4%
Turkey Western Europe CIS&Eastern Europe
Africa Middle East Pakistan
Other
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Sales Bridge

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TL mn
9,000
8,000
7,000
1842
6,000
113 301
5,000 5,383
4,000
3,240
3,000
2,000
1,000 2,200 2,313
-
2017 Q3 TR - Organic INT - Organic INT - FX Impact 2018 Q3
Turkey International Impact on Rev
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2018 3Q	Organic	Currency Effect	TOTAL
Domestic Growth	5.2%	0.0%	5.2%
International Growth	9.3%	56.8%	66.1%
Total Growth	7.6%	33.9%	41.5%

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Financial Performance

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Income Statement

				Δ%	Δ%			Δ%
TL mn	2018 Q3	2017 Q3	2018 Q2	YoY	QoQ	2018 9M	2017 9M	YoY
Revenue	7,696	5,440	6,512	41	18	19,490	15,135	29
Gross Profit	2,511	1,725	1,974	46	27	6,135	4,757	29
margin	32.6	31.7	30.3			31.5	31.4
EBIT *	603	409	418	47	44	1,394	1,123	24
margin	7.8	7.5	6.4			7.2	7.4
Profit Before Tax	332	258	189	28	75	679	709	-4
margin	4.3	4.8	2.9			3.5	4.7
Net Income**	253	258	145	-2	75	575	755	-24
margin	3.3	4.7	2.2			2.9	5.0
EBITDA*	787	546	579	44	36	1,890	1,527	24
margin	10.2	10.0	8.9			9.7	10.1

• 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

Consolidated

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7,696 33.0
31.7 (41%)
6,512 32.6 32.0 (18%)
5,440 30.3 31.0
30.0
29.0
28.0
27.0
26.0
25.0
2017 Q3 2018 Q2 2018 Q3
Revenue Gross Margin (%)
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White Goods (50%) Consumer Electronics (-2%) Other (31%)
(31%) (-6%) (-20%)
900 1,20026.0 3
6,161 39.0 1,088
800 1,10024.0 3
4,721 70037.0 677 704 663 24.8 1,00022.0 35.3 3
34.4
4,097 60035.0 20.8 21.5 20.0900 873 3
33.0 3
500 18.0800
33.1 33.1 29.1 2
31.0
31.9 400 16.0700 666
2
29.0
300 14.0600
2
27.0
200 12.0500 2
10025. 0 10.0400 2
2017 Q3 2018 Q2 2018 Q3 2017 Q3 2018 Q2 2018 Q3 2017 Q3 2018 Q2 2018 Q3
Revenue Gross Margin (%) Revenue Gross Margin (%) Revenue Gross Margin (%)
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Balance Sheet

TL mn	30.09.2018	31.12.2017		30.09.2018	31.12.2017
Current Assets	20,877	13,610	Current Liabilities	13,195	8,403
Cash and Cash Equivalents	4,225	2,582	ST Bank Borrowings	4,687	3,262
Trade Receivables	9,414	6,518	Trade Payables	6,045	3,576
Inventories	6,201	3,780	Provisions	655	431
Other	1,037	730	Other	1,808	1,135
Non-current Assets	9,611	6,827	Non-current Liabilities	8,293	5,118
Property, Plant and Equipment	4,468	3,265	LT Bank Borrowings	6,836	4,114
Intangible Assets	3,527	2,578	Other	1,457	1,004
Financial Investments	381	285
Other	1,235	699	Equity	9,001	6,915
Total Assets	30,489	20,436	Total Liabilities	30,489	20,436

	30.09.2018	31.12.2017	31.12.2016	31.12.2015
Net Financial Debt/Equity	0.81	0.69	0.69	0.70
Total Liabilities/Total Assets	0.70	0.66	0.66	0.66

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Working Capital

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6,201
8,847
4,752
7,508
938
683 9,414
7,900
6,045
4,609
2016 - Assets 2018 Q2 2016 - Liabilities 2017 1Q - Assets 2018 Q3 20171Q - Liabilities
Trade Rec. Inventory Other Rec. Trade Payables Other Pay. Working Capital
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Change 19% 30% 31% 18%

Working Capital / Sales

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39.1% 41.8%
38.7%
36.2% [37.2%] [39.3%] 32.5%
30.9% 30.3% 30.8%29.3% 32.2% 33.8% [33.5%] 30.3% [31.6%] [32.7%] [35.1%]
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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 Dec-17 Mar-18 Jun-18 Sep-18

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Cash&Debt Profile

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TL mn
6,000 2.11 2.52 2.56 2.45 2.83 3.13 3.15 Cash breakdown by currency
4,000 0.00
2,000 2,886 2,038 1,983 2,582 2,612 2955.974 4,225 -5.00 13% 5%
0
17%
-2,000 -2,770 -2,922 -3,216 -3,262 -3,900 -4,413 -4,687 -10.00 4%
-4,000
-6,000 -3,980 -3,874 -3,767 -4,114 -4,351 -15.00 12%
-5,029
-8,000 -6,836 -20.00
-10,000 49%
-25.00
-12,000
-14,000 -30.00
17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 18 Q3 TRY USD GBP EUR RUB Other
Cash and cash equivalent Short term debt Long term debt Net Debt/EBITDA
Debt profile (as of Sep 30 2018)
Debt maturity profile
Effective mn Original TL mn
Interest Rate p.a. (%) Currency Equivalent
2018
TRY 19.9% 4,251 4,251
9%
EUR 1.2% 112 780
2023
ZAR 9.3% 750 316
27%
CNY 4.4% 7 6
GBP 1.4% 7 53
RON 5.0% 14 21
2019
PKR 7.0% 12,403 600 31%
Total 6,027
USD 5.1% 511 3,063 2021
EUR 4.0% 350 2,433 21%
2020
Total Eurobond 5,495 12%
0
Total 11,523
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	Debt profile (as of Sep 30 2018)	Effective	mn Original	TL mn	Debt maturity profile
		Interest Rate p.a. (%)	**Currency **	Equivalent
	TRY	19.9%	4,251	4,251	2018 9%
	EUR	1.2%	112	780
	ZAR CNY	9.3% 4.4%	750 7	316 6	2023 27%
	GBP	1.4%	7	53
	RON	5.0%	14	21	2019
	PKR	7.0%	12,403	600	31%
	Total			6,027
	USD	5.1%	511	3,063	2021
	EUR Total Eurobond	4.0%	350	2,433 5,495 0	2020 12% 21%
	Total			11,523
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FX Hedging Policy

FX POSITION - CONSOLIDATED

(TRYmn) Before Hedge Hedged Position Net Position	(TRYmn) Before Hedge Hedged Position Net Position
EUR -225 247 22 USD* -2,728 2,458 -270 GBP 814 -833 -19 Other 1,019 -1,077 -59
TOTAL -1,120 794	-326
-3.6% Net FX Position/Equity

* Mainly stemming from Pakistan and Vietnam where hedging is limited

• The primary strategy is on balance sheet hedging mainly through receivables, payables and financial liabilities, and the remaining part is hedged through financial derivatives.

• FX hedging is a strictly pursued policy in Arçelik since around 30 currencies are actively managed in global operations.

• It is a KPI for the company management not to have an FX exposure exceeding low single-digit % of equity.

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Cash Flow

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2018
9M
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TLmn
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2017
9M
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TLmn
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2018 Expectations

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2018 Expectations

Turkey : ~ -15% sales volume White goods market volume [previous -5% - flat] growth* International : ~%2

PREVIOUS NEW Revenue Growth Around 25% in TRY Around 30% in TRY EBITDA Margin Around 9,5% Around 9,5% (2018) EBITDA (2018)* TRY 2,35-2,60 bln. *TRY 2,40-2,70 bln. - Long Term EBITDA margin** Around 11%

• 6 main products, in compliance with WGMA data.

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**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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