ARÇELİK A.Ş. — Interim / Quarterly Report 2018

Jul 27, 2018

==> picture [299 x 105] intentionally omitted <==

2018 6-Month Financial Results

July 27, 2018

Sensitivity: Public

2018 Q2 Summary

• Strong international sales, TRY depreciation, and robust domestic A/C sales lead to all-time high quarterly turnover.

• Depreciation of major currencies (TRY, PKR) and an unfavorable domestic mix pressured profitability

• Market share gains all across Europe continued in both FS and BI segments

• Price adjustments both in domestic and some international markets

• Higher interest rate environment elevated financing cost

• TRY depreciationand stronger domestic market (QoQ) raised working capital and consequently the leverage

Net Sales TRY 6.5 bln.

EBITDA Margin

8.9%

WC / Sales

32.7%

Leverage

3.1X

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

2Sensitivity: Public

2018 Q2 Sales Performance

Key Factors Impacting Revenues

==> picture [85 x 231] intentionally omitted <==

International Organic growth continued in 2Q18 thanks to strong Growth performance in Europe and emerging markets

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

CurrencyImpact

High Base of Sell-in demand in Turkish MDA market was sluggish as 2017 expected due to high base of last year

A/C Sales in Domestic Market

Above the market increase was recorded in sell-in sales

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

Sensitivity: Public 3

2018 Q2 Margin Performance

Key Factors Impacting Margins

==> picture [85 x 232] intentionally omitted <==

Currency Movements

Domestic Product Mix

Raw Material

Price Increases

TRY and PKR further depreciated during the quarter and EUR/USD parity declined slightly compared to Q1 levels

Higher share of A/C sales, which have a lower margin, had a negative impact on domestic profitability

Both plastic and metal prices stabilized during the quarter

In addition to adjustments made in domestic market, prices have been increased in Romania, Poland, S. Africa and Pakistan

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

4Sensitivity: Public

2018 Q2 Performance - Turkey

• Thanks to a more favorable base and some pull-forward demand in May, contraction was milder compared to 1Q (1Q: -19% 2Q: -7%)

Market*

• Despite losing some momentum, A/C demand remained solid (1Q: +42% - 2Q: +13%)

• World Soccer Cup had no impact on the retail demand for TV, which was flat YoY.

Turkish MDA6 Total Market YoY Change

==> picture [341 x 196] intentionally omitted <==

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

50%
42%
40% 40% 39%
30%
25% 25%
20% 21%
17%
10% 9%
7% 6%
0%
-5%
-10% -8%
-16% -17% -16%
-20% -20% -20%
-23%
-30%
2016 2017 2018
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) 2Q18 2Q17 YoY	('000 Units) 2Q18 2Q17 YoY	('000 Units) 2Q18 2Q17 YoY	('000 Units) 2Q18 2Q17 YoY	2Q16 vs. 2Q16	2Q16 vs. 2Q16
Refrigerator Freezer Washing M. Dryer Dishwasher Oven	527 393 538 18 408 285	607 337 589 21 472 306	-13%	527 205 538 10 394 263	0%
			17%		91%
			-9%		0%
			-14%		70%
			-14%		4%
			-7%		8%
Total	2,169	2,332	-7%	1,939	12%

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

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

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

Sensitivity: Public 5

2018 Q2 Performance - Turkey

• Topline growth of 14% was achieved in the domestic market thanks to price adjustments and high performance in A/C segment.

Arçelik A.Ş.

• In MDA, unit sales was in line with the market in 2Q18 (Market: -7%, Arcelik -9%) Sell-out sales were once again better as indicated by flat (YoY) installments

• A/C segment stood as a significant source of revenue growth (2Q: +46%)

• Improving mix and higher market share in larger screen and UHD TVs. (share of UHD TV is now 25% vs 12% in 2017)

==> picture [331 x 213] intentionally omitted <==

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

Underperformers Outperformers
2Q18 Domestic
Revenue Growth
(YoY): +14.5%
SDA Consumer Free Standing Air- Freezer
Sales Electronics MDA Sales Conditioner Sales
Sales Sales
51%
46%
11%
1% 10%
----- End of picture text -----

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

Sensitivity: Public 6

2018 Q2 Performance - International

• West Europe remains sluggish, East Europe is robust but cooled down in 2Q18

• UK did not improve, Germany is still negative, France turned red, Spain lost some momentum

Market*

• Poland was flat in 2Q, Romania declined further while Russia strengthened

• As in the previous quarters, shift to built-in continued

• S. Africa extended its positive performance to 2Q18

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

==> picture [327 x 197] intentionally omitted <==

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

-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
3M 6M
----- End of picture text -----*

European Market Unit Growth by Product Type (6M18) (%)

==> picture [307 x 177] intentionally omitted <==

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

5.7%
1.4% 1.7% 1.5%
0.5% 0.7%
0.2%
-0.3%
-2.0%
Washing M. Dryer Dishwasher Cooler Freezer Oven TOTAL Free Standing Built-in
----- End of picture text -----

• Figures are based on retail panel of a market research company. S. Africa comparison is based on 4M18 data

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

7Sensitivity: Public

2018 Q2 Performance - International

• Topline growth of almost 40% was achieved in international markets thanks to organic growth and TRY devaluation.

Arçelik A.Ş.

• Share of built-in sales reached ~20% of international MDA sales in 2Q18

• Grundig MDA sales continue its remarkable performance with ~66% YoY growth in 2Q18

• SDA sales, another strategic focus, surged by ~42% YoY in 2Q18

==> picture [324 x 203] intentionally omitted <==

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

Underperformers Outperformers
2Q18 International
Revenue Growth (YoY):
+38.4%
Free-Standing TV SDA Built-in Grundig MDA
Sales Sales Sales Sales Sales
66%
45%
42%
37% 38%
----- End of picture text -----

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

Sensitivity: Public 8

2018 Q2 Performance - International : Europe

• Despite the declining market in West Europe, Arçelik Group outperformed the market with market share gains across all Europe.

Arçelik A.Ş.

• Advantage of depreciating TRY was used in some countries to increase market share and to improve margin in others.

• Price adjustments were done in countries/regions like Spain, Romania and Central Europe.

Arçelik Group Unit Market Share Gains (YoY) (points) - MDA 6[*]

==> picture [673 x 219] intentionally omitted <==

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

3.1 3.1
1.3 1.3
1.2
1.1
0.9
0.7
0.6 0.6 0.6
0.1 0.1
UK Spain Italy France Germany Romania Poland Russia Ukraine EU23 EU23 EU23 S. Africa
Total F/S B/I
----- End of picture text -----

* Figures are based on retail panel of a market research company for Jan-Jun 18 except EU23, whichis based on Jan-April

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

Sensitivity: Public 9

2018 Q2 Performance – International : Asia & Africa

S. Africa & Sub-Sahara

• In the domestic market, Defy had a flat topline in hard currency in H1 due to slower Q2.

Arçelik A.Ş.

• Despite the difficult trading envirionment (forex shortages, etc), exports to Sub-Sahara were up low-single digit (in hard currency) in H1.

ASEAN • Sales in ASEAN region reached ~USD42mn in 2Q18. • Refrigerator productionin Thailand was ~170 K units, up by 32%~~.~~ • Market shares in cooling segment doubled in major countries.	Beko MS in Cooling	June 17	June 18
	Malaysia	0.8%	1.4%
	Thailand	0.6%	1.3%
	Vietnam	0.8%	2.6%

Pakistan

• Dawlance continued to enjoy around 20% topline growth in LC in 2Q2018.

• Price adjustments were done in order to cope up with PKR devaluation, high raw material prices and increased tariffs on imported product/parts.

India

• Work continues on the purchased land in Sanand, Gujarat.

• Initial sales to the JV has already started with sales of TRY 10 million.

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

Sensitivity: Public 10

Trends in Raw Material Prices

Metal Prices Index - Market

Plastic Prices Index - Market

==> picture [710 x 234] intentionally omitted <==

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

+7%
110 140
100 +13% 130
120
90
110
80
100
70
90
60
80
50 70
40 60
2Q Average Metals Price Index (Market) 2Q 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 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18
----- 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

1Q17	2Q17	3Q17	4Q17	1Q18	2Q18
82	83	85	90	94	93

Plastic Prices Index Quarterly Average - Market

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

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

11Sensitivity: Public

2018 Q2 Other Developments

==> picture [56 x 56] intentionally omitted <==

Existing operations of industrial motors and payment technologies were spinned off as two new companies under the names of «WAT Motor Industry & Trade Inc.» and «Token Financial Technologies» to increase focus and unlock the huge value of both businesses.

==> picture [94 x 31] intentionally omitted <==

The resilient balance sheet of Arçelik A.Ş. was again validated as Fitch Ratings has affirmed the Company’s Long-Term Foreign and Local Currency Issuer Default Ratings at "BB+" and upgraded its National Long-Term rating to "AA+" from "AA". The Outlooks are Stable. Fitch has also affirmed Arçelik A.Ş.'s senior unsecured bond rating at "BB+".

==> picture [123 x 82] intentionally omitted <==

==> picture [191 x 50] intentionally omitted <==

Arçelik’s commitment to corporate governance was reaffimed by SAHA Inc. which has increased the Corporate Governance Rating of Arçelik A.S. to 9.53

Arçelik Experience Store in Istinyepark Mall won grand prize in 2018’s Outstanding Store Design<1200 sqm” category at the 12[th] World Retail Awards as part of World Retail Congress.

==> picture [140 x 94] intentionally omitted <==

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

12Sensitivity: Public

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

Sales Performance

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

Sensitivity: Public 13

Sales by Region

==> picture [312 x 414] intentionally omitted <==

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

+29%
6,512
5,061
4,150
+38%
2,998
2,362
2,063 +14%
2017 Q2 2018 Q2
+22%
11,794
9,695
7,526
5,673 +33%
4,022 4,267
+6%
2017 6M 2018 6M
----- End of picture text -----

==> picture [314 x 436] intentionally omitted <==

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

2018 Q2
5.6%
6.1%
2.3%
6.0% [4.6%]
6.3% 3.1% 36.3%
6.8%
40.8%
11.8% 2017 Q2
13.6%
27.0%
29.9%
2018 6M
5.4%
5.6%
2.1%
4.5%
6.7%
3.1% 36.2%
6.4%
41.5%
11.4% 2017 6M
13.5%
27.7%
30.4%
Turkey Western Europe
CIS&Eastern Europe Africa
Middle East Pakistan
Other
----- End of picture text -----

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

Turkey International

14Sensitivity: Public

Sales Bridge

==> picture [684 x 315] intentionally omitted <==

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

TL mn
7,000
856
6,000
296
299
5,000
4,150
4,000
2,998
3,000
2,000
2,362
1,000 2,063
-
2017 Q2 TR - Organic INT - Organic INT - FX Impact 2018 Q2
Turkey International Impact on Rev
----- End of picture text -----

2018 Q2	Organic	Currency Effect	TOTAL
Domestic Growth	14.5%	0.0%	14.5%
International Growth	9.9%	28.6%	38.4%
Total Growth	11.7%	16.9%	28.7%

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

Sensitivity: Public 15

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

Financial Performance

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

Sensitivity: Public 16

Income Statement

==> picture [572 x 287] intentionally omitted <==

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

Δ% Δ% Δ%
TL mn 2018 Q2 2017 Q2 2018 Q1 YoY QoQ 2018 6M 2017 6M YoY
Revenue 6,512 5,061 5,282 29 23 11,794 9,695 22
Gross Profit 1,974 1,554 1,651 27 20 3,625 3,032 20
margin 30.3 30.7 31.2 30.7 31.3
EBIT * 418 361 373 16 12 792 715 11
margin 6.4 7.1 7.1 6.7 7.4
Profit Before Tax 189 214 158 -11 20 347 450 -23
margin 2.9 4.2 3.0 2.9 4.6
Net Income 145 257 178 -44 -19 322 498 -35
margin 2.2 5.1 3.4 2.7 5.1
EBITDA* 579 496 523 17 11 1,102 981 12
margin 8.9 9.8 9.9 9.3 10.1
----- End of picture text -----**

• 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 <==

17Sensitivity: Public

Change in Sales (YoY) (QoQ)

Revenue and Gross Profit by Segment

==> picture [400 x 213] intentionally omitted <==

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

Consolidated
7,000 32.0
6,512
31.2
6,000 30.7 (29%) 31.0
5,061 5,282 (23%)
5,000 30.0
30.3
4,000 29.0
3,000 28.0
2,000 27.0
1,000 26.0
0 25.0
2017 Q2 2018 Q1 2018 Q2
Revenue Gross Margin (%)
----- End of picture text -----

==> picture [720 x 221] intentionally omitted <==

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

White Goods (30%) Consumer Electronics (18%) Other (30%)
(22%) (11%) (39%)
4,721 900 1,20026.0
39.0 1,088
800 1,10024.0
3,869 37.0 24.2 704 30.6
3,630 700 632 1,00022.0 29.5 29.1
35.0600 596 21.5 20.0900 836
781
33.0500 18.0800
33.2
32.5 31.9 31.0400 17.0 16.0700
29.0300 14.0600
27.20 0 12.0500
25.0100 10.0400
2017 Q2 2018 Q1 2018 Q2 2017 Q2 2018 Q1 2018 Q2 2017 Q2 2018 Q1 2018 Q2
Revenue Gross Margin (%) Revenue Gross Margin (%) Revenue Gross Margin (%)
----- End of picture text -----

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

Sensitivity: Public 18

Balance Sheet

TL mn	30.06.2018	31.12.2017		31.03.2018	31.12.2017
Current Assets	16,369	13,610	Current Liabilities	10,894	8,403
Cash and Cash Equivalents	2,956	2,582	ST Bank Borrowings	4,413	3,262
Trade Receivables	7,900	6,518	Trade Payables	4,609	3,576
Inventories	4,752	3,780	Provisions	542	431
Other	760	730	Other	1,329	1,135
Non-current Assets	8,000	6,827	Non-current Liabilities	6,258	5,118
Property, Plant and Equipment	3,694	3,265	LT Bank Borrowings	5,029	4,114
Intangible Assets	2,886	2,578	Other	1,230	1,004
Financial Investments	365	285
Other	1,055	699	Equity	7,216	6,915
Total Assets	24,368	20,436	Total Liabilities	24,368	20,436

	30.06.018	31.12.2107	31.12.2016	31.12.2015
Net Financial Debt/Equity	0.90	0.69	0.69	0.70
Total Liabilities/Total Assets	0.70	0.66	0.66	0.66

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

Sensitivity: Public 19

Working Capital

==> picture [540 x 177] intentionally omitted <==

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

4,752
4,310 7,508
6,795
683
553 7,900
6,728
4,609
3,828
2016 - Assets 2018 Q1 2016 - Liabilities 2017 1Q - Assets 2018 Q2 20171Q - Liabilities
----- End of picture text -----

Change 17% 10% 20% 10%

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

Working Capital / Sales

==> picture [513 x 153] intentionally omitted <==

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

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%]
----- 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 Dec-17 Mar-18 Jun-18

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

Sensitivity: Public 20

Cash&Debt Profile

==> picture [639 x 425] intentionally omitted <==

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

TL mn
4,000 2.11 2.52 2.56 2.45 2.83 3.13 Cash breakdown by currency
2,000 0.00
2,886 2,038 1,983 2,582 2,612 2,956 15% 7%
0 -5.00
13%
-2,000 -2,770 -2,922 -3,216 -3,262 -3,900 -4,413 -10.00 2%4%
-4,000
12%
-3,980 -3,874 -3,767 -4,114 -15.00
-6,000 -4,351
-5,029 -20.00
-8,000
46%
-25.00
-10,000
-12,000 -30.00
17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 TRY USD GBP EUR RON RUB Other
Cash and cash equivalent Short term debt Long term debt Net Debt/EBITDA
Debt profile (as of Jun 30 2018) Debt maturity profile
Effective mn Original TL mn
Interest Rate p.a. (%) Currency Equivalent
TRY 15.2% 3,666 3,666 2018
21%
EUR 1.0% 148 786 2023
ZAR 9.6% 800 265 24%
CNY 4.4% 24 17
GBP 1.3% 6 34
USD 4.9% 28.9 131.6
SEK 0.5% 2 1
PKR 6.6% 8,834 329
Total Bank Borrowings 5,230 2021
USD 5.1% 505 2,302 20% 2019
EUR 4.0% 360 1,911 28%
2020
Total Eurobond 4,212
7%
----- End of picture text -----

		Effective	mn Original	TL mn
		Interest Rate p.a. (%)	**Currency **	Equivalent
TRY		15.2%	3,666	3,666
EUR		1.0%	148	786
ZAR		9.6%	800	265
CNY		4.4%	24	17
GBP		1.3%	6	34
USD		4.9%	28.9	131.6
SEK		0.5%	2	1
PKR		6.6%	8,834	329
Total USD	Bank Borrowings	5.1%	505	5,230 2,302
EUR Total	Eurobond	4.0%	360	1,911 4,212
Total				9,442

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

21Sensitivity: Public

FX Hedging Policy

FX POSITION - CONSOLIDATED

(TRYmn) Before Hedge Hedged Position Net Position	(TRYmn) Before Hedge Hedged Position Net Position
EUR -670 714 44 USD -2,312 1,959 -353 GBP 550 -566 -16 Other 672 -714 -42
TOTAL -1,760 1,393	-367
-5.1% Net FX Position/Equity

• 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 28 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.

==> picture [287 x 187] intentionally omitted <==

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

30
0.4%
-52
-83
-128 -126
-147
-188 -1.1% -1.2%
-242
-301 -2.1% -2.0%
-2.5% -367
-3.7%
-4.1%
-5.1%
-5.7%
16 Q1 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2
Net FX Position Net FX/Equity
----- End of picture text -----

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

22Sensitivity: Public

Cash Flow

==> picture [51 x 43] intentionally omitted <==

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

2018
6M
----- End of picture text -----

==> picture [607 x 214] intentionally omitted <==

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

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

==> picture [50 x 42] intentionally omitted <==

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

2017
6M
----- End of picture text -----

==> picture [608 x 215] intentionally omitted <==

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

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

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

Sensitivity: Public 23

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

2018 Expectations

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

24Sensitivity: Public

2018 Expectations

White goods Turkey : [-5% - flat] sales volume market volume International : ~%2 growth PREVIOUS Revenue GrowthGrowthrowth Around 20% in TRY EBITDA MarginMargin Around 10% (2018) EBITDA (2018) TRY 2,38-2,62 bln.-2,62 bln.2,62 bln.bln..*

PREVIOUS NEW Revenue GrowthGrowthrowth Around 20% in TRY Around 25% in TRY EBITDA MarginMargin Around 10% Around 9,5% (2018) EBITDA (2018) TRY 2,38-2,62 bln.-2,62 bln.2,62 bln.bln.. TRY 2,35-2,60 bln. - Long Term EBITDA margin** Around 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 <==

Sensitivity: Public 25

==> 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 26

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 <==

27Sensitivity: Public