ARÇELİK A.Ş. — Interim / Quarterly Report 2018

Apr 26, 2018

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2018 3-Month Financial Results

April 26, 2018

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2018 Q1 Summary

• Strong organic growth in international sales coupled with weak TRY led to topline growth

Net Sales TRY 5.3 bln.

• Tighter opex management, strong EUR/USD improved EBITDA margin on a QoQ basis.

• W. Europe had a negative start while E. Europe continues to be strong

• Market share gains all across Europe, mainly in built-in segment

• Price adjustments in domestic market continued during the quarter

• Working capital deteriorated slightly mainly due to TRY depreciation at quarter-end

• Net leverage increased due to dividend payment in Q1, translation impact of higher FX

• denominated debt and higher TRY interest rates

EBITDA Margin

9.9%

WC / Sales 31.6%

Leverage

2.83X

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2018 Q1 Sales Performance

Key Factors Impacting Revenues

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Despite the weak demand in W. Europe, where Arcelik gained market share, E. Europe, S. Africa and Pakistan were strong during the quarter.

International Growth*

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

Currency Impact

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

• Based on January-February 2018 retail sales data

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2018 Q1 Margin Performance

Key Factors Impacting Margins

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Pricing Price hikes in domestic market Opex-to-Sales ratio improved by 140bps QoQ and 50bps YoY OPEX thanks to operational leverage and strict opex control Strong Euro against Dollar continued to have a positive EUR/USD impact on profitability of international sales Panel Prices & Panel prices have been declining since mid 2017 and helped TV Product Mix margins in CE as well as focus on a better product mix As budgeted, metal and plastic prices Raw Material remained elevated

Opex-to-Sales ratio improved by 140bps QoQ and 50bps YoY thanks to operational leverage and strict opex control

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2018 Q1 Performance - Turkey

• Sell-in demand for MDA continues to be sluggish due to high base of last year. (3M: -19%)

• Contraction in sell-out side was milder. (-10-15%)

Market

• On the contrary, A/C demand was exceptionally strong (3M: +42%)

• Retail demand for TV* was flat YoY with increasing share of larger screen sizes

Turkish MDA6 Total Market YoY Change

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50%
42%
40% 40% 39%
30%
25% 25%
20% 21%
17%
10%
7% 6%
0%
-5%
-10%
-16% -17% -16%
-20% -20%
-23%
-30%
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) 1Q18 1Q17 YoY	('000 Units) 1Q18 1Q17 YoY	('000 Units) 1Q18 1Q17 YoY	('000 Units) 1Q18 1Q17 YoY
Refrigerator Freezer Washing M. Dryer Dishwasher Oven	397 195 476 35 369 222	468 247 608 37 486 253	-15%
			-21%
			-22%
			-5%
			-24%
			-12%
Total	1,694	2,099	-19%

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

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

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2018 Q1 Performance - Turkey

• Destocking at dealers and high base of 2017 led to a higher decline than the market in MDA (2018Q1: Market: -19%, Arcelik -25% vs. 2017Q1: Market: +36%, Arcelik +42%)

Arçelik A.Ş.

• Strong revenue generation in A/C segment with start of first local production using R32 gas and 10-year guarantee for invertor

• Improving mix and higher market share in larger screen and UHD TVs.

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Underperformers Outperformers
1Q18 Domestic
Revenue Growth
(YoY): -2.7%
Built-in Free Standing SDA Consumer Air-
MDA Sales MDA Sales Sales Electronics Conditioner
Sales Sales
44%
4%
2%
-5%
-6%
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2018 Q1 Performance - International

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Market
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• Germany and UK led the negative start in W. Europe while E. Europe started robust

• France was flat, Spain protected its momentum while Italy contracted

• Strong growth goes on in E. Europe in general, except for Romania due to high base

• As in the previous quarters, shift to built-in continued in 1Q18

• S. Africa recorded strong growth, on top of its positive performance in 2017

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% 25.0%
E. Europe
Russia
Poland
Romania
Ukraine
W. Europe
United Kingdom
Germany
France
Italy
Spain
South Africa
2M
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European Market Unit Growth by Product Type (2M18) (%)

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4.9%
2.9%
2.2%
0.3% 0.5% 0.6%
-0.5% -0.3%
-3.9%
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 Q1 Performance - International : Europe

• 2M18 marked a succesful period in terms of market share gains all across Europe:

Arçelik A.Ş.

• Arcelik Group was among the top performers for both FS and BI segments in total Europe

• • Arcelik Group became no.1 in UK and no.2 in Spain

• Beko was the top market share gainer and became 4[th] brand in built in segment

• Grundig MDA sales almost doubled YoY with significant market share gains

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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 2018
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Underperformers Outperformers

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Underperformers Outperformers
1Q18 International
Revenue Growth (YoY):
+26.2%
Freezer Washing Built-in SDA Grundig MDA
Sales Machine Sales Sales Sales
Sales
99%
33% 33%
21%
19%
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Figures are based on retail panel of a market research company for Jan-Feb 18

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2018 Q1 Performance – International : Asia & Africa

S. Africa & Sub-Sahara

• Defy continues its far-ahead leading position in domestic market with almost 40% share.

Arçelik A.Ş.

• Though it’s still a niche (<10% of market), growth of Defy in BI was strong (>65% share)

• Exports of Defy to Sub-Sahara growing by more than 10% in hard currency

ASEAN

• In line with expanding distribution, ASEAN region sales reached ~USD35mn in 1Q18

• Refrigerator production in Thailand was almost 80 K units, increasing by more than 30%

Pakistan

• High performance in washing machines, cooking appliances and A/C led to almost 20% topline growth (in LC) in Q1

• Execution of first Dawlance mono brand shop in April

India

• Purchase of the land for the refrigerator plant has been completed.

• Trade operations of JV is to start by mid-year, with sales of around USD 25-30 mio..

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Trends in Raw Material Prices

Metal Prices Index - Market

Plastic Prices Index - Market

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Although plastic and metal +8%
110 140 prices further increased in
1Q18, this was broadly in-
100 +15% 130 line with our budget
120 forecasts
90
110
80
100
70
90
60
80
50
70
40 60
3M Average Metals Price Index (Market) 3M Average Plastics Price Index (Market)
Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-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

4Q16	1Q17	2Q17	3Q17	4Q17	1Q18
74	82	83	85	90	94

Plastic Prices Index Quarterly Average - Market

4Q16	1Q17	2Q17	3Q17	4Q17	1Q18
103	119	117	119	123	128

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2018 Q1 Other Developments

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• Beko announced the extension of its sponsorship of FC Barcelona over the next three sportive seasons.

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• The extension coincided with the launch of a global initiative ‘Eat Like A Pro’ campaign that aims to help tackle the global epidemic of childhood obesity.

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• In collaboration with Divan hotel chain, Arçelik launched Asista, a voice intelligent system.

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• In the last week of March 2018, Arçelik A.Ş. paid a total of TRY 435 mio. gross cash dividends to shareholders.

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Sales Performance

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Sales by Region

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+14%
5,282
4,634
3,376
2,675 +26%
1,959 1,906
-3%
2017 Q1 2018 Q1
Turkey International
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2018 Q1
5.2%
5.1%
2.0%
4.3%
7.1% 4.9%
3.2%
36.1%
6.0%
42.3%
10.9% 2017 Q1
13.4%
28.4%
31.1%
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
-53
5,000 283 418
4,000
3,376
2,675
3,000
2,000
1,000 1,959 1,906
-
2017 Q1 TR - Organic INT - Organic INT - FX Impact 2018 Q1
Turkey International Impact on Rev
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2018 Q1	Organic	Currency Effect	TOTAL
Domestic Growth	-2.7%	0.0%	-2.7%
International Growth	10.6%	15.6%	26.2%
Total Growth	5.0%	9.0%	14.0%

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Financial Performance

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Income Statement

				Δ%	Δ%			Δ%
TL mn	2018 Q1	2017 Q1	2017 Q4	YoY	QoQ	2017	2016	YoY
Revenue	5,282	4,634	5,706	14	-7	20,841	16,096	29
Gross Profit	1,651	1,478	1,749	12	-6	6,506	5,340	22
margin	31.2	31.9	30.7			31.2	33.2
EBIT *	373	354	282	6	32	1,406	1,331	6
margin	7.1	7.6	4.9			6.7	8.3
Profit Before Tax	158	237	112	-33	41	821	1,202	-32
margin	3.0	5.1	2.0			3.9	7.5
Net Income**	178	241	90	-26	97	845	1,304	-35
margin	3.4	5.2	1.6			4.1	8.1
EBITDA*	523	485	427	8	23	1,954	1,769	10
margin	9.9	10.5	7.5			9.4	11.0

• EBIT was 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
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5,706 33.0
31.9 5,282
(14%) 32.0
4,634 (-7%)
31.0
31.2
30.7 30.0
29.0
28.0
27.0
26.0
25.0
2017 Q1 2017 Q4 2018 Q1
Revenue Gross Margin (%)
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White Goods (15%) Consumer Electronics (11%) Other (11%)
(-7%) (-29%) (19%)
885
4,167 900 85026.0
3,869 39.0 781
800 80024.0
3,362 37.0 23.7 24.2 750 33.7
700 22.0
632 703
35.0 700
600 569 20.0 654
30.6
34.9 650
33.0
500 18.0
18.1 600 28.7
32.5 31.0400 16.0
31.7 550
29.0300 14.0
500
27.0200 45012.0
25.0100 40010.0
2017 Q1 2017 Q4 2018 Q1 2017 Q1 2017 Q4 2018 Q1 2017 Q1 2017 Q4 2018 Q1
Revenue Gross Margin (%) Revenue Gross Margin (%) Revenue Gross Margin (%)
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Balance Sheet

TL mn	31.03.2018	31.12.2017		31.03.2018	31.12.2017
Current Assets	14,444	13,610	Current Liabilities	9,335	8,403
Cash and Cash Equivalents	2,612	2,582	ST Bank Borrowings	3,900	3,262
Trade Receivables	6,728	6,518	Trade Payables	3,828	3,576
Inventories	4,310	3,780	Provisions	522	431
Other	794	730	Other	1,084	1,135
Non-current Assets	7,208	6,827	Non-current Liabilities	5,536	5,118
Property, Plant and Equipment	3,407	3,265	LT Bank Borrowings	4,351	4,114
Intangible Assets	2,700	2,578	Other	1,185	1,004
Financial Investments	294	285
Other	806	699	Equity	6,780	6,915
Total Assets	21,651	20,436	Total Liabilities	21,651	20,436

	31.03.018	31.12.2107	31.12.2016	31.12.2015
Net Financial Debt/Equity	0.83	0.69	0.69	0.70
Total Liabilities/Total Assets	0.69	0.66	0.66	0.66

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Change 3% 14% 7% 8%

Working Capital

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4,310
3,780
6,795
6,308
553
521
6,518 6,728
3,576 3,828
2016 - Assets 2017 Q4 2016 - Liabilities 2017 1Q - Assets 2018 Q1 20171Q - Liabilities
Trade Rec. Inventory Other Rec. Trade Payables Other Pay. Working Capital
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Working Capital / Sales

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39.1% 41.8%
38.7%
36.2% 37.2% [39.3%] 32.5%
30.9% 33.8% [33.5%]
30.3% 30.8% [29.3%] 32.2% 30.3% [31.6%]
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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

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Debt Profile

Debt profile (as of Mar 31 2018)

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4,000 TL mn
2,000
1,267 1,621 2,168 2,491 2,467 2,722 2,442 2,886 2,038 1,983 2,582 2,612
0
-1,673 -1,803 -2,185 -2,508 -2,078 -2,370 -2,251 -2,770 -2,922 -3,216 -3,262
-2,000 -3,900
-4,000 -2,581 -2,965 -3,269 -3,084 -3,078 -2,843 -3,407
-3,980 -3,874 -3,767 -4,114
-6,000 -4,351
-8,000
-10,000
2013 2014 2015 16 Q1 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1
Cash and cash equivalent Short term debt Long term debt
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6,000 5,640 3.0
5,000
5,000 2.6 4,758 4,794 2.8 2.5
3,863 2.5 2.6 2.5
4,000 2.3 2.0
2,988 [3,146] 3,286 2.2 3,100 3,216 2.1
3,000 1.8 2,689 1.5 2,491 1.8 1.5
1.4
2,000 1.0
1,000 0.5
0 0.0
2013 2014 2015 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1
Net Debt (TL mn) Net Debt/EBITDA
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	Effective	mn Original	TL mn
	Interest Rate p.a. (%)	**Currency **	Equivalent
TRY	14.3%	3,220	3,220
EUR	1.2%	131	637
ZAR	9.7%	750	251
CNY	4.4%	24	15
GBP	1.1%	5	30
USD	2.2%	0.0	0.1
SEK	0.5%	2	1
PKR	6.5%	10,245	348
Total Bank Borrowings			4,501
USD	5.1%	511	2,016
EUR	4.0%	356	1,734
Total Eurobond			3,751
Total			8,251

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Debt maturity profile
2018
2023
27%
24%
2021
21%
2019
2020
25%
3%
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Cash Flow

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2018
3M
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TLmn
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2017
3M
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TLmn
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2018 Expectations

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2018 Expectations

White goods market volume growth

Turkey* : [-5% - flat] sales volume Flat (previous) International : ~%2

Stable or higher market share Market Share in key regions Revenue Growth Around 20% in TRY EBITDA Margin (2018) Around 10% 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

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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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