ARÇELİK A.Ş. — Interim / Quarterly Report 2017

Jan 30, 2018

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2017 Financial Results

January 30, 2018

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2017 Q4 Summary

• Despite the weak domestic market, revenues boosted by seasonality of international sales and weak TRY.

Net Sales TRY 5.7 bln.

• Deterioration in gross margin mainly due to lower share of domestic sales

• Mixed performance in Europe: W. Europe had lower growth, E. Europe was still robust

EBITDA Margin

7.5%

• Price adjustments in domestic market partly offsetting the negative impact of TRY

depreciation in 4Q17

WC / Sales

30.3%

• Stable EUR/USD parity on a QoQ basis

• Improvement in working capital after the end of SCT incentive

• In line with recovery in WC, net leverage declined to 2.45x

Leverage 2.45X

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2017 Q4 Sales Performance

Key Factors Impacting Revenues

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Currency Impact

Spin-off Impact

International Growth*

End of SCT Cut

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

Higher domestic sales due to inclusion of SCT and bandrole (for CE) impact through consolidation of Turkish sales company Slower growth in Western Europe, further accelaration in Eastern Europe, robust performance in South Africa and political turmoil affecting demand in ME

Sluggish domestic demand after the SCT-break ended by the end of September 2017

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* Based on January-December 2017 retail sales data

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2017 Q4 Margin Performance

Key Factors Impacting Margins

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Price hikes in domestic market Pricing (Limited impact as the hike is valid since Dec’ 1) Longer term positioning in steel market at the end of 2Q still mitigated increasing prices, plastics were a bit higher but open cell market eased further Further depreciation of TRY against USD in 4Q17 (8% QoQ – 15% YoY) Higher margin domestic sales remained weak after the end of Sales Mix SCT cut while international sales were seasonally strong (Int’l Sales/Total - 9M: %59 – 4Q: %67)

Raw Material Cost

TRY Depreciation

Sales Mix

Higher share of int’l sales elevated logistics and guarantee costs during the quarter

OPEX

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2017 Q4 Performance - Turkey

(9M: +23% - 4Q: -13%). However, retail demand was more positive.

Market

• Similar negative trend in A/C market after a robust 9-M period. (9M: +37% – 4Q: -26%)

• Retail demand for TV continued to be negative in Q4 (-10%)

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Turkish MDA6 Total Market
YoY Change
50%
42%
40% 40% 39%
30%
25% 25%
20% 21%
17%
10%
7% 6%
0%
-5%
-10%
-16%
-20% -20%
-30%
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) 4Q17 4Q16 YoY	('000 Units) 4Q17 4Q16 YoY	('000 Units) 4Q17 4Q16 YoY	('000 Units) 4Q17 4Q16 YoY
Refrigerator Freezer Washing M. Dryer Dishwasher Oven	388 46 518 45 357 240	487 58 555 38 423 278	-20%
			-21%
			-7%
			20%
			-16%
			-14%
Total	1,594	1,839	-13%

• MDA and A/C figures are based on BESD data. TV figures are based on retail panel of a market research company.

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2017 Q4 Performance - Turkey

• Sales performance in MDA6 in line with the market average during the quarter (Market: -13% YoY, Arcelik -14% YoY)

Arçelik A.Ş.

• In TV segment, performance was similar to market while the focus is to improve the mix

• POS Cash Register unit sales slightly improved in 4Q17 (+6% YoY)

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Underperformers Outperformers
4Q17 Domestic
Revenue Growth
(YoY): +19.0%
Free-Standing POS CR Built-in TV SDA
Sales Sales Sales Sales Sales
77%
58%
28%
18%
15%
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2017 Q4 Performance - International

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Market
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• W. Europe ended a sluggish year, E. Europe remained robust

• UK was slower, Germany remained flat, France advanced further, Spain & Italy decelerated in 4Q17

• Strong growth goes on in E. Europe in general, Poland was robust in particular, Romania lost some momentum.

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

• S. Africa recorded a strong turn-around since mid-year, 4Q17 added further pace

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

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-5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%
Russia
Poland
Romania
Ukraine
United Kingdom
Germany
France
Italy
Spain
South Africa
9M 12M
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European Market Unit Growth by Product Type (11M17) (%)

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6%
5%
4%
4%
3% 3% 3%
2%
-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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2017 Q4 Performance – International : Europe

• Arçelik Group continued to capture back market share in Q4 and closed the year flat YoY.

Arçelik A.Ş.

• In line with its growth strategy, the Group continued to strengthen its position in built-in and premium segments.

• Significant growth was also achieved in SDA (74% in Q4), another strategic category.

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

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Underperformers Outperformers
4Q17 International
Revenue Growth (YoY):
+30.0%
Freezer Washing Built-in Grundig MDA SDA
Sales Machine Sales Sales Sales
Sales
74%
57%
31%
28%
11%
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Figures are based on retail panel of a market research company.

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2017 Q4 Performance – International : Asia & Africa

S. Africa & Sub-Sahara

• Defy, which also manages sales in Sub-Sahara, increased its sales in line with the market

Arçelik A.Ş.

• In addition to existing assembly lines in Sudan, a new one was launched by our distributor in Ethiopia to increase market penetration

ASEAN

• In line with expanding distribution, ASEAN region sales reached ~USD 100 mn in 2017

• Refrigerator production in Thailand exceeded 250K units, 2018 expectation is ~400K units

Cooling – Unit Market Share (Dec. ‘17)	Country Share	Country Share	Cooling – Weighted Distribution (Dec. ‘17)	Country Penetration	Country Penetration
	Thailand Malaysia Vietnam	0.9% 1.2% 1.7%		Thailand Malaysia Vietnam	27% 21% 47%

Pakistan

• With strong sales in Q4, Dawlance reached annual sales of TRY 912 mn revenue in 2017, indicating ~25% YoY growth.

India

• JV agreement with Voltas has been completed and the board has been appointed. Trade operations is planned to start by mid-2018.

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Trends in Raw Material Prices

Metal Prices Index - Market

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Metal Prices Index - Market Long term positioning at the end Plastic Prices Index - Market
of 2Q17 still benefits us as the
increase in procurement cost in +19%
110 130
4Q17 is behind the market prices
100 +20% 120
90 110
80 100
70 90
60 80
50 70
40 60
Annual Average Metals Price Index (Market) Annual Average Plastics Price Index (Market)
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17
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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

3Q16	4Q16	1Q17	2Q17	3Q17	4Q17
71	74	82	83	85	90

Plastic Prices Index Quarterly Average - Market

3Q16	4Q16	1Q17	2Q17	3Q17	4Q17
101	103	119	117	119	123

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2017 Q4 Other Developments

Arçelik A.Ş. developed BeyondCare® , a mobile ECG monitoring system that allows remote monitoring of vital signs such as heart rythm, respiration, activity and body temperature.

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Arçelik A.Ş. named winner for ‘Best Contribution to Corporate Responsibility’ in 2017 European CIPS Management Awards.

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Arçelik A.Ş. was identified as a global leader in corporate sustainability and has been awarded

a position on this year’s A List for climate and water by CDP, the non-profit global

environmental disclosure platform.

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The first SKD assembly plant was opened in Ethiopia, which consists of two assembly lines that will assemble refrigerators, chest freezers, cookers and built-in oven products.

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Arctic has been awarded as one of Top 3 most powerful Romanian brands by the BIZ Magazine, one of the most prestigious publications in the country.

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Grundig made the global launch of «Respect Food» initiative on World Food Day (October 16).

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Sales Performance

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Sales by Region

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+26%
5,706
4,526
3,802
+30%
2,926
1,600 +19% 1,903
2016 Q4 2017 Q4
+29%
20,841
16,096
12,716
9,647
+32%
8,125
6,449
+26%
2016 2017
Turkey International
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2017 Q4
[4%]
2% [3%]
8%
3% [5%] 33%
8%
35%
16% 14% 2016 Q4
33%
34%
Turkey Western Europe CIS&Eastern Europe
Africa Middle East Pakistan
Other
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2017

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4% [4%]
3%
7% 3% [5%]
7%
39%
40%
13%
13% 2016
32%
30%
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
110
719
303 48
5,000
4,000
3,802
3,000 2,926
5,452
2,000
1,000 1,903
1,600
-
2016 Q4 TR - Organic INT - Organic INT - FX Impact Acquisition 2017 Q4
Turkey International Impact on Rev
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2017 Q4	Organic	Currency Effect	Acquisition	TOTAL
Domestic Growth	19.0%	0.0%	0.0%	19.0%
International Growth	1.6%	24.6%	3.8%	30.0%
Total Growth	7.8%	15.9%	2.4%	26.1%

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Financial Performance

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Income Statement

				Δ%	Δ%			Δ%
TL mn	2017 Q4	2016 Q4	2017 Q3	YoY	QoQ	2017	2016	YoY
Revenue	5,706	4,526	5,440	26	5	20,841	16,096	29
Gross Profit	1,749	1,432	1,725	22	1	6,506	5,340	22
margin	30.7	31.6	31.7			31.2	33.2
EBIT *	282	301	409	-6	-31	1,406	1,331	6
margin	4.9	6.7	7.5			6.7	8.3
Profit Before Tax	112	108	258	4	-57	821	1,202	-32
margin	2.0	2.4	4.8			3.9	7.5
Net Income**	90	230	258	-61	-65	845	1,304	-35
margin	1.6	5.1	4.7			4.1	8.1
EBITDA*	427	423	546	1	-22	1,954	1,769	10
margin	7.5	9.3	10.0			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
5,706 33.0
5,440
(26%) 32.0
4,526 (5%)
31.7 31.0
31.6
30.7 30.0
29.0
28.0
27.0
26.0
25.0
2016 Q4 2017 Q3 2017 Q4
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Revenue Gross Margin (%)
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White Goods (25%) Consumer Electronics (49%) Other (9%)
(2%) (31%) (-2%)
885
900 70028.0
4,097 4,167 80039.0 25.3 26.0 666 654
650 34.4
3,329 70037.0 677 24.0 33.7
603
594 23.7 60022.0
60035.0
20.0
20.8
50033.0 550
33.9 18.0
33.1
40031.0
31.7 50016.0
30029.0 14.0 25.3
450
20027.0 12.0
10025.0 40010.0
2016 Q4 2017 Q3 2017 Q4 2016 Q4 2017 Q3 2017 Q4 2016 Q4 2017 Q3 2017 Q4
Revenue Gross Margin (%) Revenue Gross Margin (%) Revenue Gross Margin (%)
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Balance Sheet

TL mn	31.12.2017	31.12.2016		31.12.2017	31.12.2016
Current Assets	13,610	10,974	Current Liabilities	8,403	6,606
Cash and Cash Equivalents	2,582	2,442	ST Bank Borrowings	3,262	2,251
Trade Receivables	6,518	5,295	Trade Payables	3,576	3,086
Inventories	3,780	2,762	Provisions	431	412
Other	730	475	Other	1,135	857
Non-current Assets	6,827	5,935	Non-current Liabilities	5,118	4,299
Property, Plant and Equipment	3,265	2,762	LT Bank Borrowings	4,114	3,407
Intangible Assets	2,578	2,304	Other	1,004	892
Financial Investments	285	239
Other	699	630	Equity	6,915	6,005
Total Assets	20,436	16,909	Total Liabilities	20,436	16,909

	31.12.2107	31.12.2016	31.12.2015	31.12.2014
Net Financial Debt/Equity	0.69	0.54	0.70	0.72
Total Liabilities/Total Assets	0.66	0.64	0.66	0.65

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Working Capital

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3,945
3,780
6,587
6,308
640
521
7,010
6,518
3,870 3,576
2016 - Assets 2017 Q3 2016 - Liabilities 2017 1Q - Assets 2017 Q4 20171Q - Liabilities
Trade Rec. Inventory Other Rec. Trade Payables Other Pay. Working Capital
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Change -7% -4% -6% -5%

Working Capital / Sales

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39.1% 41.8%
38.7%
39.3% 32.5%
36.2% 37.2%
30.9% 33.8% [33.5%]
30.3% 30.8% [29.3%] 32.2% 30.3%
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
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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] [1,983] [2,582]
0
-839
-2,000 -1,218 -1,629 -2,144 -1,673 -1,803 -2,185 -2,508 -2,078 -2,370 -2,251 -2,770 -2,922 -3,216 -3,262
-1,528
-1,859 [-2,581] -2,965
-4,000 -3,269 -3,084 [-3,078] -2,843 -3,407
-3,980 -3,874 -3,767 -4,114
-6,000
-8,000
2010 2011 2012 2013 2014 2015 16 Q1 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4
Cash and cash equivalent Short term debt Long term debt
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Debt profile (as of Dec 31 2017)

	Effective	mn Original	TL mn
	Interest Rate p.a. (%)	**Currency **	Equivalent
TRY	13.0%	2,789	2,789
EUR	1.4%	117	527
ZAR	9.4%	810	248
CNY	4.4%	24	14
GBP	1.1%	7	34
USD	2.2%	0.0	0.1
PKR	6.4%	7,969	270
SEK	0.5%	0.6	0.3
Total Bank Borrowings			3,884
USD	5.1%	504	1,902
EUR	4.0%	352	1,590
Total Eurobond			3,492
Total			7,376

Debt maturity profile

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6,000 3.0
5,000 4,758 [5,000] 4,794 2.5
4,000 2.3 2.2 2.6 2.3 2.2 3,863 2.5 2.6 2.5 2.0
2,988 [3,146] [3,286] [3,100] 3,216 2.1
3,000 1.8 2,689 2,491 1.8 1.5
1,983 [2,263] 1.5
1.4
2,000 1.0
0.9
1,000 740 0.5
0 0.0
2010 2011 2012 2013 2014 2015 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4
Net Debt (TL mn) Net Debt/EBITDA
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2023
26%
2018
44%
2021
21%
2020
2019
3%
6%
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Cash Flow

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TLmn
2017
TLmn
2016
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2018 Expectations

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2018 Expectations

White goods market Turkey : Flat Sales Volume volume growth* International : c.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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