ARÇELİK A.Ş. — Interim / Quarterly Report 2018

Jan 30, 2019

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2018 Financial Results

January 30, 2019

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2018 Q4 Summary

• International organic growth, YoY depreciation of TRY and price adjustments led to

Net Sales TRY 7.4 bln.

• 30% top-line growth YoY

• Flat gross profit margin QoQ as increasing domestic profitability offsetted the negative impact of TRY appreciation on international margins

• Relief in raw material prices started to help margins in 4Q18

• Strict opex management with 160 bps QoQ improvement in Opex-to-Sales ratio

• Slight market share losses in Europe compared to 9M18

EBITDA Margin

12.2%

WC / Sales

28.0%

• TRY appreciationand strong collection performance helped WC/Sales ratio

• Leverage declined thanks to strong EBITDAgeneration and TRY valuation

Leverage

2.4X

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2018 Q4 Sales Performance

Key Factors Impacting Revenues

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International Growth

CurrencyImpact

Domestic Demand

Pakistan Market

Organic growth (~6%) continued in 4Q18 thanks to strong performance in Europe, ASEAN and MENA

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

Despite the new SCT Incentive and a favorable base, domestic sell-in demand remained weak

Mainly due to macro developments, Pakistani market had a slower quarter

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2018 Q4 Margin Performance

Key Factors Impacting Margins

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Earlier price adjustment in Turkey, Pakistan and MENA region PriceAdjustments led to expansion in profit margins

Thanks to strict OPEX management during the quarter, OPEX Management Opex-to-Sales ratio improved by 160bps QoQ

Both plastic and metal prices continued to decline during the quarter

Raw Material

TRY appreciationhad a negative impact on international profitability through sales of pre-purchased inventory but was supportive for domestic margins

TRY Appreciation

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2018 Q4 Performance - Turkey

• Despite the SCT incentive and low base of 2017, sell-in market contracted by 22% in 4Q. However, retail demand was positive in the last 2 months due to SCT break.

Market*

• A/C demand declined by 15% during the quarter.

• Retail demand for TV decreased sharply by 24% (YoY) in the quarter (9M: +0,9%)

Turkish MDA6 Total Market YoY Change

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50%
40%
30%
20%
10% 9%
0% 3%
-10% -8%
-16% -17% -15%
-20% -23% -20% -22% -21%
-30% -29%
-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) 4Q18 4Q17 YoY	('000 Units) 4Q18 4Q17 YoY	('000 Units) 4Q18 4Q17 YoY	('000 Units) 4Q18 4Q17 YoY	4Q16 vs. 4Q16	4Q16 vs. 4Q16
Refrigerator Freezer Washing M. Dryer Dishwasher Oven	312 6 401 47 298 178	388 46 518 45 357 240	-20%	487 58 555 38 423 278	-36%
			-87%		-89%
			-23%		-28%
			3%		23%
			-16%		-30%
			-26%		-36%
Total	1,242	1,594	-22%	1,839	-32%

• 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-Dec ‘18 period

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2018 Q4 Performance - Turkey

• Topline decline realized at 3% YoY mainly due to fragile demand environment

• In MDA, unit sales was better than the market in 4Q18. (Market: -22%, Arcelik -18%)

Arçelik A.Ş.

• A/C unit sales also outperformed the market as volumes remained flat YoY.

and it continued to enjoy the second position in FY with ~25% market share.

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Underperformers Outperformers
4Q18 Domestic
Revenue Growth
(YoY): -3.0%
Cash Register TV
Sales Sales
Air Washing Cooler
Conditioner Machine Sales
Sales Sales
17%
15%
2%
-6 -26%
8
%
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2018 Q4 Performance - International

• West Europe improved slightly in 4Q18 but closed year with ~1% decline.

• UK, Spain and Italy were the source of improvement (QoQ) while Germany and France were weak.

Market*

• East Europe enjoyed another strong quarter as yearly growth reached 8%.

• After a weak 9M, Romania also contributed to region’s performance

• S. African retail demand grew significantly as demand shifted from Q3 to Q4.

• s

• Mainly due to macro conditions, Pakistan slowed down in 4Q18.

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

European Market Unit Growth by Product Type (12M18) (%)

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-10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0%
2.4%
2.0% 2.0%
Russia 1.9%
Poland 1.7% 1.6%
1.5%
Romania
Ukraine 1.0%
0.9%
United Kingdom
Germany
France
Italy
Spain
South Africa
9M 12M
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 Q4 Performance - International

• TRY depreciationand organic growth led to ~46% increase in international sales.

• Share of built-in improved ~100bps YoY to ~20%.

Arçelik A.Ş.

• Grundig sales increased more than 70%.

• SDA had another strong quarter with 52% revenue growth.

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Underperformers Outperformers
4Q18 International
Revenue Growth (YoY):
+46.4%
TV Free Standing SDA Built-in Grundig MDA
Sales Sales Sales Sales Sales
73%
58%
52%
46%
33%
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2018 Q4 Performance - International : Europe

• Slight market share losses in Q4 after an exceptionally strong 9M18.

Arçelik A.Ş.

• Throughout 2018, Beko has reached highest ever market shares (monthly) in WE total, UK, France, Spain, Romania and Russia.

• TRY is still supportive albeit to a lesser extent compared to 3Q18.

• In some Western European markets, promotional activity was reduced to focus more on profitability.

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Arçelik Group
Unit Market Share Gains (YoY) (points) - MDA 6 []
2.5
0.7 0.7 0.7 0.7
0.6 0.6
0.4 0.4
-0.2
-0.3
-0.7
UK Spain Italy France Germany Romania Poland Russia Ukraine EU23 EU23 EU23
Total F/S B/I
Market
20.4 7.7 8.4 7.6 5.5 40.1 15.2 5.5 4.9 10.1 11.2 7.0
Share (%)
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• Figures are based on retail panel of a market research company for Jan-Dec 18 except EU23 region, which is based on Jan-Oct

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2018 Q4 Performance – International : Asia & Africa

S. Africa & Sub-Sahara

• Sell-in sales were weak as retail demand is expected to be sluggish in 1H19 in S. Africa.

Arçelik A.Ş.

ASEAN

• Sales in ASEAN region was ~USD23mn in 4Q18. (USD135mn YTD*)

• Refrigerator productionin Thailand was ~345 K units, up by 30%.

• Market share gains go on in the region.

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Unit Market Share in Cooling
1,7 1,8
1,5
1,1 1,0
0,7
Malaysia Thailand Vietnam
2017 2018
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Pakistan

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

• Price adjustments continued in all product categories in Q4.

India

• Plant construction is going on as the JV is building up distribution, including listing on Tata CliQ.

• With the initial product launch, sales to the JV reached TRY 120 million.

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* In previous quarters, direct sales to India were included in ASEAN sales. As VoltBek started trading operations, FY figure excludes sales to India.

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Trends in Raw Material Prices

Metal Prices Index - Market

Plastic Prices Index - Market

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-9%
110 -6% 140
130
100
120
90
110
80
100
70
90
60 80
50 70
40 60
4Q Average Metals Price Index (Market) 4Q 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 Oct-18 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-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

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

Plastic Prices Index Quarterly Average - Market

3Q17	4Q17	1Q18	2Q18	3Q18	4Q18
119	123	128	125	121	111

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2018 Q4 Other Developments

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A new R&D Center, Arch R&D Co. Ltd., was launched in High-Tech Development Zone, in Wuxi, Jiangsu, China.

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Beko Spain received recognition for its career in Spain by the Secretary of State for Energy as Beko has been the fastest growing brand in Spain on the MDA6 sector in the last decade.

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The launch of the new Grundig concept store took place in November in S. Africa. The B2B solution for architects, designers and interior decorators is a first of its kind in the country.

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Beko “ Eat Like A Pro ” campaign with FC Barcelona won the “Best Brand Activation involving a Club” category along with a silver award in “ Partnership of the Year ” at Football Business Awards in London.

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Thanks to its accomplishments in sustainability, Arçelik won the first prize in the "Management" category of the European Business Awards for the Environment. It is the firstever Turkish company to receive the award in its industry.

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Sardis, the new generation mobile payment terminal developed by Token, the financial technologies spin-off company, won the Innovation Award by Consumer Technology Association at CES.

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Sales Performance

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Sales by Region

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+30%
7,414
5,706
5,570
+46%
3,802
1,903 -3% 1,845
2017 Q4 2018 Q4
+29%
26,904
20,841
18,479
12,716 +45%
8,125 8,425
+4%
2017 2018
Turkey International
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2018 Q4
3.2% [4.9%]
2.1%
24.9%
7.9%
3.5%
7.8%
3.6% 33.4%
2.4%
15.7% 2017 Q4
17.3%
33.6%
39.7%
Turkey Western Europe CIS&Eastern Europe
Africa Middle East Pakistan
Other
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2018
5.6%
4.3%
2.2%
7.2% 4.4% 31.3%
6.8% 4.2%
2.7% 39.0%
13.2% 2017
15.7%
29.7%
33.6%
Turkey Western Europe
CIS&Eastern Europe Africa
Middle East Pakistan
Other
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Sales Bridge

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TL mn
8,000
7,000 1552
-59
216
6,000
5,000
5,570
4,000
3,802
3,000
2,000
1,000 1,903 1,844
-
2017 Q4 TR - Organic INT - Organic INT - FX Impact 2018 Q4
Turkey International Impact on Rev
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2018 Q4	Organic	Currency Effect	TOTAL
Domestic Growth	-3.1%	0.0%	-3.1%
International Growth	5.7%	40.8%	46.5%
Total Growth	2.7%	27.2%	29.9%

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Financial Performance

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Income Statement

				Δ%	Δ%			Δ%
TL mn	2018 Q4	2017 Q4	2018 Q3	YoY	QoQ	2018	2017	YoY
Revenue	7,414	5,706	7,696	30	-4	26,904	20,841	29
Gross Profit	2,410	1,749	2,511	38	-4	8,546	6,506	31
margin	32.5	30.7	32.6			31.8	31.2
EBIT *	713	282	603	153	18	2,107	1,406	50
margin	9.6	4.9	7.8			7.8	6.7
Profit Before Tax	270	112	332	141	-19	949	821	16
margin	3.6	2.0	4.3			3.5	3.9
Net Income**	281	90	253	212	11	856	845	1
margin	3.8	1.6	3.3			3.2	4.1
EBITDA*	908	426	787	113	15	2,797	1,954	43
margin	12.2	7.5	10.2			10.4	9.4

• 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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9,000 Consolidated 34.0
8,000 7,696 33.0
7,414
7,000 32.6 32.5 (30%) 32.0
(-9%)
6,000 5,706 31.0
5,000 30.7 30.0
4,000 29.0
3,000 28.0
2,000 27.0
1,000 26.0
0 25.0
2017 Q4 2018 Q3 2018 Q4
Revenue Gross Margin (%)
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White Goods (42%) Consumer Electronics (-9%) Other (7%)
(-4%) (22%) (-20%)
900 885 90026.0 873
6,161 5,907 39.0800 808 85024.0 39.2
24.8
800
37.0 23.7 663
700 75022.0
699
35.0
4,167 600 70020.0
654 35.3
33.5 33.0500 19.5 65018.0 33.7
33.1 600
31.0400 16.0
31.7 550
29.0300 14.0
500
27.0200 45012.0
400
25.0100 10.0
2017 Q4 2018 Q3 2018 Q4
2017 Q4 2018 Q3 2018 Q4 2017 Q4 2018 Q3 2018 Q4
Revenue Gross Margin (%) Revenue Gross Margin (%) Revenue Gross Margin (%)
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Balance Sheet

TL mn	31.12.2018	31.12.2017		31.12.2018	31.12.2017
Current Assets	19,196	13,501	Current Liabilities	12,497	8,403
Cash and Cash Equivalents	5,342	2,582	ST Bank Borrowings	5,517	3,262
Trade Receivables	7,756	6,518	Trade Payables	4,734	3,576
Inventories	5,088	3,780	Provisions	582	431
Other	1,011	622	Other	1,663	1,135
Non-current Assets	9,172	6,935	Non-current Liabilities	7,652	5,118
Property, Plant and Equipment	4,534	3,265	LT Bank Borrowings	6,432	4,114
Intangible Assets	3,109	2,578	Other	1,221	1,004
Financial Investments	348	285
Other	1,181	807	Equity	8,219	6,915
Total Assets	28,368	20,436	Total Liabilities	28,368	20,436

	31.12.2018	31.12.2017	31.12.2016	31.12.2015
Net Financial Debt/Equity	0.80	0.69	0.69	0.70
Total Liabilities/Total Assets	0.71	0.66	0.66	0.66

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Working Capital

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Change
6,201
19%
8,847
5,088
7,541
30%
938
31%
751
9,414
7,756
6,045
4,734 18%
2016 - Assets 2018 Q3 2016 - Liabilities 2017 1Q - Assets 2018 Q4 20171Q - Liabilities
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Trade Rec. Inventory Other Rec. Trade Payables Other Pay. Working Capital

Working Capital / Sales

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32.5% 30.9% 30.3% 30.8% 29.3% 32.2% 33.8%
33.5% 35.1%
30.3% 31.6% 32.7% 28.0%
Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18
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Cash & Debt Profile

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TL mn
4.00 Cash Breakdown by Currency
10,000 3.13 3.15
2.83
2.52 2.56 2.45 2.36 3.00 4%
2.11 9%
4%
14%
5,000 2.00
2,886 2,038 1,983 2,582 2,612 2,956 4,225 5,342 1.00 10%
0
-2,770 -2,922 -3,216 -3,262 -3,900 -4,413 -4,687 -5,517 0.00
-5,000 -3,980 -3,874 -3,767 -4,114 59%
-4,351 -1.00
-5,029
-6,836
-6,432
-10,000 -2.00
17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 18 Q3 18 Q4
TRY USD GBP EUR RUB Other
Cash and cash equivalent Short term debt Long term debt Net Debt/EBITDA
Debt profile (as of Dec 31 2018) Debt Maturity Profile
Effective mn Original TL mn
Interest Rate p.a. (%) Currency Equivalent
TRY 20.6% 4,640 4,640 2023+
2%
EUR 1.1% 262 1,580 2023
ZAR 9.4% 750 275 23%
GBP 1.5% 7 50 2019
RON 4.9% 4 6 46%
PKR 9.3% 16,333 611
Total 7,161
USD 5.1% 505 2,657 2021
EUR 4.0% 353 2,130 18%
Total Eurobond 4,787
2020
11%
Total 11,948
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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 662 -880 -218 USD -2,092 2,222 130 GBP 697 -683 15 Other 984 -1,009 -25
TOTAL 251 -349	-98
-1.2% Net FX Position/Equity

* Mainly stemming from Pakistan and Vietnam where hedging is limited

• The primary strategy is on balance sheet hedging mainly through cash, 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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0.4%
-1.1% -1.2% -1.2%
-2.5% [-2.1%] [-2.0%]
-3.6%
-3.7%
-4.1%
-5.1%
-5.7%
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16 Q1 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 18 Q3 18 Q4 Net FX Position Net FX/Equity

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Cash Flow

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2018
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TLmn
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2017
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TLmn
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2019 Expectations

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2019 Expectations

White goods market volume Global: ~ +2% sales volume growth Revenue Growth Around 25% in TRY The Group is in the process of assessing the impact of TFRS 16, EBITDA Margin Around 10,5% which is expected to be accretive to (2019) EBITDA margin in 2019. EBITDA (2019)* TRY 3,3-3,7 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, and does not include any impact from TFRS 16 implementation

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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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