ARÇELİK A.Ş. — Interim / Quarterly Report 2020

Oct 23, 2020

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2020 Q3 Highlights

▪ Strong top line growth at 45%

TRY11.9bn

14.3%

▪ Higher profitability at all-lines

▪ Demand recovery across all regions

• Currency tail-wind in international operations

• Strong FCF sustained: TRY1,877 mn. FCF[*] in 3Q20

Revenue

24%

NWC/Sales Ratio

EBITDA Margin 1.2x

Leverage

▪ Further improvement in working capital and leverage despite currency headwind

• Arcelik achieved another milestone in sustainability by going carbon-neutral in global production

Sensitivity: Public * Free Cash Flow calculated as Net Operating Cash Flow + CAPEX

We have become carbon neutral !

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New Product Line Up: Hygiene Shield

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Hygiene Shield

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▪ The new portfolio includes appliances with in-built disinfection programmes and functions to disinfect packaged food and belongings to help consumers adjust to the 'new normal' at home.

▪ Developed as a result of in-depth consumer research conducted across the globe and with innovative new technology, the Hygiene Shield product line has the power to kill more than 99% of bacteria and viruses (including coronavirus) .

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2020 Q3 Key Factors Sales/Margins

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11,938
8,246 7,832
2019 Q3 2020 Q2 2020 Q3
34.6
33.1 30.9
2019 Q3 2020 Q2 2020 Q3
14.3
14.3
11.1 11.1
11.1
10.2
2019 Q3 2020 Q1 2020 Q2
EBITDA margin excluding one off items
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Revenue Stronger than expected recovery in key markets
Growth [+45%] TRY Depreciation
Almost 100% CUR in production facilites
Gross
Weaker USD against EUR and GBP
34.6%
Margin
Stable raw material price due to longer contracts
Stricter OPEX Management
EBITDA
14.3%
Higher operational leverage
Margin
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2020 Q3 Strict OPEX Management

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27.0%
26.0%
25.2% 25.2%
24.9%
24.5%
24.4%
23.7%
23.3%
22.8%
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Further Improvement in OPEX Management

• 170bps QoQ and 240bps YoY improvement

• Positive contribution of higher scale and TRY depreciation to operational leverage

• Strict opex management in all subsidiaries

Resulting in the lowest OPEX/sales ratio since 2013Q4 !

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2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 Sensitivity: Public

2020 Q3 Historically Low WC/Sales

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FCF Impact:
TRY1.4bn
35.1%
33.5%
30.8%
28.3%
24.0%
Sep-16 Sep-17 Sep-18 Sep-19 Sep-20
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Continuing Improvement in WC Management

• ~140bps negative impact from currency

• Continue focusing on SKU optimization and

inventory management

• Strong receivable collection performance in

domestic market

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2020 Q3 Strong Cash Generation

FCF Generation (TRYmn)

L12M FCF Yield:%26

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1,859 1,877
767
495
398
3Q19 4Q19 1Q20 2Q20 3Q20
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Strong Focus on FCF Generation

• Highest quarterly FCF at TRY1,877mn

• Strong EBITDA

• Strict OPEX and CAPEX management

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•
Substantially stronger performance in WCR
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2020 Q3 Strong Balance Sheet

TRY Loan and Bonds Maturity Schedule

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Average Cost on TRY
~15% ~20-25% ~15% ~10% 8-9% 8-9%
Redemptions and
Re-Pricing ~45%
TRY Average Interest Rate (Period End)
15-20%
~15%
5-10%
~5% ~5%
1Q21 2Q21 3Q21 4Q21 1Q22 2Q22
Net Leverage
3.1
2.4
1.9
1. 2
June '18 Sep '18 Dec '18 Mar '19 June '19 Sep '19 Dec '19 Mar'20 Jun '20 Sep'20
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Existing TRY debt portfolio may benefit from roll-overs in 2021

• Benefit from lower cost of funding in 3Q20

• No roll-overs until 1Q21

• Portfolio will start re-pricing in 1Q21

• Existing loans to be rolled over in 1H21 currently have 15-20% rate on average

• 10% of the portfolio will continue to remain

below 10% interest rate in 2021

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2020 Q3 Raw Material Trends

Metal Prices Index Quarterly Average - Market

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100
80
60
40
3Q Average Metals Price Index (Market)
4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20
85 83 82 79 77 77 72 77
140 Plastic Prices Index Quarterly Average - Market
120
100
80
60
3Q Average Plastics Price Index (Market)
4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20
111 105 110 104 101 100 89 97
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-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20
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-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20
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Info-Text No Major Cost Pressure Expected for Q4

• Market prices increased by ~10% during the quarter (2Q20-end vs. 3Q20-end)

• Our contract prices remained flat compared to 2Q

• Contracts already secured at favorable prices

• for 4Q procurements

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Source: Steel BB, Steel Orbis, ICIS - Chemical Industry News & Chemical Market Intelligence

Metal Index includes: CRC, HRC, Galvanized Steel, Stainless Steel, Copper, Aluminium – Plastics Index Includes ABS, Polystyrene, Polyurethane, Polypropylene Sensitivity: Public

Regional Market Dynamics

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2020 Q3 Turkish Market

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MDA-6 Air-Conditioner TV
+33% +87% +31%
Market
Turkish MDA6 Market YoY Change
58%
21% 21%
12% 14% 14%
6%
-11% -8%
2019 2020
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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Sensitivity: Public MDA-6 and A/C data (sell-in) is based on WGMA for 3Q20. TV market reflects the data of a retail panel market for July-August 2020 (September figures are not released yet).

2020 Q3 European Market

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30
25
20
15
10
5
0
-5
35
30
25
20
15
10
05
00
Poland Romania Russia Poland Romania Russia Poland Romania Russia Poland Romania Russia
June July August September
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Stronger than expected rebound

• Strong rebound during the quarter

• UK and Germany led the growth in W. Europe

• Poland and Russia remained significantly strong

• European markets turned positive in 9M20 period

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2020 Q3 Arçelik Performance in International

42%

Europe

4% Africa

9% Asia-Pacific

• Strong demand rebound during the quarter(high single-digit sales growth in €)

• Significant revenue growth in Germany and UK

• Profitability supported by strong EUR, GBP and weak TRY

• Price index improvement in Germany , UK and Poland

• Remarkable turnaround for Defy as sales were up almost 40% (both domestic and exports) in local currency

• Profitability improved (YoY) at all lines for Defy thanks to tight expense control, price adjustments

• ~20% sales increase in Pakistan in PKR terms reflecting the pent-up demand after lockdowns in Q2

• Around mid-teens topline growth for Singer Bangladesh, following a hard second quarter

• ASEAN revenue realized at USD26 mn, indicating to 4% YoY increase.

Arcelik Regional Sales Growth (YoY % in EUR)

~15%

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~10%
~5%
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West Europe
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South Africa & Sub Sahara
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Flat
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East Europe

APAC

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Sales Performance

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2020 Q3

2020 Q3 Sales by Region

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4.4% [4.1%]
2.8%
2.3%
4.8%
5.9% 2.7% 34.4%
5.3% 33.4%
3.2% 2019 Q3
15.8% 16.6%
29.5%
30.3%
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+45%
11,938
8,246
+43% 7,834
5,488
4,104
2,758 +49%
2019 Q3 2020 Q3
+17%
27,538
23,576
17,420
+11%
15,689
+28%
10,118
7,887
Turkey
2019 9M 2020 9M
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2020 9M
2.7% [3.6%][4.4%]
2.6%
4.9%
5.0%
4.3%
36.7%
33.5%
6.4%
2.8% 2019 9M
14.8%
14.8%
30.3%
30.3%
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Turkey Western Europe CIS&Eastern Europe Africa Middle East Pakistan Bangladesh Other

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Turkey International

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2020 Q3 Sales Bridge

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14,000
11,938
12,000
1715
632
10,000
1346
8,428
8,000 7,834
6,000
5,488
4,000
2,000 4,104
2,758
-
TL mn 2019 Q3 TR - Organic INT - Organic INT - FX Impact 2020 Q3
Turkey International Revenue Impact
2020 Q3 Organic Currency Effect TOTAL
Domestic Growth 48.8% 0.0% 48.8%
International Growth 11.5% 31.2% 42.8%
Total Growth 24.0% 20.8% 44.8%
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Financial Performance

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2020 Q3 Income Statement

					Δ%
TL mn	2020 Q3	2019 Q3	**2020 Q2 **	Δ% YoY	QoQ	**2020 9M **	**2019 9M **	Δ% YoY
Revenue	11,938	8,246	7,832	45	52	27,538	23,576	17
Gross Profit	4,132	2,725	2,419	52	71	9,021	7,607	19
margin	34.6	33.1	30.9			32.8	32.3
EBIT *	1,368	644	572	112	139	2,529	1,703	49
margin	11.5	7.8	7.3			9.2	7.2
Profit Before Tax	1,285	270	526	377	144	2,119	832	155
margin	10.8	3.3	6.7			7.7	3.5
Net Income**	1,041	253	409	311	155	1,709	711	140
margin	8.7	3.1	5.2			6.2	3.0
EBITDA*	1,713	914	869	87	97	3,453	2,479	39
margin	14.3	11.1	11.1			12.5	10.5
EBITDA -ex.one-offs	1,713	914	801	87	114	3,168	2,479	28
margin	14.3	11.1	10.2			11.5	10.5

• 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. 2020 Q3 EBITDA is also adjusted for TRY27mn loss arising from sale of manufacturing facility in China

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** Net income before minority

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2020 Q3 Cash & Financial Debt

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TL mn 4.00
3.15
8,000 2.36 2.31 2.40 2.41 2.39 3.00
2.33
1.88
3,000 4,225 5,342 6,478 5,788 5,482 6,937 7,827 9,253 11,540 2.00
1.24
-2,000 -4,687 -5,517 -5,602 -5,596 -5,772 -6,152 -6,210 -5,781 1.00
-9,606
-7,000 0.00
-6,836 -6,432 -7,529 -7,690 -7,359
-8,803 -9,885 -10,113
-12,000 -1.00
-7,301
-17,000 -2.00
18 Q3 18 Q4 19 Q1 19 Q2 19 Q3 19 Q4 20 Q1 20 Q2 20 Q3
Cash and cash equivalent Short term debt Long term debt Net Debt/EBITDA
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Financial Debt profile (as of Sep 30 2020)

		Effective	mn Original	TL mn
		Interest Rate p.a. (%)	Currency	Equivalent
	TRY EUR	11.3% 1.0%	4,212 204	4,212 1,864
	GBP	0.7%	7	70
	USD ZAR AUD	1.8% 5.5% 3.3%	40 1,140 14	314 525 77
	RUB	2.0%	110	11
	CNY PKR	4.7% 8.6%	2 7,459	2 349
	BDT	8.5%	3,348	308
	Total			7,733
	USD	5.1%	512	3,997
	EUR	4.0%	350	3,198
	TRY*	19.1%	1,016	1,016
	Total Bond			8,211
	Total			15,944
Sensitivity: Public *Average fixed rate at 19.1% through Interest Rate Swaps

Cash Breakdown by Currency

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9%
5%
7%
41%
12%
27%
USD EUR TRY GBP RUB Other
2023+
2020
4%
14%
2023
29%
2022
6% 2021
47%
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USD EUR TRY GBP RUB Other

Debt Maturity Profile

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2020 9M Cash Flow

2020 9M

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2019 9M
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2020 Guidance

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2020 Guidance

Arçelik Turkey (in TRY) 25-30% growth Revenue International (in FX) < 5% decline

20-25% (previous 10-15% growth) growth in TRY

2020 EBITDA Margin >11.5% (previous 10,5-11%) Profitability Long term EBITDA Margin >11.5% Around EUR 180 mio. CAPEX WC/Sales (previous EUR 150-160 mio.)

< 27% (previous < 30%)

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APPENDIX: Other Financial Statements

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2020 Q3 Margin by Segments

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12,000 Consolidated 11,938 37.0
11,000 35.0
33.1
34.6 33.0
10,000
30.9
31.0
9,000
8,246 29.0
8,000 7,832
27.0
7,000
25.0
6,000 23.0
5,000 21.0
2019 Q3 2020 Q2 2020 Q3
Revenue Gross Margin (%)
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Consumer Electronics
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White Goods
10,500 38.0
37.2
9,359 37.0
9,500
36.0
8,500
35.0
7,500 35.2
33.7
34.0
6,480
6,500
33.0
5,458
5,500 32.0
4,500 31.0
2019 Q3 2020 Q2 2020 Q3
Revenue Gross Margin (%)
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Other
1,500 1,460 29.0
1,413
1,400 28.0
1,300 27.6 26.1 28.2 27.0
26.0
1,200
25.0
1,100
24.0
1,000 967
23.0
900
22.0
800 21.0
700 20.0
2019 Q3 2020 Q2 2020 Q3
Revenue Gross Margin (%)
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38.0 1,166 24.0
22.5
1,100
37.0 22.0
914
36.0 900 799 21.2 20.0
21.8
35.0 18.0
700
34.0 16.0
500
33.0 14.0
32.0 300 12.0
31.0 100 10.0
2019 Q3 2020 Q2 2020 Q3
Revenue Gross Margin (%)
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2020 Q3 Working Capital

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6,839
8,620
5,875
8,275
1,890
1,248 12,111
8,959 8,822
5,670
2020 6M 2020 9M
2016 - Assets 2016 - Liabilities 2017 1Q - Assets 20171Q - Liabilities
Trade Rec. Inventory Other Rec. Trade Payables Other Pay. Working Capital
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Working Capital / Sales

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30.3% 30.8% 29.3% 32.2% 33.8% 33.5%
30.3% 31.6% 32.7% [35.1%] 28.0% 27.3% 28.4% 28.3% 27.0% 26.4%
25.7%
24.0%
Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20
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2020 Q3 FX Hedging

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400 3.9% 6.0%
300
4.0%
200
2.0%
100
0 0.0%
0.4% 0.7%
-100 -0.5% -2.0%
-1.1% -1.2% -1.2% -1.2%
-200
-2.5% [-2.1%-2.0%] -3.6%
-2.9% [-2.4%] -3.2% -4.0%
-300 -3.7%
-4.1% -5.1%
-6.0%
-400
-5.7%
-500 -8.0%
Net FX Position Net FX/Equity
16 Q1 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 18 Q3 18 Q4 19 Q1 19 Q2 19 Q3 19 Q4 20 Q1 20 Q2 20 Q3
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• FX hedging is a strictly pursued policy in Arçelik since more than 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.

(TRYmn) Before Hedge Hedged Position Net Position	(TRYmn) Before Hedge Hedged Position Net Position
EUR -1,138 1,139 2 USD -363 219 -144 GBP 996 -990 5 Other 1,057 -983 73
TOTAL 552 -616	-64
-0.5% Net FX Position/Equity

• 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.

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2020 Q3 Singer Bangladesh Results

BDT mn 2020 Q3 2019 Q3 2020 Q2 Δ% YoY	Δ% QoQ	2020 9M 2019 9M	Δ% YoY
Revenue 6,272 5,390 2,995 16	109	12,331 13,331	14
Gross Profit 1,599 1,448 830 10 margin 25.5 26.9 27.7	93	3,254 3,681 26.4 27.6	16
EBIT 746 703 266 6 margin 11.9 13.0 8.9	181	1,222 1,635 9.9 12.3	18
Net Income 458 440 79 4 margin 7.3 8.2 2.6	480	648 952 5.3 7.1	12

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Contacts for Investor Relations

Polat Şen Özkan Çimen Orkun İnanbil CFO Finance Director Investor Relations Manager Tel: (+90 212) 314 34 34 Tel: (+90 212) 314 39 01 Tel: (+90 212) 314 31 14

Kerimcan Uzun

Investor Relations Specialist Tel: (+90 212) 705 96 81

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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Thank You

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