ARÇELİK A.Ş. — Interim / Quarterly Report 2020

Jul 23, 2020

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- A Crisis Like No Other: COVID 19

A Deep Global Recession in 2020

Different Recovery Scenarios

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-4,9%
-5,2%
-6,0%
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World Bank

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OECD
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IMF
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- COVID 19 Impact: Appliance Market

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- COVID 19 Impact: Evolving Needs

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Evolving Consumer Needs Seizing Opportunities ▪ ▪ Conscious Consumption Reliability ▪ ▪ Re-Prioritizing What is Important Value for Money ▪ ▪ E-Commerce Boom Resource Efficiency

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- COVID 19 Impact: Building Resilience

Solid Business Continuity

Inventory Optimization

In our production facilities, all necessary precautions were taken at world standards and production was maintained with maximum capacity.

Consolidated inventory value was reduced to EUR 762 mio. with effective stock management

▪ Utilizing 90% Capacity with World Class Protective Measures

▪ Around 18% improvement compared to last year

Daily Production Capacities

Inventory (EURmn)

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120
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100
60
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968
927
843
807
762
June-19 Sep-19 Dec-19 March-20 June-20
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- COVID s 19 Impact: Serving Communitie

Ventilator Production

Hospital Donations

• The project started on March 25, the first prototype was produced on March 31, mass production began on April 25, and 5,000 ventilator production was completed on June 20.

• Nearly 3.000 ventilators have been exported.

• Arcelik donated 59 ventilators to different countries.

• In Turkey, more than 2000 Arcelik and Beko brand products were donated.

• Nearly 8,800 products were donated to more than 550 hospitals in 20 countries.

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Turkey, Brazil, Azerbaijan, Uzbekistan, Chad, Niger, Bangladesh, Somalia, Afghanistan, Nigeria, Dagestan, UAE, Libya, Syria, Romania, Philippines, Ukraine, Russia, Kazakhstan, Indonesia, Pakistan, Kenya, S.Africa

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Turkey, Romania, France, Spain, Poland, Kosovo, Serbia, Bosnia and Herzegovina, Slovenia, Philippines, Ukraine, United Kingdom, Czech Republic, Ghana, Thailand, Nigeria, Angola, Germany, Pakistan, Bangladesh

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" " - COVID 19 Arcelik New Normal am Progr

Identifying the changing consumer habits and 1 behaviours; re-designing the brand approach to fulfil their needs

Creating a more competitive and profitable product 2 portfolio to fulfill the needs in hygiene, quality and lifestyle based on shifting consumer behaviour

Growing e-commerce in potential markets, deploying 3 the new e-commerce strategy in 2020

Transition to «New Normal» and ensuring health and 4 safety of the employees and the business continuity in production and offices in the following 12-36 months

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2020 Q2 Highlights

• Limited top line contraction at 7%

• Slight decline in gross margin due to lower CUR (QoQ)

TRY7.8bn

11.1%

▪ ~2.5ppt QoQ improvement in OPEX/Sales

• One-off contribution of ~TRY67mn in EBITDA

• Strong FCF sustained: TRY1,859 mn. FCF[*] in 2Q20

• Improvement in working capital and leverage in a challenging environment

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Revenue EBITDA Margin
26% 1.9x
NWC/Sales Ratio Leverage
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• Arçelik is now among the supporters of TCFD (Task Force on Climate-related Financial Disclosures)

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

2020 Q2 Key Factors Sales/Margins

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8,428
-25%
Organic decline in international sales due to lock-downs
Revenue 7,832
-17% Contraction in domestic unit sales 7,768
-7%
Growth
+20% TRY Depreciation
2019 Q2 2020 Q1 2020 Q2
28.7%
Lower CUR in TR and RO, factory closures in ZA, PK, BD
31.8
Gross
28.7% Slightly better raw material prices 31.4 30.9
30.9%
Margin
33.8% Stronger EUR/USD towards the end of 2Q
2019 Q2 2020 Q1 2020 Q2
7.6% 11.2
10.5
Stricter OPEX Management 11.1
EBITDA 7.3% 10.5 10.2
11.1% Lower contribution from one-off items (QoQ) 8.4
Margin
16.0%
2019 Q2 2020 Q1 2020 Q2
Apr-20 EBITDA margin excluding one off items
May-20
Jun-20
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OPE 2020 Q2 Improvement in X/Sales

OPEX Items - % of Sales

Successful Cost-Cutting Measures

• Support of government incentives

• Significant cut in administrative expenses

• Lower marketing investments, cancellation of

some trade fairs

• Better inventory management

• Measures taken and rebound in revenue in June

led to lowest monthly OPEX/Sales since 2013.

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2020 Q2 Historically Low WC/Sales

Continuing Improvement in WC Management

• Decreasing receivables days in domestic market

33.8% 32.7% 30.3% 28.4% 25.7%

• Continuation of measures in inventory management, such as SKU optimization, elimination of aged inventory and toxic SKUs • Achieving better terms from large, international suppliers

• Supplier financing programme

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Jun-18

Jun-19 Jun-20

Jun-16

Jun-17

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2020 H1 Strong Cash Generation

FCF Generation (TRYmn)

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2,355
672
811
782 355
1,739
1,565
-550
-1,095
-581
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FCF Performance Further Improved

• Higher EBITDA generation in 1H20 in TRY terms

• Slightly lower CAPEX in TRY, ~15% decline in EUR

• Substantially stronger performance in WCR

1H19

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1H20
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EBITDA Chg. İn Working Capital Adjustments CAPEX

2020 Q2 Strong Balance Sheet

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Cash and Equivalents (TRYmn)
9,253
6,937
2019 Q4 2020 Q2
TRY Average Interest Rate (Period End)
25.0%
15.2%
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11.3%
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June '18 Sep '18 Dec '18 Mar '19 June '19 Sep '19 Dec '19 Mar'20 June '20

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Net Leverage
2.4
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3.1
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1.9
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June '18 Sep '18 Dec '18 Mar '19 June '19 Sep '19 Dec '19 Mar'20 June '20 Sensitivity: Public

FCF Performance Further Improved

• TRY 9,3 bln. in cash (80% in hard currency)

• Undistributed dividend of TRY 500 mio. and Token sale of TRY 310 mio. to support liquidity

• Successfully rolled over H1 TRY-redemptions and have also done prefinancing at convenient rates

• Hard currency FX debt service is limited with Eurobond coupon payments

• Continuation of strict hedging policy

• Net leverage below 2X

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Regional Market Dynamics

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2020 Q2 Turkish Market

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MDA-6 Air-Conditioner TV
-1% +7% +4%
Market
Turkish MDA6 Market YoY Change
12% 14% 14%
6%
-8%
-11%
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 2Q20. TV market reflects the data of a retail panel market for April-May 2020 (Junes figures are not released yet).

2020 Q2 Arçelik Performance in Turkey: MDA6

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Installation Figures for MDA6 – Change (YoY)
25%
23%
20%
15% 16%
10%
5%
1%
0%
-4%
-5%
-10% -10% [-7%]
-15%
-20%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2019 2020
5.00
Inventory Level at Dealers – MDA6 (Months)
4.50
4.00
3.50
3.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2019 2020
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Strong Performance in Sell-Out

• Intentionally cautious approach in sell-in sales, combined with high base of 2019, resulting in YoY decline in 2Q20 (-15%)

• However, sell-out was much stronger than sell-in during whole quarter

• More room for sell-in growth in 2H2020 due to low level of dealer inventory

Omnichannel Transformation

• E-com fulfilment increased from 121 to 1.469 dealers in a month after Covid-19.

• Daily e-commerce revenue is 10-fold after e-com mobilisation

• Web traffic increased 43% compared to last year (32,6 Mio people visited our websites in 2020).

• We leveraged our competitive advantage focusing speed and service (Delivery in 48hours, unconditional return in 14 days)

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in 2020 Q2 Arçelik Performance Turkey: TV, A/C, SDA

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Strong Performance in Sell-in Stronger Performance in Sell-Out
Unit Change (YoY) 2Q20 (YoY) Sell-out/Sell-in (Units) 2Q20 (Sell-Out/Sell-in)
40% 18% 17%
9%
+5% +15%
0%
-26%
Unit Change (YoY) 31%
46%
32%
+29% +3%
-15%
-20%
-7%
Revenue Change (TL, YoY) 50%
38%
24%
13%
+24% +15%
-3%
-16%
April May June
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2020 Q2 European Market

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25
15
5
-5
-15
-25
-35
-45
-55
-65
55
45
35
25
15
5
-5
-15
-25
-35
Poland Romania Russia Poland Romania Russia Poland Romania Russia Poland Romania Russia
March April May June
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• Recovery after the shock

• • Some markets started already feeling the negative impact in March

• All major markets were negative in April

• Recovery started in May in Germany and E. Europe

• Almost all markets turned green in June

• • July and August orders signals continuation of this trend

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2020 Q2 European Market

Booming Online Sales

• Significant increase in online channel share, especially during lockdown periods

• Loyal customers accelerated rise of click & mortar business more than pure online players

• ➢ 56% YTD increase in click&mortar

• ➢ 16% YTD increase in pure online

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Online Channel Value Share - %
Jan-20
Feb-20
CIS Countries
Mar-20
Apr-20
May-20
Western Europe Eastern Europe
44 47
36 34 36
23 21 27 29 27
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Online Channel Value Share - %

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Euro 2020 Q2 Arçelik Performance in pe

Arcelik Group Unit Market Share Change – YoY

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1.5
1.3
0.5 0.5
0.1 0.1
-0.4
-1.4
UK Germany Spain France Italy Poland Romania Russia
Arcelik Group Value Market Share – MDA 8
8.4%
7.7%
6.2% 6.3%
5M19 5M20
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Market Share Gains

• Strong crisis performance with market share gains in major markets in Europe

Winner in the Online

• Succesfully managed structural change

• Gained market share in online channels

• Product range has a good fit with online sales

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Traditional Channel Online Channel

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2020 Q2 Arçelik Performance in International

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42% Europe
▪ Online sales support in April, May
▪ Significant contraction in France, Spain
and Italy in April and May
▪ Visible recovery especially in W. Europe in
June led by Germany
▪ Contraction in E. Europe slowed down in
June and some countries turned positive
▪ Market share gains continued in 2Q20
~+5%
~-5%
~-25%
~-30%
East Europe West Europe
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• 4% Africa

• ▪ Almost no sales in S. Africa in April due to lock-down

• Reopening of retailers started on June 1st.

• June contraction in MDA-9 was limited at 5-10% range

• Defy’s exports in June was up by ~20% in EUR terms

• Profitability normalized in June

Arcelik Regional Sales Growth (YoY % in EUR)

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April+May-20 June-20
~-10%
~-75%
South Africa & Sub Sahara
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9% Asia-Pacific

• ~55% revenue contraction in Pakistan in PKR terms reflecting both macro conditions and COVID19 impact.

• Singer Bangladesh had ~40% contraction in top-line despite a strong recovery in June

• ASEAN revenue realized at USD21mn, indicating to 27% YoY decline.

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~-10%
~-60%
APAC
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Sales Performance

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2020 Q2 Sales by Region

2020 Q2

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2.5% [3.1%] [4.7%]
-7% 2.6%
4.3%
3.5%
5.3%
8,428 34.7% 41.4%
7,832 14.1% 6.6%2.8% 2019 Q2
13.9%
5,502 -17% 4,587
28.1%
28.0%
2,926 3,245
+11%
2020 6M
2019 Q2 2020 Q2
3.0% [4.6%]
+2% 2.6%
2.8%
4.9%
4.3%
15,330 15,600 5.1%
38.6%
33.5%
7.0%
2.5%
13.9% 2019 6M
10,201 9,586 13.8%
-6%
30.8%
30.2%
6,014
5,129 +17%
2019 6M 2020 6A Africa Middle East Pakistan Other
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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 Q2 Sales Bridge

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10,000
319
9,000 8,428
-1440
7,832
8,000 525
7,000
6,000
5,502
4,587
5,000
4,000
3,000
2,000
3,245
2,926
1,000
-
TL mn 2019 Q2 TR - Organic INT - Organic INT - FX Impact 2020 Q2
Turkey International Revenue Impact
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2020 Q2	Organic	Currency Effect	Acquisition	TOTAL
Domestic Growth	10.9%	0.0%	0.0%	10.9%
International Growth	-26.2%	9.5%	0.0%	-16.6%
Total Growth	-13.3%	6.2%	0.0%	-7.1%

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P&L Performance

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2020 Q2 Income Statement

					Δ%
TL mn	2020 Q2	2019 Q2	**2020 Q1 **	Δ% YoY	QoQ	**2020 6M **	**2019 6M **	Δ% YoY
Revenue	7,832	8,428	7,768	-7	1	15,600	15,330	2
Gross Profit	2,419	2,643	2,470	-8	-2	4,889	4,882	0
margin	30.9	31.4	31.8			31.3	31.8
EBIT *	572	629	589	-9	-3	1,161	1,058	10
margin	7.3	7.5	7.6			7.4	6.9
Profit Before Tax	526	302	308	74	70	834	562	48
margin	6.7	3.6	4.0			5.3	3.7
Net Income**	409	232	259	76	57	668	458	46
margin	5.2	2.8	3.3			4.3	3.0
EBITDA*	869	887	871	-2	0	1,739	1,565	11
margin	11.1	10.5	11.2			11.2	10.2
EBITDA -ex.one-offs	801	887	654	-10	23	1,455	1,565	-7
margin	10.2	10.5	8.4			9.3	10.2

• 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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2020 Guidance

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2020 Expectations

▪ In the mid of this global pandemic, the first priority of company management has been to ensure the health and well-

being of all employees and their families all over the world.

▪ The second critical issue is to keep the high liquid position of the company to be prepared against any scenario.

• After a weak demand in second quarter, we expect strong demand in Q3 . (mid-single digit growth in EUR)

• Raw-material prices and EUR:USD parity are expected to continue act as tail-wind in 2H20.

▪ Though there are still uncertainty around Q4 related with COVID-19 , the business impact may not be as hard as April and May.

• With all measures taken and implemented in all our factories and suppliers globally, we aim to keep our factories .

• running while keeping all our employees safe

• Thanks to our operational competitive advantages and strong balance sheet, we continue to see more opportunities in

• the market aftermath of COVID-19 .

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2020 Guidance

Arçelik Turkey (in TRY) 15-20% growth 10-15% Revenue International (in FX) Around 5% decline growth in TRY 2020 EBITDA Margin 10.5-11.0% Profitability Long term EBITDA Margin >11.5% Around EUR CAPEX WC/Sales Below 30% 150-160 mio.

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APPENDIX: Other Financial Statements

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2020 Q2 Margin by Segments

Consolidated

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31.8
31.4
30.9
8,428
7,768 7,832
2019 Q2 2020 Q1 2020 Q2
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Revenue Gross Margin (%)
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White Goods Consumer Electronics Other
6,500 6,345 35.0 980 914 30.0 1,500 1,460 32.0
30.2
900
1,400
759 1,324 30.0
6,000 33.6 33.7 34.0 25.0 1,300 29.2
5,723 700 25.6 28.0
33.0 1,200
5,500 5,458 23.3 21.8 20.0 1,100 1,064 26.0
500
32.5 32.0 1,000 26.1
24.0
5,000 300 15.0 900
31.0
22.0
800
4,500 30.0 100 10.0 700 20.0
2019 Q2 2020 Q1 2020 Q2 2019 Q2 2020 Q1 2020 Q2 2019 Q2 2020 Q1 2020 Q2
Revenue Gross Margin (%) Revenue Gross Margin (%) Revenue Gross Margin (%)
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2020 Q2 Working Capital

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5,821 5,875
8,665 8,275
1,091 1,248
9,157 8,959
5,580 5,670
2020 3M 2020 6M
2016 - Assets 2016 - Liabilities 2017 1Q - Assets 20171Q - Liabilities
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Trade Rec. Inventory Other Rec. Trade Payables Other Pay. Working Capital

Working Capital / Sales

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30.3% 30.8% 29.3% 32.2% 33.8% 33.5%
35.1%
30.3% 31.6% 32.7% 28.0% 27.3% 28.4% 28.3% 27.0% 26.4%
25.7%
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
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2020 Q2 Cash & Financial Debt

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

			Effective	mn Original	TL mn
		Interest	Rate p.a. (%)	Currency	Equivalent
TRY			11.3%	4,183	4,183
EUR			0.9%	233	1,799
GBP			0.7%	3	28
USD ZAR			1.9% 6.9%	47 980	322 390
AUD			3.3%	13	63
RUB			2.0%	27	3
PKR			10.0%	10,892	442
BDT			9.0%	6,722	543
Total					7,773
USD			5.1%	506	3,459
EUR			4.0%	360	2,778
TRY*			19.1%	1,015	1,015
Total	Bond				7,253
Total					15,026

Sensitivity: Public *Average fixed rate at 19.1% through Interest Rate Swaps

Cash Breakdown by Currency

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3%
4% 6%
9%
49%
29%
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USD EUR TRY GBP RUB Diğer

Debt Maturity Profile

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2023+
2020
4%
18%
2023
26%
2022
6%
2021
46%
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2020 Q2 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 -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
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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 -1,170 1,261 91 USD 147 -231 -84 GBP 458 -431 26 Other 848 -807 41
TOTAL 282 -208	74
0.7% 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 H1 Cash Flow

2020 1H

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2019 1H
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2020 Q2 Singer Bangladesh Results

BDT mn 2020 Q2 2019 Q2 2020 Q1 Δ% YoY	Δ% QoQ	2020 6M 2019 6M	Δ% YoY
Revenue 2,995 5,198 3,064 -42	-2	6,059 7,941	14
Gross Profit 830 1,442 825 -42 margin 27.7 27.7 26.9	1	1,655 2,233 27.3 28.1	16
EBIT 266 695 266 -62 margin 8.9 13.4 8.7	0	532 997 8.8 12.6	18
Profit Before Tax 129 560 163 -77 margin 4.3 10.8 5.3	-21	292 745 4.8 9.4	15
Net Income 79 389 111 -80 margin 2.6 7.5 3.6	-29	191 512 3.2 6.4	12

2Q20 Highlights

▪ Lockdowns and other measures led to ~40% top-line contraction in 2Q20

▪ Double-digit increase in June sales

▪ Washing Machine, SDA and MW Oven performed relatively better

▪ Better product mix helped gross margin throughout the quarter.

▪ EBIT margin declined on a YoY basis mainly due to revenue contraction

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2020 Q2 Raw Material Trends

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110
100
90
80
70
60
50
40
2Q Average Metals 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-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20
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140
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120
110
100
Info-Text
90
80
70
60
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 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20
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Metal Prices Index Quarterly Average - Market

3Q18	4Q18	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20
90	85	83	82	79	77	77	72

Source: Steel BB, Steel Orbis

Index includes: CRC, HRC, Galvanized Steel, Stainless Steel, Copper, Aluminium

Plastic Prices Index Quarterly Average - Market

3Q18	4Q18	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20
121	111	105	110	104	101	100	89

Source: ICIS - Chemical Industry News & Chemical Market Intelligence Index includes: ABS, Polystyrene, Polyurethane, Polypropylene

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Contacts for Investor Relations

Orkun İnanbil

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

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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