ARÇELİK A.Ş. — Interim / Quarterly Report 2022

Apr 22, 2022

1Q22 Financial Results

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Sensitivity: Public

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1Q22 HIGHLIGHTS

TRY28.2bn

Robust revenue growth through pricing resulted in margin expansion in all lines q/q…

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Robust sales growth of 117% y/y & 25% q/q, the organic growth was 84% y/y

Revenue

10.6%

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Strong sell-out in Turkey and Eastern Europe in the first two months of 2022, while weaker sell-in in Turkey as expected

EBITDA Margin

22.7%

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Strong EBITDA margin expansion of 127 bp (257 bps lfl) on q/q mainly thanks to effective pricing while 393 bp contraction on y/y as a result of the cost inflation and high base of 1Q21

OPEX / Sales

27.7%

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Net Working Capital/Sales was 27.7% mainly due to higher inventories as result of higher material costs and increased receivable days

NWC / Sales

2.81x

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Leverage was 2.81x. Adding the value of shares bought back as of yearend (0.43x impact) and annualized EBITDA & cash contribution of acquisitions (0.15x impact), the leverage would be 2.24x.

Leverage

2

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Key Factors Sales / Margins

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REVENUE GROWTH

117%

Price increases on both quarterly & yearly basis

TRY depreciation on both quarterly & yearly basis

Inorganic growth on a yearly basis

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GROSS MARGIN

30.8%

Price increases on a quarterly basis

Higher capacity utilization on a quarterly basis

Higher raw material prices on a yearly basis coupled with depreciated TRY

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1Q22 Financial Results

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EBITDA MARGIN

10.6%

Improved gross margin on a quarterly basis

108 bps improvement in OPEX/Sales q/q

Negative impact of cost inflation on a yearly basis

Lower capacity utilization on a yearly basis

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4,260
3,609
23,904
18,909
12,984
TRYmn
1Q21 4Q21 1Q22
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34.5%
30.8%
28.8%
1Q21 4Q21 1Q22
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14.6%
10.6%
9.4%
1Q21 4Q21 1Q22
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*Total inorganic net sales contribution.Sensitivity: Public

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Operational Performance

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1Q22 Financial Results

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More than doubled revenue from Turkish business y/y in 1Q22 Financial Results a declining MDA6 (sell-in) demand environment

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MDA6*

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ARÇELİK y/y growth (%)
TURKEY y/y growth (%)
73%
50%
(12%) (11%)
2M21 2M22
AIR CONDITIONER
ARÇELİK y/y growth (%)
TURKEY y/y growth (%)
59%
46%
26%
14%
2M21 2M22
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TELEVISION**

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ARÇELİK y/y growth (%)
TURKEY y/y growth (%)
6%
(13%)
2M22
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Turke Revenue Growth y

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79%
42%
Strong price increases on y/y & q/q
8.379 Unit growth in A/C y/y & q/q
5.912
4.686
Unit contraction in MDA6 (sell-in)
TRYmn
1Q21 4Q21 1Q22
Turke Share in Total Revenue
y
1Q22
Inorganic international growth
30%
36%
1Q21
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Strong price increases on y/y & q/q Unit growth in A/C y/y & q/q Unit growth in small kitchen appliances y/y Unit contraction in MDA6 (sell-in)

MDA6 and A/C data (sell-in, in unit terms) is based on WGMA for 2M22 period on a cumulative basis. *TV market reflects the data of a retail panel market for 2M22 period in unit terms on a cumulative basis.Sensitivity: Public

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11% Share in total revenue

Strong revenue growth in Europe y/y in 1Q22 backed by price increases & inorganic growth

1Q22 Financial Results

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27%
Share in total Western Europe
revenue
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MDA6 Market

y/y market unit growth

• Demand in the majority of Western European countries fell mainly due to high base impact.

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W. Europe

• Cycling a low base, MDA6 demand grew at high single digit in Germany.

Germany

• Despite unit contraction in total Western Europe, market grew in value terms thanks to price increases and leaning towards more premium segments.

France

Great Britain

Arçelik in Western Europe

Italy Spain

• 8% y/y revenue growth in EUR terms thanks mainly to price increases and inorganic revenue contribution.

• Beko maintained leadership in the U.K. with increased market share and moved to 1[st] position in Spain with improved price index in 2M22 compared to 2021 year-end.

Belgium

Austria

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(15%) (10%) (5%) 0% 5% 10%
2M22
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Eastern Europe

MDA6 Market

y/y market unit growth

• Significant demand growth in Eastern Europe mainly driven by Russia.

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E. Europe
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• Strong sell-out in Russia due to rapid depreciation of Ruble.

• Together with unit growth, price increases and increased share of premium segments resulted in significant market growth in value terms in 2M21 y/y.

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Russia
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Arçelik in Eastern Europe

• 11% y/y revenue growth in EUR terms thanks mainly to price increases.

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Poland
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• Beko maintained leadership in Poland with increased market share in 2M22 compared to 2021 year-end.

Romania

• Beko & Arctic brands continued to lead the market in Romania in 2M22.

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(15%) 0% 15% 30%
2M22
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MDA6 market charts show the growth of sell-out demand in the countries and the regions in 2M22 y/y and reflect the data of a retail panel market. Eastern European MDA6 market chart excludes Ukraine’s figures.Sensitivity: Public Russia’s share in Arçelik’s total revenue in 1Q22 was 1.7% (4Q21: 2.0%, 1Q21: 1.7%). Ukraine’s share in total revenue in 1Q22 was 0.1% (4Q21: 0.5%, 1Q21: 0.3%).

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APAC sales more than doubled thanks to Arçelik-Hitachi 1Q22 Financial Results Middle East sales growth driven by Egypt operations

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11%
Share in total
revenue
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Africa & Middle East

Asia-Pacific

• Revenues from Africa & Middle East increased by c.59% y/y in 1Q22 in EUR terms thanks to significantly higher contribution of Middle East operations.

• Revenues from APAC grew by c.136% in EUR terms in 1Q22 y/y thanks to Arçelik-Hitachi contribution (c.13% share in total revenue).

• Defy’s domestic unit sales contracted on both q/q & y/y mainly due to the logistic problems in the country, public holidays in the quarter, and high base of last year while export units grew on both q/q & y/y.

• In Pakistan, unit growth thanks to declining COVID cases & opening of markets and price increases resulted in c.23% higher sales in EUR terms in 1Q22 y/y (c.28% in PKR terms).

• Defy’s revenue increased by mid to high single digit in EUR terms y/y in 1Q22 thanks to price increases while contracted by mid to high single digit in EUR terms q/q due to unit contraction.

• In Bangladesh, sales were increased by c.4% in BDT terms in 1Q22 y/y driven by higher refrigerator, washing machine, television and A/C sales.

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19%
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Share in total revenue

• Strong market leadership of Defy in South Africa maintained.

• Beko Egypt posted c.155% y/y and c.175% q/q revenue growth in EUR terms mainly thanks to significant unit growth and price increases.

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Stable raw material prices in the market until late February, started to increase after war

1Q22 Financial Results

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Average Metal Prices Index - Market

Average Plastic Prices Index - Market

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1Q22 141,8
2021 126,9
4Q21 131,7
3Q21 133,6
2Q21 134,2
1Q21 108,3
2020 79,1
4Q20 90,2
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1Q22 175,1
2021 158,8
4Q21 Info-Text 166,4
3Q21 157,5
2Q21 171,5
1Q21 139,6
2020 98,7
4Q20 108,5
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• Deterioration of supply & demand equilibrium due to the war between Russia & Ukraine impacted metal raw material prices negatively starting from March.

• Increased oil, gas and energy prices due to the war between Russia & Ukraine impacted plastic raw material prices negatively starting from March.

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

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Sales Performance

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1Q22 Financial Results

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Resilient revenue composition through diversification

Sales Bridge

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116.9% y/y
4.260
TRYm
6.763 51.3%
y/y 19.786
464
3.692 81.5%
5.6%
y/y
78.8% y/y
8.297 y/y
8.379
4.686
1Q21 TR INT INT Acquisition 1Q22
Organic Organic FX Impact Impact
International Turkey
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1Q22 Financial Results

Sales Breakdown by Geography

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1Q22
Turkey
15%
Western Europe
30%
2% 4% [3%6%]
3% CIS & Eastern Europe
4%
36%
6%
Africa
6%
1Q21
13% Middle East
5%
Pakistan
11% 31% Bangladesh
27% Other
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*The net sales of Arçelik-Hitachi Home Appliances has been shown in Other. In 1Q22, the share of Arçelik Hitachi Home Appliances in total net sales was c.13%.Sensitivity: Public

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Financial Performance

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1Q22 Financial Results

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Summary financials

1Q22 Financial Results

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TRYmn 1Q22 1Q21 y/y 4Q21 q/q	TRYmn 1Q22 1Q21 y/y 4Q21 q/q	TRYmn 1Q22 1Q21 y/y 4Q21 q/q	TRYmn 1Q22 1Q21 y/y 4Q21 q/q	TRYmn 1Q22 1Q21 y/y 4Q21 q/q	TRYmn 1Q22 1Q21 y/y 4Q21 q/q	TRYmn 1Q22 1Q21 y/y 4Q21 q/q
Revenue	28.164	12.984	117%	22.519		25%
Gross Profit	8.687	4.483	94%	6.477		34%
EBIT	2.282	1.545	48%	1.156		97%
Profit Before Tax	1.451	1.294	12%	974		49%
Net Income	1.224	1.100	11%	893		37%
Net Income -exc. one-off items	1.224	1.100	11%	601		104%
EBITDA	2.993	1.890	58%	2.106		42%
EBITDA -exc. one-off items	2.993	1.890	58%	1.815		65%
Gross Profit Margin	30,8%	34,5%	(368 bps)	28,8%		208 bps
EBIT Margin	8,1%	11,9%	(379 bps)	5,1%		297 bps
Net Profit Margin	4,3%	8,5%	(413 bps)	4,0%		38 bps
Net Profit Margin -exc. one-off items	4,3%	8,5%	(413 bps)	2,7%		168 bps
EBITDA Margin	10,6%	14,6%	(393 bps)	9,4%		127 bps
EBITDA Margin -exc. one-off items	10,6%	14,6%	(393 bps)	8,1%	257 bps

*EBIT was calculated by deducting the impact of FX gains and losses arising from trade receivables & payables, credit finance income and charges and cash discount expense and adding income & expenses from sale of property plant and equipment.Sensitivity: Public

12

Increased working capital requirement and share buyback resulted in higher leverage in 1Q22

1Q22 Financial Results

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Net Debt & Leverage

Debt Currency & Rates Breakdown

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2.81
Buyback impact: 0.43x
2.40
2.39
Acq. impact: 0.15x
2.14 2.24
1.86
22,557
1.42 16,565
9,074
TRYmn
1Q21 2021 1Q22
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Currency	Effective Interest Rate	Original Currency	TRY Equivalent
	p.a.	(mn)	(mn)
TRY	19.2%	8,558	8,558
EUR	1.6%	446	7,271
USD	2.4%	29	423
GBP	1.5%	7	130
ZAR	5.3%	1,069	1,082
AUD	3.3%	25	279
PKR	10.9%	33,319	2,656
BDT	5.8%	6.317	1,074
RUB	14.7%	1,256	216
RON	5.1%	70	229
PLN	5.0%	17	60
TOTAL LOANS			21,977
USD	5.0%	512	7,503
EUR	3.0%	359	5,847
TRY	18.9%	2,261	2,261
TOTAL BOND			15,611
TOTAL			37,587

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Cash Currency Breakdown Debt Currency Breakdown
TRY16.7bn (EUR1.0bn) TRY37.6bn (EUR2.3bn)
13% 15%
Other Other 21%
11% USD
TRY 44%
USD
9%
CNY 29%
TRY
7% 35%
GBP 15% EUR
EUR
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Debt Currency Breakdown

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Debt Maturity Profile
TRY37.6bn (EUR2.3bn)
22%
2024+
38%
2022
40%
2023
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*If the value of the shares acquired as of 31.03.2022 were deducted from net debt and EBITDA & cash contributions of our recent acquisitions were annualized the leverage is calculated as 1.86x as of 2021 and as 2.24x as of 1Q22. Sensitivity: Public

13

Negative FCF in 1Q22 mainly due to NWC

EBITDA Margin

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1Q21 1Q22
Non-cash
GP Margin OPEX/Sales
Items
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CAPEX/Sales

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3.0%
2.7%
1Q21 1Q22
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1Q22 Financial Results

Working Capital/Sales

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2021 1Q22
Rec. Inv. Pay. Others
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Free Cash Flow

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(1.801)
TRYmn (2.108)
1Q21 1Q22
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Guidance

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1Q22 Financial Results

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2022 Guidance

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Revenue

1Q22 Financial Results

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• Turkey (in TRY) c.60% growth

• International (in FX) c.25% growth

• Consolidated (in TRY) >80% growth

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EBITDA Mar in c.10.5% g

WC/Sales c.25%

CAPEX

c.220 mio EUR

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Q&A

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1Q22 Financial Results

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Appendix

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1Q22 Financial Results

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Margins by segments

1Q22 Financial Results

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Consolidated

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34,5%
35,0%
30,8%
35.000
28,8%
30,0%
28.164 30.000
25,0%
22.519 25.000
20,0%
20.000
15,0%
12.984 15.000
10,0% 10.000
5,0% 5.000
0,0% 0
2021 1Q 2021 4Q 2022 1Q
Revenue Gross Margin
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White Goods

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40,0%
36,5%
35.000
35,0%
31,0%
29,5% 30.000
30,0%
22.185 25.000
25,0%
17.684 20.000
20,0%
15,0% 15.000
9.947
10,0% 10.000
5,0% 5.000
0,0% 0
2021 1Q 2021 4Q 2022 1Q
Revenue Gross Margin
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Consumer Electronics

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30,0% 5.000
25,6% 4.500
25,0%
4.000
20,5%
20,0% 18,1% 3.500
3.000
15,0% 2.029 2.500
1.822
2.000
10,0%
1.159 1.500
1.000
5,0%
500
0,0% 0
2021 1Q 2021 4Q 2022 1Q
Revenue Gross Margin
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Other
7.000
35,0% 33,0% 32,1% 32,5%
6.000
30,0%
5.000
25,0% 4.157
4.000
20,0%
2.806
3.000
15,0%
1.878
10,0% 2.000
5,0% 1.000
0,0% 0
2021 1Q 2021 4Q 2022 1Q
Revenue Gross Margin
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Close watch on FX risk, proactively taken actions

1Q22 Financial Results

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3,9%
2,9%
0,7%
0,4% 0,3%0,3%
-0,5%
-1,1% -1,2% -1,2% -1,2%
-2,1%-2,0% -3,6% -2,4% -2,6%
-2,5% -2,9% -3,2%
-3,7%
-4,1% -5,1%
-4,1%
-5,7%
-6,6%
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 20 Q4 21 Q1 21 Q2 21 Q3 21 Q4 22 Q1
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TRYm Before Hedge Hedged Position Net Position
EUR (7,892) 7,720 (172)
USD (3,170) 2,484 (685)
GBP 2,001 (1,839) 162
Other 1,697 (1,577) 120
TOTAL (7,363) 6,789 (575)
Net FX Position / Equity (2,6%)
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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 a FX exposure exceeding low single-digit % of equity.

• The primary strategy 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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Contacts

Özkan Çimen

CFO

(+90) 212 314 34 34

1Q22 Financial Results

Öktem Söylemez

Senior IR Specialist

(+90) 212 705 96 81

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Investor Relations App

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www.arcelikglobal.com investorrelations@arcelik.com

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Disclaimer

1Q22 Financial Results

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This presentation contains information and analysis on financial statements as well as forwardlooking 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 nor of its or nor other shall have Arçelik any managers employees any person any liability whatsoever for any loss arising from the use of this presentation.

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Thank You!

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Sensitivity: Public