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ARÇELİK A.Ş. Interim / Quarterly Report 2022
5890_rns_2023-01-25_dd720ce9-e4b9-4784-9506-7173751bad5c.pdf
Interim / Quarterly Report
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4Q22 Financial Results
Arçelik
January 25, 2023
Koç
2
Arcelik
4Q22 HIGHLIGHTS
TRY39.2bn
Revenue
9.1%
EBITDA Margin
22.2%
OPEX / Sales
21.0%
NWC / Sales
2.26x
Leverage
Solid revenue growth momentum on track as further eased material costs contributed margin expansion..
Robust revenue growth of 74% y/y driven by price increases, higher units sold in Turkey and TRY depreciation. Organically, annual growth was 67%. On a quarterly basis, the revenue growth was 14% while organic growth were stood at 11%.
Sell-out and sell-in were positive in Turkey mainly thanks to pull forward demand, while contraction in consumer demand continued in both West & East Europe.
Eased costs, price increases and further improved OPEX/Sales ratio resulted in 42 bps q/q EBITDA margin expansion.
Net Working Capital/Sales was 21.0% thanks to decreasing inventories and strong collection.
Leverage was 2.26x, down by 0.42x compared to 3Q22 thanks to strong cash generation in the quarter.
A new business partnership with Whirlpool in Europe and acquisition of Whirlpool's MENA subsidiaries has been announced.
Overview of recent corporate actions; Beko Europe & acquisition of Whirlpool's MENA subsidiaries
4Q22 Financial Results
Arçelik
The NEWCO 'Beko Europe'
Arçelik
Whirlpool
25 European Subsidiaries / Country Offices
38 European Subsidiaries / Country Offices
~ 6,000 Employees
~ 14,400 Employees
2 Factories in Romania
14 Factories in Italy, Poland, Slovakia and The UK
Brands to be owned by the NEWCO; Grundig, Arctic, Elektrabregenz, Flavel and Leisure
Brands to be licensed to the NEWCO; Beko, Altus, Blomberg
Brands to be owned by the NEWCO; Hotpoint, Indesit, Bauknecht, Privileg and Ignis
Brands to be licensed to the NEWCO; Whirlpool
- A new company (NEWCO) named 'Beko Europe' has been established.
- 24 million annual production capacity in total for European business.
- Arçelik will have the control of the NEWCO and fully consolidate.
- Around EUR6bn and EUR4.3bn combined revenues as of FY21 and 9M22, respectively.
- Over EUR200mn cost synergies expected from footprint optimization, procurement and logistics.
- Apart from the NEWCO for European business, Arçelik will acquire Whirlpool's MENA subsidiaries at an EV amount of EUR20mn subject to net working capital and net debt adjustment at closing date.
- Around EUR182mn revenue of Whirlpool's MENA subsidiaries, as of FY21.
- Conditions: Subject to approval from regulatory authorities
- Expected closing: Second half of 2023.
*The final ownership ratio will be determined by taking into account the EBITDA and net fixed asset value in the FY22
financials and based on net debt and net working capital after the closing financial statements are prepared.
Key Factors Sales / Margins
4Q22 Financial Results
Arcelik
REVENUE GROWTH
74%*
- Price increases on both quarterly & yearly basis
- Significant TRY depreciation on a yearly basis
- Increased unit sales in Turkey on a yearly basis
GROSS MARGIN
29.0%
- Eased raw material costs
- Appreciated EUR against USD
- Lower capacity utilisation on both quarterly & yearly basis
EBITDA MARGIN
9.1%
- Lower OPEX/Sales on a quarterly basis thanks to lower marketing and logistics expenses
*Includes inorganic revenue contribution of Indesit International JSC and Whirlpool RUS LLC acquisition.
Organically, annual and quarterly revenue growth was 67% and 11% in 4Q22, respectively.
Operational Performance
4Q22 Financial Results
Arcelik
Solid revenue growth maintained in Turkey y/y in 4Q22 backed by higher units and price increases
4Q22 Financial Results
Arçelik
MDA6*
ARÇELİK y/y growth (%) TURKEY y/y growth (%)
(1%)
AIR CONDITIONER*
ARÇELİK y/y growth (%) TURKEY y/y growth (%)
27% 34% 4% (3%)
TELEVISION**
ARÇELİK y/y growth (%) TURKEY y/y growth (%)
0% 2% (19%) 11M21 11M22
Turkey Revenue Growth
Turkey Share in Total Revenue
*MDA6 and A/C data (sell-in, in unit terms) is based on WGMA for 4Q22 period on a cumulative basis.
**TV market reflects the data of a retail panel market for 11M22 period in unit terms on a cumulative basis.
Continued macroeconomic and politic challenges weighed on demand in both Western and Eastern Europe throughout 2022
4Q22 Financial Results
Arcelik
Western Europe
MDA6 Market
- Further slowdown in consumer demand in Western Europe market in October & November, leading to high single digit contraction in 11M22, on a yearly basis.
- Great Britain has been worst performer among Western European countries with a demand contraction at mid-teens percentage.
- Despite having been contracted in unit terms, market remained flattish in 11M22 y/y in value terms, reflecting price increases and higher share of premium segment sales. Yet, this trend has been vanished in Oct-Nov 2022 period with c.2% y/y contraction in value terms.
Arcelik in Western Europe
- Flattish revenue in EUR terms in 4Q22 compared to a year ago.
Eastern Europe
MDA6 Market
- Consumer demand continued to contract by double-digit percentage in 4Q22, leading to c.10% contraction in 2022 on a yearly basis.
- Market grew significantly at mid-teens percentage in value terms in 2022 on thanks mainly to strong price increases in the market.
Arcelik in Eastern Europe
- 46% y/y revenue growth in EUR terms thanks mainly to price increases and inorganic revenue contribution from recent acquisition. Organically, revenue growth was 16%.
MDA6 market charts shows the growth of sell-out demand in both Western & Eastern Europe and reflect the data of a retail panel market.
Eastern European MDA6 market chart excludes Ukraine's figures.
Sound revenue growth in Africa & Middle East in 2022 APAC sales posted slight contraction in 4Q22 y/y
4Q22 Financial Results
Arcelik
Africa & Middle East
- Revenues from Africa & Middle East increased by c.27% y/y in 2022 in EUR terms thanks to significantly higher growth in both operations.
- Defy's domestic unit sales were significantly higher in the fourth quarter compared to 3Q22 thanks mainly to Black Friday campaigns. On a yearly basis, units were down by high single digit due to declining market. Export units were down by mid-to-high single digit on a quarterly basis and grew at low-teens on a yearly basis.
- Defy's revenue increased by c.15% in EUR terms and by c.20% in ZAR terms q/q in 4Q22 thanks to unit growth and price increases and grew by c.13% in EUR terms and c.15% in ZAR terms y/y mainly thanks to price increases.
- Defy further increased its market share significantly as of December 2022, compared to a year ago in South Africa and maintained its strong leadership in a declining demand environment.
- Beko Egypt registered c.29% y/y revenue growth in 4Q22 in EUR terms thanks mainly to price increases while on a quarterly basis, revenue fell by c.26% in EUR terms mainly due to the import regulation imposed in the country.
- Groundbreaking ceremony has been organised in Egypt for USD100mn greenfield investment which is expected to be established in 2023.
Asia-Pacific
- Revenues from APAC were down by c.5% in EUR terms in 4Q22 y/y.
- In Pakistan, due to depreciated PKR against EUR, lower A/C sales and deteriorated purchasing power of consumers, units were contracted on both quarterly and yearly basis. Thus, net sales were down by c.9% q/q in PKR terms (c.11% in EUR terms). On a yearly basis, thanks to price increases, net sales were increased by c.6% in PKR terms while due to PKR depreciation, net sales were contracted by c.8% in EUR terms.
- In Bangladesh, net sales were increased by c.4% in BDT terms in 4Q22 y/y driven by higher television unit sales and price increases. In EUR terms, net sales were down by c.3% due to depreciated BDT against EUR.
4Q22 Financial Results Arcelik
Raw material prices were further eased in 4Q22
However, still quite above pre-pandemic levels
Average Metal Prices Index - Market
- Continued easing of metal raw material prices as a result of further shrunk in demand.
Average Plastic Prices Index - Market
- Increased oil, gas and energy prices due to the war between Russia & Ukraine impacted plastic raw material prices negatively starting from March.
- Declining energy prices resulted in further lower plastic prices in 4Q22.
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
4Q22 Financial Results
Arçelik
Resilient revenue composition through diversification
4Q22 Financial Results
Arcelik
Sales Bridge
Sales Breakdown by Geography
Financial Performance
4Q22 Financial Results
Arcelik
Summary financials
4Q22 Financial Results
Arcelik
| TRYmn | 4Q22 | 4Q21 | y/y | 3Q22 | q/q | 2022 | 2021 | y/y |
|---|---|---|---|---|---|---|---|---|
| Revenue | 39.192 | 22.519 | 74% | 34.255 | 14% | 133.916 | 68.184 | 96% |
| Gross Profit | 11.377 | 6.477 | 76% | 9.861 | 15% | 39.493 | 20.478 | 93% |
| EBIT* | 2.663 | 1.447 | 84% | 2.100 | 27% | 8.676 | 5.360 | 62% |
| EBIT* - exc. one-off items | 2.663 | 1.156 | 130% | 2.046 | 30% | 8.593 | 5.068 | 70% |
| Profit Before Tax | 2.231 | 974 | 129% | 231 | 864% | 4.218 | 3.623 | 16% |
| Net Income** | 2.664 | 893 | 198% | 495 | 438% | 4.723 | 3.251 | 45% |
| Net Income** - exc. one-off items | 1.265 | 601 | 110% | 441 | 187% | 3.242 | 2.959 | 10% |
| EBITDA | 3.582 | 2.106 | 70% | 2.986 | 20% | 11.986 | 7.206 | 66% |
| EBITDA - exc. one-off items | 3.582 | 1.814 | 97% | 2.932 | 22% | 11.903 | 6.914 | 72% |
| Gross Profit Margin | 29,0% | 28,8% | 27 bps | 28,8% | 24 bps | 29,5% | 30,0% | (54 bps) |
| EBIT Margin | 6,8% | 6,4% | 37 bps | 6,1% | 66 bps | 6,5% | 7,9% | (138 bps) |
| EBIT Margin - exc. one-off items | 6,8% | 5,1% | 166 bps | 6,0% | 82 bps | 6,4% | 7,4% | (102 bps) |
| Net Profit Margin | 6,8% | 4,0% | 283 bps | 1,4% | 535 bps | 3,5% | 4,8% | (124 bps) |
| Net Profit Margin - exc. one-off items | 3,2% | 2,7% | 56 bps | 1,3% | 194 bps | 2,4% | 4,3% | (192 bps) |
| EBITDA Margin | 9,1% | 9,4% | (21 bps) | 8,7% | 42 bps | 9,0% | 10,6% | (162 bps) |
| EBITDA Margin - exc. one-off items | 9,1% | 8,1% | 108 bps | 8,6% | 58 bps | 8,9% | 10,1% | (125 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.
**Net income before minority
Deleveraging backed by cash generation
4Q22 Financial Results
Arcelik
Net Debt & Leverage
Debt Currency & Rates Breakdown
| Currency | Effective Interest Rate | Original Currency | TRY Equivalent | Share |
|---|---|---|---|---|
| p.a. | (mn) | (mn) | (%) | |
| TRY | 21.6% | 5.666 | 5.666 | 11,5% |
| EUR | 2,5% | 588 | 11.716 | 23,9% |
| USD | 7,6% | 54 | 1.009 | 2,1% |
| GBP | 5,3% | 7 | 161 | 0,3% |
| ZAR | 6,4% | 1.093 | 1.208 | 2,5% |
| AUD | 3,3% | 29 | 363 | 0,7% |
| PKR | 16,0% | 37.706 | 3.093 | 6,3% |
| BDT | 7,0% | 5.901 | 1.071 | 2,2% |
| RUB | 13,0% | 10 | 3 | 0,0% |
| RON | 7,1% | 141 | 566 | 1,2% |
| PLN | 7,8% | 138 | 588 | 1,2% |
| NOK | 3,9% | 26 | 49 | 0,1% |
| SEK | 1,0% | 95 | 170 | 0,3% |
| IDR | 8,4% | 90.872 | 109 | 0,2% |
| MYR | 6,0% | 32 | 136 | 0,3% |
| THB | 4,4% | 185 | 100 | 0,2% |
| TOTAL LOANS | 26.007 | 53,0% | ||
| USD | 5,0% | 506 | 9.463 | 19,3% |
| EUR | 3,0% | 356 | 7.098 | 14,5% |
| TRY | 22,6% | 6.496 | 6.496 | 13,2% |
| TOTAL BOND | 23.057 | 47,0% | ||
| TOTAL | 49.064 |
Cash Currency Breakdown
TRY24.5bn (EUR1.2bn)
Debt Currency Breakdown
TRY49.1bn (EUR2.5bn)
Debt Maturity Profile
TRY49.1bn (EUR2.5bn)
Strong focus on NWC/Sales improvement paid off posting significant amount of free cash flow in 4Q22
4Q22 Financial Results
Arcelik
EBITDA Margin
Working Capital/Sales
CAPEX/Sales
Free Cash Flow
Guidance
4Q22 Financial Results Arçelik
2022 Guidance 4Q22 Financial Results Arcelik
| Revenue | Actual | |
|---|---|---|
| Turkey (in TRY) | >70% growth | 96% growth |
| International (in FX) | >20% growth | 18% growth |
| Consolidated (in TRY) | >90% growth | 96% growth |
| EBITDA Margin | c.9.5% | 9.0% |
| WC/Sales | c.25% | 21.0% |
| CAPEX | c.260 mio EUR | c.220 mio EUR |
2023 Guidance 4Q22 Financial Results Arcelik
Revenue
- Turkey (in TRY) c.45% growth
- International (in FX) c.6% growth
- Consolidated (in TRY) c.45% growth
EBITDA Margin
c.10%
WC/Sales
23% - 25%
CAPEX
c.300 mio EUR
Q&A
4Q22 Financial Results
Arçelik
Appendix
4Q22 Financial Results
Arçelik
Margins by segments
4Q22 Financial Results
Arcelik
Consolidated
White Goods
Consumer Electronics
Other
Close watch on FX risk, proactively taken actions
4Q22 Financial Results
Arçelik
- 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.
| TRYm | Before Hedge | Hedged Position | Net Position |
|---|---|---|---|
| EUR | (10,717) | 10,356 | (361) |
| USD | (2,826) | 3,306 | 480 |
| GBP | 1,045 | (1,255) | (209) |
| Other | (751) | 379 | (372) |
| TOTAL | (13,248) | 12,785 | (463) |
| Net FX Position / Equity | (1.7%) |
- 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 4Q22 Financial Results Arcelik
Özkan Çimen CFO (+90) 212 314 39 01
Mine Şule Yazgan Finance & Enterprise Risk Executive Director (+90) 212 314 30 60
Öktem Söylemez Investor Relations Lead (+90) 212 705 96 81
Investor Relations App
Available on the App Store GET IT ON Google Play
www.arcelikglobal.com [email protected]
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Disclaimer
4Q22 Financial Results
Arçelik
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! Arçelik
Koç