ARÇELİK A.Ş. — Interim / Quarterly Report 2020

Jan 25, 2021

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2020 Q4 Highlights

▪ Strong top line growth at 59%

• Strong demand continued in many markets

• High margins sustained as Q4 was the best quarter of 2020

• Positive performance in FCF (TRY 629 mn)

• Further improvement leads to historical lows in working capital and leverage

TRY13.3bn

Revenue 20.5%

NWC/Sales Ratio

14.5%

EBITDA Margin 0.95x

Leverage

• Strategic partnership with Hitachi Global Life Solutions

• Recognized as the Industry Leader by DJSI for the second year in a row

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

Industry Leader in DJSI Again !

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▪ Arçelik has once again been recognized as the Industry Leader by the DJSI.

▪ Arçelik is the only Turkish industrial company to be listed in DJSI in the Emerging Markets category for four consecutive years.

Total SAM ESG Score	Total SAM ESG Score	Total SAM ESG Score
Top 3 Ranking 2019 2020
Arçelik A.Ş	69	79
Competitor A	67	76
Competitor B	66	67

Arçelik A.Ş. - Dimensions 2019 2020	Arçelik A.Ş. - Dimensions 2019 2020	Arçelik A.Ş. - Dimensions 2019 2020
Total	69	79
Governance & Economic	68	74
Environmental	79	85
Social	62	83

Sensitivity: Public

Deal with Hitachi : Increasing Foothold in APAC

▪ Hitachi GLS will establish an SPV, which owns sales & production subsidiaries outside Japan.

Overview

▪ Arcelik agreed to pay USD 300 mn* for 60% stake of the SPV ▪ License agreement for Hitachi brand, outside Japan

▪ Increase Arçelik footprint in Asia

Rationale

▪ Synergy opportunities for both brands in the global appliance market ▪ Inorganic growth and better balance sheet metrics

Financing

▪ Arçelik will finance the transaction with cash in hand.

Conditions

▪ Subject to approval from regulatory authorities

Timetable

▪ Expected closing : April 2021

* The total consideration will be subject to adjustment according to the change in the net working capital and net debt level and the value corresponding to the minority share in the affiliated companies as of the closing date. Sensitivity: Public

SPV Operational Review

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▪ Production facilities located in China and Thailand

• China : Washing Machine

• Thailand : Refrigerator, washing machine, vacuum cleaner, pump, rice cooker, shower heater

▪ Cumulative production capacity of around 3 mln. units for WM and REFs

▪ Sales companies are located in Thailand, China, Hong Kong, Taiwan, Singapore, Malaysia, Indonesia, Vietnam, Myanmar and UAE.

▪ A workforce of around 3,800 employees

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2020 Q4 Key Factors Sales/Margins

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13,335
11,938
8,366
2019 Q4 2020 Q3 2020 Q4
34.6 35.9
31.2
2019 Q4 2020 Q3 2020 Q4
14.3
14.5
10.4
2019 Q4 2020 Q3 2020 Q4
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Revenue Strong demand in all key markets
Growth [+59%] TRY Depreciation (YoY)
Highest capacity utilization achieved for 2020 in Q4
Gross
Weaker USD against EUR and GBP
35.9%
Margin
Stable raw material price due to longer contracts
EBITDA
14.5% Higher OPEX/Sales ratio (QoQ)
Margin
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2020 Q4 Historically Low WC/Sales

Continuing Improvement in WC Management

• Continue focusing on SKU optimization and

inventory management

• Strong receivable collection performance in

domestic market

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30.3% 29.3% 28.0% 27.0% 20.5% Dec-16 Dec-17 Dec-18 Dec-19 Dec-20

Dec-16 Dec-17 Sensitivity: Public

2020 Q4 Strong Cash Generation

FCF Generation (TRYmn)

L12M FCF Yield:%20*

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1,859 1,877
767
629
495
4Q19 1Q20 2Q20 3Q20 4Q20
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• Strong Focus on FCF Generation

• • Despite seasonally high CAPEX, FCF generation remained strong

• Capacity investments to catch-up with demand rebound

• Continuing improvement in WCR

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Sensitivity: Public * As of January 22, 2021

2020 Q4 Strong Balance Sheet

Net Leverage

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3.1
2.4 2.4
1.0
Jun '18 Sep '18 Dec '18 Mar '19 Jun '19 Sep '19 Dec '19 Mar'20 Jun '20 Sep'20 Dec' 20
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Great Flexibility and Strong Balance Sheet

• Around 60% of total financial debt is due in 2021

• Huge cash of TRY 12 billion in hand

• Net Leverage of ~1.0x gives flexibility in capital

Bond Roll-overs in 2021

Currency TRY	Amount	Maturity
	500	Feb' 21
TRY	500	Jul' 21
EUR	350	Sep' 21

allocation

• Eurobond Roll-over options include: Investment

loan, a normal issuance or a green bond (or a combination of several options)

• Comfortable in terms of timing and acces to

liquidity

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2020 Q4 Raw Material Trends

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Metal Prices Index Quarterly Average - Market
100
80
60
40
4Q Average Metals Price Index (Market)
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20
83 82 79 77 77 72 77 90
Plastic Prices Index Quarterly Average - Market
140
120
100
80
60
4Q Average Plastics Price Index (Market)
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20
105 110 104 101 100 89 97 109
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 Oct-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 Oct-20
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Source: Steel BB, Steel Orbis, ICIS - Chemical Industry News & Chemical Market Intelligence

Info-Text

Limited Cost Pressure in Q4

• Market prices increased by 20-25% during the quarter (3Q20-end vs. 4Q20-end)

• Thanks to previously secured contracts, Arcelik’s procurement cost did not change dramatically

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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 Q4 Turkish Market

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MDA-6 Air-Conditioner TV
+26% -3% +1%
Market
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Turkish MDA6 Market YoY Change

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58%
30% 30%
21% 21% 20%
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 4Q20. TV market reflects the data of a retail panel market for October-November 2020 (December figures are not released yet).

2020 Q4 Rates and Demand

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2020 – Post COVID-19
2017 – SCT Incentive
Increasing Rates High Growth
Stable Rates High Growth
40,00
50%
35,00
30%
30,00
25,00
10%
20,00
-10%
15,00
-30%
10,00
5,00 -50%
Avg Rate on Consumer Loans Industry Growth
Interest Rate
MDA-6 Growth
Jan-15 Apr-15 Jul-15 Oct-15 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 Oct-20 Jan-21
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Limited correlation between interest rates and demand

• 10ppt hike in consumer loan rates only increases the monthly payment of the customer by ~TRY20*

• Indirect impact through higher liquidity

• Consumer confidence, consumer expectations and government incentives are main factors in replacement demand

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* Assuming an average retail price of ~TRY3,000 and 12 month installments Source: CBRT Sensitivity: Public

2020 Q4 European Market

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45
35
25
15
5
-5
-15
-25
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Stronger demand sustained

• Substantial growth during the quarter

• Black Friday shifted to December in some

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45
40
35
30
25
20
15
10
5
0
Poland Romania Russia Poland Romania Russia Poland Romania Russia
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countries, resulting in a very strong year-end

• Both East and West Europe closed 2020 with a YoY growth despite lockdowns in 2Q20

October November December

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2020 Q4 Arçelik Performance in International

52%

Europe

7% Africa

9% Asia-Pacific

• Double digit revenue growth in Spain, Italy , UK, with negative performance only from France

• Highest sales for 2020 was achieved in Q4 for Defy as topline was up by 12% in local currency

• Very strong demand in Q4 with sales up by 48% in Pakistan, bringing YTD decline to below 20% in local currency

• All major countries in E. Europe, recording double-digit topline growth

• Profitability supported by strong EUR, GBP and weak TRY

• Despite the worst quarter in Defy history (sales down 45% in Q2), yearly sales were almost in line with 2019.

• Annual profit margins improved for Defy thanks to tight expense control, price adjustments and lower interest rates

• Thanks to strong business results in Q4 (sales up almost 29%), the year was almost flat for Singer Bangladesh, despite almost 2-month lockdown in Q2

• ASEAN revenue realized at USD27 mn

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~15-20%
~5-10%
East Europe West Europe
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Arcelik Regional Sales Growth (YoY % in EUR)

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~15-20%
APAC
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4-5%
S. Africa & Sub Sahara
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Sales Performance

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2020 Q4

2020 Q4 Sales by Region

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2.5% [2.7%1.9%][4.6%]
+59%
4.2%
6.7% 29.9%
2.4%
7.2% 29.2%
13,335 2.4%
2019 Q4
16.3%
17.2%
8,366
+58% 9,350
36.6%
5,927
34.6%
3,985
2,439 +63%
2020
2019 Q4 2020 Q4
3.0% [4.4%]
+28% 2.5%2.7%
4.7%
5.5%
3.8%
34.5%
40,872
6.6% 32.3%
2.7%
31,942 2019
15.6%
15.2%
+24% 26,770
21,616 32.0%
31.7%
14,103
10,326 +37%
Turkey Western Europe CIS&Eastern Europe Africa Middle East Pakistan Bangladesh Other
2019 2020
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Turkey International

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2020 Q4 Sales Bridge

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16,000
14,000 13,335
2647
12,000
776
10,000 1545
8,366
9,350
8,000
6,000
5,927
4,000
2,000 3,985
2,439
-
TL mn 2019 Q4 TR - Organic INT - Organic INT - FX Impact 2020 Q4
Turkey International Revenue Impact
2020 Q4 Organic Currency Effect TOTAL
Domestic Growth 63.3% 0.0% 63.3%
International Growth 13.1% 44.7% 57.8%
Total Growth 27.7% 31.6% 59.4%
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Financial Performance

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2020 Q4 Income Statement

					Δ%
TL mn	2020 Q4	2019 Q4	**2020 Q3 **	Δ% YoY	QoQ	**2020 9M **	**2019 9M **	Δ% YoY
Revenue	13,335	8,366	11,938	59	12	40,872	31,942	28
Gross Profit	4,786	2,607	4,132	84	16	13,806	10,215	35
margin	35.9	31.2	34.6			33.8	32.0
EBIT *	1,607	593	1,368	171	17	4,135	2,296	80
margin	12.0	7.1	11.5			10.1	7.2
Profit Before Tax	1,379	282	1,285	389	7	3,498	1,114	214
margin	10.3	3.4	10.8			8.6	3.5
Net Income**	1,163	240	1,041	385	12	2,848	925	208
margin	8.7	2.9	8.7			7.0	2.9
EBITDA*	1,932	872	1,713	122	13	5,357	3,351	60
margin	14.5	10.4	14.3			13.1	10.5
EBITDA -ex.one-offs	1,932	872	1,713	122	13	5,073	3,351	51
margin	14.5	10.4	14.3			12.4	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 Q4 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 5,342 11,540 2.00
4,225 6,478 5,788 5,482 6,937 7,827 9,253 12,002
1.24 0.95
-2,000 -4,687 -5,517 -5,602 -5,596 -5,772 -6,152 -6,210 -5,781 1.00
-9,606 -10,231
-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
-6,844
-17,000 -2.00
18 Q3 18 Q4 19 Q1 19 Q2 19 Q3 19 Q4 20 Q1 20 Q2 20 Q3 20 Q4
Cash and cash equivalent Short term debt Long term debt Net Debt/EBITDA
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Cash Breakdown by Currency

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12%
4%
39%
6%
12%
26%
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Financial Debt profile (as of Dec 31 2020)

		Effective	mn Original	TL mn
		Interest Rate p.a. (%)	Currency	Equivalent
	TRY	11.9%	4,764	4,764
	EUR	0.9%	211	1,896
	GBP	0.6%	5	52
	USD	2.1%	23	170
	ZAR	5.1%	900	453
	AUD	3.3%	13	74
	RUB	2.0%	111	11
	PKR	7.8%	13,963	635
	BDT	7.0%	2,054	179
	Total			8,233
	USD	5.1%	506	3,712
	EUR	4.0%	354	3,187
	TRY*	19.1%	1,026	1,026
	Total Bond			7,925
Sensitivity: Public Total *Average fixed rate at 19.1% through Interest Rate Swaps				16,158

USD EUR TRY GBP RUB Other

Debt Maturity Profile

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2023+ Eurobond (20%)
4% TRY Loans (20%)
TRY Bond (6%)
2023
27%
2021
62%
2022
7%
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2020 12M Cash Flow

2020 12M

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2019 12M
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2021 Guidance

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2020 Guidance

Guidance Realized Turkey (in TRY) 25-30% growth ✓✓ 37% growth Arçelik International (in FX) < 5% decline ✓ 2% decline Revenue Consolidated Total (in TRY) 20-25% growth ✓✓ 28% growth Profitability EBITDA Margin >11.5% ✓ 13.1% < 27% ✓ 20,5% Working Capital/Sales CAPEX Around EUR 180 mio. x c. EUR 215 mio.

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2021 Guidance

Turkey (in TRY)

15-20% growth

Arçelik Revenue

International (in FX) >5% growth Consolidated Total (in TRY) c.20% growth

Profitability EBITDA Margin Working Capital/Sales

c.11.0%

c.25%

c.220 mio.

CAPEX

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APPENDIX: Other Financial Statements

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2020 Q4 Margin by Segments

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Consolidated
13,335 37.0
13,000
12,000 11,938 35.9 35.0
34.6 33.0
11,000 31.2
31.0
10,000
29.0
9,000
8,366
27.0
8,000
7,000 25.0
6,000 23.0
5,000 21.0
2019 Q4 2020 Q3 2020 Q4
Revenue Gross Margin (%)
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Consumer Electronics
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White Goods

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Consumer Electronics Other
40.01,500 1,455 24.0 1,500 34.0
1,413
1,391
1,300 1,166 23.0 22.0 1,400 32.0
38.0 22.5 32.8
1,100 967 20.0 1,300 30.0
21.2 28.2
36.0 900 18.0 1,200 29.0 28.0
1,100
34.0 700 16.0 26.0
1,000 940
500 14.0 24.0
900
32.0
300 12.0 800 22.0
30.0 100 10.0 700 20.0
2019 Q4 2020 Q3 2020 Q4 2019 Q4 2020 Q3 2020 Q4
Revenue Gross Margin (%) Revenue Gross Margin (%)
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11,500
10,488
10,500
38.0
9,359
9,500 38.1
8,500 37.2 36.0
7,500 34.0
6,460
6,500
32.8 32.0
5,500
4,500 30.0
2019 Q4 2020 Q3 2020 Q4
Revenue Gross Margin (%)
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2020 Q4 Working Capital

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6,839 7,096 8,375
8,620
1,722
1,890
12,111 12,149
9,645
8,822
2020 9M 2020 12M
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%
20.5%
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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 Dec-20

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2020 Q4 FX Hedging

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400 3.9% 6.0%
4.0%
200
2.0%
0
0.0%
-200 0.4% 0.7%
-0.5%
-2.0%
-1.1% -1.2% -1.2% -1.2%
-400
-2.5% [-2.1%-2.0%] -3.6%
-2.9% [-2.4%] -3.2% -4.0%
-3.7%
-4.1% -5.1% -4.1%
-600
-6.0%
-5.7%
-800 -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 20 Q4
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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 -15 14 -2 USD 10 -18 -8 GBP 11 -11 0 Other 1,347 -1,907 -560
TOTAL 1,353 -1,923	-570
-4.1% 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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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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