Arçelik
2016 12-Month Financial Results
2
• Strong sales in domestic MDA market both in sell-in and sell-out
• Slowing growth in European MDA market at retail level
• First signs of growth in S. African market in comparison with the same period of 2015
• Negative impact of increasing steel and panel prices on gross and EBITDA margin
• Finalization of the acquisition process of Dawlance, the leading appliance company in Pakistan
• Decreasing cash and increasing leverage following the acquisition
• Spinning off Turkish operations under the roof of Arçelik Marketing Company (December 30)
• Hitting the target of working capital over sales ratio
• Depreciation of TRY
• Strenghtening USD in global markets
•
2016 Q4 Key Developments
3
Key factors impacting revenues
2016 Q4 Sales Performance
Turkish
Market
International
Growth
Strong sales in domestic MDA market both in sell-in (+11% in Q4) and
sell-out (+7% in Q4)
Slowing end-consumer demand in West Europe, around 20% unit
market shrinkage in December in the UK
POS Cash RegisterNegative effect of the deadline extension for merchants with turnover up
to 150 K TL until the end of 2017 (Sales value down 30% in Q4)
FX Impact Depreciating TRY against EUR and GBP
Consolidation of
Dawlance
Despite the fact that Q4 is not a strong quarter (as majority of sales is in
refrigeration), consolidation of Dawlance has positively affected quarter
sales by 2%
4
2016 Q4 Margins
Key factors impacting margins
FX Impact
• Negative impact of USD and EUR based raw material prices,
following TRY devaluation
• Devaluation of EUR and GBP against USD
• Devaluation in EGP
POS Cash RegisterService fee of almost 400.000 units of POS cash registers on the
field, contributing to the topline and more to the profit
Sales & Marketing
Expenses
Though still higher compared to 2016 Q3, decreasing share of
sales & marketing expenses compared to the same period of 2015
Project ExpensesCosts related with getting the consent of bond-holders within the
process of partial spin-off of Turkish operations, and with Dawlance
acquisition (TRY 22 million)
Raw Material Costs Increasing sheet metal and large size panel prices
5
• Growth in MDA and air conditioner markets
- Despite flat sales in Q3, a yearly unit growth of %5,4 in MDA market
- Thanks to the high performance in first half, a growing A/C market around 9%
• Shrinking TV market (around 7%), where chains and import brands selling through
these chains lost power.
2016 12-Month Market Performance - Turkey
Market
Arçelik A.Ş.
• Above market-average growth in all major product groups (MDA, TV, A/C)
- Outperforming unit growth (~%6) in MDA market
- Highest unit market share gain in TV market (Unit market share above 28%)
- Above 20% increase in unit sales for A/C
- POS cash register sales increasing 6% in unit terms, compared to 2015
* MDA and A/C figures are based on BESD data. The data for TV is based on retail panel.
* Based on company sell-in unit sales.
6
2016 12-Month Market Performance - International
Market
Arçelik A.Ş.
• Despite the slowdown in second half, a cumulative unit growth of 3,5% in Europe
(West Europe: 3,2% – East Europe: %4,8)
- UK has recorded the highest unit growth in West Europe despite the slowdown in Q4
- Around 25% unit growth in Romania, supported by the VAT incentive
- Positive growth in Russia and Ukraine, which were negative in 2015
• A decreasing S. African market (down 5%) in 2016, following the 2% decline in 2015
• Arçelik Group continuing to strenghten its position in international markets
- Beko continues to lead the European MDA free-standing segment
- Beko is among the the Top 3 Winners in terms of market share gain in built-in segment
Around 10% increase in built-in sales, Beko becomes the leader in B/I in the UK
- Around 50% increase in Grundig MDA sales, targeting the premium segment
- Undisputed market leading positions with local brands such as Defy and Arctic
- Thai refrigerator plant, which became operational in 2016 Q1, reached a production
volume around 100.000 units
7
Market Unit Growth in Europe
(MDA 6)
Beko Unit Market Share in Europe (%)
(MDA 6)
2016 12-Month Market Figures
Turkish MDA6 Total Market – Monthly Sell-in Figures
(MDA 6)
Turkish Market by Product Group
(MDA6)
0
1
2
3
4
5
6
7
8
9
10
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
%
Total Free-standing Built-in
-10% -5% 0% 5% 10% 15% 20% 25%
S. Africa
UkraineRussia
RomaniaPoland
E. Europe
UKSpain
ItalyGermany
FranceW. Europe
January-December 2016
000 Units 12M 2016 12M 2015 Change
Refrigerator 2.040 1.976 3%
Freezer 648 571 14%
Washing M. 2.122 2.026 5%
Dryer 93 82 13%
Dishwasher 1.573 1.483 6%
Cooker 995 951 5%
Total 7.470 7.090 5%
11%
17%
9%
-2%
3%5%
-7%
7%
0% 0%
20%
15%
-10%
-5%
0%
5%
10%
15%
20%
25%
0,0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
14 15 16 YoY
mn unitsmn unitsmn unitsmn units
8
Trends in Parity and Raw Material Index
EUR/USD Development Raw material Market Price Index*
* Raw material price index for appliances category
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
1,6
20
13
Q1
20
13
Q2
20
13
Q3
20
13
Q4
20
14
Q1
20
14
Q2
20
14
Q3
20
14
Q4
20
15
Q1
20
15
Q2
20
15
Q3
20
15
Q4
20
16
Q1
20
16
Q2
20
16
Q3
20
16
Q4
Annual Average EUR/USD
60
65
70
75
80
85
90
95
100
105
Jan-1
3
Mar-
13
May-1
3
Jul-13
Sep-1
3
Nov-1
3
Jan-1
4
Mar-
14
May-1
4
Jul-14
Sep-1
4
Nov-1
4
Jan-1
5
Mar-
15
May-1
5
Jul-15
Sep-1
5
Nov-1
5
Jan-1
6
Mar-
16
May-1
6
Jul-16
Sep-1
6
Nov-1
6
Annual average RM price index (market)
9
• All closing conditions has been satisfied regarding the acquisition of production and sales companies
operating in Pakistan under Dawlance brand and the share transfer has been completed on
November 2, 2016.
• Following regulatory approvals and upon final General Assembly approval, a new company named
"Arçelik Pazarlama A.Ş” has been established to manage domestic operations with lean and focused
management strategies in line with Group’s international operations.
• JV Agreement with LG was renewed to be effective until end-2023. In addition to existing product
portfolio, Arcelik-LG will produce commercial air conditioning products.
• At Turkish Innovation Week which was held by the Turkish Exporters Assembly in December 2016 ,
Arçelik A.Ş. was granted "R&D Leadership" award.
• Arçelik has been awarded the title of most popular brand in Turkey in the white goods category
based on the results of the research "Turkey's Lovemarks".
2016 Q4 Other Developments:
10
Sales Performance
11
Sales by Region
TL mn 2016 Q4 2015 Q4 2016 Q3
Δ%
YoY
Δ%
QoQ 2016 2015
Δ%
YoY
Total Revenue 4.526 4.067 4.083 11 11 16.096 14.166 14
Turkey 1.600 1.533 1.669 4 -4 6.449 5.724 13
International 2.926 2.534 2.414 15 21 9.647 8.442 14
40,4%
32,8%
12,5%
7,4%3,3% 3,5%
40,1%
31,6%
13,0%
6,9%3,3%
5,1%
Turkey Western Europe CIS&EasternEurope
Africa Middle East Other
2015 12M 2016 12M
37,7%35,0%
13,2%
7,3%
3,0% 3,8%
35,4%32,8%
13,9%
8,2%
3,3%6,6%
Turkey Western Europe CIS&EasternEurope
Africa Middle East Other
2015 Q4 2016 Q4
12
Sales Bridge
2016 12M Organic Currency Effect Acquisition TOTAL
Domestic Growth 12,7% - - 12,7%
International Growth 6,5% 6,7% 1,1% 14,3%
Total Growth 9,0% 4,0% 0,6% 13,6%
5.724
16.007
6.449
8.442
-
9.647
725551
566 89
-
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
18.000
2015 12M TR - Organic INT - Organic INT - FX Impact Acquisition 2016 12M
Impact on Rev
International
Turkey
TL mn
13
Financial Performance
14
* 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
Income Statement
TL mn 2016 Q4 2015 Q4 2016 Q3
Δ%
YoY
Δ%
QoQ 2016 2015
Δ%
YoY
Revenue 4.526 4.067 4.083 11 11 16.096 14.166 14
Gross Profit 1.432 1.322 1.361 8 5 5.340 4.536 18
margin 31,6 32,5 33,3 33,2 32,0
EBIT * 301 371 375 -19 -20 1.331 1.157 15
margin 6,7 9,1 9,2 8,3 8,2
Profit Before Tax 108 243 283 -55 -62 1.202 785 53
margin 2,4 6,0 6,9 7,5 5,5
Net Income** 230 212 264 9 -13 1.304 893 46
margin 5,1 5,2 6,5 8,1 6,3
EBITDA* 423 465 484 -9 -13 1.769 1.527 16
margin 9,3 11,4 11,9 11,0 10,8
15
Revenue and Gross Profit by Segment
TL mn 2016 Q4 2015 Q4 2016 Q3
Δ%
YoY
Δ%
QoQ 2016 2015
Δ%
YoY
Consolidated
Revenue 4.526 4.067 4.083 11 11 16.096 14.166 14
Gross Profit 1.432 1.322 1.361 8 5 5.340 4.536 18
Gross Profit % 31,6 32,5 33,3 33,2 32,0
White Goods
Revenue 3.368 2.915 3.130 16 8 11.707 10.299 14
Gross Profit 1.099 1.024 1.079 7 2 4.138 3.578 16
Gross Profit % 32,6 35,1 34,5 35,3 34,7
Consumer Electronics
Revenue 634 649 528 -2 20 2.266 1.966 15
Gross Profit 191 157 151 22 26 633 433 46
Gross Profit % 30,2 24,2 28,7 27,9 22,0
Other
Revenue 525 503 426 4 23 2.123 1.901 12
Gross Profit 141 142 130 0 8 568 524 8
Gross Profit % 27,0 28,2 30,6 26,8 27,6
16
Balance Sheet
TL mn 31.12.2016 31.12.2015 31.12.2016 31.12.2015
Current Assets 10.986 9.406 Current Liabilities 6.606 5.236
Cash and Cash Equivalents 2.442 2.168 ST Bank Borrowings 2.251 2.185
Trade Receivables 5.295 4.791 Trade Payables 3.086 2.090
Inventories 2.762 2.140 Provisions 412 335
Other 487 308 Other 857 627
Non-current Assets 5.924 4.332 Non-current Liabilities 4.299 3.826
Property, Plant and Equipment 2.750 2.056 LT Bank Borrowings 3.407 3.269
Intangible Assets 2.304 1.171 Other 892 557
Financial Investments 239 749
Other 630 357 Equity 6.005 4.676
Total Assets 16.909 13.739 Total Liabilities 16.909 13.739
31.12.2016 31.12.2015 31.12.2014 31.12.2013
Net Financial Debt/Equity 0,54 0,70 0,72 0,72
Total Liabilities/Total Assets 0,64 0,66 0,65 0,64
17
Working Capital / Sales
Working Capital
TL mn FX Basis TL Basis 31.12.2016 FX Basis TL Basis Total
ST Trade Rec. 2.381 2.914 5.295 ST Trade Payables 1.402 1.684 3.086
Other Receivables 48 58 106 Other Payables 313 44 358
Inventory 1.649 1.113 2.762 Working Capital 2.363 2.357 4.719
TL mn FX Basis TL Basis 31.12.2015 FX Basis TL Basis Total
ST Trade Rec. 2.038 2.753 4.791 ST Trade Payables 798 1.292 2.090
Other Receivables 29 33 62 Other Payables 248 44 292
Inventory 1.035 1.105 2.140 Working Capital 2.057 2.554 4.611
33,3% 38,9% 39,2% 39,1% 38,7% 36,2% 37,2% 39,3%41,8%
32,5%30,9% 30,3% 30,8% 29,3%
Dec-12 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16
18
Debt maturity profile
Debt Profile
416 905 1.317 1.174 1.741 1.267 1.621 2.168 2.491 2.467 2.722 2.442
-1.915 -1.924-839
-1.629 -2.144 -1.673 -1.803 -2.185 -2.508 -2.078 -2.370 -2.251
-1.577
-188-1.218
-1.528-1.859 -2.581
-2.965-3.269 -3.084
-3.078 -2.843 -3.407
-7.000
-6.000
-5.000
-4.000
-3.000
-2.000
-1.000
0
1.000
2.000
3.000
4.000
2008 2009 2010 2011 2012 2013 2014 2015 16 Q1 16 Q2 16 Q3 16 Q4
Cash and cash equivalent Short term debt Long term debt
TL mn
3.076
1.207
740
1.983
2.263
2.9883.146
3.2863.100
2.6892.491
3.216
5,1
1,30,9
2,3 2,22,6
2,3 2,21,8
1,5 1,4
1,8
0
1
2
3
4
5
6
0
500
1.000
1.500
2.000
2.500
3.000
3.500
2008 2009 2010 2011 2012 2013 2014 2015 16Q1 16Q2 16Q3 16Q4
Net Debt (TL mn) Net Debt/EBITDA
Debt profile (as of Dec 31 2016)
Effective mn Original TL mn
Interest Rate p.a. (%) Currency Equivalent
TRY 10,7% 1.540 1.540
EUR 1,7% 151 559
ZAR 9,9% 750 193
RUB 8,9% 475 27
CNY 4,4% 110 55
GBP 1,0% 5 23
USD 1,4% 0 2
PKR 6,3% 5.432 182
Total Bank Borrowings 2.581
USD 5,1% 504 1.773
EUR 4,0% 352 1.304
Total Eurobond 3.077
Total 5.658
201740%
20185%
2019-201%
202123%
202331%
19
Cash Flow
TL mn 2016 12M 2015 12M
Beginning Balance 2.166 1.621
Net Operational Cash Flow 2.067 1.723
CapEx -831 -640
Acquisition of subsidiary -746 -1
Acquisition of minority interest 0 -282
Fixed Asset Sales 7 19
Financial Asset Sales 559 0
Dividend Paid -262 -350
Dividends Received 13 24
Changes in Bank Borrowings -440 230
Other Financial & Investing Activites -409 -330
Differences due to FX Conversion 317 153
Changes in Cash 275 546
Ending Balance 2.442 2.166
20
2017 Expectations
21
Market Share
White goods market volume growth
Revenue Growth
EBITDA Margin (2017)**
Long-TermEBITDA margin**
Stable or higher market share in key regions
Turkey* : c.3%
International : c.2%
>20% in TRY
c.11%
c.11%
*6 main products, in compliance with WGMA data.
**EBITDA margin calculations are inline with the methodology used in calculation of historical values
2017 Expectations
22
Polat Şen
CFO
Tel: (+90 212) 314 34 34
www.arcelikas.com
Contacts for Investor Relations
Hande Sarıdal
Finance Director
Tel: (+90 212) 314 31 85
Orkun İnanbil
Investor Relations Manager
Tel: (+90 212) 314 31 14
23
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.
Disclaimer