Arcelik A.s. · BIST:ARCLK
Arcelik A.s — Investor Presentation (December 2023)
60 slides from Arcelik A.s's investor presentation, December 2023
Slide 1: Investor Presentation December 2023
Investor Presentation December, 2023 Sensitivity: Public
Slide 2: Agenda
AGENDA Overview of 3Q23 Guidance Arçelik Highlights (pg. 46-48) (pg. 3-8) (pg. 25-33) Investment Sustainability Appendix Highlights (pg. 34-45) (pg. 49-59) (pg. 9-24) Investor Presentation Sensitivity: Public
Slide 3: Overview of Arçelik
Overview of Arçelik Investor Presentation Sensitivity: Public
Slide 4: Koç Holding: strong, stable & supportive parent
Koç Holding: strong, stable & supportive parent Overview of Arçelik Turkey’s Leading Investment Holding Company Strategic Overview ▪ Turkey’s largest industrial and services group Energy Automotive Consumer Durables Finance Other Main Companies ▪ Sustainability oriented business model focusing on pr
Slide 5: A leading global household appliances company
A leading global household appliances company with… Overview of Arçelik 31 82 14* c.45k +150 30 +2,300 c.3,000 Production Subsidiaries Brands Employees Countries R&D and Design Engineers & Patent plants worldwide we serve Centres Researchers Application in R&D Centres Strong Ownership Structure Dive
Slide 6: Such a great history..
Such a great history.. Overview of Arçelik • Acquisition of Defy in South Africa (2011) • Groundbreaking of Thailand • Establishing a new JV with Refrigerator Plant (2015) Hitachi* • Beko starts marketing & sales • Listed under BIST Sustainability • Acquisition of Whirlpool Turkey operations Index P
Slide 7: Far reaching operational network
Far reaching operational network Overview of Arçelik Washing Refrigerator Dishwasher Dryer Cooking A/C* TV SDA Machine Turkey ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Romania ✓ ✓ S.Africa ✓ ✓ ✓ ✓ Pakistan ✓ ✓ ✓ ✓ ✓ Russia ✓ ✓ Thailand ✓ ✓ ✓ Bangladesh ✓ ✓ ✓ ✓ India** ✓ ✓ China ✓ R&D Centres & Offices Partners Production Pla
Slide 8: Strategy – focus on where to play
Strategy – focus on where to play to ensure Overview of Arçelik long-term sustainable and profitable growth Where we Expanding our boundaries Expanding our boundaries Building a new engine of Reinforcing our core will play (geographies) (products) growth • Continue to strengthen our leading • Increa
Slide 9: Investment Highlights
Investment Highlights Investor Presentation Sensitivity: Public
Slide 10: Key investment highlights
Key investment highlights Investment Highlights • Leading producer of white goods in Turkey Leading positions in • Beko is one of the top three largest brand in the European market and market leader in the U.K. (up from 7th position in 2004) key markets • One of the three largest market share in the
Slide 11: Leading position in key markets – dealer & after-sales network
Leading position in key markets – strong dealer & after - sales Investment Highlights network and brand image provide continuous leadership in Turkey Exclusive Dealer After-Sales Stong Brand Network Services Recognition • Around 3,000 exclusive dealers in Turkey for • Widest after-sales network in T
Slide 12: Leading position in key markets – Europe and emerging markets
Leading position in key markets – solid presence in Europe & Investment Highlights leading positions in emerging markets with key brands Beko Market Unit Share (EU24) 10% ✓ Maintained 1st position in the U.K. 8% 6% ✓ Among top three brands in major countries in Europe including Austria, Belgium, 4%
Slide 13: Diversification – operating in more diversified regions
Diversification – operating in a Investment Highlights more diversified regions EXPANDING PRODUCTION BASE THROUGH INCREASING EMERGING MARKET EXPOSURE THROUGH • Acquisitions • Acquisitions • Greenfield investments • Opening of new sales offices 2010 Production Base 2022 2010 Revenue Breakdown 2022 2%
Slide 14: Diversification – a wide product range
Diversification – a wide product range Investment Highlights with the leading brands PRODUCT PORTFOLIO BRAND PORTFOLIO Built-in & Freestanding Consumer Major Appliances Electronics • Refrigerators • TV’s • Freezers • Smart Phone’s • Washing Machines • Notebook’s & Tablets • Dryers • POS Cash Registe
Slide 15: Diversification – strong ratings above Türkiye sovereign
Diversification – strong ratings, above Türkiye sovereign Investment Highlights Diversification of Arcelik recognised by S&P and Fitch Standard & Poor's Fitch BB BB- Three notches above Turkey Sovereign Two notches above Turkey Sovereign BBB BBB Stable Negative Negative BBB- BBB- Stable Stable Stabl
Slide 16: Proven track record of inorganic growth
Proven track record of inorganic growth – geographical Investment Highlights expansion backed by smart strategy ASEAN Pakistan • Thailand greenfield investment for leveraging Beko brand • Acquired Dawlance, the leading home appliances brand in and its European positioning across the region Pakistan,
Slide 17: Cost competitiveness
Cost competitiveness – providing Arcelik to Investment Highlights achieve higher quality with lower costs Low Cost Base Most labour intensive functions including HQ, R&D and production plants located in low cost countries. Economies of Scale Huge production capacity in Turkey, Romania. High capacity
Slide 18: Financial strength – solid revenue growth
Financial strength – solid revenue growth with Investment Highlights sustainable margins throughout the years SOLID REVENUE GROWTH THROUGH SUSTAINABLE PROFITABILITY THROUGH • Organic growth • Global sourcing power • Inorganic growth • Strict cost management • Strategic pricing initiatives • Operatio
Slide 19: Financial strength – working capital efficiency
Financial strength – working capital efficiency has Investment Highlights been structured through years of continuous focus EFFECTIVE WC MANAGEMENT THROUGH ‘10-’15 Avg. • Reducing receivable days 35.7% • Extending payable days ‘16-’22 Avg. 26.1% • Healthy levels of inventory 40,0% 38,9% 36,2% 33,0%
Slide 20: Financial strength – robust profitability and free cash flow
Financial strength – robust profitability leading to Investment Highlights strong free cash flow FCF (TRYmn) FCF CREATION THROUGH 4.859 6.421 • Strong profitability 5.096 • Controlled NWC 1.837 3.175 1.101 1.243 2.067 649 1.723 1.681 845 675 554 1.003 204 384 590 (196) (86) (352) (471) (124) (508) (
Slide 21: Financial strength – strong balance sheet management
Financial strength – strong balance sheet management Investment Highlights led healthy leverage despite acquisitions & share buyback 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
Slide 22: Leading R&D capabilities
Leading R&D capabilities - we integrate rapidly Investment Highlights developing technologies into our business model Romania 30 >2,300 2 R&D Centres Researchers +2.3k United 30 Kingdom 1 +0.8k Russia 7 2 Turkey Pakistan 2010 2023 2010 2023 3 15 Taiwan 1 >3,000 India China Thailand 1 2 2 Patent Sout
Slide 23: R&D Strategies
R&D Strategies Investment Highlights Sustainable Smart Global and Digital Wellness @ Home Spaces R&D Energy Efficiency & Management Air filtration and Indoor Air Quality Talent Development Autonomous Products Water Filtration Technologies and Global Collaborations Frontier Technologies for Applicati
Slide 24: Innovation Ecosystem
Innovation Ecosystem Investment Highlights Garage Innovation Hub University Collaborations WE-inTech Program Atölye Garage Innovation Hub is the Innovation department of We collaborate with universities on graduation thesis. In WE-inTech aims to create an environment where future Arçelik acts as a b
Slide 25: 3Q23 Highlights
3Q23 Highlights Investor Presentation Sensitivity: Public
Slide 26: 3Q23 Highlights
3Q23 Solid revenue growth momentum and annual margin improvement at all lines maintained.. HIGHLIGHTS TRY58.2bn Consolidated revenue growth of 70% y/y driven by continued strong unit growth in Türkiye, strategic pricing initiatives and TRY depreciation. Revenue Wholesale & retail demand in Türkiye r
Slide 27: Key Factors Sales / Margins
Key Factors Sales / Margins 3Q23 Highlights REVENUE GROWTH GROSS MARGIN EBITDA MARGIN 70% 32.8% 10.6% Strong unit growth in Türkiye Lower raw material costs on both q/q & y/y Better gross profitability on both q/q & y/y TRY depreciation on both q/q & y/y Favorable EURUSD parity on y/y Increased OPEX
Slide 28: Steady growth in revenue gained momentum in Türkiye
Steady growth in revenue gained momentum in Türkiye 3Q23 Highlights thanks to ongoing robust demand and strategic pricing efforts MDA6* Türkiye Revenue Growth ARÇELİK y/y growth (%) TÜRKİYE y/y growth (%) 121% 30% 30% 22% 2% Unit growth in MDA6 (0%) 22,403 Unit growth in A/C 18,398 Unit growth in TV
Slide 29: Demand in Western Europe continued to decline
Demand in Western Europe continued to decline but at a slower rate 3Q23 Highlights whereas it showed signs of improvement in Eastern Europe 23% 16% Share in total Western Europe Eastern Europe Share in total revenue revenue y/y market growth in unit terms MDA6 Market MDA6 Market y/y market growth in
Slide 30: Demand in key geographies remained weak
Demand in key geographies remained to be weak 3Q23 Highlights 9% 12% Share in total Africa & Middle East Asia-Pacific Share in total revenue revenue • Revenues generated from Africa & Middle East increased by c.7% • Revenues from APAC were down by c.31% in EUR terms in 3Q23 y/y in 3Q23 in EUR terms,
Slide 31: Summary financials
Summary financials 3Q23 Highlights TRYmn 3Q23 3Q22 y/y 2Q23 q/q 9M23 9M22 y/y Revenue 58.218 34.255 70% 46.948 24% 145.057 94.724 53% Gross Profit 19.077 9.861 93% 14.998 27% 46.491 28.116 65% EBIT 4.844 2.100 131% 3.958 22% 11.495 6.013 91% EBIT - exc. one-off items 5.118 2.046 150% 3.958 29% 11.76
Slide 32: Leverage maintained at healthy levels
Leverage maintained at healthy levels 3Q23 Highlights Net Debt & Leverage Debt Currency & Rates Breakdown Currency Effective Interest Rate Original Currency TRY Equivalent p.a. (mn) (mn) TRY 29.4% 13,017 13,017 EUR 5.8% 1,262 36,627 2,70 70.000.000 USD 8.6% 116 3,183 2,45 GBP 7.0% 6 205 2,50 2,36 60
Slide 33: EBITDA margin expansion; FCF under pressure
EBITDA margin expansion thanks to improved cost environment 3Q23 Highlights FCF under pressure due to increased WC and higher CAPEX EBITDA Margin Working Capital/Sales 24,4% 23,4% 22,7% 21,0% 3Q22 3Q23 2022 1Q23 2Q23 3Q23 Non-cash GP Margin OPEX/Sales Items CAPEX/Sales Free Cash Flow 1,729 5.1% 4.0%
Slide 34: Sustainability
Sustainability Investor Presentation Sensitivity: Public
Slide 35: Sustainability as a business model
Sustainability as a business model Sustainability Reputation Stakeholders Sustainable Finance Competitive edge Empowering Responsible and Sustainable Innovations & Improving the lives of people Sustainability Leadership Sustainable Value Chain Product Range Sensitivity: Public 35 35
Slide 36: Sustainability Governance
Sustainability Governance Sustainability Board of KH Consumer Durables president is Directors responsible to report ESG issues to BoD Board Level Climate Risk Risk Committee Management Committee Sustainability Council Gathers quarterly (chaired by CFO) Human Rights Council Gathers quarterly (chaired
Slide 37: Sustainability as Performance
Sustainability as Performance Sustainability Sensitivity: Public 37 37
Slide 38: Sustainability as Performance
Sustainability as Performance Sustainability Sensitivity: Public 38 38
Slide 39: Net Zero Journey
Net Zero Journey Sustainability Energy efficiency Sustainable Innovation Net-zero and Compensation Sensitivity: Public 39
Slide 40: GHG Emissions in 2022
GHG Emissions in 2022 Sustainability TARGETS BY 2030 BY 2050 ↓ 30% ↓ 15% ↓ 90% Scope 1-2 Scope 3 To committed emissions Emissions to reaching net-zero (Use of sold emissions products) Total Scope 1&2&3 GHG Emissions from 2018 baseline from 2022 baseline 27,067,100 tonnes CO2e 2022: 28% 19% * Data co
Slide 41: 2030 targets to reduce environmental footprint
We have set all targets for 2030 Sustainability to reduce our environmental footprint 50 MW 45% 45% 99% 5% Establish Energy Water Waste Bio based renewable consumption withdrawal recovery material energy per product in per product in rate in content in systems manufacturing manufacturing manufacturi
Slide 42: 2030 targets for being a progressive global citizen
We have set our 2030 Targets Sustainability for being a progressive global citizen 35 hours 35% 32% ISO 50001 Training Ratio Ratio Ensure suppliers* hours per of women of women in top exceeding 500 employee in the total management ToE obtain the workforce positions ISO 50001 certificate 5000 100% 10
Slide 43: 2030 targets to respond to the needs of society
We have set all targets for 2030 Sustainability to respond to the needs of society 241.3M 265.3M 1,810 Tons Hero 15M People* People* Food Brands People*** Raise Raise Save Support the needs Raise awareness awareness food from of local awareness on healthy on food being wasted communities in on clima
Slide 44: Sustainability achievements
Sustainability achievements Sustainability Included since 2017 A- in Climate Change Global 100 Index, Top 300 Impact AAA on the In the FTSE4Good Bloomberg Gender and having 85/100 and A in Water 89th Companies, 16th Sustainability Index Emerging Market Equality (GEI), which is the highest Programs 2
Slide 45: Greenbond – May 2021 Use of Proceeds
As a financing tool with better terms Sustainability Greenbond – May 2021 Use of Proceeds • Energy Efficient Products EUR350mn EUR1.6bn • Eco-efficient and/or Circular Economy Adapted Products Amount Issued Demand • Energy Efficiency in Production 5 Years 145 • Green Buildings Maturity # of investor
Slide 46: Guidance
Guidance Investor Presentation Sensitivity: Public
Slide 47: 2022 Guidance
2022 Guidance Guidance 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 Sensitivity: Public 47
Slide 48: 2023 Guidance
2023 Guidance Guidance Revenue • Turkey (in TRY) c.75% growth • International (in FX) c. (-) 4% EBITDA Margin c.10.5% WC/Sales <25% CAPEX c.300 mio EUR Sensitivity: Public 48
Slide 49: Appendix
Appendix Investor Presentation Sensitivity: Public
Slide 50: Dividend policy
Dividend policy Appendix 68% 59% 57% 52% 52% 50% 48% 48% 41% 42% 2010-2022 Average 29% 33% 0% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 • Arçelik conducts a dividend policy within the framework of the provisions of the Turkish Commercial Code, Capital Markets Legislation, T
Slide 51: Summary financials
Summary financials Appendix TRYmn 2017 2018 2019 2020 2021 2022 Revenue 20.841 26.904 31.942 34.255 68.184 133.916 Gross Profit 6.506 8.546 10.215 9.861 20.478 39.493 EBIT 1.406 2.107 2.296 2.100 5.360 8.676 EBIT - exc. one-off items 1.406 2.107 2.296 2.046 5.068 8.593 Profit Before Tax 821 949 1.11
Slide 52: Revenue and COGS Structure
Revenue and COGS Structure Appendix Revenue Breakdown COGS Breakdown Breakdown of by Currency by Currency Raw Material Cost 12% 3% 3% 20% 33% 16% 51% 50% 17% 44% 30% 21% TRY EUR USD Other TRY EUR USD Other Metal Sheet Plastics Aluminium Copper *2021 year-end figures. Sensitivity: Datas as of 2022 Pu
Slide 53: Declining trend in raw material prices
Declining trend in raw material prices have been continued Appendix Average Metal Prices Index - Market Average Plastic Prices Index - Market 3Q23 99 3Q23 141 2Q23 105 2Q23 147 1Q23 111 1Q23 154 2022 122 2022 175 4Q22 102 4Q22 156 3Q22 110 3Q22 176 2Q22 136 2Q22 195 1Q22 141 1Q22 175 • Metal raw mat
Slide 54: Resilient revenue composition through diversification
Resilient revenue composition Appendix through diversification Sales Bridge Sales Breakdown by Geography 2Q23 45.3% y/y Türkiye 13% 1.521 Western Europe 5.133 3% 15% 6.7% 8.662 672 22.7% 3% CIS & Eastern Europe y/y y/y 3% 30% 39% 28,550 2% 3.0% 89.0% y/y 4% 5% Africa y/y 46.771 22,568 41.638 3% 2Q22
Slide 55: Margins by segments
Margins by segments Appendix Consolidated 31,9% 31,1% 60.000 29,6% 30,0% 46.948 50.000 25,0% 39.891 40.000 20,0% 32.305 30.000 15,0% 20.000 10,0% 10.000 5,0% 0,0% 0 2Q22 1Q23 2Q23 Revenue Gross Margin White Goods Consumer Electronics Other 32,3% 33,0% 60.000 6.000 30,5% 30,8% 30,6% 29,6% 30,0% 27,5%
Slide 56: Close watch on FX risk
Close watch on FX risk, proactively taken actions Appendix 3,9% 2.000 6,0% 1.000 2,9% 1,7% 2,9% 4,0% TRYm Before Hedge Hedged Position Net Position 2,0% EUR (17,162) 14,615 (2,546) 0 0,0% 0,7% 0,3% 0,3% -1,2% -0,5% -2,0% -1,2% -1,2% -1.000 -1,7% USD (13,902) 12,369 (1,534) -2,4% -2,6% -4,0% -2.000 -
Slide 57: Awards & Achievements
Awards & Achievements Appendix Sensitivity: Public 57
Slide 58: Contacts
Contacts Appendix Özkan Çimen Mine Şule Yazgan Öktem Söylemez CFO Finance & Enterprise Risk Executive Investor Relations (+90) 212 314 39 01 Director Senior Lead (+90) 212 314 30 60 (+90) 212 705 96 81 Investor Relations App www.arcelikglobal.com investorrelations@arcelik.com Sensitivity: Public 24
Slide 59: Disclaimer
Disclaimer Appendix 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 e
Slide 60: Thank You!
Thank You! Sensitivity: Public