Arcelik A.s. · BIST:ARCLK
Arcelik A.s — Investor Presentation (August 2022)
57 slides from Arcelik A.s's investor presentation, August 2022
Slide 1: Investor Presentation August 2022
Investor Presentation August, 2022 Sensitivity: Public
Slide 2: Agenda
AGENDA Overview of 2Q22 Guidance Arçelik Highlights (pg. 43-45) (pg. 3-7) (pg. 22-30) Investment Sustainability Appendix Highlights (pg. 31-42) (pg. 46-56) (pg. 8-21) Investor Presentation Sensitivity: Public
Slide 3: Overview of Arçelik
Overview of Arçelik Investor Presentation Sensitivity: Public
Slide 4: A leading global household appliances company
A leading global household appliances company with… Overview of Arçelik 28 48 12 +40k +150 29 +2,000 +2,300 Production Countries with Sales Brands Employees Countries R&D and Design Engineers & Registered plants & Marketing Offices worldwide we serve Centres Researchers patents in R&D Centres Strong
Slide 5: Such a great history..
Such a great history.. Overview of Arçelik *Acquisition of Dawlance in Pakistan *Establishment of Arçelik Pazarlama AŞ *Turkey’s first 4K Android Ultraslim TV & *Acquisition of Hitachi* OLED TV *Acquisition of Whirlpool *Turkey’s first ‘Smart Home Assistant’ Turkey Plants** Establishment in Beko sta
Slide 6: Far reaching operational network
Far reaching operational network Overview of Arçelik Washing Refrigerator Dishwasher Dryer Oven Cooking TV A/C* Machine Turkey ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Romania ✓ ✓ S.Africa ✓ ✓ ✓ ✓ ✓ Pakistan ✓ ✓ ✓ ✓ Russia ✓ ✓ Thailand ✓ ✓ Bangladesh ✓ ✓ ✓ Subsidiaries & Affiliates ✓ Manufacturing Plants India** Partners Ch
Slide 7: Strategy – focus on where to play
Strategy – focus on where to play to ensure Overview of Arçelik long-term sustainable and profitable growth Expanding our Expanding our Where we Building a new Reinforcing our core boundaries boundaries will play engine of growth (geographies) (products) • Continue to strengthen our • Increasing int
Slide 8: Investment Highlights
Investment Highlights Investor Presentation Sensitivity: Public
Slide 9: Key investment highlights
Key investment highlights Investment Highlights • Leading producer of white goods in Turkey Leading positions in • Beko is the 2nd largest brand in the European market (up from 7th position in 2004) key markets • 3rd largest market share in the European market (excluding Turkey) as a Group, whilst h
Slide 10: Leading position in key markets – dealer and 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 Arçelik • Widest after-sales netw
Slide 11: Leading position in key markets – presence in Europe and emerging markets
Leading position in key markets – solid presence in Europe & Investment Highlights leading positions in emerging markets with key brands ✓ Maintained 1st position in the U.K. and Poland in 2021 in unit terms Beko Market Unit Share (EU24) 10% #2 ✓ Captured leadership position in France in 2021 in uni
Slide 12: 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 2021 2010 Revenue Breakdown 2021 2%
Slide 13: Diversification – wide product range with leading brands
Diversification – a wide product range Investment Highlights with the leading brands PRODUCT PORTFOLIO BRAND PORTFOLIO Built-in & Freestanding Consumer Electronics Major Appliances • Refrigerators • TV’s • Freezers • Smart Phone’s • Washing Machines • Notebook’s & Tablets 1st in European Free- Europ
Slide 14: Diversification – strong ratings, above sovereign
Diversification – strong ratings, above sovereign Investment Highlights 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 Stable Stable Negative Investment Grade Threshold Investment Grade T
Slide 15: Financial strength – solid revenue growth with sustainable margins
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 • Pricing • Operational efficiency Revenue
Slide 16: 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. 35.7% • Reducing receivable days ‘16-’21 Avg. • Extending payable days 26.9% • Healthy levels of inventory 40,0% 38,9% 36,2% 33,0%
Slide 17: Financial strength – strong free cash flow
Financial strength – robust profitability leading to Investment Highlights strong free cash flow FCF (TRYmn) 6.421 FCF CREATION THROUGH 4.859 • Strong profitability 3.175 • Controlled NWC 2.067 1.723 1.681 1.837 845 1.003 1.243 675 1.101 590 649 384 554 204 (86) (79) (124) (639) (438) (471) (379) (1
Slide 18: Financial strength – balance sheet management and leverage
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 25.000 3 p.a. (mn) (mn) 2.45 2.36 2.39 TRY 17.8%
Slide 19: Proven track record of inorganic growth
Proven track record of inorganic growth – geographical Investment Highlights expansion backed by smart strategy ASEAN Region Pakistan India • Thailand greenfield investment for leveraging Beko brand • Acquired Dawlence, the leading home appliances • Voltas, our JV Partner, is part of India’s largest
Slide 20: Leading R&D capabilities
Leading R&D capabilities - we integrate rapidly Investment Highlights developing technologies into our business model 29 +2.0k 104th R&D Centres Researchers in WIPO* List 29 The one & only Turkish company in +2.0k the first 150 since 2010 +0.8k 7 98th 115th 148th 123rd 121st 78th 74th 71st 67th 100t
Slide 21: 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 22: 2Q22 Highlights
2Q22 Highlights Investor Presentation Sensitivity: Public
Slide 23: 2Q22 Highlights
2Q22 Revenue growth remained resilient in 2Q22 while cost inflation, driven by everlasting global challenges, was HIGHLIGHTS reflected on margins.. TRY32.3bn Robust revenue growth of 122% y/y & 15% q/q, the organic growth was 90% Revenue y/y. 7.5% Strong sell-out but weak sell-in in Turkey continued
Slide 24: Key Factors Sales / Margins
Key Factors Sales / Margins 2Q22 Highlights REVENUE GROWTH GROSS MARGIN EBITDA MARGIN 122% 29.6% 7.5% Higher raw material prices coupled with further Price increases on both quarterly & yearly basis Declining gross margin depreciated TRY Lower capacity utilization on both quarterly & Higher OPEX/Sal
Slide 25: Solid revenue growth maintained in Turkey through pricing
Solid revenue growth maintained in Turkey through pricing 2Q22 Highlights High base and inflation leading to contraction in MDA6 market MDA6* Turkey Revenue Growth ARÇELİK y/y growth (%) 103% TURKEY y/y growth (%) 16% 23% 16% Strong price increases on y/y & q/q 9,737 Unit growth in A/C y/y & q/q 8,3
Slide 26: Strong revenue growth in Europe in 2Q22
Strong revenue growth in Europe in 2Q22 y/y 2Q22 Highlights through price increases & inorganic growth 24% 13% Share in total Western Europe Eastern Europe Share in total revenue revenue y/y market unit growth MDA6 Market MDA6 Market y/y market unit growth 5M22 1Q22 • Slowdown in consumer demand in
Slide 27: APAC sales doubled; growth in Africa & Middle East
APAC sales more than doubled thanks to Arçelik-Hitachi 2Q22 Highlights Growth momentum in Africa & Middle East maintained 9% 22% Share in total Africa & Middle East Asia-Pacific Share in total revenue revenue • Revenues from Africa & Middle East increased by c.49% y/y in • Revenues from APAC grew by
Slide 28: Summary financials
Summary financials 2Q22 Highlights TRYmn 2Q22 2Q21 y/y 1Q22 q/q 6M22 6M21 y/y Revenue 32,305 14,534 122% 28,164 15% 60,469 27,518 120% Gross Profit 9,568 4,393 118% 8,687 10% 18,255 8,876 106% EBIT* 1,602 1,047 53% 2,282 (30%) 3,884 2,591 50% Profit Before Tax 304 584 (48%) 1,451 (79%) 1,755 1,878 (
Slide 29: Higher leverage in 2Q22
Increasing working capital funding together with 2Q22 Highlights share buyback resulted in higher leverage in 2Q22 Net Debt & Leverage Debt Currency & Rates Breakdown Currency Effective Interest Rate Original Currency TRY Equivalent p.a. (mn) (mn) 3.15 Acq. impact: 0.13x TRY 21,5% 8.943 8.943 2.81 E
Slide 30: Negative FCF in 2Q22 mainly due to NWC
Negative FCF in 2Q22 mainly due to NWC 2Q22 Highlights EBITDA Margin Working Capital/Sales 2Q21 Non-cash 2Q22 2021 1Q22 2Q22 GP Margin OPEX/Sales Rec. Inv. Pay. Others Items CAPEX/Sales Free Cash Flow 3,5% 3,3% (946) (4.261) TRYmn 2Q21 2Q22 2Q21 2Q22 Sensitivity: Public 30
Slide 31: We See Sustainability
We See Sustainability Investor Presentation Sensitivity: Public
Slide 32: Business model under three main pillars
As a business model under three main pillars Sustainability Empowering Responsible & Sustainable Innovations & Improving the Sustainable Value Chain Product Range Lives of People As of 2023, Arçelik Global R&D expertise journey for; Focused on healthy living, partnering will not work with suppliers
Slide 33: Ambitious targets to reach
As an ambitious targets to reach Sustainability 1.5oC SBTs in line with Paris Climate Agreement Scope 1+2+3 considering the whole supply chain 50.4% ambitious reduction target Sensitivity: Public 33
Slide 34: Net zero journey
As a net zero journey Sustainability 2050 is the year that Arçelik announced net-zero emissions in all our operations! In parallel with our SBTs;* 2030 Scope 1: -50.4% 2050 Net-Zero 2030 Scope 2: -50.4% Carbon Emissions 2030 Scope 3: -50.4% Sensitivity: Public 34
Slide 35: Carbon neutrality journey
As a carbon neutrality journey Sustainability Within the scope of the Carbon Financing Project for Energy Efficient Refrigerators in Turkey, Arçelik Global received the right to 305,407 tons of CO2e emission reductions between 2013 and 2018. For 2019 & 2020, Arçelik Global became carbon neutral in g
Slide 36: Improving gender equality
As a gender equality Sustainability Improving gender equality 2020 Targets for 2030 emphasis on female members in the Board, management positions & revenue generatig functions STEM Female member in Board of Directors 2020 Target for 2025 17% 25% *Includes junior, middle and senior management positio
Slide 37: Global cooperation
As a global cooperation Sustainability Funded by EU: EUR 700k grant (EUR 340k received in 2018)- the highest grant to be received by Arçelik for an environment project Electronics Plant; WM Plant First time applications with the project: 30% recycled PC_ABS_v0 in ▪ LeoPET formulation in tub ▪ Rent m
Slide 38: Innovation: 2030 targets
As an innovation Sustainability Production WEEE Systems Recycling 2030 Targets Products (2020) Facilities PET Tub 302 tons of ~1.3M ↓ 45% 15 MW 100% C02e Units recycled Waste Fishnet ~ 53k GJ 6.5M tons Energy Establish Electricity from consumption & renewable renewable sources water withdrawal energ
Slide 39: Innovation
As an innovation Sustainability Landmark From waste to Sustainable Blockchain Products product parts Packaging Technology Sensitivity: Public 39
Slide 40: Brand value: Beko sustainability launch
As a brand value: Beko sustainability launch Sustainability Sensitivity: Public 44 40
Slide 41: Leadership in sustainability ratings
As a leadership Sustainability Included since 2017 and Terra Carta Seal holder Score higher than #34 in the Global 100 With strong ESG having 86/100 which is as the first and only 66/100 – Gold Medal Most Sustainable Performance the highest score in 2021 company from our In the top 5% of Companies S
Slide 42: Financing tool: Greenbond 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 43: Guidance
Guidance Investor Presentation Sensitivity: Public
Slide 44: 2021 Guidance
2021 Guidance Guidance Revenue Actual • Turkey (in TRY) c.35% growth 47% growth • International (in FX) c.35% growth 36% growth • Consolidated (in TRY) c.55% growth 67% growth EBITDA Margin c.11.0% 10.6% WC/Sales c.25% 26.3% CAPEX c.220 mio EUR 228 mio EUR Sensitivity: Public 18 44
Slide 45: 2022 Guidance
2022 Guidance Guidance Revenue • Turkey (in TRY) c.70% growth • International (in FX) >20% growth • Consolidated (in TRY) >90% growth EBITDA Margin c.10% WC/Sales c.25% CAPEX c.220 mio EUR Sensitivity: Public 19 45
Slide 46: Appendix
Appendix Investor Presentation Sensitivity: Public
Slide 47: Dividend policy
Dividend policy Appendix 68% 59% 57% 50% 52% 52% 48% 48% 41% 2010-2021 Average 29% 33% 0% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 • Arçelik conducts a dividend policy within the framework of the provisions of the Turkish Commercial Code, Capital Markets Legislation, Tax Regula
Slide 48: Summary financials
Summary financials Appendix TRYm 2016 2017 2018 2019 2020 2021 Revenue 16,096 20,841 26,904 31,942 40,872 68,184 Gross Profit 5,340 6,506 8,546 10,215 13,806 20,478 EBIT* 1,331 1,406 2,107 2,296 4,135 5,068 Profit Before Tax 1,202 821 949 1,114 3,498 3,623 Net Income** 1,304 845 856 925 2,848 3,251
Slide 49: Revenue and COGS Structure
Revenue and COGS Structure Appendix Revenue Breakdown COGS Breakdown Breakdown of by Currency by Currency Raw Material Cost 10% 9% 24% 6% 37% 24% 45% 49% 9% 36% 30% 21% TRY EUR USD Other TRY EUR USD Other Metal Sheet Plastics Aluminium Copper 49 *2021 year-end figures. Sensitivity: Datas as of 2021
Slide 50: Raw material prices
Stable raw material prices in the market until late Appendix February, started to increase after war Average Metal Prices Index - Market Average Plastic Prices Index - Market 1Q22 141,8 1Q22 175,1 2021 126,9 2021 158,8 4Q21 131,7 4Q21 166,4 Info-Text 3Q21 133,6 3Q21 157,5 2Q21 134,2 2Q21 171,5 1Q21
Slide 51: Resilient revenue composition through diversification
Resilient revenue composition Appendix through diversification Sales Bridge Sales Breakdown by Geography 1Q22 116.9% y/y TRYm 4,260 15% 6,763 51.3% 3% 6% 2% 30% y/y 4% 19,786 3% 464 4% 3,692 36% 5.6% 81.5% 6% y/y y/y 6% Turkey 78.8% 1Q21 8,297 y/y 13% 5% Western Europe 8,379 4,686 31% CIS & Eastern
Slide 52: Margins by segments
Margins by segments Appendix Consolidated 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 White Goods Consumer Electronics Other 40,0% 30,0% 5.000 7.000 36,5% 33,0% 35.
Slide 53: Close watch on FX risk
Close watch on FX risk, proactively taken actions Appendix 1.000 6,0% 3,9% 4,0% TRYm Before Hedge Hedged Position Net Position 2,9% 500 2,0% EUR (7,892) 7,720 (172) 0 0,7% 0,0% USD (3,170) 2,484 (685) 0,4% 0,3%0,3% -0,5% -1,1% -1,2% -1,2% -1,2% -2,0% GBP 2,001 (1,839) 162 -500 -2,1% -2,0% -3,6% -2,4
Slide 54: Awards & Achievements
Awards & Achievements Appendix Sensitivity: Public 57 54
Slide 55: Contacts
Contacts Appendix Özkan Çimen Öktem Söylemez CFO Senior IR Specialist (+90) 212 314 34 34 (+90) 212 705 96 81 Investor Relations App www.arcelikglobal.com investorrelations@arcelik.com Sensitivity: Public 58 55
Slide 56: 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 57: Thank You!
Thank You! Sensitivity: Public