Arçelik (ARCLK) Q1 2025 earnings summary

Executive summary

• Consolidated revenue reached TRY 109.1 billion in Q1 2025, up 9.3% year-on-year in real terms, mainly due to acquisitions in Europe and MENA.

• Gross margin was 28.7%, down from 29.7% year-on-year due to lower capacity utilization, pricing pressure, and competition.

• Adjusted EBITDA margin was 5.3%, with TRY 5.8 billion adjusted EBITDA, reflecting a decline from 8.0% year-on-year but an improvement over the previous quarter.

• Net loss before minority was TRY 2 billion, with a net margin of -1.8% for the period, compared to a net profit of TRY 2.6 billion in Q1 2024.

• Inflation accounting (IAS 29) was applied due to hyperinflation in Turkey, restating prior periods to current purchasing power.

Financial highlights

• Domestic sales in Türkiye fell 11.6% year-on-year in real terms, while international sales revenue grew 53.7% in euro terms, driven by EMEA acquisitions.

• Free cash flow was negative TRY 12.9 billion, compared to positive TRY 4.3 billion in Q1 2024.

• Net working capital to sales ratio improved to 20.2% from 20.9% at year-end.

• Operating profit dropped to TRY 1.0 billion, with an operating margin of 0.9%.

• Cash and cash equivalents at TRY 43.9 billion, with diversified currency holdings.

Outlook and guidance

• 2025 guidance maintained: flat domestic sales in real terms, 15% international revenue growth in euro terms, and 6.5% EBITDA margin.

• Net working capital to sales ratio expected below 20%, with EUR 300 million CAPEX planned for 2025.

• Synergy savings of EUR 140 million targeted over three years; EUR 25 million realized in Q1.

• Positive free cash flow expected by year-end, driven by operational improvements and cost controls.