Arçelik (ARCLK) Q2 2024 earnings summary

Executive summary

• Completed the acquisition and full consolidation of 75% of Whirlpool's European and 100% of MENA operations under Beko Europe as of April 1, 2024, significantly expanding scale and market presence.

• Beko Europe now controls 69 subsidiaries, 11 production facilities, and employs around 19,000 people, becoming the leading player in Europe by unit sales.

• The transaction added EUR 3 billion in revenue from acquired entities, raising total European business revenue to approximately EUR 5.4 billion.

• Net income turned negative at -TRY 805 million in Q2 2024, reflecting margin pressure and integration costs.

• The Group's consolidated financials for H1 2024 reflect provisional accounting for these acquisitions, with significant impacts on assets, liabilities, and segment results.

Financial highlights

• Q2 2024 consolidated revenues reached TRY 110.6 billion, up 23% year-on-year, driven by inorganic growth from acquisitions.

• Gross profit margin was 27.7% in Q2 2024, down 3.4 points year-on-year due to higher input and integration costs.

• Adjusted EBITDA margin was 4.8% in Q2 2024, down 5.57 points year-on-year, mainly due to higher raw material and transformation costs, and increased OpEx.

• Net loss of TRY 0.8 billion recorded in Q2, with net margin declining by 314 basis points year-on-year.

• Net debt increased to TRY 121.3 billion (EUR 3.2 billion equivalent) with cash and cash equivalents at TRY 45.3 billion.

Outlook and guidance

• 2024 guidance revised: flat local sales in Turkish lira, international revenues expected to rise ~50% year-on-year in euro terms due to acquisitions.

• Adjusted EBITDA margin guidance set at 6.5% for 2024, with net working capital to sales ratio targeted at 22%.

• CapEx guidance increased from EUR 300 million to EUR 350 million for 2024.

• Estimated EUR 300 million annual synergies by year five, with EUR 50–100 million expected in 2025.

• Integration and optimization costs from Whirlpool transactions included in guidance.