Arçelik (ARCLK) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenues reached TRY 105.4 billion, up 13.8% year-over-year, driven by Europe and MENA acquisitions closed April 1, despite weaker demand in most markets except Europe and Africa.

• Adjusted EBITDA margin was 4.6%, reflecting lower gross profitability and higher OpEx, with one-off items excluded.

• Net loss for Q3 was TRY 5.6 billion, with a net margin of -5.3%.

• Operating expenses increased due to higher personnel, marketing, and selling costs, impacting profitability.

• Major business combination completed: control of Whirlpool's European and MENA subsidiaries acquired as of April 1, 2024.

Financial highlights

• Consolidated revenues grew 14% year-over-year but declined 5% sequentially from Q2; Q3 revenue reached TRY 105.4 billion.

• Gross margin was 26.4% in Q3, down 2.9 points year-over-year and 1.3 points sequentially.

• Adjusted EBITDA margin dropped to 4.6% from 8.0% in Q3 2023; operating profit margin turned negative at -0.4%.

• Net financial expenses rose 75% year-over-year, mainly due to higher debt and hedging costs.

• Free cash flow was negative TRY 25.1 billion, mainly due to increased working capital and CapEx.

Outlook and guidance

• 2024 local sales expected to remain flat in real terms due to stagnant demand; international revenues guidance maintained at 50% year-over-year growth in euro terms, including inorganic growth.

• Adjusted EBITDA margin guidance revised to 5.8%-6% for full year 2024.

• Net working capital to sales ratio guidance updated to ~20%.

• CapEx guidance for 2024 increased from EUR 350 million to EUR 400 million, including integration costs.