Arçelik (ARCLK) Q4 2024 earnings summary

Executive summary

• Full year 2024 revenues reached TRY 458.5 billion, up 15% year-on-year, mainly from European and MENA acquisitions, while local sales were flat and international sales grew 24.7% in inflation-adjusted terms.

• Gross margin declined to 27.6% from 29.3% year-on-year due to pricing pressures, competition, unfavorable EUR/USD parity, and higher manufacturing costs.

• Adjusted EBITDA margin was 5.3%, down from 8.2% last year, impacted by higher OPEX and lower gross profitability.

• Net loss of TRY 2.2 billion reported for 2024, with a net margin of -0.5%, reflecting a 6.1 point decline year-on-year.

• Major restructuring and integration activities, including plant closures in the UK and planned closures in Poland and Italy, are underway, with related costs fully provisioned in 2024.

Financial highlights

• Consolidated revenues grew 15% year-on-year; Q4 revenues declined 5% sequentially.

• Gross margin fell by 1.8 points year-on-year; Q4 margin improved 0.5 points over the previous quarter.

• Operating profit dropped 66% year-on-year to TRY 5.7 billion; operating margin dropped 3.2 points year-on-year.

• Adjusted EBITDA for 2024 was TRY 22.9 billion, down 25% year-on-year, with one-off transaction expenses excluded.

• Free cash flow was negative TRY 18.1 billion, down from negative TRY 8.7 billion in 2023.

Outlook and guidance

• 2025 guidance targets 15% international revenue growth in EUR terms and local revenue growth in real terms.

• EBITDA margin expected to improve to around 6.5% in 2025, driven by cost synergies and operational efficiencies.

• Net working capital to sales ratio expected to fall below 20% by year-end 2025.

• Capex guidance for 2025 is approximately EUR 300 million, mainly for maintenance and new product investments.

• Cost savings of EUR 100-150 million expected in 2025 from restructuring and synergies.