Arçelik (ARCLK) Q4 2024 earnings summary

Executive summary

• Revenue for 2024 reached TRY 458.5 billion, up 15% year-on-year, mainly from European and MENA acquisitions, while local sales were flat and international sales slightly declined in real terms.

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

• Adjusted EBITDA margin dropped to 5.3%, impacted by higher OPEX, weaker gross profitability, and integration expenses.

• Net income turned negative at -TRY 2.2 billion, reflecting a sharp decline from the previous year due to restructuring and acquisition-related expenses.

• Major restructuring and integration activities, including plant closures in the UK, planned closures in Poland and Italy, and the creation of Beko Europe BV, led to substantial one-time expenses.

Financial highlights

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

• Gross profit rose to TRY 118.1 billion, but gross margin fell by 1.7-1.8 points year-on-year.

• Operating profit dropped significantly year-on-year, reflecting higher expenses and restructuring costs.

• Adjusted EBITDA for 2024 was TRY 22.9 billion, with one-off transaction expenses excluded.

• Free cash flow was negative, with figures ranging from -TRY 8.7 billion to -TRY 18.1 billion.

Outlook and guidance

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

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

• Net working capital/sales ratio targeted 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.