Arcelik realised TL1,166mn net income in 1Q22, slightly lower than our estimate of TL1,290mn but in line with consensus of TL1,147mn. Topline was 0.9% above our estimates and EBITDA margin of 10.6% was 55 bps above our estimates. Positive impact of higher than expected EBITDA was surpassed by slightly higher than expected net other & financial expenses and bottomline fell 9.6% short of our estimates.
Consolidated revenue guidance for 2022 is revised up to “>80%”, driven by “c.60%” (prev. 35%) growth in Turkey (in TL) and “c.25%” growth in international revenues (prev. 20%) (in FX). EBITDA guidance of 10.5% & NWC/Sales guidance of c.25% are maintained.
Considering steep TL depreciation, high inflation and half-year inorganic growth prospects, we foresee 87.3% topline growth and 10.1% EBITDA margin for 2022E. Based on our estimates, Arcelik is currently trading at 5.0x 22E EV/EBITDA and 7.1x 22E P/E multiples, implying 18% and 30% discounts, respectively, compared to its global peers.
Significant topline growth of 116.9% y/y in 1Q22 supported by both domestic and international growth. Domestic revenues increased by 78.8% y/y to TL8.38bn in 1Q22 whereas international revenues surged by 138.5% y/y to TL19.8bn, representing 70% of consolidated revenues, during the same period. International growth was driven by 51.3% acquisition impact, 81.5% FX impact and 5.6 % organic growth.
Arcelik realized an EBITDA margin of 10.6% in 1Q22, better than our estimate of 10.1% and consensus of 10.3%. Despite higher raw material prices, higher product prices and higher capacity utilization supported the gross margin. Arcelik realised a gross margin of 30.8% was 61bps above our estimates whereas opex/net sales ratio was 1bps below our estimates.
Arcelik’s net debt increased by 36.2% q/q to TL22.6bn (up by 21% in US$) in 1Q22 whereas NWC/Net sales ratio increased to 27.7% by 170bps to 26.3% as of 1Q22-end. Despite steep TL depreciation, cash outflows regarding acquisition, cash dividend and share buyback, Arcelik had a healthy net debt/EBITDA ratio of 2.81x in 1Q22 versus 2.4x in 4Q21. Excluding the negative impact of share buyback (0.43x) and acquisitions (0.15x), Arcelik’s net debt/EBITDA was standing at 2.24x in 1Q22. Since July 2, 2021, Arcelik bought back 59.7mn shares at an average price of TL41.35 which is 40% below yesterday’s closing of TL69.25, implying a TL1,665mn gain based on the current price. Arcelik had budgeted a sum of TL2.4bn for buy back and 82.3% of this back is completed.