Earnings Report /
Turkey

Arçelik A.Ş: Solid operating results and encouraging guidance

  • Arcelik realised TL1,166mn net income in 1Q22, slightly lower than our estimate of TL1,290mn

  • We maintain our 12-mnth TP at TL98, implying 60% upside potentia

  • Keeping Arcelik in our TOP PICKS list.

Cemal Demirtas
Cemal Demirtas

Head of Research

ATA Invest
25 April 2022
Published by

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.