Annual Report Karaağaç Caddesi No: 2-6, Sütlüce, Beyoğlu 34445 İstanbul | Türkiye Telefon: +90 212 314 34 34 Faks: +90 212 314 34 63 www.arcelikas.com /arcelikas 1 I live and prosper with my country. As long as democracy exists and thrives, so do we. We shall do our utmost to strengthen our economy. As our economy prospers, so will democracy and our standing in the world. Vehbi KOÇ 1 CONTENTS I ARÇELİK A.Ş. ANNUAL REPORT 2018 CONTENTS Sustainable Growth Corporate Responsibility Vision 2 Environmental Approach to Products and Almanac 2018 4 Production 70 Report of the Board of Directors and Message Environment-Friendly Applications 73 from the Chairman 6 Environment-Friendly Products 74 Message from the General Manager Social Responsibility Arçelik Group's vision of “Respecting The World, 8 76 Auditor’s Report on Annual Report 12 Awards and Achievements in 86 Respected Worldwide” aims to achieve profitable Financial Statement Summary 2018 16 and sustainable growth; to increase market share Financial Indicators 17 Corporate Governance Five-Year Consolidated Financial Review in its target market; the globe; to reach more 18 Shareholders 19 Corporate Governance Principles Compliance consumers in a fast-changing world with innovative Dividends Paid 20 Report 90 products and services; to safeguard the future with Share Performance 21 Statement of Compliance with Corporate corporate responsibility; and to integrate and Risk Management 22 Governance Principles 90 optimize the components of the global organization The Target Market; the Globe Global Organization while becoming a global group. Brands 28 Global Organization 118 Global Operational Network 29 Business Excellence 125 International Markets 30 Turkish Market 40 Consolidated Financial Statements and Independent Auditors’ Report Innovation Board of Directors 2018 128 Innovative and Superior Technology 48 Management 2018 130 Innovative Products 54 Independent Auditor's Report and Innovative Applications 60 Consolidated Financial Statements 139 2 3 ALMANAC 2018 I ARÇELİK A.Ş. ANNUAL REPORT 2018 ALMANAC 2018 January | February | March April | May | June July | August | September October | November | December • Arçelik continued its next-generation retailing concept • Arçelik Group established two new companies, WAT Mo- • Arçelik Group signed a 68-million-Euro credit agreement • Arçelik Group and TÜBİTAK collaborated to launch that prioritizes customer experience with a new store in tor Sanayi ve Ticaret A.Ş. for activities related to industrial with the European Investment Bank for the Washing Ma- TÜBİTAK’s ‘Support Program for Increasing Innovation Istanbul Akmerkez along with one new store in İzmir and motors and Token Finansal Teknolojiler for its payment chine factory being constructed in Romania under Artic. and Entrepreneurship Capacity – BIGG’. five new stores in Ankara. systems. • Arçelik performed a first in the world and produced a • Collaborating with the “KızCode Platform”, Arçelik Group • Arçelik-LG produced Turkey’s first domestic commercial • Beko promoted its built-in products at the EuroCucina Fair refrigerator from carbon fiber, which is 4.5 times lighter initiated a coding training program for the daughters of its air-conditioner, a VRF air-conditioner with 4 HP capacity. in Milan, Italy. and 3 times stronger than steel. employees. • Beko introduced to consumers its voice-command smart • Arçelik Retail Academy gave its first graduates. • Beko and Grundig exhibited their newest product technol- • Arçelik Group performed a first in the field of human television, designed and produced in Turkey. • In cooperation with FC Barcelona as one of its main spon- ogies at the IFA Fair held in Berlin, Germany. resources and realized its Specialization-Based Organi- • Arçelik Group initiated the ‘Fresh Start’ internship program sors, Beko started a global donation campaign as part of • The “Feed Your Soul” video series conducted in collabo- zation project. for undergraduate students. its global ‘Eat Like a Pro’ initiative to encourage children ration with Grundig-Mehmet Gürs was continued with the • Arçelik Group was listed for the 5th time in the BIST • Arçelik Group employees participated with the motto to eat healthy nutrition. motto “All we want is respect for food”. Sustainability Index which is the index of Borsa Istanbul ‘Take A Step, Make A Difference’ in the Runatolia Mara- • Arçelik Group developed the “A Ticket For Your Future” • Voltbek Home Appliances, founded by the partnership of companies with high sustainability performance. thon organized for the 13th time in Antalya. program with the objective of attracting Turkish students Arçelik Group and Voltas offered the products branded • Arçelik-LG commissioned Turkey’s first domestic commer- • Viorica Dancila, the Prime Minister of Romania and the studying abroad. Voltas Beko in the Indian market. And the foundation was cial air-conditioner production line at its Gebze factory. accompanying senior delegation visited the Arctic Indus- • The 6th meeting was held of the Arçelik R&D Consultancy laid for the refrigerator factory at Gujarat. • Arçelik opened the Arçelik Corporate Solutions store try 4.0 Factory. Committee consisting of 12 academicians who are lead- • At the ‘Invention Day’ held for the 20th time this year, which gathers the products and services required by • Arçelik Group climbed to the top of Mount Kilimanjaro, the ers in their field from the most distinguished universities Arçelik Group, Turkey’s R&D leader awarded 600 inven- corporate customers under a single roof. highest mountain of Africa with a team of 11 people con- throughout the world. tors who made the lives of consumers easier and created • Beko became the naming partner of the Fenerbahçe sisting of three assistant general managers from its senior • As part of the collaboration between Arçelik and Tchibo, value with the products and technologies they developed. Man’s Basketball Team. management in order to draw attention to global warming. the Arçelik Selamlique Capsule Turkish Coffee Machine • Arçelik Group became the only industrial company in the • Arçelik Garage launched the “Markers Wanted” program • Arçelik Group launched the Equal Dictionary on Inter- and the Grundig Turkish Coffee Machines were offered Developing Markets category of the Dow Jones Sustaina- which supports new initiatives for future home solutions. national Women’s Day on March 8 with the objective of for sale at Tchibo stores and the Tchibo Cafissimo Coffee bility Index from Turkey for the second time. • The senior management and employees of Arçelik Group gender equality in language. Machine at Arçelik stores. • The Arçelik Group Supplier Innovation Program Workshop climbed the Aconcagua Mountain in Argentine to raise • Smart Assistant Asista achieved a first by offering smart • The New York Series was launched, designed by Arçelik was held at the Arçelik Garage. awareness on global warming and to draw attention to hotel experience to the guests of Divan Istanbul as part with inspiration from the magnificent lifestyle of New York. melting glaciers. of the new collaboration between the Divan Group and • Arçelik Group opened its next-generation factory at Arçelik. Çerkezköy to produce the televisions of the future. • Beko extended its FC Barcelona sponsorship for three more seasons after the 2018-2019 season. Beko became one of FC Barcelona’s three main global sponsors with the new expanded agreement. 4 5 REPORT OF THE BOARD OF DIRECTORS AND MESSAGE FROM THE CHAIRMAN I ARÇELİK A.Ş. ANNUAL REPORT 2018 REPORT OF THE BOARD OF DIRECTORS AND MESSAGE FROM THE CHAIRMAN Dear Shareholders, Dear Shareholders, While reinforcing our presence in core markets, we also I greet you with respect and affection. I hope our As a crucial element in helping our Holding to meeting to evaluate the results of the previous reach its targets in national and international supported growth through year will be productive. markets, our company reinforced its pioneer- investments in new regions and ing position in Turkey as a result of steady and business segments in line with 2018 has been a tough year for the global econ- healthy growth throughout the year. We suc- our strategic targets, omy and our country for several reasons: the ceeded in increasing our turnover by 29% to increasing our turnover by trade showdown between the USA and China reach TRY 26.9 billion by increasing our share together with the resulting protective policies; in all our markets, receiving foreign exchange 29% to TRY 26.9 billion. Brexit uncertainty; the Iran sanctions; FED’s income from international markets and investing decisions to increase interest rates; fluctuating in new regions. foreign exchange rates and various other geo- political risks. All these factors contributed to the With approximately 30,000 employees world- negative impact on global economies, including wide, our company offers products and services our country. in 146 countries with 12 brands and 21 produc- tion sites located in Turkey, China, Pakistan, While the US economy recovered its growth South Africa, Romania, Russia, India and Thai- rate and lowered unemployment, China’s eco- land. After many years as a leading company in nomic growth decelerated to the lowest level in Turkey, Arçelik also continues to strengthen its the last 10 years. Europe continued its pursuit standing in international markets, especially in of leverage for economic growth, whereas the Europe. Our company successfully achieved its developing countries experienced