Turkish consumer goods manufacturer Arcelik’s net profit grew by 52% y/y to TRY219mn (€35mn) in Q2 while revenues rose by 29% y/y to TRY8.43bn, the company said on July 29 in a stock exchange filing.

The Q2 profit was below the market’s average expectation of TRY252mn and Seker Invest’s estimate of TRY243mn. The gap was attributable to a higher than expected effective tax rate of 23% in Q2 compared to 13.3% in Q1, Fulin Onder of the Istanbul-based brokerage said in a research note.

In H1, revenues grew by 30% y/y to TRY15.3bn while net profit rose by 39% y/y to TRY444mn.

Arcelik has updated its domestic white goods market contraction forecast for 2019 to 15% y/y from the previous 5% y/y while it has kept its 2% y/y growth estimate for the global market.

The company also cut its revenue growth estimate to 20-25% y/y for 2019 from the previous 25-30% y/y. The Ebitda margin was also revised down to around 10.5% from 11.5%.

Arcelik’s Beko is the leading home appliances brand in Europe, the UK, France and Poland while the company is also the leading appliances company in Romania, South Africa and Pakistan. The company has a 50% share on the domestic market.

Arcelik did not distribute any dividends from its 2018 profit of TRY856mn.

Consumer collapse
Amid Turkey’s economic dire straits brought on by the currency crisis that broke out around a year ago, consumer demand and sentiment in the country has collapsed. Like automotive producers, white goods manufacturers have been among industrial players that have taken the brunt of the misery.

Last week, Can Dincer, head of the Turkish White Goods Manufacturers’ Association (TURKBED), said the country’s white goods market, which saw a 9% decline in sales in the first half of this year, may contract 15% as a whole in 2019.

“Despite the tax reductions the government granted for white goods, sales nosedived in January-June. We expect a 20% contraction in the market in the final quarter of the year,” he said.

The government slashed the special consumption tax on white goods in 2018 but extended the cuts until the end of June this year.

“The tax cut, which greatly supported the industry, must be permanent. We are talking to government officials and have conveyed our demand to the government,” Dincer said.

He underlined that exports had kept local white goods manufacturers afloat.

“The local industry exports some 75% of its products. In the first six months of the year, shipments to foreign markets increased by 1% y/y to 10.1 million units,” Dincer added.