Economy,  Stock Analysis

Arçelik Stock Buyback

(Please click to read the Thread in Turkish)

Arçelik A.S. is a Turkey-based multinational manufacturer of home appliances, including white goods like refrigerators, washing machines, and ovens as well as electronics.

Arçelik was founded in 1955 and currently with its 12 different brands, 30 production facilities and 45.000 employees worldwide it is a leading company in Turkey and Europe. With its 82 subsidiaries in 53 countries and 29 R&D and design centers and offices Arçelik is a global actor in its sector.

As a part of valuation studies, I have previously updated Prof. Aswath Damodaran’s work and shared my notes in Turkish at this post. And since then I have investments in the company. But in this post, I will cover the stock buyback program that Arçelik has launched in 2021, which was augmented and still in effect.

1 – Launch of Buyback Program(s)

On July 1st, 2021 Arçelik has announced a 67,572,820.50 nominal TRY share buyback program. This sum was the equivalent of the 10% of issued capital. The purpose of this decision was discrepancy between price and value, and to support the healthy pricing in the market. According to the management, share price was not reflecting the actual performance of the company. In this vein, Arçelik allocated 2,400,000,00 TRY funds (Figure 1).

Figure 1: Launch of Share Buyback Program

The very first purchase based on this program made on the next day, on July 02nd, 2021.

In Figure 2, I have plotted daily closing price of shares with white line from 01.01.2021 to 09.03.2022, and the latest price was 52,03 TL per share. In the graph we see that share price was not below 27.50, but not above 32.68 either. After the buyback transactions, which I showed in yellow bars, market price found a solid support at this level. However participants were not convinced until the end of November. We have than witnessed a dazzling year-end rally up to 52.32 TL. As you can follow the highest purchase was made on 20.09.2021 with 2.80 million shares and on 24.02.2022 with 2.84 million shares. It is also apt to emphasise that the most intense purchase were made between August and November 2021. Considering the global retreat and sale in financial markets, and gloomy outlook at those days, it was a decisive act and in hindsight it looks now as a sign of confidence to the Company’s own business.

Figure 2: Buybacks and Share Price

However, the negative side of that act was running out of funds that were allocated for this purpose. On March 09th, 2022 Arçelik has purchased 800,000 shares and the funds used for these transactions summed to 2,212,171,034.28 TRY, which was approximately 92.17% of the maximum amount allocated for the program. In this regard, the Board of Directors decided to increase the amount of funds from 2,400,000,000 TRY to 3,000,000,000 TRY.

Figure 3, presents the details of this decision.

Figure 3: Increase in the Allocated Funds for Buyback Transactions

From that date on, Arçelik had bought more shares when there was a window of opportunity. Until May 24th, 2022 Arçelik has purchased 67,344,433 shares, which makes the 9.97% of the issued capital, and spent 2,995,261,985.94 TRY for this transactions (based on my calculations with the given KAP announcements and the difference come from the transaction costs and fees). As you could have followed, we hit the limits again. Therefore Board of Directors decided to pursue a second buyback program, which goes together with the first one, and again allows company to buyback 67,572,820.50 TRY nominal value shares, corresponding to 10% of the issued capital. As a result a total of 6,000,000,000 TRY funds allocated for the both programs.

Figure 4 shows the details of new buyback program.

Figure 4: A new buyback program

Including the last buyback on 18.08.2022 with a sum of 150,000 shares, current position is as in the Figure 5. At the end of all these transactions, Arçelik shares owned by Arçelik are 68,876,288 and the ratio of the shares bought back to the Company’s capital is currently at 10.19%. Total amount of funds used for these transactions reached to 3,1 billion TRY.

Figure 5: Current Position

2 – Executive Summary

Arçelik undertakes huge investments, measured risks and global initiatives despite geopolitic and macroeconomic uncertainties. In addition to that Arçelik attaches importance to shareholder’s well-being. In this vein Arçelik shares its excess cash from net income with its shareholders as dividends in a continues form. Although there are ups and down in the last ten years you can see the development in Figure 8. I have added last two years dividend performance in Figure 7 parallel to buyback frame. This years dividend is due on 25.09.2023. Finally, In Figure 6, I have presented these two buyback programs with its striking features. Since the launch of the program, 119 buy orders have been realised. Programs are still in force and the Company has a room to fulfil its program or extend it depending on the market conditions.

Figure 6: Executive Summary – Share Buyback

In Figure 7, you can see the dividends paid at the end of March for the last two years. Although the graph covers the period from 01.01.2021 to 4.08.2023, this is a consistent fact for more than a decade. Blue bars represent the total amount of cash returned to shareholders and explanations above those bars indicate the dividends paid per share. On March 29th, 2021 and on March 29th, 2022 total dividends sum was 1,500,000,000 TRY and dividends per share was 2.2198 TRY.

Figure 7: Executive Summary – Dividends
Figure 8: Executive Summary – Dividends History

Value is like a magnet; it pulls the price sooner or later to itself.

Arçelik is one of the companies that I have in my global portfolio for years. I also run DCF valuations occasionally. I was once again lucky to be on the same page with the Arçelik for their buyback decisions on a couple of days. I hope this figures, analysis and calculations are also useful for you, too. For further documents and news please check Arçelik Investor Relations.

With this opportunity, I’d like to thank the management and employees for the successful periods and extend my thanks to the investors who supported the price of the company shares. As we are facing global macroeconomic headwinds and political uncertainties I don’t have a future price estimate, but in the long run I’m sure the value and price will converge.

Ergun UNUTMAZ, 07.08.2023

You can read my previous works on similar subjects by clicking the links.

Şişecam Stock Buyback

I wish you all the best.


General information and statistics that are provided herein this article acquired from official sites and public resources. Thoughts and comments belong to the author and do not represent any other third parties’, public/private institutions’ or organisations’ point of view.

The information contained on this article is not an offer to buy or sell securities, foreign exchanges, indices or any other financial instruments. Works on this blog also comprise educational materials, translations, summaries and experience sharing essays. I do not provide any kind of financial services. For the investment advices and recommendations, please refer to registered institutions and authorised bodies. Parties, who gets information from this website, accept to bear the possible benefits and risks at their own responsibility, and act through their own initiative.

Leave a Reply

Your email address will not be published. Required fields are marked *