Arçelik Anticipates European Appliance Market Struggles In 2024
Arçelik CEO Hakan Bulgurlu predicts a challenging 2024 for the European home appliance market, citing energy costs and interest rates as key factors.
Arçelik, a major Turkish manufacturer known for its Beko-branded household appliances, is bracing for a challenging year in Europe. Rising energy and interest costs could lead to a 5% to 10% slump in unit sales in 2024. CEO Hakan Bulgurlu sees multiple challenges in Europe, aligning with the region's broader economic headwinds.
German Economy: A Bellwether Of Decline
Germany, considered Europe's economic linchpin, is experiencing a significant contraction, with consumer spending taking a hit due to higher interest rates. This trend parallels warnings from chemical giants BASF, Evonik, and Covestro about diminishing consumer goods demand.
Sectoral Performance: Arçelik Versus Competitors
Electrolux, a rival to Arçelik, observed a 7% and 10% yearly decline in Q3 and 2022 European shipments, respectively. Conversely, Arçelik's European earnings held steady in Q3 at €787 million, aided by growth in Eastern Europe and product diversification.
Geopolitical Concerns: An Uncertain Picture
Although price inflation appears to be stabilizing, commodity price volatility remains a concern. The Brent crude benchmark, for example, surged 20% since June, and further increases could occur if geopolitical tensions escalate.
Turkey: A Contrast In Market Dynamics
In Turkey, where Arçelik is headquartered, consumer demand remains strong. Q3 revenues leapt to TL22.4bn (€770mn), up 121% year-on-year, or 37% when converted to euros. Bulgurlu believes the recently implemented economic policies will eventually rein in domestic demand but also set the stage for a healthier economy.
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