Arzum Achieves 7.5% Increase in Inflation-Adjusted Revenue in Q3 Compared to Last Year
In the third quarter of the year, Arzum increased its inflation-adjusted revenue by 7.5% compared to the same period last year, reaching 3.8 billion TL. During this period, it continued to sustainably maintain its market share and operational profitability while enduring high financing costs due to elevated interest rates.
Arzum announced its financial results for the third quarter of 2024, noting that seasonality is a factor in the small home appliance sector, and that sales in the sector generally increase in the last four months of the year. As of September, the company observed positive effects of seasonality. They also mentioned that the positive results of strategic actions taken recently would be seen in the upcoming periods.
Arda Altınok, Deputy General Manager responsible for Financial, Commercial, and Corporate Affairs at Arzum, stated, “The first nine months of 2024 have been a challenging period due to tough economic conditions, as in all sectors. In the small home appliance sector, where seasonality is significant and summer months tend to be quieter, high interest rates negatively impacted Arzum’s finances, similar to any company managing its net working capital needs through financing. Additionally, we faced delays in import processes due to longer than normal completion times for shipping and customs transactions specifically in 2024. These delays resulted in the products we procured and prepaid not being sold in the planned period, thereby increasing our net working capital requirements. During this period, we developed various financing alternatives such as bank loans, commercial papers, and sukuk to meet our financing needs. All these adverse situations reflected approximately a 300 million TL loss in the third quarter.
Despite these adverse effects, we managed to maintain our market share and operational profitability by demonstrating strong performance in our operational activities. We remained committed to our sustainable growth strategy, focusing on cost management and cash flow optimization. In the third quarter, we achieved an inflation-adjusted revenue of 3.8 billion TL, marking a 7.5% increase compared to the same period last year. Our EBITDA reached 389.9 million TL, while our operating profit was 341.5 million TL. In the third quarter of 2024, we successfully kept our Gross Profit Margin at 31.8%, EBITDA Margin at 10.2%, and Operating Profit Margin at 9%, similar to the figures from the same quarter last year.” He also expressed confidence that the positive results of the strategic actions taken by Arzum recently would begin to be manifested.
"We incorporated 41 products belonging to 27 projects into our inventory," Altınok said. He shared that they have always believed in the potential of the small home appliance sector and continued to invest accordingly. He announced that they started using their R&D laboratory, which has completed its physical and infrastructure work, in the third quarter of 2024. He added that the laboratory will systematically conduct product validation, examination of new components, and analysis of competing products. Altınok further commented, “In this context, we have started to prioritize product validation and algorithm testing. In the second phase, related testing procedures and instructions will be created to diversify tests. Considering industry reports and trend analyses, we reviewed the prioritizations of the projects scheduled to launch in the third quarter of 2024 and incorporated 41 products belonging to 27 planned projects into our inventory. We introduced three products from the Arzum OKKA Espresso Series and the personal care series Arzum Revolution, which play a significant role in our strategic planning for 2024.”
He emphasized, “Our goal is to establish a strong presence in strategically prioritized countries.” Altınok highlighted that they are included in the Fortune 500 Turkey 2023 list, which ranks the country's leading companies based on key financial indicators. He assured that Arzum has never deviated from its goal of becoming a global brand and continues to work on existing and new international market-focused projects. He also emphasized that IFA 2024 represents one of the most critical steps in this direction. “We participated in the most comprehensive technology trade show in Europe, which celebrates its 100th anniversary this year, with a presence befitting Arzum’s 58 years of industry experience and 6 years of IFA experience. We showcased 75 different products. We unveiled the Arzum OKKA Espresso series, which will transfer our expertise in Turkish coffee to espresso and various hot and cold beverages, marking its 10th year. We also presented 17 new products, including our multifunctional smart kitchen robot Thermogusto and the Revolution series in personal care, for the appreciation of the trade show participants. As Arzum, we aim to build a strong presence in strategically prioritized countries. We believe that we will see the benefits of the innovative products we showcased at IFA and the collaboration discussions we conducted in sales in the near future. We are determining market entry strategies for target foreign markets where we have not yet entered with the Arzum and Arzum OKKA brands, advancing steadily toward becoming a global brand. IFA Berlin holds an important place in our market entry strategies for target overseas markets with the Arzum and Arzum OKKA brands. We believe IFA will contribute significantly to our 2024 objectives, which focus on increasing our international sales volume and the number of countries we operate in,” he stated.
Altınok noted that Arzum has solidified its value through its R&D investments, service quality, and commitment to its users with numerous awards. “As in every period, we were once again awarded multiple times in the third quarter of this year, as we have been every year since 2001 in the ‘Vision Awards’ competition, where annual activity reports are assessed on an international platform. With our 2023 Activity Report, we won six different awards. In an evaluation conducted by LACP (League of American Communications Professionals), one of the world’s most reputable public relations platforms, Arzum received a score of 99 out of 100 for its 2023 Activity Report, winning the highest distinction known as the ‘Platinum Award’ in this category. With the report themed ‘We Add Value to Life with Innovations,’ Arzum ranked 57th among all reports globally,” he stated.
He also mentioned that they are continuing their promotional activities for Turkish coffee at full speed, sharing that they participated in the Coffee Summit 2024, which brought together significant brands from both the domestic and foreign coffee sectors in the third quarter. He noted that they made a mark at the Ankara Coffee Festival, held for the eighth time this year, with their new OKKA Espresso Series and the offerings prepared for the event. He concluded by stating that the new series, introduced to coffee enthusiasts for the first time at the Ankara Coffee Festival after the Istanbul Coffee Summit, received great appreciation from festival participants.