The 2022 results of the 'Turkey's 500 Largest Industrial Enterprises Survey', which has been announced by the Istanbul Chamber of Industry since 1968, have been announced. In the research announced by ISO Chairman Erdal Bahçıvan, the largest organization in terms of sales from production in 2022 was Tüpraş with sales of 418.4 billion liras, followed by Star Refinery with 189.2 billion liras. Ford Automotive took the third place with sales from production of 140.1 billion. Noting that sales from production in the ISO 500 increased by 119 percent in 2022, from 2 trillion 48 billion liras to 4 trillion 485 billion liras, ISO Chairman Erdal Bahçıvan said, “This high rate of increase is due to the strong performance in exports as well as lively domestic demand, rising exchange rates and prices.” "The increase in TL equivalents of export revenues played a decisive role." said.
Total profit and loss increased by 121 percent, from 219 billion lira to 485 billion lira. However, the return on sales rate decreased by 0.2 points to 9.3 percent. This shows us that all profitability ratios had a lower profit year than last year.” he said.
INDUSTRIALISTS FOCUSED ON THEIR MAIN ACTIVITIES
Underlining that non-production activity revenues showed a limited increase in 2022 due to the loss of momentum in net foreign exchange profits, Erdal Bahçıvan said the following on the subject: “In other words, the contribution of non-production activity revenues to profitability has decreased significantly in 2022. In 2022, the ordinary income and profits of the ISO 500 from other activities were 683 billion lira, while their expenses and losses were 572 billion lira. When the difference between these two figures is taken, the non-production net income of the ISO 500 increased by 111 billion lira and the increase rate compared to the previous year was limited to 14.6 percent. I would also like to draw your attention to the non-production income of the industry in the last 10 years. We see that the share of non-operational income in the total period profit and loss has decreased from 88 percent to 23 percent in the last 5 years. “This shows us that industrialists are increasingly focusing on their core activities in recent years and making their profits from their real business.”
LOW INTEREST ENVIRONMENT WILL BE REFLECTED ON FINANCIAL EXPENSES IN 2022
Stating that financial expenses have been one of the most important elements of ISO 500 for many years, Erdal Bahçıvan noted that the financial expenses of ISO 500 will increase by 32.6 percent in 2022, from 209 billion lira to 277 billion lira. Erdal Bahçıvan, who informed that the ratio of financial expenses to operating profit decreased significantly from 61.1 percent to 41.3 percent, said, "As we have always pointed out for years and in 2018,
It is noteworthy that this rate, which was up to 89 percent, dropped to 40 percent. As can be seen, financial expenses have become a much less burden on businesses in 2022. However, it should not be forgotten that the low interest rate environment of 2022 and the regulations that bind loan usage to strict conditions are also effective. It is known how high the gap was when the financial conditions of that day were compared to today's interest and credit access conditions. Therefore, we will see more clearly how sustainable the relative improvement in the ratio of financial expenses to operating profit is in the 2023 ISO 500 data that we will announce next year.” he said.
GROWTH IN ASSETS COMES FROM EQUITY INSTEAD OF DEBT
Erdal Bahçıvan, who gave the information that the total assets of the ISO 500 increased by 83 percent from 2.1 trillion lira to 3.9 trillion lira in 2022, said that when the main items within the assets are examined, current assets increased by 78 percent from 1.4 trillion lira to 2.5 trillion lira; He said that fixed assets increased by 95 percent, from 706 billion lira to 1.4 trillion lira. Pointing out that the growth in assets was financed through equity rather than debt, unlike previous years, Bahçıvan stated that in 2022, equity capital increased by 124 percent, from 624 billion lira to 1.4 trillion lira, and total debts increased by 67 percent, from 1.5 trillion lira to 2.5 trillion lira. . Bahçıvan stated that, in addition to the support of high profits, with the effect of the decrease in borrowing opportunities and tendencies, the share of debt in the ISO 500 companies decreased from 70.7 percent to 64.3 percent, while the share of equity increased from 29.3 percent to 35.7 percent. brought.
COMMERCIAL DEBTS CAME TO THE FOREGOING IN FINANCE
Announcing that financial debts in ISO 500 increased by 64 percent from 796 billion lira to 1.3 trillion lira, Erdal Bahçıvan said, “It is understood that other debts also increased from 711 billion lira to 1.2 trillion lira, with an increase of nearly 70 percent. It is noteworthy that, similar to 2021, other debts grew above financial debts in 2022. In other words, commercial debts are used more in financing activities. We understand from the increasing use of commercial debt that companies are trying to solve their resource needs by borrowing within themselves, outside of financial institutions. Entering this debt cycle at a time when the economy begins to shrink will be one of the most challenging issues for the real sector. I would like to draw your attention to the fact that this situation may cause a break in the value chains between sectors in the coming days. When we look at the development of debts according to maturity in ISO 500 companies, we see that the increase in short-term financial debts is 99 percent, above the 37 percent increase in long-term financial debts. It is noteworthy that the share of short-term financial debts in total financial debts will exceed the 50 percent band for the first time in 2022, increasing from 42.8 percent to 52.1 percent. It is understood that this increase, as well as the negative interest rate environment, and new loan practices are effective in encouraging the use of short-term loans. He said that companies will be much more negatively affected by this situation in a high interest rate environment.
“We can.” said. 'LET THE TRANSFERRED VAT RECEIVABLES BE BANK GUARANTEE' Erdal Bahçıvan, who also made evaluations about the deferred VAT problem, also presented his suggestions for solving the problem. Erdal Bahçıvan said, “The deferred VAT problem, which we express at every opportunity as ISO, has become much more evident in 2022. The deferred VAT burden of the ISO 500 increased by 107 percent, approaching 49 billion lira. We define this cycle, as we often emphasize, as our industrial enterprises lending money to the state with zero interest and infinite maturity, despite the high need for resources. Unfortunately, this cycle continued to increase instead of decreasing in 2022. As we have brought to the agenda many times on various platforms, the solution that will give the industrialists the most relief in this regard is to turn the transferred VAT receivables into bank guarantee. "Turning it into a collateral instrument, especially for Eximbank loans, would be the most rational solution to this problem." he said. IT WAS A YEAR WHEN INFLATION INCREASED AND INTEREST RATES RISED Stating that the 2022 research was shared with the public on the 100th anniversary of the Republic, Erdal Bahçıvan said, “I think we should take a very brief look at the background of our 2022 ISO 500 Largest Industrial Enterprises research. First of all, we have experienced the return of inflation in the global economy. We saw the additional price shocks caused by the Russia-Ukraine war, especially in the energy and food sectors. We have left behind a difficult year in which central banks accelerated interest rate increases in the face of rising inflation and the climate of uncertainty intensified. Undoubtedly, our economy was affected by these developments. However, thanks to strong exports in the first half and the vitality of domestic demand throughout the year, our economy was able to differentiate itself from this negative process in the world by growing by 5.5 percent in 2022. However, this growth undoubtedly had serious costs such as high inflation and current account deficit. "Within the framework of the 'New Economic Model', which is far from rational economic policies and whose contribution to financial stability and sustainability is debated, numerous regulations that keep exchange rates and interest rates low and restrict the flow of credit determined the financing conditions of the real sector throughout the year." he said. MORE DIFFICULT CONDITIONS AWAIT THE INDUSTRIALISTS Emphasizing that the ISO 500 results for 2022 are proof that the industrialists have completed a difficult year with a strong performance, Erdal Bahçıvan continued his words as follows: “It is seen that our industrial giants have achieved significant improvements in many basic indicators. On the other hand, many macro indicators and developments on both a global and local scale show us that 2023 will present much more challenging conditions for industrialists. It will not be surprising to see the effects of this process in the 2023 ISO 500 results, which we will announce next year. Because we started to see the effects of tightening monetary policies in the global economy with a delay. As a matter of fact, both the course of world production and the expectations for our main export markets such as the Eurozone, the USA and the UK point to a lower growth pace in 2023 compared to 2022. The Export Climate Index data we announce every month confirms our assessment. This index, which remained strong throughout 2021 and in the first half of 2022, when the contribution of exports to growth was high, started to weaken as of the second half of 2022. As of August 2023, it fell below the 50 threshold and was in the contraction zone. In this sense, it is quite difficult to say that the global outlook offers significant optimism in terms of exports. If we look at domestic developments, especially since the second half of this year, we are at the beginning of a period of struggle against our basic macro vulnerabilities such as inflation and current account deficit. Steps taken in this direction will inevitably lead to a loss of momentum in growth. The fact that ISO Turkey Manufacturing PMI fell into the contraction zone in the second half of the year confirms this. "The sharp declines in sub-items, especially new orders and new export orders, limit optimism for the coming months." 'THERE WILL BE A SIGNIFICANT INCREASE IN FINANCING COSTS' On the other hand, underlining that there have been sharp increases in market interest rates due to the tightening process initiated by the Central Bank since June, Erdal Bahçıvan said, “This process is also expected to reduce imports, especially fueled by the strong consumption tendency. Therefore, in a period when exports are retreating, it is inevitable that the strong domestic demand that supports industrial production will also weaken somewhat. Another outcome of the interest rate increase process will be a significant increase in the financing costs of our industrialists, the effects of which we have begun to see for a while. To reiterate, it will not be surprising if all these elements reflect negatively on indicators such as sales performance, financing costs, exports and resource structure in the 2023 ISO 500 research results.” he said. THE SUCCESS OF MTP WILL ENSURE THE FLOW OF EXTERNAL RESOURCES Turkish industrialists, especially with the pandemicEmphasizing that Turkey continues to be at the forefront of the struggle for growth and development in 2022, as always, despite the fluctuations and disruptions in foreign markets, supply problems caused by the Russia-Ukraine war and financial difficulties within the country, Erdal Bahçıvan said, “What we share with you today is We should also accept ISO 500 data as an indicator of our industrialists' belief in the future of our country. In order for this belief and determination to continue unabated, the greatest need of our industrialists and production life is financial stability. In this context, we find important the steps taken by the economic management towards the re-establishment of financial stability, which is necessary for the sustainable and qualified growth that we express at every opportunity. For this reason, we attach great importance to the "Medium Term Program", which we have all been waiting for and which we support as the Chamber, and which was recently announced after careful study. I believe that the success of the Medium Term Program, which we expect to be implemented with determination, will also provide the flow of foreign resources that our country has needed for a long time. This resource flow; "Our greatest wish is to provide qualified new industrial investments based on technology that we have needed for a long time." said.
The 2022 results of the 'Turkey's 500 Largest Industrial Enterprises Research', which determines the league of giants of the industrial sector prepared by the Istanbul Chamber of Industry (ISO) and has been announced continuously since 1968, were shared with the public. ICI Deputy Chairman of the Board of Directors İrfan Özhamaratlı and Cemal Keleş attended the 'Turkey's 500 Largest Industrial Enterprises Research' meeting announced by ICI Chairman of the Board of Directors Erdal Bahçıvan. On the other hand, in addition to the current ISO 500, the content of the research conducted 50 years ago, that is, in 1973, as the Top 100 Companies, was also shared, as has been the case for the last 5 years. In the ISO 500 study, the largest company in terms of sales from production in 2022 was Tüpraş, with sales of 418.4 billion lira, and this organization maintained its leadership in 2022, which it has maintained for many years. The second largest organization by sales from production in 2022 was Star Refinery with 189.2 billion lira. Ford Automotive took the third place with sales from production of 140.1 billion. There was no change in the companies in the top 10 of the ranking compared to 2021.
66 COMPANIES FROM THE EARTHQUAKE AREA ARE ON THE LIST
Erdal Bahçıvan stated that the research, which was shared in May in previous years, was announced in September due to the earthquake disaster that affected 11 provinces this year and devastated the whole of Turkey, and said, “At the beginning of this year, we experienced the Kahramanmaraş earthquake, which deeply injured our country. We lost tens of thousands of our citizens. Our pain is still very fresh. The economic destruction of the disaster, which was unprecedented in the world and affected 11 of our provinces, was also great. Many of our industrial facilities could not operate for weeks. Our government declared a state of force majeure in this region and postponed the tax liabilities of our companies. As you will appreciate, many industrial enterprises from these 11 provinces are included in the ISO 500 Grand List every year. In our 2021 list, this number was 72. We see that this number will be 66 in 2022. "As these companies came to the point of sharing their financial data, we started our ISO 500 research and completed it as soon as possible." he said.
'WIDE SPRINGS IN PRODUCER AND CONSUMER INFLATION'
Noting that sales from production in the ISO 500 increased by 119 percent in 2022, from 2 trillion 48 billion liras to 4 trillion 485 billion liras, Erdal Bahçıvan continued his words as follows: “In this high-rate increase, in addition to the strong performance in exports, lively domestic demand, rising exchange rates and prices We can say that the increase in TL equivalents of export revenues plays a decisive role. When we look at the real changes in sales from production of the ISO 500 Largest organizations, the following result draws attention: When the data for 2022 is adjusted for end-of-year consumer inflation, it is seen that sales from production increased in real terms, with 33.3 percent compared to 2021. When calculating real changes, we used year-end CPI inflation this year, as we have always done in recent years. But on the other hand, we know that at the end of 2022, while CPI inflation was 64.27 percent, PPI inflation reached 97.72 percent. At this point, I would like to remind that the real inflation that reflects the economic realities of the industrialists is PPI, and emphasize that PPI is increasing much faster and the gap between producer and consumer inflation is quite wide. As a matter of fact, when the year-end PPI inflation is used, the real increase in sales from production decreases to 10.8 percent.”
PROFITABILITY RATIOS ARE LOWER THAN LAST YEAR
Stating that the ISO 500 increased its profits at high rates by using its resources efficiently, as well as its sales, and showed a generally successful performance in these areas, Erdal Bahçıvan said, “The operating profit of the ISO 500 in 2022 increased by 96 percent, from 342 billion lira to 671 billion lira. On the other hand, the operating profitability rate decreased by 2 points from 14.8 percent to 12.8 percent. Similarly, we see that profit before interest, depreciation and tax increased by almost 100 percent, from 405 billion lira to 808 billion lira. In the same year, EBITDA profitability rate decreased by 2.1 points from 17.5 percent to 15.4 percent, just like operating profitability. before tax
