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‘Turkey’s Second 500 Largest Industrial Enterprises-2021’ results have been announced

According to the “ISO Turkey’s Second Top 500 Industrial Enterprises-2021” research of the Istanbul Chamber of Industry (ICI), net sales of the Second 500 from production increased by 77.5% from ₺191.1 billion to ₺339.2 billion.

Following the “ISO Turkey’s Top 500 Industrial Enterprises-2021” survey announced in May, ISO also announced the results of the “ISO Turkey’s Second Top 500 Industrial Enterprises-2021” research, which mostly covers organizations in the nature of SMEs.

Accordingly, the net sales of the ISO Second 500 from production in 2021 increased by 77.5% from ₺191.1 billion to ₺339.2 billion.

Considering the 2021 ranking of the ISO Second 500 based on net sales from production; Ege Seramik took the first place with ₺980.1 million. Kozlu Gida followed Ege Seramik with a small margin of ₺979.8 million, while Kangal Thermal Power Plant came in third with ₺979.7 million.

137 new industrial enterprises entered this year’s list of the ISO Second 500. 57 of them consisted of companies that fell from the ISO 500 to the ISO Second 500. While the number of new companies that entered the list last year from outside the ISO 1000 was 80, the number of companies that made it to the ISO 500 from the ISO Second 500 list in 2020 was 39.

“Our industrial establishments got their share of the stronger global demand”

Erdal Bahcivan, Chairman of the Board of Directors of ICI, whose views were included in the statement, stated that the results of the ICI Second 500 in 2021 are a reflection of the industry in a dynamic year that the world economy went through with the pains of coming out of the epidemic crisis.

Bahcivan stated that with the vaccine applications in 2021, the demand for almost every sector in the world recovered earlier than expected. “This brought along the supply crisis. The most devastating side effect of the record monetary expansion provided by loose monetary and fiscal policies was global inflation, the consequences of which we are still experiencing today.”

Bahcivan stated that in Turkey, which closed the year 2021 with a double-digit growth, industrial establishments got their share from the global demand, which was strengthened by their performance in foreign markets, and said:

“The export of the ISO Second 500, which consists of smaller scale and SME companies compared to the ISO 500, offers a more successful outlook than the overall Turkey and ISO 500 in 2021 with a growth of 35%. However, when we look at the data of the ISO Second 500, a significant deterioration in the borrowing structure draws our attention. These data reveal that in the ISO Second 500, business activities are increasingly financed by borrowing. The most important thing is that there is a noticeable shortening in the maturity structure of the debt.

When we look at it, the share of financial debts in total debts decreased from 57.6% to 54.2%, while the share of other debts increased from 42.4% to 45.8%. This means: ISO Second 500 companies used their commercial debts much more to finance their activities and to meet the increasing working capital needs. In other words, in 2021, industrialists borrowed from other companies at a much faster rate than they owed to banks. This draws attention as a new situation that we encounter in the ISO Second 500 researches.”

“Companies successfully managed operating expenses and currency fluctuations”

Erdal Bahcivan stated that companies, especially exporting industrialists, have experienced various difficulties in accessing qualified and quality finance in recent years, “Looking at this picture, we can say the following. The situation that our industrialists are in in the last period, when financing conditions have tightened and credit opportunities have narrowed, is extremely worrying as it points to payment risks that may develop as a chain reaction.”

Stating that SMEs need more large-scale investments in order to scale up, increase competitiveness and expand their market, Bahcivan stated that there is no doubt that the rise in exchange rates and the tightening in financing conditions create a more challenging environment for SMEs compared to giant companies.

Bahcivan emphasized that it is an important success that the sales from production, which is the main size criterion of the ISO Second 500 companies, increased by 77.5% from ₺191.1 billion to ₺339.2 billion in 2021.

Stating that the second 500 companies successfully managed both their operating expenses and the exchange rate fluctuations during the year in a way not to be equal to the ISO 500 in 2021, Bahcivan noted that there were remarkable improvements in both EBITDA and pre-tax profitability.

Bahcivan stated that financial expenses continue to be one of the main determinants of profitability in the Second 500 as in large organizations, “The fact that the financing expenses of the ICI Second 500 have increased by 114.4% in 2021 to ₺20.1 billion due to the depreciation of the Turkish lira, the increase in inflation and the rise in interest rates, is a clear indication of this. It is imperative for our country’s industry to achieve a technology-based, qualified and value-added production structure in terms of our competition with the world. However, it is seen that a low and medium-low technology weighted structure of over 70% still cannot be overcome in the ICI Second 500 in 2021. This shows that we still have a long way to go.”

“A serious leap is needed in R&D spending”

ICI Chairman of the Board of Directors Bahcivan stated that a serious leap is needed in R&D expenditures and said:

“As a matter of fact, the ICI Second 500 results underline that the resources allocated by industrial organizations for R&D are stuck below 5 per thousand compared to sales from production. Our industry needs much more than that in an increasingly digitalized global competitive environment. In 2021, the employment of the ISO Second 500 increased by 5% to 261 thousand people, while the increase in salaries and wages paid in the same year was 39%. The employment-inducing feature of the industry was also seen here.

As of 2022, we are going through a period in which the expectations for inflation and growth in the world become negative, and a return to the 1970s and stagflation concerns are increasing. Unfortunately, it does not seem possible for our industry not to be affected by this weather change. In this context, the results of the ICI Second 500 in 2021 not only point to the ability of our industrialists to adapt to changing conditions, but also reveal the lessons to be learned in order to be prepared for a difficult period.”

Source: Trthaber / Translated by Irem Yildiz

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