In the second ISO 500, profits increased by 98 percent and salaries increased by 76 percent.

According to the research “Turkey’s Second 500 Largest Industrial Companies-2022” prepared by the Istanbul Chamber of Industry (ISO), the pre-tax profit of the country’s second 500 largest industrial companies increased by 98 percent in 2022 , reaching 74.7 billion Turkish liras.

The operating profit of these companies increased by 91 percent, reaching 100.4 billion lira.

On the other hand, in the same period, the operating profitability rate decreased 1.1 points to 12.6 percent.

Likewise, profit before interest, depreciation and taxes reached 121.1 billion lira, an increase of 90.2 percent. Despite this increase, the EBITDA profitability ratio decreased by 1.4 points to 15.2 percent.

Total profits and losses before tax increased by 98.2 percent, from 37.7 billion lira to 74.7 billion lira. However, the profitability of sales index decreased by 0.4 points, from 9.8 percent to 9.4 percent.

All these events point to a slightly lower performance in profitability ratios compared to the previous year.

On the other hand, ISO Second 500 employment increased by 1 per thousand in 2022, reaching 261 thousand people.

The increase in total wages and salaries paid in the same year was 75.9 percent. The salary increase per employee was 75.7%.

Source: ISO

SALES INCREASED BY 105 PERCENT

Production sales of the second 500 largest industrial companies increased by 104.8 percent last year compared to 2021, reaching 694.8 billion lira.

In ISO Second 500, ordinary income and profits from other activities amounted to 70 billion lira, while ordinary expenses and losses from other activities amounted to 63.5 billion lira.

Last year, the contribution of non-operating income to profitability decreased significantly.

The share of non-operating income in total profits and losses for the period decreased from 17.2 percent in 2021 to 8.7 percent in 2022.

Although there were different trends due to the unique conditions of the years, it was seen that in 2022 the industrialist focused more on his core activities and made profits from his actual business.

INFLATION AND EXCHANGE RATE BENEFITS FOR COMPANIES

According to the research, which reveals important results in terms of the performance of small and medium-sized businesses, last year the industrial sector operated in an environment in which important events occurred such as the war between Russia and Ukraine, rising inflation and the tightening of financial conditions. Changes occurred and, as a result, global growth and trade lost momentum in the second half of the year.

In this context, if the results of the ISO Second 500 are analyzed, the production sales of the second 500 companies increased by 104.8 percent in 2022, reaching 694.8 billion lire. Strong domestic demand and export growth, as well as rising inflation and exchange rates, played a decisive role in this increase.

When changes in ISO Second 500 production-based sales were examined adjusting for year-end CPI inflation, there was a very strong real increase of 24.7 percent in 2022. However, this increase it remained below the 30.4 percent increase in 2021.

To calculate real changes, year-end CPI inflation was used, as in recent years. At the end of 2022, CPI inflation was 64.27 percent, while PPI inflation was 97.72 percent. Considering this rate, the real increase in sales from production remained at 3.6 percent.

HERE ARE THE LARGEST ISO SECOND 500 COMPANIES

Last year, the first place in ISO Second 500 was shared by the companies “Şirikçioğlu İplik” and “Denim” with production sales of 2 billion 54 million lira. Safa Tarım came in second place with 2 billion 51 million lira, and Erdoğanlar Aluminum came in third place with 2 billion 47 million lira.

The second ranking of the 500 included companies with production sales between 2 billion lire 54 million and 886 million lire. 125 new industrial companies were included in this year’s list. 51 of them were companies that dropped from ISO 500 to ISO Second 500.

Despite weakening global growth dynamics last year, Turkey’s exports increased by 12.9 percent, reaching $254.2 billion. In the same year, ISO Second 500 exports increased by 19.3 percent and reached $16.1 billion, reaching an all-time high level.

The export growth rate of ISO Second 500 was above that of Türkiye and ISO 500. The share of Second 500 in Türkiye’s industrial exports increased by 0.3 points to 6.5 percent.

The number of R&D organizations in the ISO Second 500 decreased by 7 to 228 in 2022, after reaching its highest level in 2021. (Source: ISO)

THE NUMBER OF ORGANIZATIONS CONDUCTING R&D DECREASED TO 228

The number of organizations engaged in R&D in the ISO Second 500 decreased by 7 last year compared to 2021, falling to 228. Expenditures on research and development increased by 111.5 percent, approaching 2.8 billion lire.

Company employment increased by 0.1 percent, reaching 261 thousand people. The increase in salaries and wages paid in the same year was 75.9 percent.

In the second 500, the number of publicly traded companies decreased from 5 to 26.

Although it has decreased numerically in recent years, the Istanbul Chamber of Industry had the largest participation in the list with 142 companies, followed by the Aegean Region Chamber of Industry and the Kocaeli Chamber of Industry with 39 organizations each, Gaziantep with 35, Bursa with 34, and Konya with 16.

FINANCIAL EXPENDITURE INCREASED TO 32.3 BILLION TL

The financial expenses of the Second 500 remained one of the main determinants of the profitability of industrial companies in 2022.

The Second 500’s financial expenses increased by 60.8 percent last year, reaching 32.3 billion lire. The ratio between financial expenses and operating profit decreased 6 points to 32.2 percent.

Although easing the pressure of financing costs on profitability is a positive development, the low interest rate environment in 2022, as well as regulations imposing strict conditions on the use of loans, were also considered effective in this case .

However, the fact that interest and credit access conditions have tightened significantly compared to that period makes the sustainability of the relative improvement in the ratio between financial expenses and operating profits questionable.

When examining the evolution of the companies’ assets and resource structures, it was seen that the growth of the second 500’s balance sheet was 68.2 percent. The data in question indicated that, unlike previous years, asset growth was financed by equity and not debt.

THE FINANCIAL DEBT INCREASED BY 38.2 PERCENT

While financial debts increased by 38.2 percent last year, the increase in other debts was greater, at 61.6 percent. Thus, while the proportion of financial debts in total debts decreased to 50.3 percent, the proportion of other debts increased to 49.7 percent.

Regarding the evolution of debts according to their maturities, the increase in short-term financial debts was 70.1 percent, well above the 6.3 percent increase in long-term financial debts. The most concrete reflection of this process emerged in the participation of short-term financial debts in the total financial debts.

This rate continued to increase in 2022 after 2021, reaching the highest level of the post-2008 period at 61.5 percent. This increase was due to the negative interest rate environment, as well as the fact that new credit regulations made it difficult to access long-term loans and encouraged the use of short-term loans.

Mobile VAT, which is one of the problems for which industrialists have been waiting for a reasonable solution in recent years, remained a serious problem for ISO Second 500 companies.

The tax in question increased by 72.7 percent, reaching 8.9 billion lire.