The Istanbul Chamber of Industry (ISO) unveiled the results for 2022 of Turkey’s Top 500 Industrial Enterprises Survey. This annual survey, uninterrupted since 1968, highlights the powerhouses of the Turkish industrial sector. Notably, this year, companies from the flour, pasta, and biscuit sectors featured prominently on the list.
Within the ISO 500 rankings presented by the Istanbul Chamber of Industry, the top 10 remained unchanged. Tüpraş led the charge with an impressive sales figure of 418.4 billion liras based on production. Following closely, Star Rafineri came in second with 189.2 billion liras, and Ford Otomotiv took the third spot with sales amounting to 140.1 billion.
The ISO 500 list showcased several standout companies relevant to our sector. This includes 6 flour manufacturers, 6 pasta companies, and 4 producers of biscuits, yeast, and starch.
Among the leaders in the biscuit and snack category, Eti Gıda Sanayi secured the 43rd position with production-based sales tallying up to 18.906 billion liras.
In the realm of pasta, Oba Makarnacılık Sanayi made its mark as the premier pasta company, sitting at the 118th spot with sales of 7.697 billion liras. Hot on its heels, Mutlu Makarnacılık Sanayi occupied the 138th rank, pulling in sales of 6.805 billion liras, thereby clinching the second position in the pasta sector.
The flour sector spotlighted Eksun Gıda Tarım Sanayi, the pioneers behind Turkey’s first packaged flour brand, Sinangil. They ranked 255th with sales amounting to 3.859 billion liras. Meanwhile, Ulusoy Un clinched the 273rd spot with 3.644 billion liras in net production sales. Doruk Un Sanayi, having garnered attention for its recent investment forays, secured the 465th position with sales figures of 2.239 billion liras.
Pasta producers.
Flour producers.
Biscuit, years and starch producers.
Ulusoy: Aiming to join the top 100 industrial enterprises
Dr. Eren Günhan Ulusoy, Chairman of Ulusoy Un — currently ranked as Turkey’s 273rd largest industrial enterprise on the ISO 500 list — stated, “Our dedicated teams persistently strive towards our evolving objectives.”
Shedding light on the company’s aspirations, Ulusoy mentioned, “After advancing 102 spots on the list since 2021, our vision is broader than just flour production. We envisage Ulusoy Un becoming a global leader across the entire flour and baked goods sector. Our strategic focus is to be prominently present throughout the entire value chain, especially within the consumer segment. A significant leap in this direction was our acquisition of Söke Un in January 2022. We intend to leverage Söke’s retail product experience to expand further within the comprehensive flour and baked goods domain.”
Emphasizing their global reach, Ulusoy shared, “Exporting to 101 countries underlines our unwavering commitment to international growth. With our recent acquisition of a factory in Hatay this past April, our daily production capacity surged to 4,200 tons, fortifying our dominance in the Turkish flour market. In the coming times, we’re set on climbing into the prestigious ranks of Turkey’s top 100 industrial establishments.”
SALES SURGE 119% TO 4.485 TRILLION TRY
Erdal Bahçıvan, Chairman of the ISO Board of Directors, has attributed the delay in this year’s announcement of the ISO 500, which was previously disclosed in late May, to the devastating earthquake. Bahçıvan’s statement reads:
“We’re announcing a bit later than usual this year. To touch briefly on the reason for this delay: early this year, we were hit by the Kahramanmaraş earthquake, a tragedy that deeply scarred our nation. We mourn the loss of tens of thousands of our citizens. Our grief remains raw. From here, I offer prayers for God’s mercy upon those we lost and extend my deepest condolences to their grieving families.
The financial toll of this unprecedented disaster, which impacted 11 of our provinces, was massive. Many of our industrial sites remained non-operational for weeks. Recognizing the challenges, our government declared a state of force majeure in the affected region, giving businesses a reprieve from their tax obligations.
As you’d understand, many industrial establishments from these 11 provinces feature in the ISO 500 list every year. In 2021, 72 of them made the list. This year, that number stands at 66. Once these companies could share their financials with us, we quickly initiated and concluded our ISO 500 research.
It’s vital to note that several of our industrial facilities listed from the region experienced significant damage, some more than others. Despite the extent of the damage, every single one of our industrial entities managed to get back on their feet quickly. This resilience was made possible primarily by the sacrifices of their employees and the united support of both the government and fellow industrialists. I want to express profound gratitude to all who played a part in this recovery, especially our industry leaders.
Our ISO 500 survey, aimed at providing an in-depth health check of our industry and, to some extent, the Turkish economy, is invaluable thanks to the transparency of our participating companies. Their willingness to share vital information has been pivotal, and I extend heartfelt appreciation to all these industrial organizations for their invaluable contributions.
Before delving into the findings of our 2022 ISO 500 Industrial Enterprises survey, it’s crucial to briefly consider the backdrop against which these results emerged. Reflecting on the past year, we saw the re-emergence of global inflation and contended with price shocks primarily in the energy and food sectors due to the Russia-Ukraine conflict. Central banks globally reacted with swift interest rate hikes in response to mounting inflation. It was undoubtedly a challenging year filled with uncertainties.
Our economy, though impacted, demonstrated resilience. Strong exports in the first half and robust domestic demand throughout the year enabled us to achieve a 5.5% growth in 2022, distinguishing our performance from global trends. However, this growth came at the cost of soaring inflation and a widening current account deficit. Numerous policies, falling under the debated “New Economy Model” framework, focused on maintaining low exchange and interest rates and controlling credit distribution, shaping the financing landscape for the real sector.
Survey results highlight that in the ISO 500, production-derived sales surged by 119% in 2022, rocketing from 2 trillion 48 billion Turkish Liras to a staggering 4 trillion 485 billion Turkish Liras. This marked rise can be attributed to a combination of robust export performances, vibrant domestic demand, escalating exchange rates, and prices.
When adjusted for end-of-year CPI inflation, production-derived sales in 2022 showcased a 33.3% real growth compared to the previous year. We’ve consistently used the end-of-year CPI for such adjustments. However, it’s worth noting that while the end-of-year CPI stood at 64.27%, the PPI soared to 97.72%.
At this juncture, I must emphasize that the more accurate reflection of inflation for industrialists is the PPI. The growing gap between producer and consumer inflation rates is concerning. In fact, when considering the end-of-year PPI, the real growth in production-derived sales reduces to just 10.8%.
Examining the distribution of production-derived sales, we see a slight shift: the top 50 companies, traditionally accounting for around 50% of the total, now contribute 52%. The top 100 companies collectively make up 65% of the ISO 500.
Companies ranked between 100-200 contribute 14.4% to the ISO 500, while the remaining 300 companies account for 20.6%. Historically, these percentages have remained relatively consistent.
ENCOURAGING EXPORT PERFORMANCE
When assessing the export performance of the ISO 500, it’s evident that their contribution to Turkey’s overall and industrial exports is both significant and commendable.
Reflecting on 2022, in the face of global downturns in growth, Turkey marked a pivotal success in its export endeavors. Exports surged, achieving a 12.9% increase, crossing the 254 billion dollar threshold.
Conversely, exports from the ISO 500 grew by 14.1%, approaching the 98 billion dollar mark. It’s noteworthy that the ISO 500’s growth in exports outpaced Turkey’s overall performance by 1.2 percentage points, setting a historical record for both Turkey and the ISO 500 itself. When observing the share of the ISO 500 in Turkey’s industrial exports, we find it comprises an impressive 40%.
In 2022, the ISO 500’s operating profit witnessed a leap of 96%, climbing from 342 billion Turkish Lira (TRY) to 671 billion TRY. However, there was a decline in the operating profitability ratio, dipping 2 points from 14.8% to 12.8%. Similarly, earnings before interest, tax, depreciation, and amortization (EBITDA) rose sharply, nearly doubling from 405 billion TRY to 808 billion TRY. Mirroring the shift in operating profitability, the EBITDA profitability ratio also experienced a decrease, sliding by 2.1 percentage points from 17.5% down to 15.4%.
ANATOLIA’S PRESENCE GROWS ON THE LIST
When categorizing the companies in the ISO 500 by their affiliated chambers, we observe a growing favor towards Anatolia.
While there’s been a numeric decline in recent years, the Istanbul Chamber of Industry still holds the lion’s share, representing 152 companies. Following closely behind is the Kocaeli Chamber of Industry with 40 member organizations.
Subsequent to them, the Ankara Chamber of Industry showcases 39 organizations, and the Aegean Region Chamber of Industry has 38. Further down the list, we find the Gaziantep Chamber of Industry with 28 organizations, the Kayseri Chamber of Industry with 17, and the Bursa Chamber of Commerce and Industry featuring 15.
Assessing the sectoral distribution of the ISO 500 based on our Chamber’s 10-sector classification, we note:
In 2022, “basic metals and machinery manufacturing” led the charge in terms of production sales, claiming a 23.4% share. Hot on its heels was the “chemical products, plastics, and rubber products” sector, securing a nearly identical share of 23.3%. The “land, marine vehicles, and sub-industry” took the third spot with 14%.
TÜPRAŞ RETAINS ITS LEAD
In the ISO 500’s 2022 report, Tüpraş emerged as the largest organization based on sales from production, boasting an impressive 418.4 billion Turkish Liras in sales. This continued dominance reaffirms its long-standing leadership. The second spot was clinched by Star Rafineri with 189.2 billion Liras. Ford Otomotiv followed closely, ranking third with sales amounting to 140.1 billion. It’s notable that the top 10 companies maintained their positions from the previous year, 2021.
The ISO 500’s 2022 results stand as a testament to our industry’s unwavering strength, successfully navigating through a challenging year. Our industrial giants marked notable improvements in many key metrics. However, both global and local macro indicators hint at 2023 presenting even tougher conditions for the industrialists. It won’t be surprising to witness the implications of these challenges in next year’s ISO 500 report.
In recent times, we’ve begun to experience the ripple effects of tightening global monetary policies. Key indicators for world production trajectories and our primary export markets, including the Eurozone, the US, and the UK, suggest a more moderate growth pace for 2023 in comparison to 2022.
MEASURES TO NEGATIVELY IMPACT 2023 ISO 500 RESULTS
Throughout 2021 and into the first half of 2022, the Export Climate Index remained robust, largely due to the significant contribution of exports to growth. However, it began to wane in the latter half of 2022. By August 2023, it dropped below the critical 50-point threshold, signaling a contraction. Given this backdrop, it’s challenging to argue that the global outlook presents any notable optimism for exports.
Turning to our domestic situation, we’re currently navigating challenges tied to key macroeconomic vulnerabilities, notably inflation and the current account deficit. The actions taken to address these vulnerabilities are bound to slow our growth momentum. The dip of the ISO Turkey Manufacturing PMI into contraction territory in the latter half of this year underscores this point. Sharp decreases in areas like new orders and new export orders further temper optimism for the upcoming months.
Simultaneously, our Central Bank’s tightening measures, initiated since June, have prompted a significant surge in market interest rates. This strategy is anticipated to curb the imports that have been buoyed by a strong consumer spending trend. Thus, as exports recede, we can expect a slight weakening in the potent domestic demand that’s been bolstering our industrial production.
A notable fallout from the rising interest rates is the apparent uptick in our industrialists’ financing costs – a trend that has become increasingly visible. Given all these dynamics, it wouldn’t be surprising to see adverse effects on various metrics in the 2023 ISO 500 study, such as sales performance, financing costs, exports, and resource allocation.
THE “MEDIUM-TERM PROGRAM” HOLDS SIGNIFICANT WEIGHT FOR US
The ISO 500 data should also be interpreted as a testament to our industrialists’ confidence in our country’s future. This unwavering faith and resolve hinge heavily on achieving financial stability, which is paramount for both our industrialists and the broader production landscape. We highly value the steps undertaken by our economic policymakers to restore this financial stability, essential for fostering sustainable and quality growth.
This sentiment underscores why we hold the recently unveiled “Medium-Term Program” in such high regard. It’s a strategy many of us have eagerly anticipated and wholeheartedly support. Our expectation is for this program to be executed with unwavering commitment.
I’m confident that the successful implementation of this Medium-Term Program will also pave the way for the influx of foreign resources our country has long sought. We earnestly hope these resources will catalyze high-quality, technology-driven industrial investments, fulfilling a longstanding need.