Top 500 Turkish enterprises increase production-based sales by 34% in 2018

The 500 top Turkish enterprises saw growth of their production-based sales hit a 14 year-high in 2018. The enterprises posted a total of TL 878 billion production-based sales in 2018, up 34.5% from the previous year, the Istanbul Chamber of Industry (ICI - ISO) announced.

ISO Board Chairman Erdal Bahçıvan announced Tuesday the results of the "Top 500 Industrial Enterprises of Turkey 2018 Survey" in a news conference. Accordingly, the refinery giant Tüpraş continued its longtime leadership to be Turkey's top industrial enterprise with production-based sales worth 79 billion Turkish liras ($14.9 billion) in 2018.

Automotive company Ford also maintained its second position with a production-based sales value of 31 billion TL ($5.85 billion). Toyota Automotive took third place with TL 23.6 billion ($4.45 billion).

The survey, which was released on Tuesday also found that car manufacturers Oyak-Renault and Tofaş — a joint venture of Turkey's Koç Holding and Italy's Fiat Chrysler — major appliances producer Arçelik, iron/steel companies Iskenderun Demir ve Çelik, Ereğli Demir ve Çelik and Içdaş Çelik, and vehicle producer Hyundai Assan, were also among top 10 enterprises.

The top 500 increased their exports by 11.3% to $71.8 billion, while their share in the country's total exports was 42.8% in 2018, rising from 41.1% in 2017. Automotive companies again led the exports with Ford ($5.7 billion), Toyota ($4.3 billion), Oyak-Renault ($3.4 billion), Tofaş (3.07 billion) and Hyundai Assan ($1.99 billion) ranking among the top 10, joined by Tüpraş ($2.47 billion), Arçelik (2.05 billion) and Içdaş ($1.17 billion), while the names of the eighth and ninth companies have not been disclosed.

The export growth rate of the ISO 500 exceeded the 7% growth rate of Turkey's total exports and industry exports last year. Based on this performance, share of İSO 500 in Turkey's industry exports has increased to 44.5%.

The top 500 Turkish enterprises posted a total of TL 878 billion ($165.7 billion) production-based sales in 2018, up 34.5% from the previous year. Increasing prices and foreign exchange rates were key factors in this rapid growth, according to the survey. The U.S. dollar / Turkish lira rate was 5.30 as of the end of 2018, reaching as high as 7.20 in August.

The fluctuation in lira also affected foreign exchange profits and losses. Total foreign exchange profits stood at TL 231.5 billion while total foreign exchange losses were TL 200 billion with some companies having tremendous profits with other exposed to significant losses.

The real growth in production-based sales fell from 19% in 2017 to 11.8% in 2018.

The first 50 enterprises' share in total production-based sales of the top 500 firms was 50.6% in 2018, up from 50.2% in 2017.

The operational profit rate of 500 enterprises' rose by 1.3 percentage point to 10.9%, coming to TL 107.8 billion ($20.34 billion), in the last year. Ordinary income and profits from other operations amounted to TL 270 billion, while ordinary expenses and losses from other activities stood at TL 214.2 billion in this period. Excluding the difference between these two items, net non-operating income was recorded as TL 55.8 billion. Net foreign exchange profits constituted TL 31.5 billion of this figure, while the remaining TL 24.3 billion included many items such as interest, participation and dividend income.

The increased interest rates in the second half of 2018 and the rise in inflation due to the depreciation of Turkish lira constituted negative financial conditions for the top 500. The share of financing expenses of the top 500 enterprises within operational profits rose from 49.8% to 88.9%, marking the most negative level since the ISO started announcing data on Turkey's top 500 companies in 1968. Bahçıvan said that this means almost all profits have been spared for financing costs.

The share of liabilities in operation financing increased by 4.1 percentage points to 67% percent. Financial liabilities, which continued to grow in real terms by doubling the rate of increase compared to the previous year, increased by 35.3% from TL 242.9 billion to TL 328.6 billion. The number of companies posting losses increased from 78 to 119, 24% of all 500.

Ebitda size of the top 500 enterprises increased by 48% to reach TL 140.2 billion, posting a six-year-high increase.

The employment of ISO 500 saw an increase of 2.4% from the previous year and stood at over 690,000 people last year. The average increase in salaries and payment was 20.2%, slightly below the annual average inflation rate of 20.3%.

Based on added value, low-tech industries constituted 37.5% of the top 500 enterprises, followed by mid-low tech industries at 35%, mid-high tech industries at 22.2% and high-tech industries at 5.3%. The number of firms conducting research and development operations increased to 276, the highest level since 2012. The number of firms with foreign partnership stood at 117 with two additional companies.

Bahçıvan stated that the results were pleasing for medium-high and high technology production. "We find it quite valuable and significant to see that the share of high-tech industries rose from 20.2% in 2017 to 22.2% in 2018, while the share of high-tech enterprises surged from 3.6% to 5.3%," Bahçıvan said.

Recalling that the minimum level to make the İSO 500 list with production-based sales turnover rose from TL 309 million to TL 414 million, Bahçıvan noted that the number of exporting companies rose from 398 three decades ago to 464 today.