< Previous50 OCTOBER 2022 The share of financial debt in total debt dropped. In 2021, financial debts of the ISO 500 grew at a rate of 59.3 percent while other debts rose by 86.5 percent. Thus, whi- le the share of financial debt decreased to 52.8 percent in 2021, the share of other debts rose to 47.2 percent. Com- mercial debts were preferred to finance operations. Funding Structure (%) Top 500 Industrial Enterprises201320142015201620172018201920202021 Short-Term Debts36.234.634.935.638.041.641.341.145.0 Long-Term Debts20.822.425.226.324.925.427.227.325.7 Total Debts57.057.060.161.962.967.068.468.470.7 Equity 43.043.039.938.137.133.031.631.629.3 100.0100.0100.0100.0100.0100.0100.0100.0100.0 Private Enterprises201320142015201620172018201920202021 Short-Term Debts38.536.837.438.040.443.342.542.246.0 Long-Term Debts22.623.225.627.025.226.028.027.925.7 Total Debts61.160.063.065.065.669.470.670.171.6 Equity 38.940.037.035.034.430.629.429.928.4 100.0100.0100.0100.0100.0100.0100.0100.0100.0 Public Enterprises201320142015201620172018201920202021 Short-Term Debts17.015.311.114.615.624.627.028.029.8 Long-Term Debts6.015.421.220.522.019.117.519.526.2 Total Debts23.030.732.335.137.643.744.547.456.0 Equity77.069.367.764.962.456.355.552.644.0 100.0100.0100.0100.0100.0100.0100.0100.0100.0 RATES OF CHANGE 59.3% 71.1% TOTAL DEBT FINANCIAL DEBT OTHER DEBT 86.5%OCTOBER 2022 51 Ceasing of public support programs raised the share of short-term borrowing. The share of short-term financial debts in total financial debts, which fell to its lowest level with 37.8 percent in the ISO 500 in 2016, showed an increasing trend in 2017 and 2018. The share of short-term financial debts in total finan- cial debts, which peaked at 45.3 percent in 2018, fell to 41.4 percent in 2019 and to 41.2 in 2020. This share rose by 1.6 points to 42.8 percent in 2021. As is known, public support loans were discontinued at the end of 2020. Therefore, industrial establishments turned to banks and other financial institutions for credit facilities again in 2021. In addition, while the cost of borrowing increased in 2021, enterprises mostly preferred short-term revolving loans, which have lower costs. Short-term loans were also the popular choice to finance rapidly increasing exports. In line with these developments, the share of short-term financial debt in overall financial debt rose. As of 2021, the long-term financial debts of the ISO 500 were higher than short-term financial debts in 12 of the 24 sub-sectors. On a YoY basis, the number of sectors with hi- gher long-term debts decreased by two, while the number of sectors with higher short-term debts increased by one. The manufacture of basic metals ranked at the very top with the highest financial debt. The manufacture of food products, which had ranked second in 2020, remained its position in 2021. The electricity, gas, steam and air conditioning supply, whi- ch had ranked seventh in 2020, rose to the third place in 2021. Among the sectors whose short-term financial debts were significantly above their long-term financial debts, the manufacture of food products, the manufacture of other transport equipment and the manufacture of electronics stand out. In the manufacture of basic metals, short-term financial debts exceeded long-term financial debts once again. The sectors whose long-term financial debts were signi- ficantly above their short-term financial debts were the manufacture and distribution of electricity, gas, steam and air conditioning systems, mining and quarrying, the manu- facture of refined petroleum products, motor vehicles and mineral products. SHARE OF SHORT-TERM FINANCIAL DEBT IN TOTAL FINANCIAL DEBT (%) 2018 45.3 2020 41.2 2017 41.9 2019 41.4 2021 42.8 Changes in Debts (TL) Total Debts Financial DebtsOther Debts ValueShare (%)ValueShare (%) 2016379,080,634,920207,366,601,03254.7171,714,033,88845.3 2017447,231,461,383242,877,446,34554.3 204,354,015,03845.7 2018589,493,485,990328,597,965,01555.7260,895,520,97544.3 2019716,338,725,686406,312,909,87256.7310,025,815,81443.3 2020881,106,972,024499,566,278,54556.7381,540,693,47943.3 20211,507,359,556,516795,915,421,53052.8711,444,134,98647.2 Change (%) - (2021/2020)71.159.3-86.5-52 OCTOBER 2022 Financial Debts (TL) Sectors Short-Term Financial Debts Long-Term Financial Debts Total Financial Debts 05-08Mining and quarrying7,624,300,97647,139,689,16154,763,990,136 10Manufacture of food products54,928,348,20922,337,720,96277,266,069,171 11Manufacture of beverages3,802,480,72513,799,149,72217,601,630,447 12Manufacture of tobacco products49,935,000-49,935,000 13Manufacture of textiles33,474,925,94429,657,607,73163,132,533,675 14Manufacture of wearing apparel2,625,012,1391,148,467,6823,773,479,821 16 Manufacture of wood and of products of wood and cork (except furniture) 4,008,475,0788,068,771,84012,077,246,918 17Manufacture of paper and paper products4,756,945,4739,961,534,07414,718,479,548 19Manufacture of coke and refined petroleum products17,489,168,83055,906,479,34573,395,648,174 20Manufacture of chemicals and chemical products31,997,900,21228,363,408,29460,361,308,506 21 Manufacture of basic pharmaceutical products and pharmaceutical preparations 1,971,329,7031,707,083,7763,678,413,479 22Manufacture of rubber and plastic products11,854,240,4017,274,364,25819,128,604,660 23Manufacture of other non-metallic mineral products17,467,634,65230,151,222,12747,618,856,780 24Manufacture of basic metals64,470,231,94052,947,631,933117,417,863,873 25 Manufacture of fabricated metal products (except machinery and equipment) 3,316,128,6713,397,246,5486,713,375,219 26Manufacture of computer, electronic and optical products9,615,718,5461,899,678,15511,515,396,701 27Manufacture of electrical equipment13,743,386,30123,349,542,59737,092,928,898 28Manufacture of machinery and equipment N.E.C.3,872,592,4443,984,857,7867,857,450,231 29Manufacture of motor vehicles, trailers and semi-trailers24,560,444,65641,593,168,89366,153,613,549 30Manufacture of other transport equipment15,618,104,8696,361,230,36921,979,335,237 31Manufacture of furniture531,800,266726,611,6531,258,411,919 32Other manufacturing1,719,375,0811,635,554,1073,354,929,189 32.1Manufacture of jewellery, bijouterie and related articles1,719,375,0811,635,554,1073,354,929,189 35Electricity, gas, steam and air conditioning supply10,913,643,18263,067,778,30673,981,421,487 Total341,010,156,143454,905,265,387795,915,421,530OCTOBER 2022 53 In 2021, financial conditions were more favorable for industrial enterprises, despite the impact of financial fluctuations. Current ratio declined. Current ratio refers to businesses’ capability to liquidate their working assets and use the funds generated to meet their short-term financial liabilities. A working asset sto- ck that is greater in value than short-term debts indicates that the business has a net positive working capital and the capacity to fulfill its short-term financial liabilities. In 2021, the current ratio declined to 148.6 percent fol- lowing a YoY drop of 6.3 percentage points and returned to the levels of the two troubled years before 2020. This decline may be attributed to the commercial debt ma- turities that became shorter due to the deterioration in supply chains. The total debt to equity capital ratio rose significantly. The total debt to equity capital ratio, which remained flat in 2020, jumped in 2021 and reached its all-time high with 241.5 percent. The economic developments and financial shocks that mar- ked 2018 and 2019 caused a significant increase in total debt, and the total debt/equity capital ratio of the ISO 500 jumped from 169.9 percent to 216.6 percent. In other words, the total debt exceeded twice the size of equity capital. FINANCIAL RATIOS 2021 saw another one of these jumps in the debt/equity capital ratio. However, this increase was not due to the de- terioration of financial conditions, but to the rapid growth in operations and the fact that this growth was financed throu- gh more borrowing. Financial debt remained above equity capi- tal. In 2021, the financial debts of the ISO 500 grew faster than equity capital, and accordingly, the financial debts/equity capital ratio increased by 4.8 points YoY and stood at 127.5 percent. Industrial enterprises achieved a rapid growth performance in 2021, but the equity capital was insufficient to finance this growth. A sizable portion of financial debts consisted of foreign currency debts. As the exchange rates maintained their upward trend in the last months of 2021, the TL-equiva- lents of financial debts increased, causing the financial de- bts to equity capital ratio to rise. CURRENT RATIO (%) 200 150 100 50 0 20172018201920202021 153.7 147.6 154.9 148.6 147.1 250 200 150 100 50 0 TOTAL DEBT / EQUITY (%) 20182019202020212017 169.9 203.4 216.6 216.4 241.654 OCTOBER 2022 MAIN FINANCIAL INDICATORS Financial Ratios (%) ISO 500Private EnterprisesICI MembersPublic Enterprises 2018201920202021201820192020202120182019202020212018201920202021 Current Ratio (Current Assets / Short-Term Debts) 147.1147.6154.9148.6146.3147.3155.2149.1136.7142.0150.1147.5160.1153.8149.6137.1 Total Debts / Total Assets 67.068.468.470.769.470.670.171.669.069.567.768.743.744.547.456.0 Total Debts / Equity Capital 203.4216.6216.4241.5226.4239.8234.7252.6222.7227.3209.9219.177.780.290.3127.0 Short-Term Debts / Equity Capital 62.160.360.263.662.560.360.264.170.567.368.372.056.260.659.053.2 Financial Debts / Equity Capital 113.4122.9122.7127.5126.5135.5132.4132.0117.3123.1108.7110.242.048.355.581.6 Financial Debts / Total Assets 37.438.838.837.338.739.939.637.436.437.635.134.523.626.829.235.9 Equity Capital / Total Assets 33.031.631.629.330.629.429.928.431.030.532.331.356.355.552.644.0 EQUITY / TOTAL ASSETS (%) FINANCIAL DEBT / EQUITY (%) 2020 2021 127.5 2019 2018 113.4 2017 92.2 122.7 122.9 2020 2021 29.3 2019 2018 33.0 2017 37.1 31.6 31.6 Equity capital/asset ratio decreased. The equity capital to total assets ratio shows to what ex- tent industrial enterprises use equity capital to finance their activities. A high ratio points to financial health. The equity capital/total assets ratio of the ISO 500 remained unchanged in 2020 and decreased by 2.3 points to 29.3 percent in 2021. In other words, a smaller part of the growth in assets was financed by equity capital. The downward trend in the share of fixed assets in total assets continued. In 2018 and 2019, the deterioration in investment con- ditions, a fluctuating domestic demand and increases in financial expenses limited fixed asset investments. In 2020, and especially in 2021, fixed asset investments gained momentum. The long-term investment support loans provided in 2020 and the tendency of industrial en- terprises to engage in new capacity investments in the face of increasing domestic and foreign demand in 2021 were the drivers behind this momentum. In line with these developments, fixed assets grew by 51.1 percent in 2021 to hit TL 706.2 billion. The revaluation opportunity provided for fixed assets was also effective in this increase. The rapid growth in industrial activities led to a faster growth in current assets in 2021, so the share of current assets in total assets increased to 66.9 percent, while the share of fixed assets decreased to 33.1 percent.OCTOBER 2022 55 Sectoral Financial Ratios - 2021 (%) Sectors Current Ratio (Current Assets / Short-Term Debts) Total Debts / Total Assets Total Debts / Equity Capital Short-Term Debts / Equity Capital Financial Debts / Equity Capital Financial Debts / Total Assets Equity Capital / Total Assets 05-08Mining and quarrying260.655.0122.029.691.641.345.0 10Manufacture of food products128.671.9256.281.4152.942.928.1 11Manufacture of beverages179.774.1285.837.0223.057.825.9 12Manufacture of tobacco products108.277.9351.998.81.80.422.1 13Manufacture of textiles154.668.3215.864.0159.250.431.7 14Manufacture of wearing apparel126.163.5173.787.165.824.036.5 16 Manufacture of wood and of products of wood and cork (except furniture) 150.871.8254.954.9134.337.828.2 17Manufacture of paper and paper products166.762.6167.563.088.233.037.4 19Manufacture of coke and refined petroleum products93.799.111.112.960.65.389.748.10.9 20Manufacture of chemicals and chemical products152.962.9169.672.695.135.337.1 21 Manufacture of basic pharmaceutical products and pharmaceutical preparations 261.838.662.866.432.820.161.4 22Manufacture of rubber and plastic products135.171.0244.979.1114.033.129.0 23Manufacture of other non-metallic mineral products139.667.5207.654.7136.144.232.5 24Manufacture of basic metals152.965.9193.375.1102.234.834.1 25 Manufacture of fabricated metal products (except machinery and equipment) 189.860.8155.171.630.912.139.2 26 Manufacture of computer, electronic and optical products 145.767.8210.577.943.414.032.2 27Manufacture of electrical equipment159.973.1272.167.6124.633.526.9 28Manufacture of machinery and equipment N.E.C.218.048.694.478.238.319.751.4 29 Manufacture of motor vehicles, trailers and semi-trailers 156.473.2272.566.5131.235.226.8 30Manufacture of other transport equipment199.491.11.019.343.4333.529.88.9 31Manufacture of furniture244.241.972.172.022.112.958.1 32Other manufacturing195.872.5263.164.6190.652.527.5 32.1 Manufacture of jewellery, bijouterie and related articles 195.872.5263.164.6190.652.527.5 35 Electricity, gas, steam and air conditioning supply111.582.2460.335.2284.550.817.8 Total148.670.7241.563.6127.537.329.3PROFITABILITY INDICATORS External conditions play a role in the profitability of enterprises along with their business performances.OCTOBER 2022 57 5.7 The number of profitable enterprises fell. The number of ISO 500 enterprises that record a profit or loss varies from year to year. The profitability of enterpri- ses depends on external conditions as much as their own performance. In 2021, the number of ISO 500 enterprises that recorded a profit in terms of their pre-tax profit/loss for the period declined from 423 to 405, and the number of enterprises that recorded a loss climbed from 77 to 95. 2021 had several factors in store that affected the profi- tability of industrial enterprises. First, the rapid demand growth had a positive impact on sales. Meanwhile, costs went up due to increasing commodity prices, fluctuati- ons in exchange rates and the rapid rise in interest rates towards the to year-end, and the number of companies that recorded a loss increased due to pricing challenges. Return on sales climbed to 9.5 percent. Return on sales (ROS) is calculated by dividing the total profit and loss for the period by the net sales. On a YoY basis, the number of profit-makers in ISO 500 was lower in 2021 and their ROS also improved significantly with a 2.5-point increase to 9.5 percent. This increase was due to three reasons: Firstly, the recovery in domestic and international demand and global price increases were reflected on the product sales prices of industrial enterprises. Thus, the gross ROS ratio climbed significantly. Second reason was the fact that operating expenses decreased compared to net sales. Lastly, profit and income from FX was high due to the depreciation of the Turkish lira. The sectors with the highest ROS in 2021 were mining and quarrying with 41.1 percent, and the manufacture of beverages with 37.9 percent. The sectors with the lowest ROS were food products with 3.8 percent and the manufacture of wearing apparel with 5.1 percent. Return on assets reached 10.3 percent. Return on assets (ROA) is calculated by dividing the ra- tio of total pre-tax profit and loss for the period to assets. Following a recovery in 2020, the ROA enjoyed a strong 3.1-point increase to 10.3 percent. This shows that industri- al enterprises managed to make more profit on their exis- ting assets in 2021. The sector with the highest ROA in 2021 was the manu- facture of machinery and equipment at 22.7 percent. The manufacture of basic metals ranked second with 22.3 per- cent. Other sectors with high ROA were basic pharmaceu- tical products with 21.7 percent, paper and paper products with 19.2 percent, and fabricated metal products with 17.9 percent. The lowest return on assets was recorded by the manufac- ture of food products with 5.5 percent RETURN ON SALES (%) 20122014 5.7 2016 6.8 2017 7.2 2018 6.4 201920202021 5.4 7.0 9.5 2015 5.6 2013 4.9 # OF ENTERPRISES THAT RECORD PROFIT (OR LOSS) (Profit/Loss Before Tax) PROFIT (#) LOSS (#) 2019201820202021 119 89 77 95 381 411 423 405 RETURN ON ASSETS (%) 12 9 6 3 0 2012 6.7 2013 5.3 2014 6.0 2015 5.6 2016 6.2 2017 7.5 2018 7.2 2020 7.2 2021 10.3 2019 5.9 10 8 6 4 2 058 OCTOBER 2022 Return on equity surged to 35.2 percent. Return on equity (ROE) is the ratio of total profit and loss for the period to equity. ROE indicates the amount of profit that companies make with the equity they own and utilize for their activities. The ROE of the ISO 500 rose to 22.7 percent in 2020 after dropping to 18.6 percent in 2019 due to weak profitability. In 2021, this rate jumped to 35.2 percent, its all-time high. This development may also be attributed to the fact that the ISO 500 financed its fast-growing activities with borrowing rather than equity capital. Manufacture of basic metals enjoyed the highest ROE in 2021 with 65.3 percent. ROE was 59.2 percent in the ma- nufacture of wood and of products of wood, 55 percent PROFITABILITY INDICATORS Return on Sales [Total Profit and Loss for the Period (Before Tax)/ Net Sales] (%) 201320142015201620172018201920202021 ISO 500 4.95.75.66.87.26.45.47.09.5 Private Enterprises 4.16.15.25.67.16.15.36.99.8 Public Enterprises 19.1-1.914.132.910.113.66.67.9-1.7 Return on Equity [Total Profit and Loss for the Period (Before Tax)/ Equity Capital] (%) 201320142015201620172018201920202021 ISO 500 12.314.014.016.220.221.918.622.735.2 Private Enterprises 12.117.014.915.522.923.820.624.938.8 Public Enterprises 13.1-1.28.919.46.011.86.97.6-2.2 Return on Assets [Total Profit and Loss for the Period (Before Tax)/ Total Assets] (%) 201320142015201620172018201920202021 ISO 500 5.36.05.66.27.57.25.97.210.3 Private Enterprises 4.76.85.55.47.97.36.17.411.0 Public Enterprises 10.1-0.96.012.63.76.63.84.0-1.0 in the manufacture of beverages, and 54.5 percent in the manufacture of tobacco products, all at elevated levels. RETURN ON EQUITY (%) 40 30 20 10 0 2017201820192020202120162015201420132012 14.3 12.3 14.014.0 16.2 20.2 21.9 18.6 22.7 35.2OCTOBER 2022 59 Sectoral Profitability Ratios - 2021 (%) Sectors ISO 500Private EnterprisesPublic Enterprises Return on Sales Return on Assets Return on Equity Return on Sales Return on Assets Return on Equity Return on Sales Return on Assets Return on Equity 05-08Mining and quarrying41.117.539.054.631.560.211.03.07.9 10Manufacture of food products3.85.519.65.37.924.9-24.8-23.2156.8 11Manufacture of beverages37.914.355.037.914.355.0--- 12Manufacture of tobacco products15.612.154.515.612.154.5--- 13Manufacture of textiles13.39.530.013.39.530.0--- 14Manufacture of wearing apparel5.16.718.35.16.718.3--- 16 Manufacture of wood and of products of wood and cork (except furniture) 18.916.759.218.916.759.2--- 17Manufacture of paper and paper products22.219.251.322.219.251.3--- 19 Manufacture of coke and refined petroleum products -1.8-2.6-288.9-1.8-2.6-288.9--- 20 Manufacture of chemicals and chemical products 17.717.647.415.115.044.258.958.968.3 21 Manufacture of basic pharmaceutical products and pharmaceutical preparations 28.821.735.328.821.735.3--- 22Manufacture of rubber and plastic products9.29.432.49.29.432.4--- 23 Manufacture of other non-metallic mineral products 12.46.720.712.46.720.7--- 24Manufacture of basic metals15.022.365.315.022.365.3--- 25 Manufacture of fabricated metal products (except machinery and equipment) 19.017.945.616.917.146.642.922.841.5 26 Manufacture of computer, electronic and optical products 19.48.927.819.48.927.8--- 27Manufacture of electrical equipment7.710.137.77.710.137.7--- 28 Manufacture of machinery and equipment N.E.C. 20.422.744.220.422.744.2--- 29 Manufacture of motor vehicles, trailers and semi-trailers 8.013.650.78.013.650.7--- 30Manufacture of other transport equipment-12.6-4.2-47.0-12.6-4.2-47.0--- 31Manufacture of furniture13.516.127.813.516.127.8--- 32Other manufacturing-2.1-17.9-64.9-2.1-17.9-64.9--- 32.1 Manufacture of jewellery, bijouterie and related articles -2.1-17.9-64.9-2.1-17.9-64.9--- 35 Electricity, gas, steam and air conditioning supply -30.1-17.0-95.4-31.0-14.7-280.9-28.4-26.6-38.4 Total9.510.335.29.811.038.8-1.7-1.0-2.2Next >