< Previous60 OCTOBER 2022 The number of enterprises with a positive EBITDA was 489. As part of the survey, the number of enterprises that record earnings before interest, tax, depreciation and amortization have also been evaluated since 2013. This indicator, abbreviated as EBITDA, is a more accurate measure of enterprises’ profitability performance. The number of ISO 500 enterprises with positive EBITDA dropped by three YoY to 489 in 2021. This was the se- cond highest level since 2013. The number of companies that incurred loss, on the other hand, was 11. EBITDA was recorded at its highest since 2013. In 2021, the ISO 500 recorded an EBITDA of TL 405.3 bil- lion following a 119.7 percent climb. EBITDA, which has been measured since 2013, has increased gradually and steadily, except for 2019. In 2021, enterprises concentrated more on their core activities. Enterprises tried to adapt themselves to rapid growth, and at the same time, they explored new sales opportunities while managing their costs and risks bet- ter. In addition to the increase in exports and exchange rates, the upward inflationary trend positively affected the sales and EBITDA of enterprises. Being able to revaluate fixed assets in 2021 also contributed to the EBITDA growth. EBITDA ratios increased. In 2021, the ISO 500’s EBITDA margins increased signi- ficantly. The rate of increase in EBITDA/net sales, which was 13.9 percent in 2020, rose to 17.5 percent in 2021. In the same period, the EBITDA/assets ratio rose to 19 per- cent, up from 14.3 percent, and the EBITDA/equity capital ratio to 64.9 percent from 45.3 percent in 2019. CHANGES IN EBITDA MARGINS (%) 2018201920202021 EBITDA/Net Sales14.211.313.917.5 EBITDA/Total Assets 15.912.314.319.0 EBITDA/Equity 48.439.045.364.9 EBITDA INDICATORS (%) 17.5 18.0 20.1 2.5 1.4 3.2 70.9 ISO 500Public Enterprises Private Enterprises 19.0 64.9 EBITDA/Net SalesEBITDA/Total AssetsEBITDA/Equity EBITDA (TL BILLION) 450 400 350 300 250 200 150 100 50 0 # OF ENTERPRISES THAT RECORDED PROFIT OR LOSS IN TERMS OF EBITDA (Earnings Before Tax, Interest, Depreciation and Amortization) PROFITLOSS 2017 2018201920202021 488488483492489 121281117OCTOBER 2022 61 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) - (TL) Sectors 20202021 EBITDA EBITDA/ Net Sales (%) EBITDA EBITDA/ Net Sales (%) 05-08Mining and quarrying12,026,652,74336.926,799,617,81247.3 10Manufacture of food products15,587,611,2958.527,702,534,41710.7 11Manufacture of beverages1,054,484,17111.2771,910,6726.7 12Manufacture of tobacco products878,209,04611.91,901,938,05719.4 13Manufacture of textiles11,193,849,26823.422,087,964,90824.8 14Manufacture of wearing apparel1,468,211,33711.72,624,081,45912.7 15Manufacture of leather and related products93,467,23711.9-- 16 Manufacture of wood and of products of wood and cork (except furniture) 3,105,513,49018.67,147,154,57225.4 17Manufacture of paper and paper products3,971,041,95219.811,558,395,92130.0 19Manufacture of coke and refined petroleum products1,088,685,5701.119,857,431,7108.9 20Manufacture of chemicals and chemical products16,192,621,41621.541,622,755,21524.4 21 Manufacture of basic pharmaceutical products and pharmaceutical preparations 3,757,608,22133.34,102,083,12329.9 22Manufacture of rubber and plastic products6,128,738,74618.111,893,781,11320.1 23Manufacture of other non-metallic mineral products8,784,807,18523.715,790,275,59427.0 24Manufacture of basic metals28,140,657,74211.895,283,591,92419.1 25 Manufacture of fabricated metal products (except machinery and equipment) 6,955,636,04021.412,661,974,09724.2 26Manufacture of computer, electronic and optical products7,112,550,76524.69,607,991,32025.4 27Manufacture of electrical equipment12,502,291,66814.922,841,564,80415.7 28Manufacture of machinery and equipment N.E.C.4,581,813,30719.88,569,848,74519.3 29Manufacture of motor vehicles, trailers and semi-trailers24,462,147,36910.946,213,489,19314.5 30Manufacture of other transport equipment3,147,464,97024.96,699,483,49827.2 31Manufacture of furniture932,344,97313.01,368,180,06711.7 32Other manufacturing482,058,2851.3-52,467,993-0.1 32.1Manufacture of jewellery, bijouterie and related articles 482,058,2851.3-52,467,993-0.1 35Electricity, gas, steam and air conditioning supply10,670,952,45420.87,940,382,5409.6 Total184,446,547,33113.9405,286,853,10717.562 OCTOBER 2022 Operating profitability improved. Operating profit is another profitability indicator used to measure the profitability of an enterprise. Operating profit is calculated by deducting operating expenses from gross ROS and dividing the resulting figure by net sales. In 2021, operating profit of the ISO 500 enjoyed a 4-point jump, reaching 14.8 percent, up from 10.8 percent. Abso- lute operating profit grew from TL 142.8 billion in 2020 to TL 341.9 billion in 2021 with a striking 139.4 percent inc- rease. As global supply chains deteriorated, buyers qu- oted higher prices and turned to the supply of industrial goods, which in turn hiked export prices. Increase in commodity prices also put an upward pressu- re on product prices. Delays in production and supply and the failure to supply some critical products also played a role in the rise in industrial output prices. The upward tra- jectory in exchange rates and inflation in Türkiye also trig- gered this increase, and operating profits enjoyed growth. On a per-sector basis, the highest absolute operating pro- fit was generated once again by the basic metals industry with TL 89 billion, which was followed by the manufacture of chemicals and chemical products with TL 37.5 billion. While the manufacture of motor vehicles fell to the third place with an operating profit of TL 36.6 billion, the ma- nufacture of food products maintained its fourth-place position by raising TL 23 billion in operating profit. OPERATING PROFITS BY SECTOR (TL MILLION) Manufacture of basic metals Manufacture of chemicals and chemical products Manufacture of motor vehicles, trailers and semi-trailers Manufacture of food products Mining and quarrying Manufacture of electrical equipment Manufacture of textiles Manufacture of coke and refined petroleum products Manufacture of other non-metallic mineral products Manufacture of fabricated metal products (except machinery and equipment) Manufacture of rubber and plastic products Manufacture of paper and paper products Manufacture of computer, electronic and optical products Manufacture of machinery and equipment, not elsewhere classified Manufacture of wood and of products of wood and cork (except furniture) Manufacture of other transport equipment Manufacture of basic pharmaceutical products and pharmaceutical preparations Manufacture of wearing apparel Manufacture of tobacco products Electricity, gas, steam and air conditioning supply Manufacture of furniture Manufacture of jewellery, bijouterie and related articles Manufacture of beverages 88,984 37,516 36,628 23,044 21,868 19,593 18,903 13,243 12,647 11,151 10,272 10,154 8,376 7,508 5,907 5,765 3,701 2,102 1,585 1,268 1,028 679 -262 20,0000-20,00040,00060,00080,000100,000OCTOBER 2022 63 The sector with the highest operating profit in 2021 was mining and quarrying with 38.6 percent, which was fol- lowed by the manufacture of basic pharmaceuticals with 26.9 percent. The manufacture of paper and paper produ- cts ranked third with 26.3 percent, while the manufacture of other transport equipment was in the fourth place with 23.4 percent. Coming in second to last above the manufa- cture of beverages, which had a negative operating profit, was the manufacture of jewelery with an operating profit of 1.2 percent. OPERATING PROFIT RATES BY SECTOR (%) Mining and quarrying Manufacture of basic pharmaceutical products and pharmaceutical preparations Manufacture of paper and paper products Manufacture of other transport equipment Manufacture of computer, electronic and optical products Manufacture of chemicals and chemical products Manufacture of other non-metallic mineral products Manufacture of fabricated metal products (except machinery and equipment) Manufacture of textiles Manufacture of wood and of products of wood and cork (except furniture) Manufacture of basic metals Manufacture of rubber and plastic products Manufacture of machinery and equipment, not elsewhere classified Manufacture of tobacco products Manufacture of electrical equipment Manufacture of motor vehicles, trailers and semi-trailers Manufacture of wearing apparel Manufacture of food products Manufacture of furniture Manufacture of coke and refined petroleum products Electricity, gas, steam and air conditioning supply Manufacture of jewellery, bijouterie and related articles Manufacture of beverages 0.0-10.010.020.030.040.0 26.9 38.6 26.3 23.4 22.1 22.0 21.6 21.3 212 21.0 17.8 17.4 16.9 16.1 11.5 10.2 8.9 8.8 5.9 1.2 1.5 -2.3 13.564 OCTOBER 2022 Increases in export and sales unit prices boosted profitability. The aggregates and ratios in the cumulative income state- ments of the ISO 500 for 2021 provide valuable insights into the profitability of enterprises. In 2021, the ratio of cost of sales to net sales decreased by 2.8 points to 79.7 percent, resulting in a gross ROS of 20.3 percent. Meanwhile, the ratio of operating expenses to net sales dropped by 1.3 points to 5.5 percent. Thus, the operating profit ratio of ISO 500 went up from 10.8 to 14.8 percent. In 2021, the export and sales unit prices of the ISO 500 fol- lowed an upward trajectory mostly due to global develop- ments, and this had a positive impact on operating profita- bility. Increases in commodity and input costs were largely reflected in prices. In 2021, the ratio of income and profit from other opera- tions to net sales recorded a 7.1-point increase, reaching 25 percent. 20.2 percentage points of this ratio came from profit from foreign currency exchange. The ratio of expen- The aggregates and ratios in the cumulative income statements of the ISO 500 for 2021 provide valuable insights into the profitability of enterprises. Cumulative Income Statement Values (TL) Change (%) Share in Net Sales (%) 2020202120202021 Net Sales 1,325,3122,312,97374.5100.0100.0 - Cost of Sales 1,093,3061,843,22768.682.579.7 Gross Sales Profit (Loss) 232,459469,747102.117.520.3 - Operating Expenses 89,654127,81442.66.85.5 Operating Profit (Loss) 142,805341,933139.410.814.8 + Income and Profit from Other Operations 237,875578,883143.417.925.0 Profit from Foreign Currency Exchange 196,722468,195138.014.820.2 - Expenses and Losses from Other Operations 194,426482,095148.014.720.8 Loss from Foreign Currency Exchange 177,712433,669144.013.418.7 Profit (or Loss) before Financial Items 186,253438,721135.614.119.0 - Financial Expenses 88,845208,922135.26.79.0 Ordinary Profit (or Loss) / Profit or (Loss) after Financial Items97,409229,799135.97.39.9 + Extraordinary Revenues and Profits 7,21912,75576.70.50.6 - Extraordinary Expenses and Losses 12,12523,10990.60.91.0 Profit (or Loss) for the Period (Before Tax) 92,503219,446137.27.09.5 CUMULATIVE INCOME STATEMENT AND ANALYSISOCTOBER 2022 65 ses and losses from other operations to net sales was 20.8 percent, 18.7 points of which stem from FX losses. All these data indicate that FX rate fluctuations were suc- cessfully managed in 2021, as was the case in 2019 and 2020. The ratio of net income and profit from other operations of the ISO 500 to net sales was 4.2 percent in 2021, up by 0.9 points YoY. In the same period, the ratio of net profit from FX to net sales increased by 0.1 points to 1.5 percent. Good management of FX rate risk once again made a positive contribution to the profitability of the ISO 500 in 2021. With the positive contribution from income and profit from other operations, the ISO 500 reached a profitability of 19 percent before financial expenses in 2021. Accordingly, the profit rate before financial expenses increased by 4.9 points YoY. At the same time, the ratio of financial expenses to net sa- les saw a 2.3-point increase, hitting 9 percent. This indica- tes that the financial expenses recorded a significant YoY increase. As a result, the ISO 500’s ordinary profitability after financial expenses was at 9.9 percent in 2021, up by 2.6 points YoY. After extraordinary revenues and profits (0.6 percent) and extraordinary expenses and losses (1 percent), the pre-tax profitability/net sales ratio of the ISO 500 amounted to 9.5 percent in 2021. This rate indicates an increase of 2.5 po- ints over the 7 percent in 2020. Financial expenses to operating profits ratio dropped to 61.1 percent. In 2021, financial expenses continued to be a key indicator for the ISO 500’s profitability. As a result of the deprecia- tion of the Turkish lira in 2021, the rise in inflation and in- terest rates, financial expenses went significantly up YoY. However, while same conditions persisted, the increase in operating profit was realized at a higher rate. In 2021, the ISO 500’s financial expenses amounted to TL 208.9 billion following a 135.2 percent increase. The sha- re of the ISO 500’s financial expenses in operating profits dropped from 62.2 percent to 61.1 percent. Considering the last four years marked by a highly tur- bulent financial atmosphere, industrial enterprises allo- cated almost all their profit from their main activities to Both net income from FX and non-opera- ting profit increased. The ISO 500 survey considers non-operating revenues in calculations and analyses. This is partially due to the impact of non-operating expenses on the profitability (or lack thereof) of enterprises. The second reason is the need to calculate non-operating revenues separately to identify the ISO 500’s profit as national income and valu- e-added. The value-added generated by enterprises is calculated through revenues or factor income payments. To find the factor income of profit as national income, non-operating revenues are deducted from pre-tax total profit and loss for the period, and the provisions allocated from profit for that year are added to the result. Non-operating revenue comprises dividend income, affi- liate revenues, interest revenues, net FX profits, and sale of current and fixed assets. In 2021, the ISO 500’s net non-operating revenues grew by 122.8 percent to TL 96.8 billion, up from TL 43.4 billi- on. However, the share of non-operating revenues in total profit and loss for the period dropped from 47 percent to 44.1 percent. financial expenses in 2018 and the pressure of financial expenses on profitability was lower in 2019. In 2020, while the upward trend in financial expenses led to an increased financial pressure, its extent remained limited thanks to the higher increase in operating profits. In 2021, financial expenses followed a steep upward trend, but this additi- onal financial burden was compensated by the improve- ment in operating profitability. FINANCIAL EXPENSES/OPERATING PROFIT (%) 2018201920202021 Financial Expenses (TL Million) 95,82363,83188,845208,922 Operating Profit (TL Million) 107,82292,113142,805341,933 Financial Expenses/ Operating Profit (%) 88.969.362.261.1 PROFITABILITY INDICATORS66 OCTOBER 2022 With the increase in FX rates in 2021, the ISO 500’s net profit from foreign currency exchange increased by 81.6 percent to TL 34.5 billion, up from TL 19 billion. This indicates that the risks emerged with the hikes in FX rates were managed well. Increasing profit from foreign currency exchange also boosted non-operating profits. Non-Operating Revenues (Net) (TL) (Top 500 Industrial Enterprises) Non-Operating Revenues (1) Change (%) Total Profit and Loss for the Period (Before Tax) (2) Change (%)1/2 (%) 201614,069,026,3668.737,734,174,18533.237.3 2017 18,844,429,68333.953,084,908,28340.735.5 2018 55,816,782,890196.263,528,258,36119.787.9 2019 37,228,794,798-33.361,614,073,797-3.060.4 2020 43,448,530,15616.792,503,472,32050.147.0 2021 96,788,343,103122.8219,445,968,018137.244.1 Non-Operating Revenues (Net) (TL) (Private Enterprises) Non-Operating Revenues (1) Change (%) Total Profit and Loss for the Period (Before Tax) (2) Change (%)1/2 (%) 201611,200,909,9472.929,772,961,62617.237.6 2017 16,750,676,79549.550,551,340,12569.833.1 2018 45,705,402,402172.958,241,941,93615.278.5 2019 33,211,281,302-27.358,303,818,8520.157.0 2020 38,595,113,42216.288,601,831,37352.043.6 2021 93,284,279,436141.7220,658,000,865149.042.3 On a sector-by-sector basis, the largest absolute non- operating revenue in 2021 was recorded by the manufac- ture of basic metals with TL 30.3 billion. The sector with the highest non-operating revenue/net sales ratio was the manufacture of beverages with 106.9 percent. On the other hand, the ratio of non-operating re- venues to net sales of many other manufacturing sectors remained low.OCTOBER 2022 67 Non-Operating Revenues (Net) (TL) Sectors Non-Operating Revenues (Net) Non-Operating Revenues (Net) / Net Sales 05-08Mining and quarrying9,418,006,33716.6 10Manufacture of food products-1,348,376,381-0.5 11Manufacture of beverages12,246,371,425106.9 12Manufacture of tobacco products204,103,4132.1 13Manufacture of textiles5,369,978,7086.0 14Manufacture of wearing apparel-216,925,274-1.1 16 Manufacture of wood and of products of wood and cork (except furni- ture) 4,435,562,72415.8 17Manufacture of paper and paper products614,107,9831.6 19Manufacture of coke and refined petroleum products6,639,896,5393.0 20Manufacture of chemicals and chemical products8,156,557,8694.8 21 Manufacture of basic pharmaceutical products and pharmaceutical preparations 1,214,100,5388.8 22Manufacture of rubber and plastic products-214,197,405-0.4 23Manufacture of other non-metallic mineral products4,411,777,8847.5 24Manufacture of basic metals30,329,485,4976.1 25 Manufacture of fabricated metal products (except machinery and equipment) 1,122,490,3592.1 26Manufacture of computer, electronic and optical products4,480,808,27111.8 27Manufacture of electrical equipment4,378,886,1043.0 28Manufacture of machinery and equipment N.E.C.4,049,929,5249.1 29Manufacture of motor vehicles, trailers and semi-trailers1,609,849,1410.5 30Manufacture of other transport equipment-1,623,592,150-6.6 31Manufacture of furniture743,964,7406.3 32Other manufacturing-635,835,542-1.2 32.1Manufacture of jewellery, bijouterie and related articles -635,835,542-1.2 35Electricity, gas, steam and air conditioning supply1,278,785,2911.6 Total96,788,343,1034.2 Non-Operating Revenues (Net) (TL) (Public Enterprises) Non-Operating Revenues (1) Change (%) Total Profit and Loss for the Period (Before Tax) (2) Change (%)1/2 (%) 20162,868,116,41938.97,961,212,559172.536.0 2017 2,093,752,888-27.02,533,568,158-68.282.6 2018 10,111,380,488382.95,286,316,425108.7191.3 2019 4,017,513,496-60.33,310,254,945-37.4121.4 2020 4,853,416,73420.83,901,640,94717.9124.4 2021 3,504,063,667-27.8-1,212,032,847-131.1-289.1VALUE- ADDED EFFICIENCY AND PRODUCTIVITY Efficiency and productivity of the enterprises are measured by value-added generated, relative output ratios, turnover ratios and labor productivity.OCTOBER 2022 69 While the share of profits and interests in net value-added increased, the share of wages fell. The calculation of value-added generated by the indust- rial enterprises in the ISO 500 survey is based on the factor income payments for factors of production. The- refore, the survey compiles data on the factor incomes the enterprises pay for factors of production. Data on wages and salaries paid (including workforce shares as full compensation and social security premi- ums paid by the employer), labor as a factor of producti- on, interest paid for capital and profit as national income for the producers’ share are collected to calculate the value-added generated by the ISO 500. Amortization set aside for the period and net indirect taxes (indirect taxes and subsidies) are added to the net Distribution of Net Value-Added by Factor Incomes (%) ISO 500 201320142015201620172018201920202021 Salaries and Wages Paid 55.957.556.552.746.954.751.544.532.2 Interest Paid 11.614.315.413.916.834.427.125.328.1 Profit as National Income 32.428.228.233.436.310.921.330.339.7 Net Value-Added100.0100.0100.0100.0100.0100.0100.0100.0100.0 Private Enterprises 201320142015201620172018201920202021 Salaries and Wages Paid 55.352.655.554.645.551.250.543.030.8 Interest Paid 12.914.316.215.117.033.626.925.227.7 Profit as National Income 31.833.228.430.237.515.222.631.741.5 Net Value-Added100.0100.0100.0100.0100.0100.0100.0100.0100.0 Public Enterprises 201320142015201620172018201920202021 Salaries and Wages Paid 61.0183.368.238.771.9306.570.480.1104.9 Interest Paid 2.115.96.14.814.495.530.626.248.6 Profit as National Income 37.0-99.225.856.613.7-302.0-1.0-6.3-53.5 Net Value-Added100.0100.0100.0100.0100.0100.0100.0100.0100.0 EFFICIENCY AND PRODUCTIVITY value-added to calculate gross value-added at basic prices and producer’s prices for each enterprise. Accor- dingly, the survey examines and analyzes net values ad- ded and the share of the factor incomes that constitute these. In 2021, net value-added to factor income of the ISO 500 displayed a sharp change. The share of profit as national income jumped from 30.3 percent to 39.7 percent, reac- hing its highest level of the last decade. The share of interest paid in the net value-added ge- nerated increased from 25.3 percent to 28.1 percent. However, the share of wages and salaries paid fell from 44.5 percent to 32.2 percent. These developments point to the fact that, in a period marked by rapid growth and high inflation in 2021, pro- fits rose in the distribution of factor incomes within net value-added.Next >