Distinguished Members of the Press,
Esteemed Guests,

We gather once again to review the 2023 results of the "ISO Türkiye's Top 500 Industrial Enterprises Survey," a valued tradition that has grown in significance over the years and proudly celebrates its 56th anniversary today.

On behalf of the Istanbul Chamber of Industry (ISO), which has been presenting this survey annually for over half a century, I extend my warmest greetings to you, our esteemed members of the press. Alongside our Deputy Chairman, Mr. İrfan Özhamaratlı and Mr. Cemal Keleş, I welcome you with heartfelt respect.

First, let me extend my congratulations once again on the recent Eid al-Adha. This occasion enriched our spiritual lives, strengthened our bonds of love, respect, and brotherhood, and provided us with profound examples of unity, solidarity, and generosity.

Those of you who follow the ISO 500 closely know that for the last five years, we have been sharing both our current ISO 500 survey and the edition conducted 50 years ago. In the file distributed to you this year, you will find the magazine we published under the title "Türkiye's Top 100 Companies," which covers the results of the survey we conducted in 1974.

Reflecting on the survey dated August 15, 1974, I would like to highlight the progress our industry has made over the past 50 years. According to the 1973 data, nearly 75 percent of our industry was concentrated in and around Istanbul. Apart from Istanbul, only companies from Izmir, Adana, Ankara, Bursa, and Tekirdağ made it to the list from the private sector.

Our late, esteemed Chairman Nurullah Gezgin, who penned the foreword to the survey, was delighted to see two new companies from Kayseri make the list that year.

He remarked, "The inclusion of two companies from Kayseri, a city in Central Anatolia, among Türkiye's top industrial giants clearly indicates that our industrialization is spreading nationwide.”

Now, let’s turn our attention to the current landscape. As we review the updated list, which will soon be displayed, we find that 349 industrial enterprises from outside Istanbul are now part of the ISO 500. From Kahramanmaraş to Gaziantep, Samsun to Denizli, and Kayseri to Konya, we take pride in seeing Türkiye's largest industrial enterprises rising across the country over the past 50 years.

Dear Members of the Press,

Before delving into the results of our ISO 500 survey, I would like to highlight a few positive developments from this year’s survey that inspire optimism. Among the summarized data we share annually, which could be considered a check-up of the survey, we examine the "Distribution of Value-Added Generated by Technology Intensity.” To be honest, this is one of the most anticipated data points each year, providing insights into our industry's connection with low-tech, mid-tech, and high-tech.

In recent years, this data has remained relatively static. However, this year, as we will soon show, we have observed a positive shift towards mid-to-high-tech and high-tech in our industry. In 2023, compared to 2022, the combined share of high-tech and mid-to-high-tech industries in total value-added increased by 4 percentage points, signaling promising progress in our industry’s technological transformation.

Access to qualified finance has always been a major challenge for the industry, and going public is undoubtedly one of the primary solutions. This year, we have seen a significant increase in the number of industrial companies going public in the ISO 500. A notable portion of these are new IPOs. This is encouraging, as it demonstrates a growing openness among our industrialists towards this crucial financing option.

Distinguished Members of the Press,

Dear Guests,

Over the years, the ISO 500 has been a beacon, sharing invaluable insights about our industry's present and future with us and the economic community. For those eager to understand the path to technology-based, competitive, and high-value-added production, the "ISO-Türkiye's Top 500 Industrial Enterprises Survey" is an unmatched and priceless resource.

In essence, this knowledge is a cherished legacy passed down by our predecessors, one we proudly continue. ...And I believe it is the most precious of legacies. I would like to honor all our esteemed industrialist forebears and ICI employees, who, since 1968, have paved the way for this valuable research and helped maintain the dignity and reputation of the ISO 500 throughout the years.

I extend heartfelt thanks to our consultants, especially the ICI Economic Research and Corporate Finance Department, which annually dedicate months to meticulously evaluate and finalize data from our industrial companies.

Of course, our gratitude also goes to our industrial companies... We deeply appreciate our industrial enterprises for their invaluable contributions to this historical archive of the Turkish economy and for being our most cherished partners in producing the ISO 500 survey.

Distinguished Members of the Press,

Before diving into our research, I think it would be useful to briefly review the domestic and international economic developments impacting our industrial sector in 2023 to better understand the results.

Globally, production and trade significantly slowed in 2023, with growth trailing behind historical averages.

Throughout the year, high geopolitical tensions, deepening technological competition, increasing protectionism, and fragmentation trends dampened growth. This weakness has negatively differentiated the industrial sector globally and Europe regionally.

While the Turkish economy and industry were affected by all global factors, particularly weak European demand and geopolitical tensions, significant developments also occurred domestically. The February 6 Kahramanmaraş earthquakes, which left us all in mourning, not only caused human losses but also dealt a blow to the regional economy. The reconstruction of the region has created a substantial need for financial resources.

When we look at economic policies, as we will recall, the approach that prioritized growth while de-emphasizing vulnerabilities such as inflation and the current account deficit continued throughout the first half of the year. Post-elections, in the second half of the year, a major shift took place with the implementation of a normalization program focused on combating inflation.

However, this shift inevitably led to tighter financing conditions and a more challenging business environment for our industry. Hence, we can say that it feels as though we experienced ‘two distinct years’ within the same year in terms of both growth performance and economic policies.

As a result, our economic growth in 2023 stood at 4.5 percent, but this growth lacked structural health. The industrial sector grew by 0.8 percent, and the manufacturing industry by 1.6 percent, falling behind overall economic performance. Exports recorded a weak increase across Türkiye and a slight decline in the industrial sector.

With imports surging, the contribution of foreign demand to growth was negative. Therefore, it would not be an overstatement to say that 2023 posed considerable challenges for our industrial sector. The 2023 results of our ISO 500 survey unveil a treasure trove of insights, reflecting the complex economic landscape in which our industry operates.

Before moving on to the results, I would like to draw your attention to another important matter. As you know, high inflation led to the reintroduction of inflation accounting in 2023 after many years. As we will explore in detail shortly, the inflation adjustment applied to non-monetary assets significantly affected both the equity and total assets of ISO 500 enterprises.

The ISO 500 stands out as a pioneering scientific study that thoroughly examines the effects of inflation adjustments on industrial enterprises through a vast data set.

Distinguished Members of the Press,

Esteemed Guests,

Following this brief overview, now let us proceed to the findings of our ISO Türkiye's Top 500 Industrial Enterprises-2023 survey.

Production-based sales within the ISO 500 rose by 42.1 percent in 2023 from TL 4.485 trillion to TL 6.375 trillion.

As I briefly mentioned earlier, it was not difficult to predict that this increase, indicating a weaker performance compared to 2021 and 2022, has been coming since the end of 2022.

Analyzing the reasons for the decline in production-based sales growth from 119 percent in the previous year to 42.1 percent in 2023, we find that slowing global demand, the devastating February 6 earthquakes, and post-election economic policy changes played crucial roles.

The stark reality is evident in the real changes in net production-based sales. When scrutinizing the changes in production-based sales of the ISO 500 in real terms, one specific result stands out: Adjusted for year-end consumer inflation, production-based sales in 2023 declined by 13.8 percent in real terms compared to 2022.

To compute these real changes, we have employed the year-end CPI inflation, as has been our practice in recent years. However, we know that annual inflation followed a highly volatile path throughout 2023. To recap, year-end inflation was 64.77 percent for CPI, while it was lower at 44.22 percent for PPI. The average annual inflation stood at 53.86 percent for CPI and 49.93 percent for PPI.

Regardless of the indicator used, the ISO 500's production-based sales in 2023 fell short of inflation and declined in real terms. If the average CPI inflation rate had been used for the calculation, the real decline would have been 7.6 percent.

Examining the distribution of production-based sales across groups of 50, the top 50 companies, historically hovering around a 50-percent share, maintained their weight this year.

Distinguished Members of the Press,

Turning to external performance, the ISO 500's exports decreased by 2.9 percent compared to 2022, falling to $95.1 billion due to the impact of challenging global competition conditions.

Despite the weakening global growth dynamics in 2023, Türkiye's exports increased by a modest 0.5 percent, reaching $255.4 billion. In the same year, Türkiye's industrial exports experienced a slight decline of 0.2 percent, totaling $245.6 billion.

Clearly, the ISO 500 and Türkiye's industrial sector as a whole were adversely affected by the export market stagnation in 2023.

Nevertheless, when we look at the share of the ISO 500 in Türkiye's industrial exports, we see that this ratio, at 38.7 percent, hovers close to 40 percent threshold.

The data presented now includes some of the "basic indicators" of the ISO 500, which we meticulously analyze each year and which the economic community eagerly awaits.

This table indicates that in 2023, both sales and profitability of the ISO 500 remained weak.

Specifically, the operating profit of the ISO 500 in 2023 surged by 39.7 percent, leaping from TL 671 billion to TL 937 billion. However, the operating profitability ratio decreased by 0.3 percentage points from 12.8 percent to 12.5 percent.

Earnings before interest, tax, depreciation, and amortization (EBITDA), another key profitability indicator for ISO 500 enterprises, grew by 45.5 percent, reaching TL 1.175 trillion from TL 808 billion. In the same year, the EBITDA profitability ratio increased by 0.3 percentage points, from 15.4 percent to 15.7 percent.

Last but not least, we see that the overall pre-tax profit and loss increased by 32.9 percent, rising from TL 485 billion to TL 645 billion. Nonetheless, it is worth noting that the return on sales dipped by 0.7 points, settling at 8.6 percent.

As evident, all profit aggregates in 2023 lagged behind the inflation rate, signaling a decline in real terms.

Moreover, except for EBITDA, all other profitability ratios indicate that 2023 was a less profitable year compared to the previous one.

The negative impacts of 2023 on the industry are starkly illustrated in our profit and loss-makers table.

According to pre-tax profit and loss figures in the ISO 500, the number of profitable enterprises dropped from 442 in 2022 to 404 in 2023. Meanwhile, the count of enterprises incurring loss rose from 58 to 96. This figure marks the highest level since 2018.

On a brighter note, based on EBITDA, which reflects operational profitability, the number of profit-makers remained high, increasing by 1 to 490.

This table provides an overview of the profitability components within the ISO 500. Comparing it to last year, the most notable development of 2023 is the emergence of a net foreign exchange loss for the first time in many years.

However, net profit from other income, excluding foreign exchange transactions, more than compensated for these losses, reaching TL 282 billion. Consequently, the ratio of total non-operating income to net sales rose from 2.1 percent to 3.6 percent. At this point I would like to remind you that these revenues include items such as interest, dividend and subsidiary income, securities and fixed assets sales, commissions, etc.

While we are on this topic, I would like to draw your attention to the share of non-operating revenues in the industry's total profit and loss over the past decade. After declining for four consecutive years to 22.9 percent in 2022, this share increased to 41.3 percent in 2023, approaching its historical average.

Financial expenses of ISO 500 have long been a critical part of our survey and represent a major challenge for industrial enterprises.

As we examine this data, it is apparent that the financial expenses of the ISO 500 are poised to surge by 92.5 percent in 2023, ascending from TL 277 billion to TL 533 billion.

Consequently, the ratio of financial expenses to operating profit increased by 15.6 percentage points from 41.3 percent to 56.9 percent. Given that the 12-year average is 57 percent, it underscores once again that industrialists continue to allocate more than half of their profits to financial expenses.

Dear Members of the Press,

This table allows us to delve into the developments in the asset and resource composition of these companies. Before diving into details, as mentioned earlier, we observe the reflections of the "inflation adjustment" introduced in 2023. Let me remind you that this practice has significantly influenced the size of enterprises' balance sheets.

In fact, post-inflation adjustment data for 2023 shows that total assets of the ISO 500 increased by 126 percent, from TL 3.9 trillion to TL 8.8 trillion. Nearly TL 2.9 trillion of this increase is attributed to inflation adjustment.

Examining the sub-items of assets, the inflation adjustment primarily impacted fixed assets. Fixed assets increased by 242 percent, from TL 1.4 trillion to TL 4.7 trillion. Inflation adjustment accounted for TL 2.7 trillion of this rise.

Meanwhile, the increase in current assets was much lower at 63 percent, with inflation adjustment contributing only TL 173 billion.

On the liabilities side, equity surged by 245 percent in 2023 post-inflation adjustment, from TL 1.4 trillion to TL 4.8 trillion. The effect of inflation adjustment on equity was substantial, amounting to TL 2.8 trillion.

The impact on total debt was far less, as the adjustment was applied to non-monetary assets. In essence, while total debt increased by 60 percent, from TL 2.5 trillion to TL 4 trillion post-adjustment, the inflation adjustment's impact was limited to TL 31 billion.

In the debt-to-equity chart displayed here, it is evident that the inflation adjustment significantly bolstered the resource structure of the ISO 500, favoring equity.

The share of equity, which was 35.7 percent in 2022, would have fallen to 33.2 percent in 2023 without the adjustment; however, it rises to 54.5 percent after the adjustment. In essence, the inflation adjustment boosts the equity share in the ISO 500 balance sheet by 21.3 percentage points, surpassing total debt.

At this point, the importance of inflation adjustment becomes evident, as it helps in bringing business balance sheets closer to reality and enables a more accurate interpretation of financial indicators.

In reviewing this table presenting the developments in the sub-items of debts, we observe that financial debts in the ISO 500 grew by 54 percent, rising from TL 1.3 billion to TL 2 trillion. Meanwhile, other debts surged by nearly 66 percent, from TL 1.2 trillion to TL 2 trillion.

As previously mentioned, since inflation adjustment applies only to non-monetary assets, financial debts remain unaffected, while the impact on other debts is minimal at 1.6 percent.

Our final three tables reveal that the inflation adjustment has led to a significant shift on the assets side via fixed assets and on the liabilities side via equity. This has resulted in a more robust resource structure.

Observing debt evolution, we see that non-financial debts grew faster than financial debts in 2023, mirroring trends from 2021 and 2022. This likely reflects the tightening of access to finance during the latter half of last year.

Analyzing maturity structures, it is noteworthy that the 53 percent increase in short-term financial debts was slightly less than the 56 percent rise in long-term financial debts.

However, as shown in this table, the share of short-term financial debts in total debts remained higher than long-term debts at 51.7 percent, with no significant change from the previous year.

Dear Members of the Press,

The issue of "deferred VAT," which we at ISO have consistently highlighted, persists. In 2023, the VAT burden accumulating on the ISO 500 increased by 36.5 percent to nearly TL 67 billion after inflation adjustment.

Although this increase is somewhat more favorable than previous years by remaining below inflation, we continue to view this cycle as our industrial enterprises essentially lending money to the state with zero interest and infinite maturity.

Especially during high inflation periods, delays in VAT receivable refunds impose a heavier burden on our companies' cash flow.

As I mentioned at the beginning of my speech, we have now arrived at the ISO 500 data that brings us the most joy and optimism for the future. Examining the table that provides valuable insights into the technological landscape of our industry, it is apparent that medium-to-low-tech industries once again contributed the most to the value-added generated in 2023, accounting for 33.9 percent. However, this group's share dropped by 3.8 percentage points annually. Similarly, the share of low-tech industries fell by 0.2 percentage points to 28.7 percent.

On the other hand, the share of mid-to-high-tech industries increased by 3.1 percentage points to 30.3 percent, while the share of high-tech industries rose by 0.9 percentage points to 7.1 percent, indicating some acceleration.

Consequently, the combined share of mid-to-high-tech and high-tech industries reaching 37.4 percent—the highest level ever—offers a glimmer of hope for the long-sought technological transformation of our industrial sector. Nevertheless, in today's globally competitive landscape driven by digital and green transformation, this is merely a starting point, and we must strive harder to elevate it further.

When we examine the number of ISO 500 enterprises investing in R&D, it is evident that our industry needs to show greater enthusiasm in this area. The number of R&D-investing organizations in the ISO 500 appears to have stagnated after a steady increase until 2018.

The number of R&D-engaged enterprises, which fell from 265 in 2021 to 260 in 2022, rose back to 265 in 2023. However, it is evident that industrial enterprises must further intensify their R&D efforts to achieve a high-value-added, technology-driven industry.

This table illustrates the R&D expenses of our enterprises in 2023. These expenses surpassed TL 30 billion, marking an 87.5 percent year-on-year increase. Even with this increase, the ratio of R&D expenses to production-based sales remains at 4.8 per mille, highlighting the substantial progress still needed in this area.

This table reveals that the employment within the ISO 500 grew by 1.9 percent in 2023, reaching approximately 804,000 individuals. Concurrently, the rise in wages and salaries paid during the same year stands at around 120 percent.

For companies, going public is a pivotal avenue for broadening access to capital, particularly for industrial enterprises seeking high-quality financial resources. At the beginning of my speech, I mentioned this as another aspect of the ISO 500 data that brings us joy.

In recent years, we have observed a growing trend of industrial enterprises opting to go public to access qualified financing. The 2023 data confirms this trend among ISO 500 companies.

After stabilizing between 65-69 companies from 2017-2021, the number of publicly held companies in the ISO 500 rose by 8 in 2022 and 12 in 2023, reaching 85. Consequently, the number of publicly traded companies among the ISO 500 has attained its highest level to date.

In 2024, we continue to observe that the enthusiasm of our industrial companies for going public persists, and we view this as a positive development for facilitating the use of capital market instruments.

Foreign-invested enterprises continue to play an important role in the Turkish industrial sector. This graph displays the number of foreign-invested enterprises in the ISO 500.

One positive indicator is that the number of foreign-invested enterprises, which had been declining since the 2010s, increased by 8 to 116 in 2023. The shares of foreign-invested enterprises in basic indicators also appear to have benefited from this increase.

When we rank the ISO 500 according to their respective chambers, we see that the weight of Anatolia is increasing.

Although there has been a decrease in numbers in recent years, the largest share still belongs to the Istanbul Chamber of Industry with 151 companies. Istanbul is followed by the Ankara Chamber of Industry with 45 organizations.

Next are the Aegean Region Chamber of Industry and Kocaeli Chamber of Industry, each with 38 companies. Following them are the Gaziantep Chamber of Industry with 29 organizations, Bursa Chamber of Commerce and Industry with 16, and Kayseri Chamber of Industry with 14.

When examining the sectoral breakdown of the ISO 500, we discern the following distribution based on the 10-sector categorization formulated by our Chamber:

In 2023, the sector with the highest share of production-based sales was the "basic metals and machinery" at 22.5 percent, though this share fell by 0.9 percentage points from last year.

The "chemical, plastics and rubber products", ranking second at 19.7 percent, saw a decline of 3.6 percentage points from the previous year.

In third place is the "land & sea vehicles and sub-industry," which increased its share by 3.7 points to 17.7 percent from last year.

Distinguished Members of the Press,

We now proceed to the ISO 500 rankings, eagerly awaited by all. In the distributed report, you can find the detailed rankings for all 500 companies by their production-based sales. Within the table, you will find the top 10 companies, as is the tradition each year.

According to the ISO 500 Industrial Enterprises 2023 survey, the largest enterprise by production-based sales was Tüpraş with TL 484 billion worth of sales. This enterprise maintained its long-standing leadership position in 2023 as well.

The second largest organization by production-based sales in 2023 was Ford Otosan with TL 238 billion.

Meanwhile, Star Rafineri took the third place with approximately TL 227 billion in production-based sales.

As shown in the table, there were two notable changes in the top 10 of the ISO 500 compared to 2022. Mercedes-Benz and Gramaltın Kıymetli Madenler, absent from the top 10 last year, have successfully ascended into the top 10.

Dear Members of the Press,

Last year, we announced our ISO 500 survey somewhat late, in September, due to the "state of force majeure" caused by the earthquake disaster. Consequently, our meeting coincided with a period when most of 2023 was behind us, and the year's economic picture was gradually becoming clearer.

On that day, I mentioned that the relatively positive results of 2022 should not be expected in 2023 and said:

“The 2023 ISO 500 data, set for release next year, will offer more comprehensive insights into the sustainability of the relative improvement in the ratio of financial expenses to operating profit. We all accept that the overly optimistic outlook of 2022 will not be of the same magnitude in 2023. A stable recovery and sustainable financing quality are always our top priorities. We have consistently observed that temporary and periodic recoveries, after a certain period, impose costs on society, especially on industrialists. I can confidently say that we are beginning to see this in 2023.”

...And all the financial indicators of the ISO 500, which we have just shared with you, should be viewed as a transformation of these predictions into the reality of the industry in 2023.

We discussed extensively the damage caused to our economy by the break with economic rationality in 2022 and the "ebb and flow" in economic practices. For this reason, I do not want to dwell too much on this issue here. However, we must view the 2023 results of the ISO 500 as a microcosm illustrating that "the first consequence of straying from financial stability will be high inflation, and that an inflationary growth model cannot be high-quality and sustainable." We all understand that high inflation creates a temporary mirage on company balance sheets. As time unfolds, we confront the reality.

This is precisely what the key indicators of the ISO 500 reveal. Beyond our experiences as the real sector, the damage inflicted by high inflation on public finances, the financial realm, and most importantly, society, is substantial. Inflation produces not only economic harm but also sociological, psychological, and, crucially, moral and ethical repercussions.

Distinguished Members of the Press,

This year’s ISO 500 results may appear somewhat pessimistic, influenced by domestic and international economic conditions. However, they also demonstrate that the Turkish industry is adeptly sustaining production even in the most challenging circumstances, leveraging its accumulated expertise and resilience.

The foundation of this success undoubtedly lies in the competitive strength and market diversity our industry has cultivated in the global arena. Industrialists of different sectors are leveraging this capability to hone their competitive edge against international competitors with each passing day. Our goal is to underscore the significance of the production economy. By ensuring that support for production is qualified, we aim to amplify this competitive power.

In this context, I firmly believe that the contributions of our industry to the national economy will continue to grow, provided that financial stability—the cornerstone of our industry’s promising growth—is restored and high inflation is conquered. Consequently, the picture we present today should be regarded as a clear indicator of the critical role financial stability plays in fostering sustainable, stable, and quality growth, a point we reiterate at every opportunity.

As I conclude my remarks, reaffirming my faith in our industry and its production capabilities for a bright future, I would like to express my gratitude to you, esteemed members of the press, for attending our meeting, and extend my respect and affection to all of you.