Mid-Sized Turkish Manufacturers See Sluggish Growth in 2024

The Istanbul Chamber of Industry (ISO) has released its “Second Top 500 Industrial Enterprises of Turkey – 2024” report, highlighting the performance of medium-sized manufacturers operating under increasingly difficult economic conditions. This analysis follows the release of the ISO 500 rankings, which cover the country’s largest industrial firms.

As in previous years, the 2024 edition of the ISO Second 500 list offers a detailed look into how mid-sized companies are navigating economic and financial pressures. Key metrics include net sales from production, exports, employment, R&D, and technology investment.

A significant focus of the study was the net sales from production, which continue to be a leading indicator of industrial health. Despite an increase in nominal sales—from 988 billion TL to 1.393 trillion TL, marking a 41% jump—the real-term performance showed a marginal decline once adjusted for inflation.

Real Sales Growth Stalls Despite Nominal Increase

While the headline sales growth appears strong, the inflation-adjusted data tells another story. With Turkey’s Domestic Producer Price Index (D-PPI) averaging 41.1% in 2024, the real change in net sales was actually a 0.1% decline. This marked the third consecutive year of real contraction, mirroring trends also seen in the ISO 500.

Domestic and Global Pressures Weigh Heavily

Several external and internal factors contributed to this subdued performance. Tight monetary policies, implemented more aggressively from April 2024, led to a notable slowdown in domestic demand. On the global front, weakened export demand, rising cost pressures, and a strong U.S. dollar chipped away at Turkey’s international competitiveness.

The real appreciation of the Turkish lira further dampened exports, while price adjustments couldn’t fully offset rising costs.

Top Performers of 2024

The top three firms in the ISO Second 500 based on production-based net sales were:

• İstanbul Asfalt Fabrikaları – 4.186 billion TL

• Yılmaz Redüktör – 4.185 billion TL

• Boyteks Tekstil – 4.169 billion TL

Companies with production-based net sales between 4.186 billion TL and 1.82 billion TL made it into the 2024 list. For comparison, 2023’s threshold was between 2.958 billion TL and 1.294 billion TL.

66 New Entrants Join the Rankings

A total of 66 new companies entered the ISO Second 500 in 2024. Meanwhile, 41 firms dropped down from the main ISO 500 list, and 393 companies maintained their position in the Second 500 over the last two years.

Export Growth Beats Expectations

Despite global headwinds, Turkey’s exports rose by 2.4% to $261.8 billion, with industrial exports contributing $252.1 billion, up 2.6%. The ISO Second 500’s export volume grew by an impressive 6.2%, reaching $15.9 billion. This growth outpaced that of the ISO 500, largely due to the textile and apparel sectors, which hold greater weight in the ISO Second 500.

Declining Profit Margins

In 2024, the ISO Second 500’s operating profit dropped 18.9%, falling from 145 billion TL to 118 billion TL. As a result, the operating profitability rate declined from 12.6% to 7.3%, far below the 10-year average of 10.9%.

Meanwhile, pre-tax profits and losses saw a steep 63.8% drop, plummeting from 95 billion TL to 34 billion TL. Profit margins shrank from 8.2% to 2.1%, again undercutting the 10-year average of 7%.

A notable factor in this decline was the 20.6 billion TL loss from inflation accounting adjustments. Without this, the profit margin would have stood at 3.4%, not 2.1%.

EBITDA Growth Fails to Impress

The EBITDA (FAVÖK) metric increased by 16%, rising from 177 billion TL to 205 billion TL, but this was overshadowed by a drop in EBITDA margin from 15.3% to 12.7%. This, too, underperformed the decade-long average of 13.8%.