Mixed Signals in Türkiye’s Industrials and Banking Sectors for 1Q25: Margins Under Pressure, Select Names Shine

1Q25 Industrial Sector Outlook: Sluggish Growth Amid Cost Pressures and Soft Demand

Türkiye’s industrial companies are bracing for a challenging first quarter in 2025, with margin compression, soft global demand, and inflation-driven cost pressures expected to weigh heavily on earnings, according to market forecasts.

Among weaker names, Arçelik stands out, with topline growth projected at 12%—mainly from the Whirlpool merger. However, EBITDA is set to shrink 33% year-on-year, and the company is expected to post a TL1.1 billion net loss due to persistent demand weakness and integration-related costs.

Şişe Cam may benefit marginally from robust domestic construction activity, but poor external demand and increased leverage—exacerbated by the Pacific Soda acquisition—are likely to pressure earnings. In the steel segment, both Ereğli and Kardemir are expected to report EBITDA per ton below historical averages, despite a sequential recovery from 4Q24.

Auto, Chemicals, and Power Generation: Margins Thin, Demand Soft

In automotives, Tofaş and Türk Traktör are forecast to suffer deeper operating income declines than Ford Otosan and Doğuş Otomotiv, due to more fragile margins. Although a modest QoQ rebound is anticipated in “profit per vehicle,” YoY profitability remains under pressure across the sector.

Meanwhile, Kordsa is expected to post weak financials due to softening demand and disruptions from floods in Indonesia and Thailand. Tire makers like Brisa and Goodyear are likely to experience margin erosion and low sales volumes.

In the energy space, weak electricity prices and persistent inflation are expected to erode profitability for Galata Wind, Aksa Enerji, and Zorlu Enerji. Enerjisa, thanks to its inflation-indexed revenue model, may emerge relatively unscathed.

Oil, gas, and chemicals players such as Tüpraş, Aksa, and Petkim are also anticipated to report softer operating margins. Similarly, Coca-Cola İçecek could see weak margins, with a possible spillover impact on Anadolu Efes, which is also expected to exclude its Russian operations from 1Q reporting.

Bright Spots: Enka, Orge, Telecoms, and Gold Miners

On the flip side, Enka is forecast to deliver stronger YoY results, supported by a larger construction backlog, improved energy operations, and a weaker lira. Similarly, Orge should benefit from a consistently growing order book.

The telecom sector, particularly Türk Telekom, stands out as a rare growth pocket. The company is expected to post positive real growth, outperforming sector peers.

Koza Altın is another bright spot, with a strong gold price environment boosting net sales and margins. Despite a 29% YoY decline in production to 35,000 ounces, net profit is expected to recover strongly on both a quarterly and annual basis, helped by lower financial losses and solid operations.

TAB Gıda is also expected to report robust results due to sustained consumer demand and healthy margins.

Banking Sector: Stable Earnings, Limited Catalysts

Türkiye’s banking sector delivered a solid but unspectacular start to 2025. Yapı Kredi could outperform with a stronger TL loan-deposit spread, while Akbank’s net profit growth is seen driven by trading income. İşbank may show slight QoQ improvement, whereas Garanti is projected to post a modest decline.

TSKB, Vakıfbank, and possibly Albaraka Türk are expected to tap into their free provision buffers to mitigate base effect pressures. Meanwhile, Halkbank could post a strong earnings beat thanks to deferred tax income.

Overall, the sector is projected to see a 13% QoQ and 5% YoY increase in net profits. However, analysts believe the results are unlikely to serve as a strong catalyst for banking stocks, especially given the volatile post-1Q rate environment.