What the ISO 500 Says...

Towards the end of last month, we published the “ISO Türkiye Top 500 Largest Industrial Enterprises 2024” survey, which caused a great stir in the economic community. The ISO 500 results provide crucial insights into the impact of the disinflation program implemented in Türkiye on the industrial sector, amid global negative developments, tensions, and uncertainties.

I would like to share a few of the most striking findings from this survey, which are analyzed in detail with tables and charts in the following pages of our magazine. It highlights the heavy burden borne by our industry during this challenging period for our economy. 

First, the net sales from output of the ISO 500 have been declining in real terms for three consecutive years. Second, for the first time in recent years, industrialists were forced to allocate nearly all (96.6%) of their earnings to financing expenses. Third, the operating profitability of the ISO 500 declined to 6.2% in 2024 from 10.4% during the 2014-2023 period. Similarly, the decline in sales profitability to 2.6% in 2024 from an average of 7.1% over the past 10 years is, in our view, should be carefully evaluated.

These few data alone clearly demonstrate the severe business conditions the industry is currently facing and enduring. Therefore, we must understand the reasons behind these conditions. We have conveyed every possible warning on this matter as part of our responsibility.

We see that resolving the current inflation and bringing it back under control can only be achieved at a very high cost. Unfortunately, the industrial sector is bearing the brunt of this heavy burden.

This is why we have consistently expressed our confidence in, and support for, the Medium-Term Program (MTP) from the very beginning. And we have not limited this support to mere words. The most important one is undoubtedly the concrete support we have provided in the fight against inflation since the MTP was launched. For instance, in August-September 2023 period, the basic goods inflation rate, which is considered the most important inflation index for industry, stood at around 58%. This rate is now at around 20%. However, the services inflation rate, which was around 88 to 89% at that time, has only reached 58% today. The Consumer Price Index (CPI), which reflects all other factors, is currently at around 37%. On the other hand, measures taken to combat inflation have raised commercial loan rates to 55% to 60%.

In other words, we, industrialists, are forced to continue output with an interest burden that is much higher than our own inflation rate of 20%. Frankly, we are concerned that this will reduce the output capacity and capabilities of the manufacturing industry in the future, leading to a disruption in the supply of goods.

We discussed many other issues related to the ISO 500 in a panel organized under our ICI Assembly meeting in May with journalists, academics, and economists under the main agenda of "Evaluating Our Industry in Light of the ISO Top 500 2024 Data: Structural Issues, Competitive Characteristics, and Change,".

We have published ISO 500 results for the 57th time this year and each issue of it has become a historical financial document now. I believe it will once again provide a fruitful platform for discussion for our economy and industry.

In the first days of this month, we will celebrate Eid al-Adha, one of the most meaningful and special days of our spiritual world. I wish you and all your loved ones a happy Eid al-Adha, filled with peace, and extend my best wishes for a month of peace and good health to everyone.

 Erdal Bahçıvan
Istanbul Chamber of Industry
Chairman of the Board of Directors