State firm climbs 500 steps in one year in profits

Tuesday, July 27, 2010

GÖKHAN KURTARAN

İSTANBUL - Hürriyet Daily News

Climbing from the bottom among Turkey’s top 500 companies, state-owned Electricity Generation Co., or EÜAŞ, was the most profitable company in 2009, according to the annual report by the Istanbul Chamber of Industry, or ISO. The company was ranked 500th in profitability in 2008, posting a loss of 652.4 million Turkish Liras.

Talking to the Hürriyet Daily News & Economic Review, Tanıl Küçük, ISO chairman, said the company had climbed 500 steps in the list thanks to slashing its financing costs, as well increasing electricity prices by 20 percent. EÜAŞ posted a net profit of 1.423 billion liras last year.

“The success of the company shows the roadmap which should be followed by others as well,” Küçük said. “The structural problems of the economy keep blocking the path to growth. EÜAŞ has decreased the net cost of sales by around 86 percent, saving 1.2 billion liras.”

According to the report released Tuesday, Koç Holding’s refiner Tüpraş ranked first in sales from production, with nearly 15.5 billion liras, followed by EÜAŞ with 6.5 billion and Oyak Renault 5.4 billion liras. While the profit margins of Turkey’s top 500 companies rose last year, employment decreased sharply.
Turkey’s top 10 exporters were Oyak Renault, Ford Otomotiv, Tofaş, Tüpraş, Arçelik, Toyota, Vestel Electronics, Habaş and Petrol Ofisi. Oyak Renault’s exports reached $3.012 billion in 2009, followed by Ford Otomotiv’s $2.038 billion and Tofaş’s $2.004 billion – meaning that the top three exporters were all automobile manufacturers.

The three most profitable private companies were Tüpraş, Philsa Philip Morris and Ford Otomotiv. Tüpraş, at number three in 2008, posted a profit of 776 million liras.

“With the devastating effects of the crisis, there was a sharp decrease in employment in 2008 and 2009,” said Küçük, speaking to reporters. “From August 2008 to September 2009, the industry shrank uninterruptedly.”
“In the first quarter of 2010, the added value of manufacturing increased by 22.3 percent,” Küçük noted. “We are seeing that the Turkish economy is overcoming the effects of the global crisis.” ISO predicts an annual growth rate of around 5 percent this year.

The base effect

“We should also be aware that there was a strong base effect on the performances of the companies, since we saw the sharpest effects of the crisis by 2008,” Küçük also said. “We are still trying to reach the performance of the years 2006 and 2007.”

Employment rates demonstrate that private companies reduced the number of workers in order to resist the global crisis. On the other hand, public institutions’ employment rate increased by 5.4 percent last year.
Evaluating the first half of 2010, Küçük said, “Even though the economy showed a slight recovery out of the crisis, the foreign trade deficit and the current account deficit still remain high. We should make structural changes in order to secure the growth of the economy and the performances of the companies.”

“With the recovery signs in the economy, the number of companies in the top 500 that posted profits reached 412, up from 352 last year,” the report said.

Turkey’s biggest company, Tüpraş, ranks 196th in the global Fortune 500 list. According to the list, Tüpraş’ total sales equate to $11.8 billion. Four other Turkish companies, including Petrol Ofisi, may also make it onto the list soon, the ISO report said.