Industrial Profits Turned Into Financing Costs: IS0 500 Signals Structural Weakness

Turkey’s mid‑size industrial firms are channeling a staggering 87% of their 2025 earnings into financing expenses.

Soaring Financing Costs: Profit in the Shadow

The Istanbul Chamber of Industry (ISO) report “ISO Second 500‑2025” reveals that companies increased their financing expenses by 45.2%, reaching TL 138 billion. When expressed as a share of operating profit, this translates to an unprecedented 86.7%.

Balance‑Sheet Imbalance: Critical Debt‑Equity Ratio

■Debt‑to‑equity ratio surged to 107.5%.

■Total liabilities rose to TL 1.2737 trillion, while equity’s share fell to 48.2%.

■Short‑term financial debt’s share of total debt dropped to 54%, indicating heightened liquidity pressure.

Export Performance: Stagnation and Decline

■ISO Second 500’s exports fell 0.3% to $15.9 billion.

■Share of industrial exports slipped to 6% of total Turkish exports.

■Machinery‑equipment sector grew 23.3%, whereas computer‑electronics‑optics saw a 82.9% contraction.

Profitability Ratios: Nominal Gains Masked by Weak Margins

■Operating profit rose 35.4% to TL 160 billion, yet operating margin remained at 7.7%.

■EBITDA margin held steady at 12.8%, well below the ten‑year average of 14%.

■Return on equity edged up to 3.9%, underscoring long‑term sustainability concerns.

Expert Analysis (Hakan Çelik): Turkey’s industrial sector is bleeding profit into financing costs amid a high‑interest environment and constrained credit. This erodes capital efficiency and the deteriorating debt‑to‑equity balance amplifies financial stability risks. Policy must target lower rates, eased credit terms, and focused tax incentives for high‑tech firms; otherwise, the adverse effects on growth, employment, and exports will deepen.