Membership of the ‘500 Club’ has become more difficult

The results of the “Capital500” survey, which list the largest privately-owned companies in Turkey, cover the entire business community from information technology to retailing, industry and services. For this reason, the changes in the total turnovers, profits and exports of the companies in the Capital500 are indications of how economic developments have impacted on the Turkish business community. Our analyses show that in recent years the minimum turnover required in order to be included in the Capital500 has risen continuously. In 2001 companies had to have a minimum turnover of US $19.7 million in order to be included in the Capital500. In 2005 this figure had risen to US $48.5 million.

Since 2002 the Capital500 survey has included non-industrial companies and become a list of the ‘Largest Privately-owned Companies in Turkey’. In this way, the growth sectors of the changing global economy, such as services, information technology and the media, have been included in the study. The transformation of the Turkish economy over the last four years has also been reflected in the results of our survey. This became even clearer when we analyzed the results of the Capital500 survey over the last four years.

The continuous growth within the framework of the stabilization programme that was implemented after the 2001 crisis has had an impact on Turkish companies. Many companies have disappeared but those with a truly sound structure have survived. During this period, large, powerful companies have renewed themselves and increased their productivity. One result of all of the changes has been that entering the “Giants’ League” has become more difficult.

The minimum turnover required to enter the Capital500 has risen a little each year. In 2001 the company in 500th place in the Capital500 had a turnover of US $19.684 million. This figure has risen every year. In 2003 it was US $29.3 million. The strong performance of the economy in 2004 meant that companies’ turnovers rose and the minimum turnover required to enter the Capital500 increased to US $47 million. In 2005 the 500th company in the Capital500 had a turnover of US $48.456 million.

Growing Turnovers Have Raised The Bar
The 2001 crisis force the large companies in Turkey examine themselves and concentrate more on productivity. When this was combined with four years of continuous growth after the crisis, the largest companies in Turkey began to grow steadily. This resulted in a significant increase in the total turnovers of the companies in the Capital500.

In 2001 the 500 largest private-owned companies in Turkey had a total turnover of TL 65.907 quadrillion. This figure rose to TL 97.751 quadrillion in 2002 and TL 129.941 quadrillion in 2003. In 2004 the companies in the Capital500 had a total turnover of TL 202.840 quadrillion, which rose to TL 223.422 quadrillion in 2005.

In 2002 the turnover of the 500 largest companies in Turkey grew by 2.9 percent in real terms when compared with the previous year. In 2003 the turnover of the 500 largest companies posted a real increase of 8.5 percent. In 2004 the turnovers of the giant companies boomed and the total turnover of the companies in the Capital500 grew by 42 percent in real terms when compared with the previous year. In 2005 the total turnover of the 500 companies rose by 4.5 percent. The growth in total turnover resulted in an intensification in the competition to enter the major league and companies had to record a better performance each year in order to qualify.

Profits Fell In 2005
When we look at how the total profits of the largest privately-owned companies in Turkey have changed over the last four years, the picture that appears also reflects developments in the economy as a whole. The impact of the 2001 crisis continued for a long time and the extent of the impact it had on companies can be easily understood from the decline in their profits.

In 2002 the total profits of the companies which were listed in the Capital500 fell by 63.1 percent compared with the previous year. This decrease meant that the 500 companies’ total profits declined from TL 8.1 quadrillion in 2001 to TL 4.306 quadrillion in 2002. It was only when profits grew strongly in 2003 and 2004 that the figures returned to their previous levels. In 2003 total profits rose to TL 7.860 quadrillion. It was not until 2004 that they exceeded the figures for 2001 when they reached a total of TL 11.6 quadrillion. One of the main reasons for this growth was that in 2003 and 2004 companies adopted a profit-focused strategy. As a result, profits rose by 82.5 percent in 2003 and 47.6 percent in 2004. Total profits increased by 49 percent in real terms in 2003 and by 34.3 in real terms in 2004.

The results of the survey we have conducted this year show that the companies in the Capital500 posted total profits of TL 10.8 trillion. This represents a decline of 6.9 percent in 2005 when compared with profits in 2004. In real terms the decrease is 11.7 percent.

While evaluating the results of the profit analysis one should not forget that, when one  combines the dynamics of the Turkish economy and results of our analysis of the data in announced by the companies in the Capital500, the following fact becomes clear: large companies in Turkey perform better than small companies during times when the economy is doing well. That means that large powerful companies grow faster in Turkey. This fact means that each year it becomes more difficult to enter the Capital500. This inevitably means that the turnover required in order to be listed amongst the major companies which are steadily growing will continue to rise.