Reasons for Declining Profitability in Industry Despite Turnover Growth
According to ISO 500 and Second 500 data, while nominal turnovers are increasing, high costs and financing expenses are severely suppressing industrial profitability.
Although nominal turnovers in the industrial sector are showing an increase, limited real growth and rising financing expenses are negatively impacting corporate profitability. It is noted that a large portion of operating profits is allocated to financing expenses.
Cost Pressures and Competitiveness
The industrial sector is not only struggling with high interest rates and weak demand; rising wage, energy, and raw material costs are also complicating the process.
The lag of exchange rates behind inflation is among the factors weakening exporters' competitive power in international markets.
Production-Based Sales and Real Growth
While production-based sales of ISO 500 companies increased by 28 percent in 2025 to reach 11.1 trillion liras, real growth remained at 2.1 percent when adjusted for the Domestic Producer Price Index (D-PPI).
A similar picture was observed in the ISO Second 500 list, where the nominal increase was 28.1 percent, while real growth materialized at the level of 2.2 percent.
Export Data and Loss of Scale
ISO 500 exports increased by 8.4 percent to reach 104.7 billion dollars, whereas Second 500 exports decreased by 0.3 percent, dropping to 15.9 billion dollars.
On the other hand, the drop of 26 companies from 2024 into the lower group in 2025 clearly demonstrated that a loss of scale is occurring beyond just a loss of profitability.
Impact of Financing Expenses on Profit
While operating profitability stood at 7.7 percent in both groups, pre-tax profitability remained at 3.4 percent for ISO 500 and 2.2 percent for the Second 500.
The ratio of financing expenses to operating profit reached 84.9 percent in ISO 500 and 86.7 percent in the Second 500, eroding the majority of earnings.
Carried-Over VAT and Working Capital
The burden of carried-over VAT, which is one of the factors narrowing industrialists' working capital, continues to grow exponentially.
While the carried-over VAT amount of ISO 500 companies was 23.6 billion liras in 2021, it exceeded 120 billion liras in 2025.