Companies send mixed signals in third quarter
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ISTANBUL - As the third quarter results of companies begin to roll in, it still is quite hard to determine exactly to what extent the Turkish economy has been affected by the global economic crisis. While some firms post high quarterly profits, some others, such as Ar?elik, report extreme declines in revenues
Turkish companies' reports for the third quarter give mixed signals on whether the global economic crisis is surfacing in Turkey's economy, but an analyst said the concrete effects of the downturn will be felt when results of the current quarter are disclosed.
Ereğli Demir & Çelik, Turkey's biggest steel maker also known as Erdemir, said its third quarter profit tripled on higher prices. On the other side of the coin, İşbank's net profit during the same period slumped 74 percent from a year earlier.
Erdemir's net income climbed to YTL 603.2 million ($366 million), from YTL 181.7 million a year earlier. Sales increased 54 percent to YTL 5.8 billion. Net profit for the first nine months rose 154 percent compared to the corresponding period, reaching YTL 1.46 billion.
However, not everything is peachy. "Things got worse in the fourth quarter as steel prices declined and exports almost stopped," Bloomberg quoted Kurthan Atmaca of Ekspres Invest as saying. Erdemir reduced capacity usage because of lower demand, Chief Executive Officer Oğuz ?zgen said, adding that profits may be negatively affected in the next quarter.
Next quarter to show more
Further negative movements are expected in the fourth quarter, Ayşegül ?zgür, an analyst with Fortis Bank, told Hürriyet Daily News & Economic Review yesterday. If the Turkish lira continues to lose value, companies in automotive, technology and household appliances will be affected negatively, she said. Companies in these sectors may consolidate, fire employees or reduce production, ?zgür said, adding that Fortis' exchange rate estimate stands at YTL 1.60 per dollar. "One should remain cautious against dollar-indebted companies," she warned.
On the other hand, although İşbank reported that net profit for the past nine months of the year rose 9 percent compared to the same period last year, reaching YTL 1.3 million, the bank was not as successful in the third quarter. Turkey's biggest non-government bank said its net income fell to YTL 156.4 million ($95 million) during the third quarter. İşbank had a profit of YTL 594 million in the third quarter of 2007. "Fee generation was low and operating expenses were higher than expected," said Sadrettin Bağcı, an analyst at Finans Invest.
İşbank's loan book expanded 8.5 percent to YTL 45.7 billion in the third quarter. Its deposits grew 4.2 percent in the quarter to YTL 56.1 billion, while net interest income in the quarter rose 13 percent to YTL 851 million.
Not all banks posted profit declines. Yapı Kredi, the bank co-owned by Italy's UniCredit, said third quarter net income rose 14 percent from a year earlier, as it lent more to customers. Profit increased to YTL 365.4 million ($222 million) from YTL 320.3 million in the same period of 2007, Yapı Kredi reported Wednesday. Net profit for the first nine months reached YTL 1.1 billion.
"Yapı Kredi has been more aggressive in giving out loans, especially on the retail side," said Sevda Sarp, an analyst at Ata Invest. The bank's loan book grew 7.1 percent to YTL 36.9 billion, after lending expanded 7.3 percent in the second quarter. Yapı Kredi also posted an increase in its net profit for the past nine month, reaching YTL 1.005 billion.
Şekerbank, the lender that sold a 34 percent stake to Kazakhstan's Bank TuranAlem, posted a net profit of YTL 123 million during the first nine months. That is an increase of 13 percent compared to the same period last year. However, it is questionable whether the bank can raise capital next year, according to a report by Yatrırım Finansman Securities yesterday.
"Turkish banks and corporations will need to draw down overseas assets to cover debt liabilities falling due. Portfolio outflows are expected to accelerate," Timothy Ash, head of the Central and Eastern Europe, Middle East and Africa at Royal Bank of Scotland, wrote in a note to investors. "Overall, this suggests still a difficult balance of payment positions going forward, and pressure for further lira weakness."
Costs for media climb
On the media front, Hürriyet Gazetecilik & Matbaacılık, Turkey's biggest newspaper publisher, said third-quarter profit slumped 77 percent as administrative costs climbed. Net income fell to YTL 10.3 million ($6.2 million) from YTL 44.4 million a year earlier, Hürriyet said late Wednesday. Sales were little changed at YTL 254.6 million from YTL 253.7 million a year earlier. Hürriyet's net profit was YTL 57 million for the past nine months of the year, down 33 percent compared to the same period last year.
Doğan Gazetecilik reported a net profit of YTL 15 million for the first nine months of the year. The company's third quarter consolidated revenue grew 16 percent, however its revenue for the period was lower than YTL 102 million recorded during the second quarter, due to a slowdown in advertisement growth.
Ar?elik, Turkey's largest maker of household appliances, said quarterly net income plummeted to YTL 240,000 from YTL 65.7 million a year earlier.
Daily News is a Doğan Media Group publication.