Plastics Sector Loses Momentum

According to an assessment of Turkey's "Second 500 Largest Industrial Enterprises" 2022 list, the plastics sector lost ground. The number of enterprises operating in the plastics sector according to NACE codes declined from 27 to 24. PAGDER Board Chairman Selçuk Gülsün, evaluating Turkey's Second 500 Largest Industrial Enterprises list from the perspective of the plastics sector, stated: "Although all data of plastics industry enterprises operating according to NACE codes and included in the second 500 list show increases, when we consider that there was an 86% increase between the average exchange rate in 2021 and the average exchange rate in 2022, we see that these increases do not reflect reality." [caption id="attachment_157798" align="aligncenter"] Selçuk Gülsün[/caption]

Export Share Declined!

Gülsün continued:

"In our analyses conducted on sector members who shared their data transparently, we observe that exports contracted by more than 1.9% compared to 2021. When we consider that the plastics sector's total exports increased by 16% during the same period, we can say that the plastics industry enterprises on the ISO Second 500 list have lost their share of exports. One of the main reasons for this dual situation is the Ukraine-Russia war that started in 2022 and the rising energy prices resulting from this conflict, which triggered recession fears in Europe—our leading traditional export market—and slowed our exports to these countries. Indeed, in 2022, export growth in the plastics sector came from rapidly growing markets. While SMEs that found opportunities to make more dynamic and aggressive entries into these fast-growing markets increased their exports, large-scale companies failed to capitalize on the same opportunities. Additionally, our sector members who were on the list in both 2021 and 2022 and shared their data reported that production-based sales increased by 96.9% and net sales by 93.6%. Although this increase is substantial, when we evaluate production-based sales in dollar terms by taking into account the 86% increase in average exchange rates, we observe a much more modest growth rate of 5.9%."

Profitability rapidly eroding!

Gülsün stated that plastics sector enterprises on the Second 500 list that transparently shared their data reported EBITDA increases of 59.9% on a TL basis and a decline of 14.1% on a dollar basis: "Despite the increase in our enterprises' turnover, the decline in EBITDA also shows that operational costs could not be passed on to consumers at the same rate. The main reason for this is that plastic raw material prices are indexed to foreign exchange, and upward exchange rate movements increase costs, whereas due to the contracting domestic market, these cost increases could not be reflected at the same rate," he said. Selçuk Gülsün, noting that as the sector's most established NGO founded in 1969, PAGDER has 14 members on the ISO Second 500 list, stated: "We congratulate all our members on the list, and we highly value the contributions of these enterprises toward bringing the plastics sector to better positions in the coming years."