Hard on Industrial companies
The level of foreign currency purchases has been so high that the percentage of foreign currency deposits held by real persons in banks reached 51 percent in a first-time ever development. To top all of these, main opposition leader Kemal Kılıçdaroğlu was subject of an attack, to which senior government executives did not respond as harshly as many believe they should have; putting off and intimidating investors even more. As a reflection of all these, the interest rates are rising, the inflation and unemployment rates are climbing and hopes for economİc recovery are evaporating. The heaviest toll this situation has taken has been on the companies operating in industrial fields.
Consulting company Besfin has recently completed a survey showing the eroding impact the situation described above is having on Turkish companies. Based on the research conducted by Besfin using data from 8,900 companies, the debt-to-equity (D/E) ratio of Turkish companies is 96 percent while the shareholder equity ratio is at 37 percent. Looking at these numbers, analysts say that Turkish companies are not operating with much leverage. The shareholder equity ratio average of 13 countries is 42 percent and this figure has decreased by 17 base points for Turkish companies operating in the industrial segment.
Debt ratio stands at global average
The study has also upended the belief that Turkish companies are in too much debt. To the contrary, the debt ratios of Turkish companies do not significantly differ from world averages. What sets Turkish companies negatively apart from the rest of the world are the financing expenses they pay back. Turkish companies pay six times the interest paid by their counterparts in Germany and France and 17 times the interest costs paid in Japan, where a low-interest rate policy has been in place. Comparing Turkey with countries that are in the same league, Turkish companies still pay twice or three times the interests paid by Polish, Mexican, Italian, Brazilian, Chinese and Mexican Companies. Besfin CEO Ferda Besli explains: “When funding their assets Turkish companies don’t use much leverage. They make significantly high interest payments. The cash they have at hand is nowhere near enough to decrease their credits.” In other words, Turkish companies are not struggling when it comes to paying back debt, but they are having a hard time affording the interest costs.