A LOOK FOR IRONSTEEL SECTOR IN TURKEY Muhammet

A LOOK FOR IRONSTEEL SECTOR IN TURKEY Muhammet Ali Baştın 2001431005 Eyüphan Özyurt 2001431036 Soner Turhan 2001431034

IRON-STEEL SECTOR n n n Turkey is one of the few countries that possess a vast and diverse mineral resource base. Excluding resources of oil and coal are about 4. 500 mineral deposits in Turkey. The Turkish iron and steel industry was dominated by state-owned or partially stateowned integrated facilities and dominantly private sector electric arc furnace plants

HISTORY OF IRON-STEEL SECTOR n n n Turkey’s first steel factory was established in 1928 for military purposes Turkey has 3 integrated plants In 2002, the İskenderun Iron and Steel Factory was tied to Erdemir

THE STRUCTURE OF IRON – STEEL SECTOR n n The Turkish iron-steel sector has completed its infrastructure, capital structure and technology. It is highly competitive in the world, both in terms of price and quality Next to big companies, many small and medium-sized enterprises produce iron and steel.

The Sector Companies in Turkey n n Iron and steel production was first started in Kirikkale, which is now known as MKEK, in 1928 The first integrated plant, Karabük Iron and Steel Works (KARDEMIR) began to operate in Karabük in 1937 Eregli Iron and Steel Works (ERDEMIR) started production in 1965. In 1977, Iskenderun Iron and Steel Works (ISDEMIR)

Size and Capacity of Companies n n The production capacity of the Turkish iron and steel industry reached to 4. 2 million tons in 1980 At present, Turkish steel sector, with its around 15 million tons of crude steel production and 9. 5 million tons of total export, ranks in the 15 th in the global steel output

Products in Sector 1000 tons 2002 2003 2004 Products Production Consump. Tinplate 146 234 179 239 220 287 Galvanize 489 637 588 772 904 1016 Cold Rolled 1116 1186 1375 1615 1443 2188 Hot Rolled 2130 3386 2146 3858 1915 3891 Plate 53 287 46 269 50 391 Other 65 140 90 129 100 174 Total Flat Steel 3999 5870 4424 6882 4632 7885 Total Long Steel 11230 6906 12265 7605 13932 8619 Seamles Pipe 3 85 3 103 4 142 Grand Total 15232 12861 16692 14590 18568 16646 www. mesteel. com

Other Products n n Steel Products * Blooms * Billets * Beam Blank Rolling Mill Products * Hot Rolled Round Steel (Bars) * Hot Rolled Round Steel (Deformed Bars) * Steel Nip Beams * Steel Npu Profiles * Equal Angles * GI Profile * Rails * Billets n Coke Products * Coke Plant Products * Ammonium Sulphate, Pressed Naphthalane, Tar Paint * Carbolic Oil, Grude Benzole, Refine Washed Oil * Crude Tar Other Products * Pig Irons * Granule Slag * Oxygen, Nitrogen, Argon

THE CONDUCT OF IRON – STEEL SECTOR n n The iron and steel market is large and set to grow further Turkey was the world’s 13 th steel producer with a total production of 18. 3 million tonnes in 2003, with an impressive growth rate of 11. 1% over 2002

Foreign Trade Of Iron Steel Sector n n Turkey exports almost half of its total production, it meets domestic demand for flat products mainly through imports Economic crises in Southeast Asia and Russia and the recent one in Turkey has had negative effects on the sector, exports have recovered

Foreign Trade Of Iron Steel Sector n n Turkey exports steel products to about 151 countries and its major export partners are USA, Italy, Greece, Israel, UK, Germany and the Middle East. Turkey's number one steel export partner; the US, has currently launched the Bush Plan which entails the implementation of new tax and tariffs up to 30 percent on steel imports

State Planning Organization (SPO)

PERFORMANCE OF THE SECTOR n n n 1. Profitability of Sector’s Companies 2. Growth of Sector’s Companies 3. Other Ratios about Sector Companies

Profitability of Sector’s Companies COMPANY EREGLI IR. STE. CO IZMIR IR. STE. CO KARDEMİR IR. STE. TOTAL FINNET 2000 NET PROFIT(2005/6) YTL Ratio Of Profitability % YTL 300. 172. 619 4. 49 8. 946. 166 3. 39 11. 693. 804 1. 97 320. 812. 589 2. 40

Growth of Sector’s Companies Total Assets in 1999 YTL Tot Asset in (2005/6) YTL Growth Ratio % EREGLI 629. 360. 108 6. 678. 181. 758 1077 IZMIR 91. 928. 004 264. 095. 463 287 KARDEMİR 111. 679. 568 593. 256. 776 531 COMPANY FINNET 2000

Debt Ratios (2005/6) Debt Ratio(%) Short-term Debt/Total Debt (%) Capital Sufficiency Ratio( %) Long-term Debt/Total Debt(%) EREGLİ 46. 02 53. 46 67. 32 46. 54 IZMDC 38. 48 76. 59 72. 21 23. 41 KARDEMİR 77. 45 40. 97 56. 35 59. 03 AVERAGE 84. 55 71. 14 56. 78 28. 86 COMPANY FINNET 2000

Other Profit Ratios (2005/6) COMPANY Gross profit Margin (%) Net Profit Margin (%) Cost of Sales/Net Sales Profit/Capital Ratio MV/ BV Net Profit 20056/Equity EREGLİ 16. 03 14. 74 84. 27 6. 68 0. 63 6. 68 IZMDC -1. 65 4. 33 101. 65 4. 69 0. 90 4. 69 KRDMR 11. 36 4. 72 88. 64 3. 50 1. 48 3. 50 FINNET 2000

Price-Earning Ratio, Market Value, Book Value Company Net Profit year 2004 Paid-in Capital YTL EREGLI 496, 189, 112 IZMDC KRDMR Equity YTL Market. Value YTL Market Value USD MV/BV 487, 872, 000 4, 542, 585, 909 4, 366, 454, 400 3, 234, 410, 667 0. 96 12, 716, 310 62, 250, 000 189, 899, 229 195, 465, 000 144, 788, 889 1. 03 10, 163, 825 115, 935, 970 70, 637, 582 106, 661, 092 79, 008, 216 1. 51 FINNET 2000 P/E 8. 8 15. 3 10. 4

CONCLUSION n n Erdemir’s privatisation Mortgage Market, will effect the Iron-Steel sector positively Turkish steel producers are one of the best suppliers for the restructuring investments in Iraq and Middle East The iron and steel industry will continue to grow

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