Turkey’s Oyak Cement Invests Despite Shrinking Market: Turkish Resilience Proof againts the Financial Crisis

Istanbul, Turkey | December 16, 2008 by D-8 Secretariat

Oyak Cement Group is pressing ahead with investments

Turkey’s Oyak Cement Group said Wednesday it was pressing ahead with investments despite an expected 10 percent decline in domestic cement sales this year due to an economic slowdown.

The group said net sales in the first nine months of the year reached 691.6 million lira ($437 million), while net profit was 243.1 million lira ($154.2 million).

It did not provide comparative figures, but in 2007 as a whole, the group’s net sales rose 10 percent to 850 million lira ($539.7 million).

The group has four listed companies, Adana Cement, Bolu Cement, Mardin Cement and Unye Cement.

“Cement companies in the Oyak Cement Group are continuing with investments despite the crisis and the uncertainty which it brings with it,” the company said in a statement.

It said Adana Cement’s Isdemir slag cement and white cement plants would become operational next year. Bolu Cement’s Eregli slag cement plant will also go into operation next year.

Unye Cement’s Romanian terminal will become operational at the end of this year, the statement said.

After the announcement, shares in Unye Cement were up 1.95 percent, Mardin Cement’s were up 1.37 percent, Bolu Cement was unchanged and Adana Cement down 0.68 percent.

Global firms choose Turkey

According to the “Global Investment Expectations” study by the United Nations Conference on Trade and Development, Turkey may continue to attract foreign capital, despite a diminishing risk appetite globally.

Global firms are now looking to invest more in the safe havens of Western Europe and North America, yet Turkey is the first country to be chosen in its region.

According to 2006 figures, Turkey stood 16th worldwide and fifth among developing nations in attracting foreign capital, with $20.1 billion. Foreign capital inflows last year reached $21.8 billion but this rise did not change Turkey’s place in the ranking. By the end of the year, Turkey is expected to retain its position.

Turkey may benefit from falling import

Meanwhile, as the global economic crisis continues to bite into foreign trade worldwide, Turkey’s exports declined both in October and November.

However, it is not only exports that are declining in Turkey. The drop in the country’s imports is actually higher than the decline in its exports. Deteriorating parallel with the rising global financial crisis, Turkey’s imports declined nearly $5 billion. The country’s imports are expected to decline $50 billion next year, State Minister Kürşad Tüzmen said.

Turkey’s imports had reached $19 billion to $20 billion prior to October. That figure has declined severely within the past two months. Turkey’s imports in October totaled $14.7 billion and based on preliminary calculations, the country’s imports in November declined to $12.6 billion. The figures show a decline of $5 to $6 billion in monthly imports.

“Turkey is experiencing a serious decline in it imports due to rising foreign exchange rates as well as the contraction in the European markets,” said Tüzmen. “If today’s conditions prolong then Turkey’s imports will most likely decline by nearly $50 billion in 2009.”

Decline in commodity prices

Kürşad Tüzmen

The price of crude oil and its products, which are the largest imports, has declined seriously, said Tüzmen. “The [crude oil] price deteriorated from $170 to $40 per barrel. Iron and steel prices have also been declining. By the end of this year we expect our imports to cost anywhere from $205 to $210 billion,” Tüzmen added.

“As the result of our declining import next year, the ratio of exports covering imports will be much higher then it is today. Also, as our companies producing domestic intermediate goods step in, industrialists will be pushed to use domestic intermediate goods instead of foreign goods,” said Tüzmen. “As a result Turkey’s current account deficit will eventually decline.

D-8 Organization voiced its optimism that intra trade of Turkey-D8 which is around 12 billion dollars can be increased eventhough facing the financial turmoil. Today, in the 26th Session of D-8 Commission, in Istanbul, Turkey, the organization planned to present two guest speakers in the meeting: the Foreign Economic Relations Board of Turkey (DEIK), Secretary General Ufuk Yılmaz; and from the D-8 Federation of Chambers of Commerce, Secretary General A. Hanjani.

The main aim for these two guest speakers is to increase cooperation among the private sectors of D-8 countries. During this session of Commission, these two representatives of businessmen NGOs of D-8 countries will submit their suggestions, expectations about how trade and investment will be enlarged and iversified in the near future considering the impacts of global financial crisis.

D-8 targets to increase intra-trade within D-8 for year 2009-2010 from 6% up to 15%, such as emanated by the D-8 Roadmap 2008-1018. For instance, the organization is working to boost the volume of trade between Turkey-Indonesia from the current annual trade of 2 billions USD to 5 billions USD in 2012.

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