Kocaer Çelik's 2024 Financial Results: Navigating a Challenging Steel Market
Kocaer Çelik Sanayi ve Ticaret A.Ş. (Kocaer Çelik), a leading Turkish steel producer, has released its financial and operational results for the 2024 fiscal year. Despite some positive operational metrics, such as a modest increase in sales volume, the company reported significant declines in profitability and revenue. The results highlight the pressures faced by the steel industry in Turkey and globally, amidst challenging market conditions and inflationary pressures.
Key Financial Figures for 2024
• Net Profit:
In 2024, Kocaer Çelik registered a net profit of TRY 83.12 million ($2.28 million), a stark contrast to the net profit of TRY 1.70 billion in 2023. This marks a massive year-on-year decrease of 95% in profit, signaling significant difficulties in the company’s operations.
• Operating Profit:
The company reported an operating profit of TRY 1.18 billion ($32.34 million) in 2024. This was a 54.8% decrease from the previous year, which reflects the operational challenges faced due to price reductions and rising input costs.
• Sales Revenue:
Kocaer Çelik’s sales revenue for 2024 was TRY 19.23 billion ($526.87 million), marking a 13.4% decline compared to the previous year. The decrease in sales revenue was primarily attributed to lower selling prices in US dollar terms, a trend affecting steel producers globally.
• EBITDA and Margin:
The company’s EBITDA for 2024 decreased by 49.5% year-on-year to TRY 1.64 billion ($44.82 million). This led to a drop in its EBITDA margin to 10.6%, down from 14.4% in 2023. The drop in EBITDA reflects the combined impact of weaker sales prices and higher operational costs.
Sales Volume and Product Mix
Despite the overall decline in revenues and profits, Kocaer Çelik managed to achieve growth in sales volume for the year:
• Product Sales Volume:
The company’s product sales volume amounted to 580,443 metric tons (mt), which represented a 3.4% increase from the previous year. This growth indicates that Kocaer Çelik was able to sell more steel products despite the challenging pricing environment.
• Value-Added Products:
Kocaer Çelik also made notable progress in shifting towards high value-added products, which are typically more profitable than standard steel products. In 2024, the share of value-added products in its total sales volume increased to 42%, up from 39% in 2023. This shift in product mix is expected to further enhance profitability in the future, especially as demand for more specialized steel products continues to rise.
Challenges and Market Conditions
The 2024 financial report pointed to a number of key factors that put significant pressure on margins and led to declines in revenue:
• Challenging Market Conditions:
The steel market in 2024 was marked by price fluctuations, lower selling prices, and inflationary pressures, which reduced gross revenue and operating profit. These factors are in line with global trends in the steel industry, where rising energy costs, material shortages, and geopolitical factors have disrupted production and increased operating costs.
• Cost Increases and Inflation:
Like many other industries, Kocaer Çelik faced rising costs due to inflation, which affected its overall profitability. Higher costs for raw materials, energy, and transportation compounded the difficulties in achieving higher margins despite increasing sales volume.
• Price Reduction on US Dollar Basis:
In addition to internal challenges, the global steel market’s ongoing fluctuations in US dollar prices significantly impacted Kocaer Çelik’s sales revenue. As the Turkish lira continued to face volatility, steel producers in Turkey were forced to sell at lower prices on the international market, leading to further revenue losses.
Investment Plans and Future Outlook
Despite the setbacks in 2024, Kocaer Çelik remains focused on long-term growth. The company emphasized its strategic investments in its financial report, with a clear focus on expanding its high-value product lines:
• Investment in High-Value Products:
In 2024, Kocaer Çelik made TRY 644 million (approximately $17.35 million) of investments aimed at improving its production capabilities, particularly in the area of high value-added products. The company expects these investments to pay off in 2025, where it anticipates a significant increase in the share of high-value product sales in its total portfolio.
• Expansion and Modernization:
The company’s emphasis on value-added products aligns with its broader strategy to modernize its operations and increase the quality and profitability of its steel products. This will help Kocaer Çelik differentiate itself in a competitive and challenging market and better serve customers in sectors that require more specialized steel, such as automotive, construction, and machinery manufacturing.
• Market Trends in 2025:
Looking forward, Kocaer Çelik remains cautiously optimistic. With investments in modernization, a stronger focus on value-added products, and the completion of new projects, the company hopes to improve profitability and capitalize on recovery in global steel markets.
Key Takeaways:
• Net Profit Decline: Kocaer Çelik reported a net profit of TRY 83.12 million ($2.28 million) in 2024, a 95% decrease compared to the previous year.
• Operating Profit Fall: The company’s operating profit dropped by 54.8%, reaching TRY 1.18 billion ($32.34 million).
• Revenue Decrease: Sales revenue decreased by 13.4% year-on-year to TRY 19.23 billion ($526.87 million), primarily due to lower selling prices in US dollar terms.
• EBITDA Drop: Kocaer Çelik’s EBITDA declined by 49.5% to TRY 1.64 billion ($44.82 million), resulting in a decrease in EBITDA margin to 10.6%.
• Sales Volume Growth: The company achieved a 3.4% increase in product sales volume, reaching 580,443 metric tons in 2024.
• Value-Added Product Share: The proportion of value-added products in total sales volume rose to 42% from 39% in 2023.
• Inflation and Cost Pressures: Rising costs and inflation negatively impacted margins and overall profitability in 2024.
• Future Investments: Kocaer Çelik invested TRY 644 million in 2024, with plans to increase its share of high-value products in 2025.
