Dear valued business partners and esteemed employees,

As Akkök Holding, we have once again successfully completed this year, as we have throughout our 70-year journey. On this occasion, we wanted to share with you our forecasts for 2023, taking into account the developments in the world and our country throughout the year.

The rapid recovery in 2021 following the COVID-19 pandemic brought inflationary effects, leading central banks to initiate a series of interest rate hikes in the first quarter of 2022. However, when global inflation rates reached their highest levels in the last 40 years, it was understood that the intervention was delayed. The invasion of Ukraine by Russia, the subsequent energy crisis, and the difficulties in accessing finance further decreased the global growth rate from 6% in 2021 to around 3% in 2022. This rate was recorded as the lowest growth rate in the last 30 years, excluding the 2009 financial crisis and the 2020 pandemic. The events led to entering 2023 with an increased risk of recession. The collapse of banks such as SVB and Credit Suisse suggests that strong interest rate hikes are not expected to continue for the remainder of 2023.

On the other hand, dynamics in major economies continue to differ. While growth in Europe is expected to halt in 2023 due to efforts to recover from the war’s effects and the transition to alternative energy sources, China’s economy is anticipated to grow by more than 5% due to the early termination of the ‘Zero Covid’ policy and an acceleration in individual consumption. In America, where the dollar and the labor market have strengthened, the Federal Reserve is expected to maintain a 5% interest rate next year due to banks’ high sensitivity to interest rates. Our general expectation is that with the cessation of global interest rate hikes, we will see a recovery in economic activity, especially in the second half of 2023.

Contrary to many economies struggling with inflation, our country prioritized growth and supported employment. In this context, measures such as policy interest rate cuts, significant minimum wage increases, and the reduction of corporate tax rates from 25% to 23% were implemented in 2022. As a result, a growth rate of 7.6% was achieved in the first half of 2022, while the unemployment rate fell to around 10%. However, growth slowed in the remainder of the year due to the increasingly negative reflections of the global conjuncture and our own vulnerabilities; the year was completed with a growth rate of around 5%. On the other hand, commercial activities have been significantly challenged by factors such as inflation reaching 80%, a growing current account deficit, the election atmosphere, low foreign exchange reserves, and frequently changing regulations. Difficulties in accessing finance, high energy costs, and low external demand are likely to further restrict economic activity in 2023. The impact of short-term measures taken may lead to more fundamental problems in the long term.

Despite this challenging macroeconomic environment, Akkök Holding continued to grow and invest without slowing down in 2022. In all the sectors we operate, we develop long-term growth plans with the active participation and support of our subsidiaries and implement innovative investments that will add value to our country and stakeholders. For instance, in 2022 alone, we made investments approaching 200 million USD in projects such as Akkim‘s facility for the domestic production of epoxy, a completely imported product, DowAksa‘s third carbon fiber production line, and Aksa’s outdoor technical yarn facility. We closely follow all developments and innovations in technology, consumer habits, and business models, integrating them into our processes.

With these investments, which balance new product and capacity increases, we continue to achieve our concrete sustainable growth goals. This year, we also established the Green Strategy Initiative in collaboration with our group companies to strengthen cooperation in sustainable and environmentally friendly growth. Thus, we will take concrete steps towards action plans in areas such as circular economy, renewable energy, and adaptation to climate change, which are current necessities for sustainable growth.

As a result of all our efforts, we achieved a total turnover of 78.5 billion TL in the challenging year of 2022. Our EBITDA level increased by 130% to 12 billion TL. Furthermore, our exports recorded a significant increase of 30%, reaching 740 million dollars. While implementing our investments with a long-term perspective and goals of creating added value, I thank all our business partners and employees who have not spared their support and determination during this globally challenging period.

(January 2023)