Reporting by Nevzat Devranoglu; Writing by Huseyin Hayatsever; Editing by Jamie Freed
Finance
Turkey may exclude banks from inflation-adjusted accounting -minister
/cloudfront-us-east-2.images.arcpublishing.com/reuters/6EZR3HHEANNPHM2LFGUGT6DBTQ.jpg "Turkey may exclude banks from inflation-adjusted accounting -minister")
Turkey’s Finance Minister Mehmet Simsek speaks during the 66th General Assembly of Turkish Banks Association in Istanbul, Turkey August 17, 2023. REUTERS/Murad Sezer/File Photo Acquire Licensing Rights
ANKARA, Nov 1 (Reuters) – Turkey will move to inflation-adjusted accounting, but financial institutions may be excluded from the practice, Finance Minister Mehmet Simsek said late on Tuesday.
Turkish companies’ end-2023 balance sheets will be inflation adjusted, with the practice expected to continue until 2026 due to current inflation forecasts, the Treasury told Reuters last week, a change analysts said would most affect the country’s banks.
“We will move to inflation accounting. Maybe there’ll be an exception for financial institutions, and we’ll not include them to the practice. But apart from that, we will move into that practice,” Simsek told a parliamentary commission.
The Treasury’s revenue administration published a draft regulation this month detailing a move to inflation accounting.
Turkish annual consumer price inflation climbed to 61.53% in September, the most recently available data.
In the last two years, companies have sought to protect themselves from high inflation by purchasing fixed assets rather than leaving money in bank accounts. Those that have turned to non-monetary fixed assets are expected to receive higher profits and pay correspondingly higher taxes in 2024.
Turkish banks, which saw their average profit increases slow to 50% in the first half of this year following a 366% surge in 2022, would be among those affected most negatively by the move to inflation-adjusted accounting, analysts said.
“Banks will report perhaps a quarter of the profits they used to report,” Soner Gokten, assistant professor for accounting and finance at Turkey’s Baskent University, said last week.
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Revenue: €147.4m (down 39% from FY 2023).
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Net income: €22.6m (down 73% from FY 2023).
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Profit margin: 15% (down from 35% in FY 2023). The decrease in margin was driven by lower revenue.
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EPS: €1.62 (down from €5.98 in FY 2023).
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All figures shown in the chart above are for the trailing 12 month (TTM) period
Revenue exceeded analyst estimates by 29%. Earnings per share (EPS) also surpassed analyst estimates by 3.5%.
Looking ahead, revenue is forecast to grow 46% p.a. on average during the next 2 years, compared to a 8.3% growth forecast for the Electrical industry in Germany.
Performance of the German Electrical industry.
The company’s shares are down 9.9% from a week ago.
Before we wrap up, we’ve discovered 3 warning signs for Energiekontor (1 is significant!) that you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Friday was another in the series of dramatic losses in the equity markets as investors pushed financial conditions into negative terrain because of mounting concerns around the costs linked to an expanding trade war.
Given the ever-widening scope of U.S. tariffs, with the next round set to take effect on April 2, the risks to the economic outlook through the financial channel are elevated and rising.
We anticipate that the economies targeted by the tariffs will retaliate in-kind. investors, firm managers and policymakers should also anticipate that retaliation will most likely include the tradeable services sector and not just agriculture, goods and politically sensitive industries like transportation.
Read more of RSM’s insights on the economy and the middle market.
The S&P 500 equity index peaked on Feb. 19 and has since lost 9% of its value with losses in seven of the past nine weekly sessions. On Friday alone, roughly $1.25 trillion in equity valuations were wiped away.
Interestingly, the Russell 2000 index of small cap corporations—a proxy for the health of privately held small and medium-sized businesses—has lost the most ground among the major stock indices.
The RTY index has now lost 17% of its value since peaking on Nov. 25, suggesting a loss of confidence in economic growth that will result in a slower pace of hiring and outlays on capital expenditures that will show up in hard data in the near term.
It is not just the equity market showing excessive levels of risk. Volatility in the Treasury market remains above its long-term average and corporate yield spreads are widening, offering more evidence of the concern over the direction of the economy.
While not yet significantly different than neutral, our RSM US Financial Conditions Index fell below zero on the last Friday of March.
Our index is designed such that negative values indicate increased levels of risk being priced into financial assets. Higher risk implies a higher cost of credit, which will affect the willingness to borrow or to lend that will hamper economic growth.
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Revenue: €476.9m (down 2.6% from FY 2023).
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Net income: €31.0m (up 11% from FY 2023).
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Profit margin: 6.5% (up from 5.7% in FY 2023). The increase in margin was driven by lower expenses.
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EPS: €2.32 (up from €2.09 in FY 2023).
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All figures shown in the chart above are for the trailing 12 month (TTM) period
Revenue was in line with analyst estimates. Earnings per share (EPS) surpassed analyst estimates by 2.0%.
Looking ahead, revenue is forecast to grow 5.1% p.a. on average during the next 3 years, compared to a 5.0% growth forecast for the Machinery industry in Germany.
Performance of the German Machinery industry.
The company’s share price is broadly unchanged from a week ago.
It is worth noting though that we have found 1 warning sign for WashTec that you need to take into consideration.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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