Turkish ready-to-wear maker Arsan Tekstil says 2001 was a record year

ISTANBUL – Reporting a surge in net 2001 profits, Turkish thread and ready-to-wear maker Arsan Tekstil said yesterday cheaper world cotton prices and the collapse of the Turkish lira had helped make it a record year. The company could be the exception that proves the rule in Turkey where a year of crisis has pounded bottom lines and many exporters have yet to see the benefits of a 50-percent tumble in the value of the lira since it was floated a year ago. Arsan shares were the biggest gainers on the Istanbul stock exchange yesterday, up 9.76 percent at mid-session after reporting over the weekend that 2001 net profits were up 1,684 percent to 1.38 trillion lira (around $10 million) from 77 billion in 2000. Crucially, the firm increased operating profit 663 percent to 13.63 trillion lira. Other firms that have reported major profits in 2001 were generally cash-rich companies that made exceptional income by riding interest rates that soared during the economic crisis early last year. Arsan Director General Alisan Arikan told Reuters the company had been well placed to benefit from low input cotton prices and had not needed to redirect itself to exports, as many firms are now trying to do to compensate for recession at home. «We were already an exporting firm, that was an advantage. Plus the cost of cotton fell abroad. The raw material we use most is cotton. Additionally, we were working with stocks and reduced them,» Arikan said. «And we made no investment. We were comfortable there,» he added, speaking by telephone from the company site in the southern city of Kahramanmaras, not far from the Syrian border. Textile companies accounted for around a third of Turkish exports, a little over $30 billion last year. The government is hoping exports fueled by the weak lira will drive a recovery in the economy this year after the worst recession since 1945. Arikan said Arsan was also able to extend the term of its debt, with short-term debt up 39 percent to 25.46 trillion lira and long-term debt up 136 percent to 6.11 trillion lira, according to year-end results. Many firms with foreign currency debt have found it hard to manage with local currency earnings that have tumbled in value. Arikan said he was confident about the coming year and aimed to increase turnover by 60 percent. The government expects end-2002 consumer inflation of 35 percent but many analysts expect it to be higher.

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