One of Tekfen Holding's two main lines of business, the contracting industry, was severely affected by the Russo-Ukrainian War right after the pandemic. As the economic recession caused many infrastructure projects to be postponed, the war accentuated the East-West polarization, subsequently changing geopolitical balances, exacerbating security concerns, and triggering a shrinkage in the international contracting industry. A flagship of the Turkish economy, the construction industry succumbed to these challenges as well and failed to reach the 2022 goal of $50 billion in new projects and recorded $17.8 billion in new venture volume.
However, the positive advances in Turkey’s relations with the Gulf countries in 2022 proved hopeful for the Turkish construction industry. Normalization of relations with Saudi Arabia, in particular, accelerated industrial talks with the Saudis. Despite the severe fluctuations throughout the year, the oil prices followed a steady growth trend, thus enabling infrastructure investments. Consequently, we were invited to quote numerous projects over the course of the year. Tekfen Construction undertook new projects worth $260 million and managed to keep its backlog at around $1.217 billion despite the challenging conjuncture. The Ceyhan Manufacturing Facility, operating under the company, added to its portfolio two large-scale manufacturing projects, namely the PKN Orlen Refinery in Poland and the NFE project in Qatar.
Another engineering and contracting group company, Tekfen Manufacturing, recorded $15.1 million worth of new projects in 2022 in addition to its backlog. Continuously expanding its foreign orders, the company set foot in Australia for the first time in its export history.
Strengthening its engineering services in the contracting industry with the latest technologies, Tekfen Engineering achieved significant growth in recent years, and in 2022, continued its ventures in digital solutions, sustainable technologies, the national defense industry, and aerospace in addition to the more traditional lines of business. Intending to seize business opportunities abroad, Tekfen Holding launched an office in Kenya the previous year, then a recent one in the UK in 2022. The company submitted quotes for numerous projects around the world throughout the year.
Already highlighted by the pandemic, food security and agricultural sustainability became a constant in the global agenda following the Russo-Ukrainian crisis. As the war broke out between the two largest international suppliers of barley, wheat, and corn, the skyrocketing input and transportation prices caused the food prices to reach an all-time high in February 2022. With Russia being a major global fertilizer raw material supplier, the tension negatively impacted the fertilizer industry. The instability in the commodity markets and the peaks in natural gas prices prompted many European fertilizer manufacturers to either slow down or halt manufacturing with record-breaking fertilizer prices. The inescapable increase in fertilizer prices in Turkey and the world further expedited the recent shrinking of the fertilizer market and difficulties in accessing fertilizer.
The Tekfen Group considers it a highly significant responsibility to contribute to food security through productivity-boosting agricultural input and direct production. Turkey’s leading fertilizer manufacturer and market leader, Toros Agri, managed to sustain its capacity use at around 75 percent despite the year-long disruptions in the supply chain and the deteriorating conjuncture and registered 1.6 million metric tons of sales in a narrowing fertilizer market. Toros Agri’s agile and flexible responses to the extraordinary and unpredictable events in the post-pandemic industry boosted the company’s competitive power and improved its financial statements in recent years. Ranking export champion five years in a row in chemical fertilizers, our company once again reached striking sales volumes as the previous year's ban on fertilizer exports was partially removed in 2022.
Based in New York, our corporate venture capital fund, Tekfen Ventures, continues to successfully connect our group to the innovation and venture world with brand-new opportunities. While global venture capital investments worth hundreds of billions of US dollars lost acceleration in 2022, given the global uncertainties, the venture ecosystem remains one of the most significant sources of sustainable and innovative business models in the world.
Most recently, in 2022, Tekfen Ventures incorporated into its portfolio the new biotechnology venture Laverock, which aims to employ cell and gene therapy to treat various critical diseases. Within the same year, the cooperation between the Tekfen Ventures investment Petra, a company working on no-contact tunneling technologies, and Tekfen Engineering and Contracting Group proved the possibilities of advances in our operating areas through innovative solutions and technologies. Another Tekfen Ventures investment, Phospholutions, continue to successfully cooperate with Toros Agri on field tests while Tropic Biosciences works with Agripark R&D Center on banana saplings. Our group aims to expand such value-creating synergies in other lines of business through Tekfen Ventures.
Our primary focus in 2022, a year brimming with economic challenges and ambiguities, was to be agile in our response to the rapidly changing conditions and hard-to-estimate events in all our areas of operation, to manage the risks in the best possible manner, and to ensure our business continuity. In 2022, we reached a total sales income of 30,668,492,000 Turkish lira and registered 3,409,784,000 Turkish lira in EBITDA and 3,448,392,000 Turkish lira in net profit. By the end of the year, our group’s assets amounted to 32,187,365,000 Turkish lira and shareholder’s equity to 10,590,200,000 Turkish lira.
Our group continuously monitors investment opportunities that will cement our position in the market, foster our competitive power, and boost our profit-oriented approach. The investment we launched to this end to expand the Torosport Ceyhan Terminal, which shows significant potential due to its position in the Gulf of Iskenderun and its prime infrastructure facilities, gained considerable traction in 2022. The project to strengthen and extend the Western Pier from 1.1 kilometers to 2.3 kilometers to welcome larger tonnage liquid cargo ships is expected to be completed by June 2023. Subsequently, Torosport Ceyhan will further improve its presence in the rapidly growing port management sector.
In addition to financial and operational success, we also consider it a significant priority to combat climate change, acknowledged as the greatest risk to the future of our world. Following suit of the previous years, we witnessed numerous extraordinary climate events in 2022. While millions of people faced famine due to drought in some regions of the world, many lost their lives in fierce floods. The unprecedented heat in the European continent triggered many wildfires. Efficient combat against climate change requires sustainable business models in all industries. Switching to a low-carbon economy is only possible through the full support of the business world.
Therefore, we consider our Carbon Net Zero Roadmap efforts as an obligation not only for our group but for the future of our world. In 2022, we became one of the 53 companies in Turkey to score a "B" in the CDP's Climate Change Program. As for the Water Security Program, we ranked 103rd among the 2,437 companies worldwide rated "A." We boosted our BIST Sustainability Score from a B to an A-.
We continue to review the business processes of our group companies thoroughly to boost their adaptive capacity to climate change's negative impacts and align them with our carbon-free goal. In 2022, we notably maintained work on preparing our roadmap and harmonization efforts regarding the EU Green Deal, Carbon Border Adjustment, and Emission Trading System. I find the cooperation of our R&D Centers in the agriculture and fertilizer industries with national and international organizations, science institutions, and universities, particularly crucial and valuable.
As we prepare this report, I remember the words of the Founding and Honorary President of Tekfen Group Companies, the late Ali Nihat Gökyiğit: “I’ve always considered social responsibility and sustainability principles as an integral part of my business life and ventures. When faced with problems, I’ve always opted to ask, ‘What can I do?’ instead of blaming others!” These words have inspired us at the Tekfen family to take whatever steps necessary toward our shared future and face the challenges instead of running away from responsibility.
Again, as we prepared this report, we were all sorrowed by the major earthquake centered in Kahramanmaraş. Over 40,000 lives were lost in the disaster. We reached out to help heal the wounds, whether by participating in the search and rescue efforts or by mobilizing all our resources to fulfill the needs of those disaster-stricken. I wish all those who lost their lives in the disaster the mercy of Allah, my deepest condolences to those who lost their family and loved ones, and a speedy recovery to all those wounded.
As Tekfen, we have always worked and will continue to work with the deepest dedication to benefit our country by following the values we inherited from our late founders Necati Akçağlılar, Feyyaz Berker, and Nihat Gökyiğit. It will remain our priority in the upcoming period to further advance Tekfen on a path of science and technology with a human- and environment-friendly approach and to create value for all our stakeholders without compromising our values.
Sincerely,
Zekeriya Yıldırım
Chairman