Key Highlights from the 2025 Financial Report
• Audit Opinion: The independent auditor, EY (Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş.), issued an unqualified opinion, stating that the consolidated financial statements fairly represent the Group’s financial position as of December 31, 2025.
• Revenue Growth: The Group recognized a total revenue of 208,909,904 Thousand TL for 2025, a slight increase compared to the 204,059,940 Thousand TL reported in 2024.
• Profitability:
◦ Gross Profit: 18,564,675 Thousand TL (down from 20,004,604 Thousand TL in 2024).
◦ Operating Profit: 9,951,865 Thousand TL (significantly lower than the 21,056,220 Thousand TL in 2024).
◦ Net Profit: The consolidated net profit for the year was 694,345 Thousand TL, with 511,801 Thousand TL attributable to the parent company.
• Earnings Per Share: The earnings per share dropped to 0.0761 TL in 2025 from 2.0056 TL in the previous year.
• Asset Strength: Total assets grew to 558,531,195 Thousand TL. Notably, tangible fixed assets and ongoing investments account for 52% of total assets, valued at 289,676,099 Thousand TL.
• Dividends: On March 26, 2025, the General Assembly approved a cash dividend of 1,750,000 Thousand TL (0.25 TL gross per share) from 2024 profits.
• Ongoing Investments: The Group has 59,765,872 Thousand TL in ongoing investment expenditures, primarily focused on production lines in mining and metallurgy.
• Workforce: As of the end of 2025, the Erdemir Group employed 12,824 people.
• Special Item: Following the February 2023 earthquake, the Group’s subsidiary, İsdemir, finalized the collection of 2,264,995 Thousand TL in insurance compensation during this reporting period.

The $13 Billion Steel Blueprint: 5 Surprising Realities from Erdemir’s 2025 Financial Audit

In the high-stakes world of global heavy industry, few entities command as much gravity as a national steel champion. Erdemir Group (Ereğli Demir ve Çelik Fabrikaları T.A.Ş.) is not merely a corporation; it is the industrial backbone of Turkey, employing a massive workforce of 12,824 personnel across its sprawling operations. However, the true strategic trajectory of this giant is best understood not through its blast furnaces, but through the rigorous lens of its financial reporting.

The 2025 Independent Auditor’s Report, signed on February 17, 2026, by Lead Auditor Mehmet Başol Çengel of EY (Güney Bağımsız Denetim), offers a fascinating narrative of a company navigating the intersection of massive capital cycles, inflationary volatility, and physical recovery. For the strategic observer, these figures deconstruct how a $13 billion operation maintains its footing in a shifting global landscape.

1. The $13 Billion Asset Base vs. The Profit Paradox

The scale of Erdemir is captured in its Consolidated Financial Position. As of December 31, 2025, the Group’s total assets reached $13,035,875 thousand (approximately $13 billion). This represents a vast concentration of capital in mills, mines, and infrastructure.

Yet, a glance at the bottom line reveals a striking contrast: Net Profit for the period stood at $17,611 thousand (approximately $17.6 million). To an outsider, this “profit paradox”—yielding less than 0.2% on assets—might suggest inefficiency. To an analyst, it reveals the brutal capital intensity of metallurgy. Furthermore, the audit reveals a critical mitigating factor: Erdemir recorded a Net Monetary Position Gain of $22,230 thousand (approximately $22.2 million). This gain, derived from its functional currency structure, actually exceeded the total net profit, illustrating how strategic accounting protects the bottom line from currency erosion.

The reliability of these massive figures is anchored by the auditor’s “Clean Opinion”:

“In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of 31 December 2025 and its consolidated financial performance and its consolidated cash flows for the accounting period then ended, in accordance with Turkish Financial Reporting Standards (TFRSs).”

2. Revenue Recognition: The $5.3 Billion Moving Target

For the 2025 fiscal year, Erdemir generated revenue of $5,298,745 thousand (approximately $5.3 billion), derived primarily from the production and sale of iron and steel products. Auditors flagged “Revenue Recognition” as a Key Audit Matter because it serves as the primary pulse of the Group’s performance.

The complexity lies in the “transfer of control.” With massive volumes of steel moving across domestic borders and into international markets, determining the exact moment a customer assumes the risks and rewards of ownership is a logistical and accounting challenge. To verify this $5.3 billion target, the auditors executed a multi-layered defense:

• Process Analysis: Evaluating the design of internal controls over sales, shipment, and credit risk management.
• Cut-off Testing: Sampling sales invoices and shipment documents to ensure revenue was recorded in the precise period control was transferred.
• Direct Confirmation: Obtaining external confirmation letters from customers to verify the existence and accuracy of accounts receivable.

3. A Future Cast in Iron: 52% of Assets Locked in Production

The most significant strategic signal in the audit is the concentration of value in the Group’s physical engine. Tangible Fixed Assets (Property, Plant, and Equipment) and advances for fixed assets reached a carrying value of $6,760,914 thousand (approximately $6.76 billion). This represents a staggering 52% of the Group’s total assets.

Within this figure lies a massive commitment to the future: $1,394,910 thousand (approximately $1.39 billion) is currently tied up in “Ongoing Investments.” According to the report, these funds are specifically flowing into mining and metallurgy production lines and critical ore investments. Erdemir is not merely maintaining its current state; it is aggressively modernizing. When over half of a $13 billion balance sheet is locked into the “crucible” of production and future capacity, it signals a long-term industrial bet that ignores short-term market noise.

4. The USD Reporting Choice: Navigating Inflationary Waters

Erdemir presents a unique reporting nuance that acts as a strategic shield. While it is a Turkish entity reporting in Turkish Lira (TL) for local compliance, its “functional currency”—the currency of its primary economic environment—is the US Dollar.

This choice is a sophisticated response to the “High Inflation” (TMS 29) environment. While subsidiaries like Ermaden operate in Turkish Lira, the parent company’s use of the USD as its measurement unit allows it to reflect its economic essence without the distortion of local price volatility. As noted in Section 1, this structure allowed the company to realize a $22.2 million gain in its net monetary position, effectively helping the Group offset local inflationary pressures that would have otherwise eroded its balance sheet strength.

5. The Final Piece of the Recovery: The $64 Million Earthquake Settlement

The 2025 audit also marks the closing of a painful chapter for the Group, specifically regarding the İsdemir plant. Following the devastating earthquake of February 6, 2023, the Group has been engaged in extensive insurance recovery efforts.

The Consolidated Cash Flow Statement confirms that the Group has now fully collected its insurance compensation. During the 2025 period, Erdemir received $64,200 thousand (approximately $64.2 million) in cash. This inflow represents the physical restoration of capacity and the finalization of a complex recovery process.

“A total of 2,264,995 thousand TL ($64,200 thousand USD) in insurance income accrual… has been collected in cash as of the reporting date and reported under ‘Other Cash Inflows’ in the consolidated cash flow statement.”

Conclusion: Resilience in the Crucible

The 2025 audit depicts a $13 billion industrial powerhouse in a state of deliberate evolution. Despite the lean profit margins inherent in a high-investment year and a volatile macroeconomic climate, the Group is doubling down on its core strengths. With 52% of its total value committed to production and massive ongoing investments in mining and metallurgy, Erdemir is playing a generational game.

In an era of global economic shifts, can a steel giant’s massive internal investment today define the industrial landscape of the next decade? The figures suggest Erdemir is banking its future on that very premise.

Briefing Document: Ereğli Demir ve Çelik Fabrikaları T.A.Ş. (Erdemir Group) 2025 Consolidated Financial Analysis

Executive Summary

This briefing document synthesizes the consolidated financial results and independent auditor’s report for Ereğli Demir ve Çelik Fabrikaları T.A.Ş. (“Erdemir” or “the Group”) for the fiscal year ending December 31, 2025. The audit, conducted by Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. (a member firm of Ernst & Young Global Limited), provides an unqualified (“clean”) opinion, stating that the financial statements fairly present the Group’s financial position in accordance with Turkey Financial Reporting Standards (TFRS).

Critical Takeaways:

• Profitability: The Group reported a net profit of $17,611 thousand for 2025, a significant decrease from the $432,976 thousand reported in 2024.
• Revenue Generation: Total revenue for the period reached $5,298,745 thousand, primarily driven by the production and sale of iron and steel products.
• Asset Composition: The Group maintains a massive asset base of $13,035,875 thousand. Tangible fixed assets and ongoing investments represent approximately 52% of the total consolidated assets.
• Strategic Investments: Ongoing investment expenditures totaled $1,394,911 thousand (59,765,872 Bin TL), focusing on production lines and mining activities.
• Operational Scale: As of December 31, 2025, the Group employed 12,824 personnel across its various subsidiaries.

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Financial Performance Overview (USD ‘000)

The following table summarizes the consolidated profit and loss for the year ending December 31, 2025, compared to the previous year.

Key Financial Ratios and Insights

• Operating Margin: The operating profit margin saw a notable decline, dropping from approximately 10.3% in 2024 to 4.8% in 2025.
• Financing Costs: Net financing expenses remained a significant burden, with $360,393 thousand in finance expenses against $153,216 thousand in finance income.
• Tax Impact: The Group incurred a tax expense of $75,739 thousand in 2025, compared to a tax credit/income of $20,461 thousand in the prior year.

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Financial Position and Asset Base (USD ‘000)

The Group’s consolidated balance sheet as of December 31, 2025, reveals a robust but capital-intensive structure.

Assets

• Total Assets: $13,035,875
• Current Assets: $5,849,533 (Includes $2,695,176 in cash and cash equivalents).
• Non-Current Assets: $7,186,342
  • Property, Plant, and Equipment (PPE): $6,472,056
  • Intangible Assets: $258,497

Liabilities and Equity

• Total Liabilities: $6,086,527
  • Short-Term Liabilities: $2,723,795 (Includes $1,601,989 in trade payables).
  • Long-Term Liabilities: $3,362,732 (Primarily long-term borrowings of $2,756,660).
• Total Equity: $6,949,348
  • Parent Company Equity: $6,723,092
  • Non-controlling Interests: $226,256

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Key Audit Matters (KAM)

The independent auditor identified two primary areas requiring significant professional judgment during the 2025 audit.

1. Revenue Recognition

The auditor designated revenue as a kilit denetim konusu (key audit matter) because it is the most significant item in the profit and loss statement and a vital performance indicator.

• Scope: The Group recognized $5,298,745 thousand in revenue, mainly from iron and steel sales.
• Risk: Management must evaluate the transfer of control to customers based on various domestic and international shipment terms (TFRS 15).
• Audit Procedures: Included testing the design and implementation of sales controls, performing analytical procedures on revenue levels, and verifying a sample of invoices against shipment documents to ensure proper “cutoff” (recording revenue in the correct period).

2. Accounting for Fixed Assets and Ongoing Investments

This was a KAM due to the sheer scale of the assets and the complexity of calculating depreciation and determining economic life.

• Scope: Fixed assets and related investment advances totaled $6,760,914 thousand (289,676,099 Bin TL), accounting for 52% of total assets. Ongoing investments specifically amounted to $1,394,911 thousand (59,765,872 Bin TL).
• Audit Procedures: The auditor verified investment expenditures and borrowing cost capitalizations, performed physical observations of major investments through site visits, and recalculated depreciation expenses based on production-based or straight-line methods.

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Organizational Structure and Operations

Erdemir operates as a massive industrial conglomerate under the ultimate parentage of OYAK (Ordu Yardımlaşma Kurumu).

Main Subsidiaries and Participation

The Group’s reach extends through several key entities:

• İskenderun Demir ve Çelik A.Ş. (İsdemir): 94.87% ownership; integrated iron and steel production.
• Erdemir Madencilik San. ve Tic. A.Ş. (Ermaden): 90% ownership; iron ore and pellet production.
• Erdemir Çelik Servis Merkezi (Ersem): 100% ownership; steel service center.
• Kümaş Manyezit Sanayi A.Ş.: 100% ownership; magnesite ore and refractories.
• Erdemir Romania S.R.L.: 100% ownership; electrical steel production.

Personnel Distribution (as of 31 December 2025)

Total personnel increased from 12,366 in 2024 to 12,824 in 2025.

• Hourly Workers: 8,907
• Monthly Salaried Workers: 3,917

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Cash Flow Analysis (USD ‘000)

• Operating Activities: Generated a net cash inflow of $1,567,953 thousand. This included the collection of $64,200 thousand in insurance proceeds related to the February 6, 2023, earthquake.
• Investing Activities: Resulted in a net cash outflow of $434,051 thousand. Key expenditures included $384,506 thousand for the acquisition of tangible fixed assets.
• Financing Activities: Provided a net cash inflow of $15,528 thousand. The Group secured $1,067,904 thousand in new loans but made $817,411 thousand in credit repayments and paid $43,185 thousand in dividends.

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Accounting Policies and Currency Notes

• Functional Currency: While the Group reports in Turkish Lira (TL) for regulatory purposes, the functional currency for Erdemir (the parent), İsdemir, Ersem, Kümaş, and Erdemir Asia Pacific is the U.S. Dollar.
• Inflation Accounting (TMS 29): Since the functional currency of the main entities is the USD (a non-inflationary currency), they do not apply inflation adjustments. However, subsidiaries with TL as their functional currency (e.g., Ermaden, Erdemir Engineering) applied TMS 29 adjustments for the 2025 period.
• Significant Events: The Group completed the collection of all insurance receivables related to the 2023 earthquake damage as of the reporting date.