Dear Shareholders,

In 2024, the world grappled with major political uncertainties and challenges, particularly in Türkiye’s neighbouring region. Unfortunately, the conflict that began with Russia’s invasion of Ukraine to our north continues to pose a significant threat to global peace. To the south, Israel’s invasion of Gaza and Iran’s subsequent involvement further intensified global political tensions. The civil war in Syria, which had persisted for most of the year, came to an end in December when opposition forces swept into Damascus in a surprise attack and toppled the regime, ushering in a new era of uncertainty. The fall of the Assad regime in Syria, which had ruled for more than 50 years, is set to reshape the balance of power both in the region and globally.

Political instability has been a defining feature of the European continent throughout 2024. The global inflationary pressures following the COVID-19 pandemic, the economic struggles of Europe, and the burdens imposed by the Russia-Ukraine War have been steering Europe’s political landscape increasingly towards the far right. Governmental crises in Europe’s two most powerful countries, Germany and France, are fuelling anti-EU movements and raising concerns about the future of the old continent. In 2024, the European economy failed to gain the expected momentum and continued to weaken. Amid this climate of uncertainty, the U.S. presidential elections and Donald Trump’s victory in December, which secured him a second term in office, were among the most defining events of the year. On January 20, President Trump began his second term in the White House. The decisions he made immediately after taking office fuelled concerns that “Trump 2.0" term could lead to political and economic turbulence worldwide, particularly in the form of trade wars.

In 2024, the primary focus of the global economy was combating inflation, a challenge stemming from the expansionary fiscal and monetary policies implemented worldwide during the COVID-19 era. The interest rate hikes that began in 2022 to curb high inflation were paused in 2024, which were then followed by gradual rate cuts on the path to economic normalization. According to the World Economic Outlook Report published by the OECD in December, the global economy grew by 3.2 percent in 2024. This growth was largely driven by strong performances in the U.S. and China. China introduced its most comprehensive stimulus package since the pandemic to support its 5-percent growth target.

Dear Shareholders,

Although the global economy has shown resilience despite tight monetary conditions and shook off recession fears, the IMF’s October World Economic Outlook report warned that growth will remain weak in the coming years, with medium-term downside risks potentially worsening the global outlook. Therefore, the necessary conditions for the slowing global economy to regain its pre-COVID-19 dynamism have yet to be met.

During this period, developing countries, in particular, struggled to maintain economic stability. With its fragile structure, the Turkish economy also felt the intense impact of various local and international developments. To combat high inflation and stabilize volatile exchange rates, the government launched an orthodox economic program focusing on both price and financial stability in the second half of 2023. The monetary and fiscal policy measures implemented under the program influenced all economic developments and financial market movements in 2024. As a result, 2024 was marked by persistently higher interest rates, a slower depreciation of the Turkish lira, a gradual slowdown in economic growth, and a significant narrowing of the current account deficit. In this context, export-oriented companies were particularly affected by the widening gap between the inflation rate and the increase in exchange rates.

The Turkish economy closed the year with a growth rate lower than expected. The inflation forecast in the Medium-Term Programme was revised twice in 2024, rising to 44 percent from 33 percent. By year-end, inflation reached 44.38 percent, while economic growth stood at 3.2 percent. Meanwhile, tight monetary policy helped reduce external vulnerabilities, led to relatively better market perceptions, narrowed the current account deficit, and boosted international reserves. In November, international credit rating agency S&P upgraded Türkiye’s long-term credit rating from ‘B+’ to ‘BB-’ and revised its credit rating outlook from ‘positive’ to ‘stable’. In its statement, the agency highlighted that the CBRT’s tight monetary policy has helped stabilise the Turkish lira, reduce inflation, rebuild reserves, and contain dollarisation in the financial system. Patience may still be required for a little while, in order to fully observe the positive effects of the economic programme. 

Against the backdrop of heightened global and local uncertainties, Tekfen remained committed to a conservative yet well-defined strategic plan. The core elements of this plan include financial optimisation, efficiency-focused structuring, strategic strengthening, and renewable-energy-led growth. Our new strategic plan, first introduced to stakeholders in 2023, focuses on achieving a sustainable, stakeholder-driven end-to-end transformation across all areas.

In 2024, we made significant progress in nearly all of our strategic priorities. While closely monitoring our goals of manageable turnover growth, manageable debt, and predictable and sustainable profitability, we achieved significant progress in enhancing the financial indicators of our Engineering and Contracting Group through financial optimisation as well as in reigniting growth with new projects following a period of downsizing.

Our strategic strengthening goal focuses on supporting the competitive and sustainability-driven growth of Toros Agri, one of Türkiye’s leading agro-industrial companies, through a strategic partnership or an initial public offering. As part of our vision to establish Toros Agri as a regional solution partner with an integrated portfolio of products and services, we aim to carve a multinational presence and expand our capabilities. In today’s world, strategic access to raw materials and new technologies is crucial for companies to ensure survival, maintain a competitive edge, and drive rapid growth. With this in mind, we initiated negotiations in 2024 for a strategic partnership that will boost Toros Agri's value and strengthen its market position. We have also begun preparations for a potential public offering of the company, should favourable conditions arise. The first step in this process involves aligning the company’s legal infrastructure with IPO requirements.

The year 2024 was a pivotal one for Tekfen as it adapted to its new strategic plan. As the Greek philosopher Heraclitus observed 2,500 years ago, the only constant in life is change. In today’s volatile environment, filled with unexpected circumstances, Tekfen recognises the necessity of transformation more than ever. By leveraging Tekfen’s extensive ecosystem of experience and values, which have shaped its journey thus far, we will accelerate our progress towards a more sustainable and responsible future.

I extend my sincere gratitude to all my colleagues and stakeholders for their dedication and unwavering support.

Sincerely,

Mehmet N. Erten
Chairman

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