Our International Orders Increased by 50%
Erdemoğlu Holding is preparing to offer its largest company, Merinos, to public. Aiming for an international initial public offering, the group plans to allocate more than 50% of the shares to foreign institutional investors. Chairman of Erdemoğlu Holding, İbrahim Erdemoğlu and Chairman of Merinos, Mehmet Erdemoğlu answered our questions after visiting the Merinos factory in Gaziantep. Mehmet Erdemoğlu, noting that SASA, the group's only publicly traded company, is recognized by international investors, said, "A significant portion of the investors we met with are already familiar with the performance of a petrochemical company operating in Adana and the investments made by the Erdemoğlu Group in SASA. Therefore, it's easier to explain Merinos. So far, we haven't encountered an investor who said, ‘The region is unstable, and the facility is in Gaziantep, so let's not invest.'"
SAFE HAVEN EFFECT
Highlighting Merinos' production capacity, Mehmet Erdemoğlu continued: "When we compare our overseas order volume in August of last year with our current overseas orders in terms of square meters, we are approximately 50 percent higher. We are currently hiring new workers. We are increasing our capacity. We are also bringing our idle capacities into operation. Therefore, from our perspective, there is a different picture on the demand side. One could also talk about a "safe haven" effect here. Some customers may have switched from other suppliers to us. Being a reliable company is important. Being a low-cost company is important. Being able to produce in high quantities is important. And being able to deliver the product on time is becoming increasingly important."
INTERNATIONAL INVESTOR INTEREST INCREASED
Mehmet Erdemoğlu, explaining that they are talking about an international initial public offering on a scale not seen since 2017, said, "It will be high-value. More than 50% of the allocation will be made to institutional investors abroad. Even more importantly, in my opinion, it would be a success for Turkey's capital markets. From our perspective, considering the size, corporate nature, and the foreign capital it will bring to Turkey, this initial public offering is not just about Merinos' initial public offering. The resources generated by the Merinos initial public offering will strengthen the financial structure of the Erdemoğlu Group, and indirectly, we aim to reduce SASA's leverage ratio to approximately 4 by the end of 2026."
WE ARE A COMPANY WITH STRONG CASH GENERATION
Erdemoğlu, noting that the acquisition of SASA was financed with the cash strength generated by Merinos, provided the following information: "Today everyone is looking at SASA, but the main origin is Merinos. Merinos is not just a carpet company. Barcelona, the football club with the most fans in the world, defines itself as 'More than a club.' We also see Merinos as 'More than a carpet company.' You see carpets, but we are not actually talking about a company that only produces carpets. It produces the yarn needed to produce the carpets itself. It produces the dye needed to dye the yarn itself. It handles the dyeing process itself. It will even start producing the polyester chips needed to produce that yarn itself from October 1st. We have made an investment of approximately 270 million dollars in polyester chips here. This is the profitability brought about by end-to-end integration.”
WE KNEW HOW TO TURN CRISES INTO OPPORTUNITIES
Explaining that numerous uncertainties arose along with regional conflicts, İbrahim Erdemoğlu stated, "Many raw materials experienced upward price movements. However, at the point we have reached today, we see that prices have returned to somewhat more stable levels. Thanks to our fully integrated structure at Merinos, we utilized our cost advantage, speed, and flexibility. We turned this situation to our advantage. Crisis times have always created growth opportunities for our family businesses. We have grown even more during every crisis period."
WE GREW TENFOLD EVERY 10 YEARS
İbrahim Erdemoğlu, Chairman of the Board of Erdemoğlu Holding, stated that Merinos' growth was not accidental, but the result of a strategy they have been implementing for many years. Erdemoğlu stated, "In 1983, our annual turnover was around 250,000 dollars. In 1993, our turnover was 3 million dollars. In 2003, we reached 30 million dollars. In 2013, we achieved a turnover of 300 million dollars. In 2023, the total turnover of our group reached 3 billion dollars. We progressed by continuously transferring technology and knowledge from abroad. Due to the impact of these factors, as Erdemoğlu Holding, we may not have grown tenfold again in 2031. Because today, at Merinos, approximately 92% of our turnover comes from exports. We sell to over 100 countries. Merinos produces approximately 7% of the machine-made carpets produced worldwide. We have an annual production capacity of 80 million square meters."
Source: Yeni Şafak Newspaper
SAFE HAVEN EFFECT
Highlighting Merinos' production capacity, Mehmet Erdemoğlu continued: "When we compare our overseas order volume in August of last year with our current overseas orders in terms of square meters, we are approximately 50 percent higher. We are currently hiring new workers. We are increasing our capacity. We are also bringing our idle capacities into operation. Therefore, from our perspective, there is a different picture on the demand side. One could also talk about a "safe haven" effect here. Some customers may have switched from other suppliers to us. Being a reliable company is important. Being a low-cost company is important. Being able to produce in high quantities is important. And being able to deliver the product on time is becoming increasingly important."
INTERNATIONAL INVESTOR INTEREST INCREASED
Mehmet Erdemoğlu, explaining that they are talking about an international initial public offering on a scale not seen since 2017, said, "It will be high-value. More than 50% of the allocation will be made to institutional investors abroad. Even more importantly, in my opinion, it would be a success for Turkey's capital markets. From our perspective, considering the size, corporate nature, and the foreign capital it will bring to Turkey, this initial public offering is not just about Merinos' initial public offering. The resources generated by the Merinos initial public offering will strengthen the financial structure of the Erdemoğlu Group, and indirectly, we aim to reduce SASA's leverage ratio to approximately 4 by the end of 2026."
WE ARE A COMPANY WITH STRONG CASH GENERATION
Erdemoğlu, noting that the acquisition of SASA was financed with the cash strength generated by Merinos, provided the following information: "Today everyone is looking at SASA, but the main origin is Merinos. Merinos is not just a carpet company. Barcelona, the football club with the most fans in the world, defines itself as 'More than a club.' We also see Merinos as 'More than a carpet company.' You see carpets, but we are not actually talking about a company that only produces carpets. It produces the yarn needed to produce the carpets itself. It produces the dye needed to dye the yarn itself. It handles the dyeing process itself. It will even start producing the polyester chips needed to produce that yarn itself from October 1st. We have made an investment of approximately 270 million dollars in polyester chips here. This is the profitability brought about by end-to-end integration.”
WE KNEW HOW TO TURN CRISES INTO OPPORTUNITIES
Explaining that numerous uncertainties arose along with regional conflicts, İbrahim Erdemoğlu stated, "Many raw materials experienced upward price movements. However, at the point we have reached today, we see that prices have returned to somewhat more stable levels. Thanks to our fully integrated structure at Merinos, we utilized our cost advantage, speed, and flexibility. We turned this situation to our advantage. Crisis times have always created growth opportunities for our family businesses. We have grown even more during every crisis period."
WE GREW TENFOLD EVERY 10 YEARS
İbrahim Erdemoğlu, Chairman of the Board of Erdemoğlu Holding, stated that Merinos' growth was not accidental, but the result of a strategy they have been implementing for many years. Erdemoğlu stated, "In 1983, our annual turnover was around 250,000 dollars. In 1993, our turnover was 3 million dollars. In 2003, we reached 30 million dollars. In 2013, we achieved a turnover of 300 million dollars. In 2023, the total turnover of our group reached 3 billion dollars. We progressed by continuously transferring technology and knowledge from abroad. Due to the impact of these factors, as Erdemoğlu Holding, we may not have grown tenfold again in 2031. Because today, at Merinos, approximately 92% of our turnover comes from exports. We sell to over 100 countries. Merinos produces approximately 7% of the machine-made carpets produced worldwide. We have an annual production capacity of 80 million square meters."
Source: Yeni Şafak Newspaper