Saturday October 25, 2014 Search
Weather | Athens
19o C
12o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
European firms plan for Greek unrest and euro exit

By David Jones

British electrical retailer Dixons has spent the last few weeks stockpiling security shutters to protect its nearly 100 stores across Greece in case of riot.

The planning, says Dixons chief Sebastian James, may look alarmist but it's good to be prepared.

Company bosses around Europe agree. As the financial crisis in Greece worsens, companies are getting ready for everything from social unrest to a complete meltdown of the financial system.

Those preparations include sweeping cash out of Greece every night, cutting debts, weeding out badly paying customers and readying for a switch to a new Greek drachma if the country is forced to abandon the euro.

"Most companies are getting ready and preparing for a Greek exit and have looked at cash, treasury and currency issues,» said Roger Bayly, a partner at advisory and accountancy firm KPMG.

Europe's No 2 electrical retailer Dixons owns Greece's market leading but loss-making Kotsovolos chain, which has a 25-percent market share selling iPads and laptops as well as washing machines, televisions and air conditioning units.

Chief Executive James says the company has contingency plans to shutter up its 69 wholly owned and 29 franchised Greek stores and close them in the short term to protect against any threat of civil unrest and prepare for a switch to a new drachma.

Greece accounts for just over 3 percent of Dixon's annual sales of around 8.2 billion pounds. The company competes with Europe's No 1 electrical chain Metro and with a number of local players which James says may struggled to survive in a crisis.

"We know it would put paid to quite a lot of our competitors and give us an opportunity to get more of a market share. So we are ready and we would be very interested to see how it would turn out,» said James.

Dixons, using its experience of dealing with riots in London and other British cities last summer - big flat-screen televisions were the looters' booty of choice - has ordered enough shutters to protect its stores and is working with the Greek police and security groups.

The group's sales dipped 9 percent in Italy, Greece and Turkey in the year to late April. The group does not split out Greek sales, but these three nations make up around 7 percent of the group's annual sales.

Diageo, the world's biggest spirits group and the name behind Johnnie Walker whisky and Smirnoff vodka, has reacted by slashing its marketing spend in Greece, reducing stock levels and pulling cash quickly out of the country after it saw its Greek sales halve in the last three years to less than 100 million pounds.

Diageo has weekly meetings aimed at cutting its exposure to Greece, protecting remaining sales by bolstering its own in-house distribution network, halting supplies to some small bars and focusing on high-end hotels and clubs.

Diageo's Chief Marketing Officer Andy Fennell says its Greek sales are still falling. The once big Johnnie Walker market has already shrunk and now accounts for less than one percent of the group's 10 billion pound annual turnover.

"There could be a marked impact on Greece but the big question is what happens elsewhere across the eurozone,» Fennell said with an eye on Diageo's bigger troubled markets inside the eurozone such as Spain and Ireland.

The London-based Association of Corporate Treasurers says businesses should take precautions such as demanding cash on delivery and writing sales contracts in another currency such as pounds or dollars.

"Businesses need to build in protection by checking payment terms, sweeping cash out of subsidiaries and into other currencies and check on the vulnerability of suppliers,» said Martin O'Donovan, ACT's deputy policy and technical director.

KPMG's Bayly advises his clients to check the six Cs when preparing for a possible Greek euro exit: cash, contracts, continuity, counterparties, control and commercial. He believes that automotive companies, tour operators and pharmaceutical groups would see the biggest immediate disruption from an early euro exit by Greece.

He argues most companies are well prepared on cash issues and contracts with suppliers, but less so on how they would cope with business continuity in the immediate aftermath of a euro exit.

Bayly also warns companies to guard against the failure of key suppliers or counterparties, to tighten up on controls to avoid errors and fraud, and also to be clear on how they would be affected commercially by possible future changes in patterns of government and consumer spending.

The world's biggest luxury car group BMW says it is already prepared for the worst after seeing a quarter of Greek BMW dealerships go out of business since 2008 and its national annual deliveries slashed by more than two thirds from a peak of around 7,000.

"We're very good at scenarios. Clearly we've thought through what it would mean to us,» said BMW board member and global sales chief Ian Robertson. «We're absolutely sure that the euro has a long future ahead of it. That doesn't necessarily mean that it remains in its current structure."

Holiday firm TUI AG took early action last November when it asked Greek hoteliers to sign new contracts to pay them in drachmas if a new currency were introduced using an exchange range which would be set by the Athens government.

It also has contingency plans to move customers to other destinations if civil unrest does break out, similar to measures it put into place last year following turmoil in North Africa during the Arab Spring revolutions.

Major drugmakers such as Britain's GlaxoSmithKline and Switzerland's Roche are working with European authorities on emergency plans to keep vital medicines flowing into Greece if it exits the euro.

They know that turning off the supply tap is not an option as this can lead to protests and damage to their reputations as many see them under a moral obligation to continue to supply medicines.

Mobile phone giant Vodafone says it has plans to cope if the Greek banking system is frozen and civil unrest breaks out. It says the experience of recent unrest in Egypt showed it how it had to protect its buildings and make pre-paid top-up phones a priority.

"We need to be sure that we have the billing capability, the right people in the right places, the fuel and the money. The switching of the currency is an IT thing, we switched from the old currency to the euro,» said Chief Executive Vittorio Colao.

British banknote printer De La Rue is drawing up plans to print new drachma notes in the event of a Greek euro exit, according to an industry source with knowledge of the matter. The world's biggest security firm G4S expects to be involved in distributing notes around the country.

De La Rue, which as the world's biggest commercial banknote printer produces more than 150 currencies, has made no comment. Analysts say Greece could have to turn to outside printers because of the sheer quantity of banknotes needed.

"Our fastest growing business last year in European cash services was Greece and clearly our biggest contingency issue would arise if the country were to leave the euro and go back to the drachma because basically we would be involved in the whole roll out of the currency,» G4S Chief Executive Nick Buckles said. [Reuters]

ekathimerini.com , Monday May 28, 2012 (07:07)  
TAIPED waits for green light from Eurostat
Trade deficit shrinks on big drop in imports
SMEs unable to claim subsidies
Taxes kept growing in second quarter
Athens, Nicosia satisfied by EU leaders´ stance toward Ankara
A reference in Friday’s European Council conclusions calling on Turkey to respect Cyprus’s sovereign rights left Athens and Nicosia content with the outcome of the European Union leaders’ su...
Suspended policeman chief suspect in cousin’s murder
A 27-year-old police officer who has been suspended from duty since 2013 for extortion, is being treated as the chief suspect in a murder committed in a suburb of Piraeus on Thursday. Police...
Inside News
BASKETBALL
A win is a win is a win for Olympiakos
A bad Olympiakos defeated a worse Laboral Kutxa 63-57 to make it two out of two in the Euroleague on Friday. In a game where the two teams had an overall field goal rate of about one in thre...
SOCCER
Panathinaikos snatches point at Eindhoven
Panathinaikos offered its fans a glimpse of its glorious past in European competitions snatching a draw at PSV Eindhoven, on an otherwise bad night for Greek soccer in the Europa League, as ...
Inside Sports
COMMENTARY
Tension for tension’s sake?
It is evident that Turkish President Recep Tayyip Erdogan feeds off tension. He would barely have achieved as much as he has – and prevailed – if he had not been so keen to confront a series...
EDITORIAL
Testing ground
The Regional Authority of Attica is a good testing ground for politicians who appear to thrive on accusations to prove whether they can actually solve major problems of a practical nature. T...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. A win is a win is a win for Olympiakos
2. TAIPED waits for green light from Eurostat
3. Trade deficit shrinks on big drop in imports
4. SMEs unable to claim subsidies
5. Taxes kept growing in second quarter
6. Thessaloniki Port expects 2014 to be record year
more news
Today
This Week
1. Woman killed in tram accident in Floisvo, south of Athens
2. Clocks to go back 1 hour on Sunday
3. Venizelos slams Turkey for 'flagrant violation of international law' off Cyprus
4. ECB vies for third time lucky in European stress tests
5. Cyprus GDP upgrade seen as boosting bailout exit plans
6. ECB bank assessment to show 6-billion-euro capital gap, Citi says
Today
This Week
1. The past, present and future of the Greek debt crisis
2. Greece’s closed society is central to its current malaise
3. Greece must stick to reforms, says Schaeuble
4. At least 11 banks to fail European stress tests, three in Greece, report says
5. Cyprus to block Turkey's EU talks after EEZ violation
6. Samaras’s crumbling Greek exit lacks backing from economists
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.