ECONOMY

Worst performance in 50 years for Athens bourse

For the first time in the history of the Athens stock exchange, from the time that historical data started to be recorded in the 1960s, the number of lossmaking companies outnumbered those that managed to turn a profit last year.

The final result for the 265 companies listed on the Athens bourse in 2010 showed net losses of 2.9 billion euros versus total profits of 3.6 billion in the previous year.

According to Manos Hatzidakis, head of investment strategy at brokerage Pegasus, the fourth quarter of last year was the worst on record. Companies were 2.4 billion euros in the red for the October-December period, boosting total losses for the year to 2.9 billion.

This figure does not take into account results from Atlantic supermarkets and television station Eleftheri Tileorasi, which were unable to publish company accounts on time for the close of the reporting season. Their inclusion will likely take the final figure over the 3-billion-euro mark.

For the first nine months of the year, Atlantic and Eleftheri Tileorasi reported combined losses of 120 million euros.

According to Hatzidakis, companies have seen profit margins sharply deteriorate.

Small-cap companies showed a very narrow profit margin of between 2.4 and 2.8 percent.

Only large-cap companies have managed to avoid this drop, maintaining an operating profit margin of 14.09 percent.

One of the reasons for the sharp fall in profitability is related to the rising cost resulting from internal financing needs as cash flows worsen. At the same time, there is no opportunity for bank lending.

The 2010 nightmare belongs to the past. However, initial indications for the start of 2011 are not optimistic, since in the same period a year earlier the market was yet to experience the shock of the country resorting to the International Monetary Fund and the European Union for the 110-billion-euro rescue package.

The sharp drop in consumption stemming from this uncertainty is likely to peak in second-quarter figures as consumer sentiment remains at the lowest levels in a decade.