Greece’s listed firms feeling the heat of rising oil costs

Companies listed on the Athens Stock Exchange (ASE) appear vulnerable to the precipitous rise in oil prices. The 13-year highs have begun to weigh on the costs of listed companies, especially industrial ones. Industries especially vulnerable to the oil price rise are metals, food, packaging materials, plastics and cement producers. With oil at over $41 per barrel, production costs rise and, if the situation persists, they will soon affect goods prices. Some analysts note that some industries producing widely consumed goods are considering immediate price rises to offset the extra burden imposed by high oil prices. Titan and Heracles Cement are two of the most vulnerable firms. These are both exporting firms with high energy costs. The euro’s strength against the dollar makes their situation even more difficult. Aluminium of Greece, a purely export company which has been hurt by the weak dollar, faces a further drop in business due to high oil prices. The same holds true for other strongly export-oriented metals firms, such as Viohalco group subsidiaries, foremost of all ELVAL. The food and beverages industry continued its long tradition of being among the most profitable sectors of the economy. The rise in oil prices affects producers, because they use considerable amounts of energy in running production lines around the clock. But the sector’s enterprises are well known for their dynamism and resilience in periods of economic downturn. Passenger shipping will also face problems in the high season, during the summer. If to this is added the fact that, from November 1, 2004, the market will be deregulated and foreign passenger shipping firms will be able to compete in the domestic market, a strong shakedown in the sector may be expected. There was an effort to keep passenger shippers’ costs down last year. Recently, negotiations with banks for the restructuring of the shippers’ loans were concluded, which should strengthen their financial base. However, intensifying turf wars, like the one between ANEK and Strintzis Lines over the Piraeus-Hania route, will hasten mergers, such as the one being considered between ANEK and Minoan Lines. S&B Industrial Minerals (formerly Silver and Baryte) is another firm with very strong international presence, which faces rising costs in transporting its products. S&B posted a record net profit of 17.4 million euros last year. Moves to simplify and rationalize production and organization led to fewer taxes being paid worldwide. Consolidated sales declined slightly, to 289.6 million euros, from 291.3 million in 2002. The company’s board will propose to keep the dividend at last year’s level (0.23 euros per share). The rise in oil prices is attributed to the relatively limited US reserves ahead of a period of peak consumption as well as to the escalation of violence in the Middle East. OPEC has an official price target of $22-$28 per barrel, which has been exceeded over several months. Despite that, OPEC reduced production in early April by a million barrels, to 23.5 million per day, as its members complained of low prices due to the weakness of the dollar.

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