ECONOMY

Firms dread new Covid wave

firms-dread-new-covid-wave

Looking at{BLA_WRD_TXT} the first-half results published by listed companies last week, it is easy to understand why they are having nightmares about a second wave of the coronavirus pandemic.

The lockdown imposed on the economy from mid-March to early May left a big hole in their finances; a second wave will inevitably hurt, and especially the sectors most dependent on retail trade and tourism.

Take Motodynamics, the exclusive representative in Greece of car rental company Sixt. The great drop in tourist arrivals led to a 60% reduction in sales compared to the first half of 2019. Motodynamics’ car rental business lost €1.7 million, compared to a €445,200 profit in the same period last year. This greatly contributed to the group’s overall first-half losses rising from €2.1 million in 2019 to €3.5 million this year. However, earnings before interest, taxes and asset depreciation (EBITDA) were relatively stable, at €1.4 million.

Another listed firm, Petros Petropoulos, which is active in the wider automobile sector, saw sales contract 20.5% to €45.5 million and its inventory rising from €16 million at the end of 2019 to €27.8 million at the end of June 2020. However, sales inched up in June and July and management hopes this trend will continue.

The pandemic affected companies’ bottom lines in many sectors: Two examples, among many, are commercial refrigeration manufacturer and glassmaker Frigoglass and bottler Coca-Cola HBC. In the case of Coca-Cola, sales fell 25%, as it is dependent in Greece, more than elsewhere, on sales outside the home and on tourism. Despite that drop, Coca-Cola HBC increased its market share in the category of carbonated beverages. It also realized economies of €61 million, as part of €100 million spending cuts it had planned for for the whole year. Net profit fell 36.4% to €124 million.

The most resilient firms proved to be telecoms and tech. OTE telecoms, for example, which cut spending considerably, more than doubled after-tax profit to €184.3 million on roughly similar turnover of €1.8 billion.