Construction companies raised about 2.5 billion euros from the Athens Stock Exchange in the, now long gone, bull-market era. The sector was also the one that benefited the most from funds made available by the European Union for big infrastructure projects, as well as from business related to the Olympic venues. Despite this vast windfall, the majority of construction firms showed a decline in profit and an increase in indebtedness in the first half of 2004, and the worst is still to come. First-half results show, according to analysts, that very few firms are ready for the post-Olympic slump which, they predict, will shock many of them. Actually, only the three biggest construction groups (Hellenic Technodomiki, J&P-Avax and GEK-Terna), as well as a number of smaller firms (Diekat, Edrasi, Michaniki) are in a position to weather the coming storm. Even some construction groups that took advantage of the mathematical formula method of awarding public contracts did not manage to improve their financial results. Aegek’s pretax profit, for example, has fallen steeply, while the same holds true, to a lesser extent, for Pantechniki. Both groups are among the victims of «shotgun mergers» made under pressure in order to conform to new requirements for lucrative state contracts. These mergers have had a mostly negative impact on the companies’ operations and their finances. Aegek is a model case: Its consolidated pretax profit for the first half of 2004 was just 6.5 million euros, while its liabilities have risen to 360 million. The financial statements of listed construction firms clearly show that new projects are rare and that many of these firms do not have the capacity to undertake more projects. In the first half of 2004, the firms’ almost single source of income were the Olympic projects which, thankfully, were late, because other projects had been blocked for several months due to the controversy surrounding the mathematical formula. This led some firms to take their case to the Council of State and also caused the European Union to intervene. What is also apparent from the financial statements is that the enormous amount of capital raised on the bourse was wasted. «Some big shareholders got rich overnight and essentially stopped following the projects. Everybody knows, however, that, without very close monitoring, a construction site can turn from a goldmine into a financial burden,» an engineer told Kathimerini. There is the example of Attikat, with its suddenly very discreet chairman, Panayiotis Panousis, who used to loudly advertise his investment projects (he had even made the headlines as a leader of a consortium of investors that would buy OTE Telecom). During the first half of the year, Attikat’s turnover dropped 31 percent and its pretax profit 70 percent. Ironically, this was partly due to the fact that the company had finished the Olympic projects it had undertaken, such as the sailing center in Aghios Cosmas, on time. Other firms were embroiled in administrative turmoil because of clashes among big shareholders after their mergers. Empedos is a prime example of this type of firm. The company, analysts say, is paying for the hasty absorption of six small sub-contractors by its predecessor, Gnomon. Empedos’s turnover declined 19 percent in the first half and net pretax profit dropped 69 percent compared to the first half of 2003. The actual results are extremely low compared to the company’s projections made in its prospectus during its recent capital increase. Some other sub-contractors were unfortunate not to be favored by the three or four large groups that took maximum advantage of the mathematical formula in order to grab all available public contracts. These sub-contractors were inevitably forced to do less business. Many of them are family businesses which lived off taking a share of public contracts and were unable to diversify. Olympic Technical is in a special category. The vast majority of its turnover comes from the US housing market and the activities of its subsidiary there. With the exception of Olympic Technical, the big three groups mentioned above accounted for 50 percent of all listed construction firms’ turnover. All three have limited presence, but a presence nonetheless, in sectors beyond state contracts, such as housing and energy. They are financially healthy. Therefore, no one worries about the future, even though their management forecasts a reduction in turnover in this year and next. Sector managers say that the speculation about construction companies making up for the lost public products by expanding into housing, or energy, projects, or even undertaking projects abroad, is not serious. First of all, the housing market is also declining. As for the energy market, no one has yet profited from the wind energy or hydroelectrical projects where private companies are involved. However, Hellenic Technodomiki has launched an aggressive bid for Rokas, a company which has a 50 percent share in the expanding wind energy market. As for projects abroad, Greek contractors cannot expect similar profits in the Balkans where delays in implementing projects are even greater than in Greece. Expansion must target the central and western European market, if Greek firms can compete there.