ECONOMY

Construction firms eye projects abroad

After a decade of lukewarm or non-existent presence in neighboring markets, Greek construction companies – under pressure due to the negative circumstances for public works projects in Greece – are active again: The last few weeks have brought several announcements about projects in the Balkans, the Middle East and the setting up of subsidiaries in nearby countries. Analysts hope contractors are making their first outward steps, which they see as the only way to maintain the high turnover the Greek market used to offer them until recently. However, they are finding penetrating the Balkans tougher than their press releases show: Without alliances with global players and support by the Greek state, they are limited to small contracts, as the best ones are shared among powerful European and American groups. Revenue from the many subsidiaries created by listed construction companies in the region has been poor, as contractors focused on the bucolic Greek public works scene, which gave them plenty of scope with little effort. Now these firms realize that expanding abroad is a matter of survival, at least for those in good liquidity shape. Experience from large European groups shows income spreads across many service categories, with markets abroad contributing 40 or 50 percent in their turnover. Contractors’ efforts split into two fronts: Most of them move toward the Balkans’ EU candidates, Bulgaria and Romania. The GEK-TERNA Group announced this week a subsidiary in Sofia focusing on real estate. Others opt for the Middle East, opening offices in the United Arab Emirates or Kuwait. Greek companies have a relationship with the Arab world dating from the 1960s. ATHINA, AKTOR (which recently secured a road project in Kuwait) and VIOTER and others have offices in the region, but compared 20 or 30 years ago their earnings are next to nothing. During the turmoil in the Balkans some contractors turned to the former Soviet markets, with particularly unfortunate results. The adventure of Elliniki Technodomiki and J&P AVAX in Moldova is well known, where they undertook the (self-funded) construction of a fuel terminal but the project was left incomplete as the Moldovan state ran out of funds. A similar story befell METON-ETEP (part of AEGEK today). Some, however, continue in the region, like Michaniki: It recently opened the shopping mall it constructed in Odessa, after building a complex of shops and houses there. The company has publicized its interest and taken its first steps in the Russian market. In the Balkans, the country with the strongest Greek presence is Romania, where nearly all listed contractors have subsidiaries, often competing against one another in tenders. They are also involved in real estate, but the best projects are reserved for others: A road project of at least 2.3 billion euros was awarded directly to the consortium of US company Bechtel and Turkish Enka, despite European reactions. Recently the French Vinci group undertook another road project with a 480-million-euro budget. The group, which led construction and operation of the Rio-Antirio bridge, will manage the road between Comamic and Predeal for 25 years. Without the right allies, Greek construction companies are limited to smaller projects, mainly road works. The AEGEK Group, the listed company with the strongest presence in Romania, has won the 14-million-euro contract for maintaining the national road. In the Bulgarian market, Greek constructors also have subsidiaries but are thus far more hesitant. Projects are limited and firms are trying to link up with Greek commercial or industrial enterprises that have large investments in the country. Many contractors have subsidiaries, but not projects, in Serbia and Montenegro, but they have expectations thanks to the Foreign Ministry’s financial aid.