Positive Q1 results may conceal a less favorable situation

First-quarter corporate results now being filed under international financial reporting standards offer a generally upbeat picture. Listed companies’ profits increased by 22.4 percent compared to last year; even excluding banks and investment companies, the increase was 12.4 percent. Average turnover rose by 7.2 percent year-on-year. On a consolidated basis, Q1 results show an even faster rise in profits, at 28.9 percent. Excluding high profits at banks and investment companies, group profits were up 19.9 percent. This strongly implies that listed companies are able to bolster their profits mainly through their subsidiaries. On the other hand, the rise in average consolidated turnover was a mere 0.4 percent. This stagnation is a significant indication that the subsidiaries’ profits do not rely on rising volume. They may derive from the value readjustment of properties and other accounting arrangements. This could also explain the small rise in public revenues from value-added tax, as the state’s revenues cannot expand without an increase in sales. The generally bright picture is reversed when one looks at the drop in sales recorded by about 140 enterprises, the 73 loss-making companies and the 106 firms (almost one in three) showing a decline in profits. The overall picture is positive because it is affected by specific sectors that are blossoming for particular reasons: Oil refineries had a 29.5 percent rise in sales because of fuel price increases, leasing saw its revenues up by 25 percent thanks to low interest rates, OPAP increased its revenues by 24.4 percent because punters are ever hopeful of a windfall, and wholesale commerce had a 25.1 percent sales increase because credit cards help pay for higher prices.

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