Builders suffer from dearth of public projects

Fewer construction projects were recorded in 2005, compared to the building frenzy in the period leading up to the 2004 Olympic Games in Athens, according to the published financial reports of 396 construction companies compiled and processed by Hellastat. The reduced number of public projects tendered out in 2005 has led to the shrinking of contractors’ activity, which has been reflected in the drop in turnover by 10.2 percent (from 4.41 billion euros in 2004 to 3.96 billion euros last year). The average decline per company came to 10.9 percent as the majority of the sample suffered a drop in sales. Smaller companies are suffering more, recording a mean drop in sales of 15.6 percent, which reduces their total share in the market by about four percentage points. The picture is even worse in net profits, with 2005 pretax earnings declining by 37 percent from the previous year, not including the 228 million euros of losses of ALTE, reaching 234.4 million euros, from 370 million euros in the year of the Olympics. The drop in earnings led to a decline in the profit margin, from 8 percent in 2004 to 6.4 percent in 2005. Although the majority of companies (344 of them, or 87 percent) showed positive results, half of them (172, or 43.4 percent of the sample) were unable to show an improvement on the 2004 results, with just 148 companies building on the previous year’s profits. Out of the 52 loss-making companies, 34 had profits in 2004. The earnings of the 20 biggest constructors were cut in half in 2005 (from 133.27 million euros in 2004 to 61.05 million euros), while the remaining 376 firms had profits of 173.4 million euros against 236.8 million euros in 2004, again not including ALTE. Among listed companies, Mochlos showed losses of 21.24 million euros and Athena of 12.94 million euros, while several constructors, albeit profit-making, suffered a major shrinking which reached 79 percent in the case of TERNA. Optimism The race for securing the contracts for six major road projects using the method of Public-Private Partnerships (PPPs), to a total budget of 7 billion euros, creates some optimism for a reversal of the negative climate of the previous year. These are the Elefsina-Corinth-Patras-Pyrgos-Tsakona highway, the Central Greece Motorway (E65), the Corinth-Tripolis-Kalamata and Lefktra-Sparta road, the Ionia Highway (linking Antirio with Ioannina), the Maliakos-Kleidi part of the main Athens-Thessaloniki national road and the underwater road in Thessaloniki. With the completion of construction works the operation of the projects will belong to the private parties for up to 30 years. Therefore the capital invested by companies will be returned through toll revenues, imposed according to the distance covered by users. Unrealized projects by major construction companies have also upped expectations. According to the statements of the 10 biggest constructors, their total outstanding work exceeds 7.5 billion euros, a sum expected to rise significantly when the contracts for the major road projects are signed.