Only 14 percent of Greek manufacturing enterprises can be strictly described as competitive, but distortions in credit finance may impact their future growth, according to a study released last week. «The overall picture of industry in 2006 was one of improvement but without the full tapping of potential,» said the report, prepared by Kantor management consultants. Even so, the sector’s total revenue exceeded 3 billion, with sales up 14.3 percent and pretax profits 18.2 percent higher. Metallurgy and metal products, chemicals, mining, clothing and tobacco products showed considerable improved profitability, while by contrast petroleum derivatives, foodstuffs, electrical equipment and footwear shrunk noticeably. «For another year, the picture was disappointing in textiles, transport equipment, paper and small industry, which remained loss-makers despite rising sales,» the report said. Kantor categorized the 1,814 enterprises surveyed, each with sales of more than 3 million, according to their average profitability and the average rise in sales over three years. Of these, 256 (14 percent) were described as competitive, 850 (47 percent) were found to be «potentially competitive» and 708 (39 percent) were evaluated as «non-competitive.» The first two categories, of competitive and potentially competitive enterprises, generated 82 percent of total sales and 100 percent of operating and pretax profits, and accounted for 70 percent of fixed capital, 74 percent of equity capital and 72 percent of capital employed. Characteristic of the problematic nature of the non-competitive segment of Greek industry is that apart from the approximately -600 million in losses it incurs every year, it also absorbed more than -250 million in finance – partly due to prior commitments. The potentially competitive enterprises absorbed 51 percent of finance, or -1.03 billion – a sum commensurate with their size in terms of the capital invested, but lagged considerably from the strictly competitive segment, which recorded a much better utilization of fixed capital and loans, having received -708 million (35.5 percent of the total) in credits. «The distortions noted in credit finance lead to lower returns on capital and allow enterprises that destroy value to remain in operation. If the dynamics of this financing continues in the long term, it will compress the competitive enterprises and impact on their growth,» said Kantor.