ECONOMY

In Brief

Eastern EU members in better shape than peers Greece’s hidden debt shows that eastern members of the European Union have sounder public finances than Western countries of the bloc, Credit Agricole Cheuvreux SA said. Greece concealed 5.3 billion euros ($7.2 billion) of debt between 2001 and 2007 by using off-market swaps, the biggest of which were with Goldman Sachs Group Inc, Eurostat, the EU’s statistics office in Luxembourg, said on Monday. Repeated revisions of Greece’s figures started last year, spurring a surge in borrowing costs that pushed the country to the brink of default and triggered a region-wide debt crisis. The use of off-market derivatives helped push borrowing to 126.8 percent of gross domestic product in 2009, the highest in the region, Eurostat said. «No question, the Eurostat revision of Greek debt data is scary,» Simon Quijano-Evans, head of emerging-market strategy at Cheuvreux in Vienna, wrote in a report yesterday. «Is this bad for Central and East Europe? In our view, not. On the contrary, it should highlight yet again the better fiscal position of most of Eastern Europe versus Western peers.» Public debt will reach 85 percent of GDP in the euro area this year and could be 118 percent in Italy, compared with 79 percent in Hungary, 54 percent in Poland and 40 percent in the Czech Republic, European Commission estimates show. The Eurostat report also underlines «that Hungary looks way better than Greece, and that the reining in of the budget deficit will help,» Quijano-Evans wrote. (Bloomberg) Motor Oil sees flat sales volume growth in 2010 Motor Oil, Greece’s second-biggest refiner, said yesterday group sales volume would be flat this year compared to 2009 as a new distillation unit helps reverse a sales drop posted in the first half. «Sales volume will be at the same level as last year,» Petros Tzanetakis, the company’s chief financial officer, told reporters. Motor Oil’s sales volume reached 9.5 million metric tons last year. But the reading declined at a 8.5 percent annual pace to 4,417 tons in the first half, primarily affected by lower trading of petroleum products across Southern Europe. A new crude distillation unit completed in May is already boosting sales, particularly in Turkey and Libya, Tzanetakis said. «Exports are going splendidly,» he said. Foreign sales account for about half of Motor Oil’s sales volume. Motor Oil’s new distillation unit, which cost about 180 million euros ($251.5 million) to build, was designed to boost refinery capacity by 25 percent. (Reuters) Temporary tax Hochtief AG believes a spike in Greek corporate tax that hit profits in its concessions unit is temporary because it would make the country’s economy uncompetitive, the head of its airport business said yesterday. Germany’s largest construction group, which has a stake of just over 40 percent in Athens International Airport, was attractively profitable in Greece before tax, Reiner Schrankler, Hochtief Airport’s chief executive, told the Global Airport Development conference in Dublin. «Greece hit us very hard, we have now a coverage income tax of 40 percent on distributed profits that was 24 percent before and we also have a one-off corporate tax of 10 percent… all in all, we saw a doubling of the tax bill,» he said. Operating profit at Hochtief Concessions, which comprises Hochtief’s airports and public-private partnerships, fell more than a quarter to 59.8 million euros in the first nine months of 2010, hit by tax hikes that cut earnings in Athens Airport. «Whatever you do to make an airport more efficient, the question is will it stay? We do not have a crystal ball but we believe that it will not stay at that level because Greece will not be competitive with regards to inward investment compared to its neighbors,» Schrankler said. (Reuters) Shipping profits Diana Shipping Inc, a Greek owner of ships that move commodities including iron ore and coal, said third-quarter profit rose 18 percent as the company’s fleet expanded. Net income increased to $33.8 million, or 42 cents a share, from $28.7 million, or 36 cents, a year earlier, the Athens-based company said. Diana was expected to earn 40 cents a share, according to the average of 13 analyst estimates compiled by Bloomberg. (Bloomberg)