by Nicolas Bornozis, Capital Link,Inc, www.capitallinkgreece.com
Greek stocks increased this week by 0.58% closing at 2334.71 points. The FTSE/ASE 20 Index increased by 0.99% closing at 1249.99 while the FTSE/ASE 40 realized a loss of 1.02%, ending the week at 1985.99 points. The FTSE/ASE small cap 80 Index decreased this week by 2.19% closing on Friday at 462.56 points.
According to press reports, Greek commercial banks are ready to submit an alternative integrated solution regarding the pension fund liability issue in the beginning of September. The same reports state that the banks promote the suggestion to include their employees into the Public Social Security Foundation (IKA), while other reports claim that such a solution will not be easily accepted by the State. Meanwhile, other reports claim that the State is examining a solution that will involve equal contributions by the State, the banks, as well as bank employees is order to find a permanent solution in the pension fund liability issue. In any way the pension liability issue will certainly be in the government’s agenda for the next months, with a solution involving the three interested parties being in our view the most possible and feasible to be implemented.
According to the National Statistics Service (NSS), Greek wholesale price inflation accelerated to 2.3 % year-on-year in July from 1.9 % in June. On a month-on-month basis, Greek wholesale price inflation posted a 0.1% decline, while the 12-m average rose 2.1%. Greek inflation remains above eurozone averages.
Greece’s budget deficit was finally settled at 4.6% of GDP in 2003, while is seen close to 5% of GDP in 2004. Eurostat officials visit Greece on Monday to confirm data. Following the completion of government’s recent fiscal inventory, the country’s budget deficit appear to have settled at 1.7% of GDP in 2002 (vs. 1.2% of GDP thought earlier) and 4.6% 2003 from 3.2% previously reported (and an initial target of 1.4% set in October 2002). The socalled ‘white hole’ is now estimated at EUR 4.48bn from a previous estimate of EUR 5.45bn, thus burdening on deficit by about EUR 1bn or 0.7% of GDP. The National Statistics Service and the General Accounting Office completed their fiscal inventory that lasted for six months and have already informed EU authorities. We recall that on November 5th, the government will present to Commission measures aiming to bring the country’s deficit to 3% of GDP. With the Olympic Games already behind us, the government’s top priority is now turned to public finances.
Based on the latest MoF data, Greece’s budget deficit is seen reaching 5% of GDP in 2004 vs. an earlier estimate of 4.5%, according to a senior finance ministry official, due to ballooning Olympic Games costs and defense debts. News is already known to the market. According to finance ministry sources, the Athens Games will cost a total of almost EUR 10bn, more than double the original target and above the previous estimate of EUR 7bn. We recall that there have been consecutive revisions of the 2003 and 2004 deficits since March, when New Democracy took power and ordered a fiscal inventory. In an interview with French newspaper Le Figaro, the Greek Finance Minister reiterated previous official government statements that the 2004 deficit would be around 4%, but seemed upbeat on its prospects. We recall that on November 5th, the government will present to Commission measures aiming to bring the country’s deficit below the bloc’s limit of a deficit of 3% of GDP.
According to press reports, Greece’s 2005 general government deficit as % of GDP is seen at 2.8%, below the bloc’s limit of 3% of GDP. This year’s deficit may reach 5.3% of GDP.We recall that the European Commission on June 24 2004 gave Greece a November 5 2004 deadline to take steps that would bring its budget deficit below EU limits by 2005 and cut its debt. The government is reportedly expected to present to IMF officials (who are in Athens these days till September 11 for a review of the country’s economic issues) ways aiming at bringing deficit within admissible levels. Primary expenditure is reportedly seen rising by 4.7% in 2005 (below the nominal GDP growth) to EUR 34.5bn, while ordinary revenues are seen rising by 7% reaching EUR 46.5bn. Moreover, Public Investment Program expenses will be reduced by 2.5bn to 6.8bn; a feasible target as there is no need to finance any Olympic Games related projects.
Standard & Poor’s said today that it has revised its outlook on Piraeus Bank S.A. to positive from stable. At the same time, the ‘BBB’ long-term and ‘A-2’ short-term counterparty credit ratings were affirmed. According to S&P’s, the outlook revision reflects Piraeus Bank’s sustained improvements in its financial performance and profitability. The ratings indicate Piraeus Bank’s good market position, successful growth strategy, sound capitalization, and prospects of improving financial performance. The positive outlook reflects the bank’s improving profitability trend and expectations of a continued strengthening of financial performance, benefiting from ongoing business expansion.
DELTA HOLDING S.A.
DELTA Group results for the first half of 2004 were affected by adverse weather conditions in the broader South Eastern Europe affecting, in particular the ice cream market which suffered a decline in sales/consumption. Thus, consolidated sales were up 1.4% to Euro 353.6 mil. versus Euro 348.7 mil. in the same quarter a year ago. This increase in sales resulted despite the reduced sales in ice cream by 14%, which has been offset by the increase in sales in all other sectors in which the Group operates (dairy products, frozen food and food retailing). The increase in sales in said sectors averaged 10% in the second quarter 2004. Gross profit grew by 3.5 percentage points to 40,7%, from 37,2% in the same period in 2003, whereas EBITDA reached Euro 54,7m, from Euro 54,1m over the comparable period of the previous year, recording a marginal increase of 1%, and thus reflecting the abovementioned decline in ice cream sales but also the overall reduction in the Group’s production cost. EBIT grew by 10,7%, thus reaching Euro 32,5m, from Euro 29,4m in 2003, thus reflecting the Group focus on improving this last year cost and organisation. EBT and after minorities, were up 119% reaching Euro 16,4 m , from Euro 7,5 m in 2003, as a result of increased productivity, improved financial management at Group levels (with an increase in cash flow and a reduction in liabilities) as well as a reduction in minority interests by approx. 30%.