By Stelios Orphanides
J&P Avax Group, one of Greece’s largest construction companies, 44 per cent-owned by Cyprus’s Joannou & Paraskevaides Group, is seeking more projects abroad for its order book to offset a drop in domestic demand, a board member said.
But seeking business abroad is one thing and getting it is another, as the uncertainty over Greece’s membership in the euro area undermines the company’s efforts, Stylianos Georgallides, executive director at J&P Avax said in an interview on March 26.
“Financing is almost impossible, banks have run out of liquidity, he said. “Also, because of the downgrading of Greek banks, it is difficult to have bank guarantees issued,” which is an obstacle to international business, he said.
Uncertainty over the country’s continued membership in the euro area increases by the day, as Greece’s cash-strapped government under left-populist prime minister Alexis Tsipras has failed to reach an agreement with other euro area members, more than two months after taking office, that will allow it to receive more bailout funds to refinance maturing debt.
As a result, pressure on the country’s financial system has further increased, with depositors withdrawing around €18bn from their accounts in Greece on fears the country could be forced to ditch the euro, which in turn further hinders economic activity in the country.
“Because of the crisis, the private sector is completely paralysed,” Georgallides said, adding that as a result of difficulties to get financing or letters of credit, increased taxation on real property, and a subsequent emptier order book, many of major Greek construction companies have gone into resolution.
“A very small number remained” in business, he said.
In 2014, Avax posted a €49.7m profit before interest, taxes, depreciation, and amortization last year, compared with a €6m loss the year before, according to a March 31 statement on the company’s website. In 2014, its turnover rose to €518.1m from €410.7m the year before, but that was almost half of that of 2009.
“We have a liquidity issue; there are some difficulties with respect to liquidity,” he said, adding that the problem is all over Greece. “We are better off as we have projects abroad and revenue from abroad”.
Georgallides, a Cypriot national, said that the company is seeking to expand its operations further in the Balkans, the Middle East and as north as in Poland.
Avax, which also successfully executed projects in Cyprus, such as the Limassol Marina and units of the Electricity Authority of Cyprus’s power plant in Vasiliko, is “trying to be present wherever there is business”, he added.
The company has executed projects in Greece and elsewhere in the world involving sport facilities, hospitals, airports, ports, motorways, including the bridge linking Rio with Antirio, power plants and other specialised projects as the artificial Island of Pearls in Qatar.