The central place of shipping in the Greek economy

The important place of the shipping industry and its participants in Greece’s overall economic picture as the country struggles to climb out of financial crisis was again evident when financial powerhouse PricewaterhouseCoopers (PwC) recently presented a study on mergers and acquisitions in Greece in 2018.

The study also referred to other financial activities in the country like bond issues and privatisations revenues.

The bottom line: Investments in Greek enterprises remain at low levels. Although they increased last year compared to 2017, they still failed to reach a satisfactory amount, according PwC.

PwC showed local firms attracted investments of EUR5.5bn ($6.16bn). This was up 7% on 2017, an increase driven by M&A moves that doubled last year to EUR3.8bn from EUR1.9bn in 2017.

PwC projects that there are M&A transactions worth EUR2bn ready for implementation in 2019, mostly in shipping, (shipyards, ports and marinas) with privatisation revenues of EUR2.7bn.

Indeed, the highflier among privatisations is that of the Piraeus Port Authority (PPA) in 2016 when Cosco Shipping bought a majority stake in the Athens Stock Exchange-list PPA. The PPA has just reported 2018 revenues reached a record Euro 132.9m ($148.8m), a 19.2% increase on 2017.

Profit before tax was double at EUR42.3m compared to EUR21.2m in 2017, and the net profit increased 147% to EUR27.9m compared to EUR11.3m the previous year.

In the same 12 months, Greek shipowners raised the number of contracts with shipyards around the world by a remarkable 75.5% on an annual basis in 2018 to become the number 1 nationality in order value, according to the global shipbuilding review by Clarksons Research. Clarksons review records Greeks signed contracts worth an estimated $9.5bn in 2018, up from $5.4bn in 2017, in the face of a 6.6% global decline in contracts with shipyards.

They climbed from fourth to first place in the global chart of shipyard orders, leaving behind the superpowers of America, at $7.4bn, with a 51.4% annual decline, the Japan, at $7.3bn and the China at $5.4bn. Clarksons says this sees the share of Greek contracts with shipyards jump from 7.8% in 2017 to 14.7% last year.

At the same time, as already reported by Seatrade-Maritime News, in 2018 the value of the Greek fleet increased by over $5bn to break the $105bn on the back of LNG ship ordering and a tanker value uptick according to research by vessel evaluation platform, VesselsValue.

Japan remains in second place of the top owning countries, with the Japanese fleet valued at $94.72bn, with the Chinese fleet seeing the largest increase in value for any of the top 10 highest valued fleets, with an additional $6.3bn added, bringing the total fleet value to just over $90bn.

Indeed, China investment in Greece is considerable, and the country is uncomfortable with the decision of European Union lawmakers February 14 to coordinate scrutiny of foreign investments, notably from China, to protect strategic technologies and infrastructure in Europe.

Under the plan, developed as Chinese investments surged, the European Commission will investigate foreign investments in critical sectors and give its view on whether they undermine European interests.

Though China is not named in the proposed legislation, its backers have complaints over investments by state-owned enterprises and technology transfers are clear references to Beijing.

The proposal, demanded by France, Germany and the previous government of Italy, faced opposition from some EU countries, including Greece, Cyprus, Malta and Portugal.

Source: seatrade-maritime.com