Galery

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Recession in Greece will last from two to five years, according to the survey of Ernst&Young. Economic experts presented the results of the Capital Confidence Barometer survey. It was conducted with the support of 49 local companies operating in 11 different economic sectors and with an annual profit of over 10 million euros each. 70% of senior managers do not believe the country could register positive economic growth anytime soon. Only 11% are optimistic and expect rapid positive development in the next 12-24 months.

More than half of the respondents state that the main priority in the next six months are structural reforms, and 41% point out that the optimization of cash flows and liquidity stabilization are the main tools to support the balance sheet. Four in ten managers reply that their main objective remains the repayment of old loans as a measure of capital balancing. 48% of the companies say that they will have to refinance their obligations over the next 12 months, and this trend increases to 70% over the next two years.

Ten months after Greece’s cutting from international capital markets, 46% of local business leaders estimate that access to funding has worsened further since July 2010. However, one third of the respondents state that they are experiencing no difficulties in their operations funding for the moment and are not going to in the next 12 months.

Bank credits remain the main source of deals financing and 54% of the respondents plan to finance their activities through bank loans over the next 12 months. A slight drop is registered here compared to the last 12 months when 64% relied on banks. Cash also play an important role in Greek business relations since the Ernst & Young survey shows that 36% of the companies use cash to pay their associates. This rate has declined because a year earlier 39% of the respondents replied that they used cash payments. The survey shows that Greek managers tend to seek alternative sources of funding which have not been widely used so far. These include increasing the share capital, shareholder loans and others.

Long-lasting recession will foster mergers and acquisitions as six out of ten respondents believe that foreign players or foreign companies would benefit more from this than the local companies in the next six months. 56% of the companies will focus on operations optimization over the next six months. 14% will try to sell part of their assets and 40% of the respondents say they are likely to resort to buying or merging with another company over the next six months.

Economic stagnation and poor conditions of the local economy are enabling the business to regroup its efforts and adjust its strategy according to the new market needs. The survey results show the need to implement a new type of capital management, which will allow companies to attract new funds or resort to mergers to consolidate their position in the specific area. Based on the principle of natural selection, companies that make a rapid turn will take a leading position in various sectors after the recession in Greece ends.