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Friday, May 11, 2018

Piraeus & Cosco: A Pure Success Story!

The Piraeus Port Authority S.A. (PPA) is a publicly traded stock corporation which operates everything that takes place in the Piraeus harbor (the land is leased from the state; not owned by PPA). The largest shareholder is Cosco Shipping of China with 51% outright. Another 16% are held in escrow in favor of Cosco until 2021 by which time they will also pass into outright Cosco ownership provided that Cosco completes the mandatory investments. The Hellenic Fund and Asset Management Association (HRADF), i. e. the Greek state, still owns 7,14% after having sold the above 67% to Cosco in 2016. Domestic and foreign institutional investors own roughly 8-10% each and the rest of the stock is widely distributed.

PPA has made a comprehensive Presentation of Financial Results 2017 to the HRADF. Here are some highlights:

* PPA recorded total revenues of 112 MEUR in 2017, spread over 5 business divisions: 3 container terminals (64 MEUR), 1 car terminal (12 MEUR), cruise operations (11 MEUR), coastal operations (10 MEUR) and ship repair (7 MEUR).
* The 3 container terminals are named Pier I, Pier II and Pier III. Already in 2008, Cosco had signed a lease for Pier II and it subsequently added, in 2013, Pier III. Pier I had operated under Greek management until Cosco's majority acquisition of PPA in 2016.
* PPA recorded earnings before taxes of 21,2 MEUR, which is a return of 19%; an outstanding performance!
* Leaving aside Pier I, the pre-tax earnings were contributed by Pier II and III (33,4 MEUR), car terminal (1,7 MEUR), cruise operations (2,0 MEUR), coastal operations (1,9 MEUR) and ship repair (1,0 MEUR). Since the sum of these individual parts amounts to 40,0 MEUR and since the total pre-tax earnings of PPA were 21,2 MEUR, it is obvious that there is a rotten apple in the group.
* Pier I, the pier which had been operated by Greek management until Cosco's majority acquisition of PPA in 2016, contributed a pre-tax loss of 15,1 MEUR! (this on revenues of 20,0 MEUR!). In previous years this loss had even been substantially higher.

The non-financial part of the presentation includes the following highlights:

* Piraeus is the 7th largest container port in Europe with good chances of moving into the top-5 in the near future.
* Piraeus is the 6th largest cruise port in the Mediterranean.
* Piraeus is the largest passenger port in Europe.
* 150 MEUR will be invested into the expansion of the cruise port.
* 20 MEUR will be invested into the expansion of the car port.
* 55 MEUR will be invested into the expansion of the ship repair operation.
* the cruise passenger terminal will be expanded and 2 warehouses will be converted into 4* and 5* hotels.

Conclusion
It is hard to think of a better foreign investment for Greece. A 'good' foreign investment is an investment which leads to something positive which would not have happened without that foreign investment. It is obviously impossible to say how PPA would have developed if Cosco had not become involved in 2008 but one point of reference is that the pier which had been operated by Greek management until 2016 had essentially been a money-squandering machine until that time (almost 100 MEUR pre-tax losses in 5 years!).

10 comments:

  1. And the 2 hotels are going to be a megalo hit. They will be build at the finger that protrude out in the harbor southwest of Gate E2. On one side they will have a view of a small dry-dock that is still in use, on the other side they will look across the harbor at the cruise terminal with the ships. There are big and small ferries passing in and out all the time. It is every cruise passengers romantic dream of shipping and Piraeus.
    Of cause there is resistance and obstructions to the building of the hotels from the local competition, they have tried to have the warehouses declared of archaeological value. I pass them twice a day, they are as ugly as warehouses come, concrete, most likely build around 1935, covered in graffiti. Well the Chinese are patient people, they will get their hotels eventually, and it will be a blessing for Piraeus.
    The COSCO venture would be perfect if the port had better direct rail connection to central Europe. The container terminals are in the middle of the city and the trucks are a pain and the cause of frequent congestions, they are also a soft spot inasmuch as they are prone to strikes. We shall see if the Chinese overcome that problem as well, or if Thessaloniki takes some of the wind out of their sails.
    Lennard.

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    1. The Piraeus port needs now rail connections. One direct rail connection from the Venizelos airport to the port which will be vital for homeporting and the cruising component as well as various rail link-ups for the logistic park areas near the port and beyond. The true value of the port is that is now spawning a brand new dynamic sector for the Greek economy in logistics.

      Dean

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  2. And as successful and dynamic the Piraeus port has become, under Chinese investment and management, it is now exposing the duplicitous nature and hypocrisy of the Germans who are throwing everything and the kitchen sink to stop its growth because of the deadly threat Chinese competition poses on them.

    If you read between the lines, the Germans now want Piraeus dead because Piraeus - if it continues its unimpeded growth will overtake German ports and has now become an existential threat to the Germans. Which brings me to my point, made several times and repeatedly here on this blog, that Germany is a frenemy state to Greece - a state pretending to be a Trojan horse friend but in reality a true enemy.

    I guarantee you that from now on we will hear many stories about "violations" of "EU law" at the port and all sorts of legal challenges designed to slow things down because Piraeus is getting into a serious position of breaking the German monopoly distribution routes in Europe.

    http://www.ypodomes.com/index.php/limania-aerodromia/limania-marines/item/46741-die-zeit-to-taxytera-anaptyssomeno-limani-pagkosmios-o-peiraias

    Dean.

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  3. Btw, you can see German venom oozing in this article about Piraeus. No, no people. Piraeus is not a success story according to the Germans. Piraeus is now "Chinas Anker in Europa". A direct threat to the 4th Reich. Time to go to war in the defense of der Vateland.

    https://www.zeit.de/wirtschaft/2018-04/neue-seidenstrasse-china-griechenland-europa-containerhafen-piraeus

    Dean.

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  4. Btw, you can see German venom oozing in this article

    you can help me out Dean, I am sure. Directing my attention on the precise "venom oozing" passages?

    Just in case I may not understand while following your lead

    LeaNder

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    1. LeaNder:

      I am not sure how much of history you and your fellow Germans know, but when your Der Zeit journalists think "ironic" that the Greeks who in the Battle of Salamina defeated the "far superior" Persian Navy are now defeated by the East by other means, I find such statement both oozing with venom, German jealousy for obviously lacking such glorious achievements and a disturbing ignorance regarding civilizations.

      So, in your German mind, the Persian empire, a despotic construct, and China with a deeply refined civilization inspired by the Greeks (see terracotta warriors) are the same thing and both represent the East? Jesus Christ, people! Are you that ignorant? And apart from your ignorance, you want to stick it to the Greeks by inferring that the excellent SinoGreek cooperation and pure admiration of two of the oldest human civilizations is somehow another defeat for the Greeks because now the East controls Piraeus? This is the most moronic thing one could invent. China is welcomed in Greece with open arms. I wish I could make the same statement about Germany but I think you very well know that not only Germany is devoid of civilization certificates of any kind but is now despised in the whole of Greece and as far as I can deduce for very good reasons.

      Furthermore, when the same German article rings the alarm bell that the port of Hamburg will be overtaken by Piraeus you don't see venom oozing again?

      And when Berlin says that Germany Inc. is not for sale to China, aren't you trying to project your own animosities against a country, China, which clearly outsells you in trade (imagine that; China beating Germany in an uninterrupted way over the years and in an undisputed manner) and which China poses an existential threat to your pattern of exporting deflation around the world?

      By the way, isn't oozing venom when you ignore the vastly superior Greek technology in military shipbuilding to the number of Persian ships and calling the Persian fleet "vastly superior"? How could the Persian fleet be vastly superior when a Greek trireme vessel was worth twenty of the Persian ships? But of course none of this matter to you and your fellow Germans. All you want to observe of a situation that clearly speaks of another humiliation of Germany by China in trade matters is that the losers are the Greeks instead who this time are conquered by the East. Talking about German propaganda with a deep inferiority complex.

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    2. I have no ethnically classifiable enemies. Why should I have a problem with China outselling Germany? I should have? You do not seriously expect German pride from me?

      Your aside, though: that ultimately China may well have been inspired as shown by the terracotta army by Greece wisdom is highly interesting. I guess the European DNA found will soon be thoroughly clarified as distinctively Greek. ... Vaguely reminds me of a paper I had to write on the history of writing in linguistics with a US scholar in linguistics. ...

      ******
      So, in your German mind, the Persian empire, a despotic construct,

      The "neo-Persian empire", spreading its sleazy fingers beyond its present land? I wish I was as sure as you it can be reduced to "despotic construct" over the centuries, millennia. It surely can be kept out of the larger silk-road land vs sea project artificially. We'll see. Clever to have a plan B though.

      ******
      Was interesting to look into your "venom" mirror.

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    3. LeaNder:

      Are you sure you don't need private lesson in catching up with generally accepted news (we are not talking accounting here but the real world):

      https://www.independent.co.uk/news/science/china-terracotta-army-ancient-greek-sculptors-alexander-the-great-marco-polo-a7357606.html

      D.

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    4. LeaNder:

      Please engage in better research so that you are better informed:

      https://www.history.com/news/greeks-may-have-influenced-chinas-terra-cotta-army

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    5. After I read the article (whose author answers to the typical german name of Zacharias Zacharakis) I decided to address Dean in future only as Comical Dean. If the article promotes anything remotely anti-greek it might be the idea that it would be helpful for Greece and Europe if the Chinese would not only run the port of Piraeus but the whole country - an idea btw. that I dared to put in the comments section of the Guardian 4 years ago.
      Urs

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