We live in an environment of uncertainty, squeezed liquidity and depressed growth prospects. Unfortunately our leaders at E.U. level have not been able to tackle the issues and take decisions in a timely manner so far.
We are not really working on the assumption of organic growth within our company. We are mostly looking at consolidating, cost cutting and seeking opportunities outside the current business.
It’s depended on the ability of European policy makers to comprehend the results of their late and inadequate actions and their determination to act forcefully to resolve this confidence crisis.
I would say that our businesses are less vulnerable to this volatility due to the nature of our business, but lately we see signs on the part of consumers on cutting back even on basic needs. The general experience is that consumers are becoming a lot more reserved.
Well there is one event I would definitely single out and that is the explosion at the Mari base where part of our electricity infrastructure has been destroyed and one could see how immediately after the event consumer confidence has plummeted resulting really in a step decrease in their spending.
It has now become the central point of concern and no doubt at this point in time it affects everything.
Through our life insurance business where we are a major investor in capital markets of course we have been affected and it is a big area of concern. Exchange rates of course affect our cost structure and more than that it makes the whole investment proposals less attractive in countries outside the Euro zone.
We have become more defensive and conservative in our investments and of course when it comes to exchange rates we use diverse ways to hedge.
Let’s talk about Cyprus. Firstly they have to put their house in order, the public finances is the first step. We have seen some progress in some respect but it’s becoming clear that might not be adequate. Then the next big step is to tackle the issue of liquidity. There is a squeeze of liquidity in the banking sector. That is affecting the interest rates, it affects the whole business environment especially the small and medium companies.
I would centre on the action at European level where unfortunately the experience was that they are one step behind. For me it is like witnessing a fire that has started, they have been trying to make decisions at the same time as the fire growing and spreading. Now we see an attempt to bring a very expensive fire fighting helicopter or equipment to fight the fire that has already spread way too much and more is needed. So I really hope that the sense of urgency on this matter is really taken seriously, is well understood and acted upon.
I believe that the impact of high interest rates especially in Cyprus is the one factor that is affecting and stopping the growth so I would say that is a starting point. In Cyprus with lending to households and businesses at a level of three times of our Gross Domestic Product we can see that interest rates staying at this level will have a very serious impediment to future growth.
I think the high level of interest rates we have been witnessing lately is a big problem. A problem for our society and a problem for our economy because we have thousands of fewer active consumers. And I think the way to tackle this is again by encouraging growth. And going back to the one important factor that I believe is important especially for small and medium companies who are the ones who can play a crucial role in creating new jobs. And I think the one thing that we as a country can do is improve on this situation of the interest rates.
We’ve become more aggressive in pricing, more conservative in spending. We’ve introduced new lower priced, more affordable products both in our beverage division and the real estate sector. And we’ve been working hard to become more flexible, adaptable and responsive to change.
I expect a proliferation of the trends seen in 2011 both in our external environment and in our efforts.
Before, we were just examining the specific markets we were interested in. Now, before entering or considering entering a new country we are evaluating first the country’s structure and fiscal health. So that’s a big change.
Our exposure to emerging markets is limited to the Balkans that have different dynamic compared to the traditional emerging markets of Asia and Latin America. Their progress is still good, the business cycle is a little bit different than the rest of Europe but still there are issues there with bureaucracy and corruption.
I believe that the companies that will manage to cope better and exit the downturn stronger than before are the ones that are strong to begin with. The ones that have a strong capital base and cash flow, the ones that have strong brands and the ones that have developed the ability to adjust and respond to change. And of course the ones that have willingness to seek and seize opportunities.
Expanding in new markets you need to be able to capitalise and leverage your assets including business relationships. For example our relationship with Diageo built on sound foundations for many years in the Cyprus market has opened the way for our expansion in Romania and Croatia. Now our ties with Diageo are stronger than ever before.
Risk management has come to the forefront of our business and we are implementing more strict credit criteria and evaluating our risk. Late payments and bad debts are number one risk these days.
Evaluation of customers’ credit worthiness, the available tools in the market are not enough to support this function at this time.
This is quite interesting because whilst now we are aiming at specific actions and focusing on well prepared social responsibility plans we became much more effecting than before. Energy is a good example, water saving is another. In our brewery for example this year we made an investment on steam recovery. The motivation behind that investment was environmental but it has decreased our energy consumption in that department by 60%. So that is a very good example.
Attracting and retaining talent has always been important but definitely now even more so.
The personal needs and aspirations of talented individuals, especially younger ones have changed over time and are changing more now. So our policies are changing to take these needs into account as a prerequisite to attract and retain talent.
Yes we do. We have it, we are constantly developing it. For us is not just having the skills, but is also having the personality that fits our culture and values.
It has been our policy to move executives especially in the case of new markets, it is a matter of know-how and trust.
My personal focus and attention has always been on facets and divisions of our businesses and we are preparing on looking for development or growth. For example I have shifted weight and time from our real estate division in Greece and I am spending more time on the other businesses and new projects in new areas.
I think there in no normalcy. The normal of yesterday is not the normal of today so I don’t think that we will return to the exact same conditions that we experienced a few years ago. Every few years we see a new set of conditions and rules of the game.