The combined profits of all companies listed on the Cyprus Stock Exchange (CSE) fell by EUR 249 mln or 39% to EUR 388.73 mln in 2009 compared to EUR 637.74 mln in 2008, according to data compiled by the Financial Mirror.
A sharp deterioration in the results of the Main Market and principally those of the three major banks and Advantage Capital, were largely responsible for the steep fall in profits.
The total profits of the Main Market stocks fell by EUR 530 mln or 57% to EUR 405 mln in 2009 compared to EUR 935 mln in 2008. Bank of Cyprus, Marfin Popular Bank and Hellenic Bank accounted for EUR 417 mln in the profit decline as their combined profits in 2009 fell 45% to EUR 514 mln compared to EUR 931 mln in 2008.
Despite the drop, the three major banks remained the most profitable on the CSE. Bank of Cyprus headed the list reporting a net profit of EUR 313 mln, followed by Marfin Popular Bank with EUR 174 mln and Hellenic Bank with profits amounting to EUR 27 mln.
LOSSES
Advantage Capital, formerly Aspis, also contributed to the deterioration by reporting net losses of EUR 107 mln for 2009 compared to EUR 17.8 mln profits in 2008, as its insurance companies in Greece were placed under administration and their operating license revoked as the Group was unable to meet the minimum capital adequacy ratios required by the Greek insurance authorities.
Leda Investments and D.H. Cyprotels were the other major loss making companies as they reported respective losses of EUR 35.5 mln and EUR 16.8 mln for 2009.
NEGATIVE PROSPECTS
The CSE General Index, composed of the Main, Parallel and Shipping sectors is down 12.5% since the beginning of this year amid concerns that the deterioration in corporate results will continue well into 2010, limiting the ability of listed companies to pay sufficient dividend or produce capital appreciation.
With no prospects of a rebound in Cyprus’ two main areas of economic activity (tourism and construction/property) that were hurt badly in 2009 offers no respite to corporate chiefs looking for new business.
Also worrisome is the dire situation of state finances, with the deficit and public debt rising sharply as state revenue continues to stay low while total expenditure remains high and still rising.
In such a dismal business environment, corporate chiefs usually turn to cost cutting to maintain profitability or to ensure their survival, but since most of the cost cutting measures were made in 2009, there is very little left to cut in 2010, leaving most corporations at the mercy of the downturn.
