Construction company Ellaktor is facing growing challenges after talk of changes to its top management, and that of subsidiary Aktor, drove the stock more than 35 percent lower on the Athens bourse in the last few days. The company denies the speculation.
Mid-session on Friday, shares were off some 5.5 percent on the Athens bourse trading at around 0.78 euros, after plummeting 20 percent on Thursday. This brings losses to some 65 percent since hitting a twelve month high of 2.25 euros in August.
The stock had climbed higher last year amidst expectations that a recent management change would help speed up restructuring plans and boost earnings. Until the end of January, the stock was trading close to 2 euros.
With its value dipping below 1.10 euros, investors such as Farallon and other foreign funds are likely to call on Ellaktor's basic shareholders to offer more guarantees on their investment. These funds had backed management changes at Ellaktor that took place in 2018 when the Kallitsantsis brothers took over the reins of the company from Leonidas Bombolas and Dimitris Koutras.
In a statement issued Friday, the company denied speculation that chairman George Provopoulos and Akto chief executive Alexandros Exarchou are stepping down. “Ellaktor considers that the circulation of false rumors is targeted and aimed at undermining the share price, primarily damaging the investment community,” the statement said.
On Monday, the company will hold a conference call with investors to provide further clarification.
Market experts say that speculation over management changes only partly explains the reason for selling pressure on the stock. The share has also been falling due to concerns over its financial performance which has been weak. The company has been losing money from contracts in Greece and abroad, underperforming targets set by management.
For the first nine months of the year, net losses were trimmed to 4.7 million euros, from 102.8 million euros in the same period a year earlier. Nine-month revenues came in at 1.1 billion euros, down from 1.3 billion euros in 2018.
Developments are being closely watched in the sector due to Ellaktor's leading position in construction, energy and concession contracts. The company has four significant assets: the Attika Odos concession; the Moreas, Olympia Odos, Rion-Antirrion bridge, Aegean Motorway concessions; wind parks; environment projects (such as waste management)
The company, however, has experienced problems in taking advantage of its position as no significant project in Greece has moved ahead recently (apart from a few exceptions). At the same time, there have been fresh delays in crucial building contracts such as Line 4 of the Athens metro, the Psytalleia waste management plant and several private-public partnerships.
Industry officials point out that Ellaktor has the resilience to withstand negative shocks but doubts remain as to when it will be able to move ahead in coming months given the project delays.