In 2012, few would have predicted that Greece would regain an investment-grade rating from the S&P, given the turmoil of the Greek debt crisis. During that period, the Greek economy contracted by 25%, and unemployment soared to a peak of 27%. While listed Greek companies still lag behind global averages—the median Greek listed company has a debt-to-capital ratio of 43% compared to 27% globally, we believe certain Greek firms stand out and deserve our attention.
Our journey began with a visit to Optima Bank, a recently established bank focused on serving high-net-worth individuals and SMEs. Optima currently has the second highest return on equity among European banks (may not be sustainable). During our discussions with their IR team, we gained insights into the challenges within Greece’s banking sector and the impact of the debt crisis. We also delved into Optima’s asset-liability management strategy and its approach to managing NPL exposures.
Our next meeting was with Metlen Group one of the largest conglomerates in Greece. Metlen operates with a distinctive approach that emphasises cost efficiency and a unique approach to identify profitable opportunities in new ventures. For example, its aluminium plants rank among the lowest-cost operators in the west. By vertically integrating into renewables, power, and adjacent industries, Metlen has built a highly profitable enterprise, with EBIT margins exceeding 15%. Our subsequent visit was to OPAP, Greece’s leading gaming group, which holds a dominant position in the domestic VLT (Video Lottery Terminals) and online gaming markets. We explored the company’s transformation since its days as an SOE during the crisis, its improvements in operational efficiency, corporate culture, and innovation across its gaming portfolio.
OPAP has maintained EBIT margins above 40% annually since 2013, excluding the pandemic year. We also visited one of its stores with management (picture on your left). We concluded our trip with a visit to Jumbo followed by tours of several of its expansive 9,000 sq. metre retail stores. Notably, Jumbo was one of the few Greek companies that managed to consistently grow its revenue YoY during the debt crisis. Conversations with management shed light on the company’s design-centric culture and its commitment to maintaining ultra-low prices (often under €5), which ensures resilience against economic shocks and a globally leading EBIT margin (28-33%), while maintaining a debt-free balance sheet, and a consistent dividend yield of 9%.
We were impressed with these companies and also Kri-Kri Milk, a yogurt and ice-cream producer and Athens Airports, a listed airport concessionaire and will continue to monitor and study these businesses.
