South Ossetia’s War Hit Constructors of Turkey
Turkish Enka that is one of the biggest general contractors in Russia slid 22 percent by result of the August trading on Istanbul Stock Exchange (ISE), although the index of the latter lost no more than 7 percent. In Enka, they attribute the capitalization slump to difficulties of the European clients, while the analysts blame the abrupt decline on the conflict in South Ossetia. Turkey is the NATO member and investors apprehend problems for Russia’s business of Enka.
Enka shed 22 percent to TRY10.6 on ISE in August (with the TRY depreciation to the U.S. dollar taken into account), while the index went down just 7 percent. Even the Q2 report that Enka released in late August failed to contain the decline despite that it showed the net profit of TRY436.5 million ($397 million), which is more than 2.3 fold (TRY185.84 million) above past year’s result. The revenues surged to TRY2.118 billion vs. TRY1.654 billion a year ago.
According to Bloomberg, the decline started August 8, when Russia and Georgia clashed for South Ossetia.
People in Enka attribute the losses to financial collapse in Europe, saying that Enka’s clients there were short of money and some projects in Eastern Europe, for instance in Romania, were suspended as a result. But this explanation doesn’t appear convincing. Under the Q1 report of Enka, European projects yielded to it just $82.4 million. The business in Russia, Ukraine, Tadjikistan and Kazakhstan accounted for $746.9 million, i.e. nearly as much as the business in Turkey ($798 million).
Of interest is that the stocks of one of Europe’s biggest general contractors, Austrian Strabag (where Oleg Deripaska owns 25 percent) lost no more than 2.3 percent in August.
Regardless, according to Russia's developers that work in Enka, its business is successful here. “Enka is involved in nearly all projects of MCG, even in Ukraine; the contract worth exceeds $1 billion,” said MCG CEO Pavel Fuks. It also works with AFI Development, Coalco, Eurasia Logistics. The worth of Russia's contracts of Enka totals $100 million, estimated Capital Group Sales Director Alexei Belousov.
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All the Article in Russian as of Sep. 01, 2008
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