Defense industry survives thanks to state largesse

The situation for Greece’s defense industry seems to be getting worse with every year that passes. This is evident in the 2018 results of Hellenic Defense Systems (EAS).

The company posted turnover of 13.4 million euros and a 150,000-euro loss. The losses would have been much higher had the state firm not received a 19.5-million-euro subsidy to pay debts to suppliers.

The lavish subsidies may be there, but inflows are weak. And almost all turnover is due to orders from the Hellenic Armed Forces, with exports worth just over 400,000 euros. Payroll costs alone for the company’s 500 employees were 13.7 million euros, higher than its turnover. Total operating costs were 29 million.

The certified accountants who signed off on the company’s balance sheet again expressed their doubts about Hellenic Defense Systems’ viability. They point to the negative cash flows and negative net worth and say they wonder how much longer the company can keep operating.

EAS management continues to publish financial statements on a going concern basis, meaning the company still manages to stay afloat. But it does so only because of state backing.

The financial statements themselves admit that “the policy of reinforcing Hellenic Defense Systems SA through new orders and contracts by the Greek state is a precondition for the company’s continued operation.”

Besides the subsidy, the company was given a 5.8-million-euro capital infusion, in cash, and 62 million in added equity through the capitalization of debt.

Still, management insists that 2019 will be a banner year. Turnover in the first half rose to 21 million euros and the company has undertaken to refit 92 Egyptian battle tanks for an unknown amount.

It also says it has outstanding orders worth 92 million euros.