Focused on complex projects MOCHLOS

FOCUSED ON

COMPLEX PROJECTS

MOCHLOS S.A. is a leading engineering and construction group based in Athens involved in a diverse range of major infrastructure and building projects. Philip Yorke talked to Ilias Kessanopoulos, the company’s project manager, about how the company has evolved to take advantage of changing market conditions with greater focus on it’s core competencies: tunnelling works and railway projects.

MOCHLOS S.A. was established in 1973 by Greek entrepreneur and civil engineer Konstantinos Stengos in Patras, a major port located some 50 kilometres from Athens. The company was quick to establish itself and found an instant demand for its services, which included technical projects for the construction industry as well as the manufacture of readymade concrete. Following this success the company was floated on the Athens stock exchange (1994). In 1999 MOCHLOS S.A. was acquired by TECHNICAL OLYMPIC S.A., a broad-based group comprising multiple companies and operating in many business sectors (construction, tourism, energy, etc.).

More recently, in 2002, MOCHLOS S.A. acquired a number of important Greek companies including ALPHA TECHNIKI S.A., SKORDALOS S.A., ELLINIKES KATASKEYES S.A. and the construction sectors of DIEKAT S.A. and TECHNICAL OLYMPIC S.A., which were purchased in order to provide the company with the chance to gain its registration as a contractor of the highest class (7th) in the relevant registry of the Greek Ministry of Public Works. According to Greek legislation, contractors of the highest class can be awarded and execute projects of any type and of unlimited value.

Today the company remains active in all major construction sectors including road building and harbour development as well as in the construction of residential, municipal and commercial buildings. In addition, it is involved in specialised projects such as underground and complex bridge works. The company employs over 150 people and in 2010 recorded a turnover of approximately €40 million. Such decline in turnover from previous years (during which the company enjoyed average turnovers of over €100 million) is entirely attributed to the Greek financial crisis, which has decreased the Greek State spending for public investments on the one hand and has also dramatically reduced the number of new construction projects being put on tender on the other. Currently, the company remains focused on executing its current projects

efficiently and acquiring a satisfactory profit from them. Until now, it has succeeded in doing so, as its average 3-year EBIDTA remains at over €9 million.

Growth in new market sectors

With the Greek economy currently going through a difficult period, the company is building on its success in other markets. Some years ago MOCHLOS S.A. made the strategic move to establish a major presence in Romania, where the government’s investment in new infrastructure projects was scheduled to increase. Kessanopoulos said, “Our decision to focus on the Romanian market has paid dividends as we have been involved in many major motorway and commercial construction projects there since opening our offices in Bucharest in 1997. The company has already completed four major projects (two road, one marine and one residential project) that provided us with a total turnover of over €130 million.

“However, today we are also participating in tendering for new contracts in Albania, Serbia and Cyprus, and we have serious plans to extend in selected areas of former Soviet Union countries. Closer to home we are currently completing three major projects for ERGOSE S.A., the Greek National Railways authority, which are worth over €120 million and which will be completed within the next six months. We use a lot of heavy equipment for these major construction projects and although we own a very satisfactory inventory of construction machinery, it is cost-effective for us today in the current economic climate to hire big items such as heavy lifting gear and earthmoving equipment.

“In addition, we have a diverse range of in-house core competencies and many highly skilled technicians who specialise in major tunnel and other underground projects. Others cannot offer the variety of expertise that we have ‘on-tap’, especially in the tunnel sector where there are very few companies able to execute such complex projects. For example, we are in the process of completing a tunnel that is over 3.5 kilometres long for the Greek National Railways and we are now installing the final concrete lining. This €55 million project is taking place in Aigio, located between Athens and Patras.

“Again for ERGOSE S.A. we are currently completing the execution of the first phase of the largest cargo railway station in Greece, in the Thriassio area (on the western outskirts of Athens). The majority of that €60 million project was completed in a record time of 18 months, during which we supplied and installed – among other works – over 5500 tonnes of rail, 200,000 tonnes of hard railway ballast and 125 railway turnouts. In another area of operation, we have been awarded the country’s largest engineering project so far this year concerning harbour extensions to the port of Thessaloniki. This €75 million project was awarded to MOCHLOS S.A. in March with an anticipated date of contract signature in October, and is on schedule to be completed in four years’ time.”

“It is projects such as these, for new tunnels, railway projects and marine harbour and port development, that will enable us to maintain our growth and our profits over the next few difficult years. We are also very fortunate in that we are a very strong company financially, with minimal debt and a reputation for reliability and high-quality engineering standards.”

Maintaining positive growth

As an integral part of a successful and diverse construction and property group − TECHNICAL OLYMPIC S.A. − the company sees no advantage in acquiring new companies and is focused solely on maintaining consistent growth though organic means. MOCHLOS S.A. also sees its future as being active not only in the Balkan regions, but also in some of the former Soviet Union countries, where infrastructure is becoming more of a priority and where it is less complex to operate than many of the Middle East countries, which currently appear ‘saturated’. For now, though, the largest concern of the company is to pass intact through the current major Greek financial crisis and recession. With it’s strong financial position, it is very confident that it will succeed. n