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European Firms Plan for Greek Euro Exit

British electrical retailer Dixons has spent the last few weeks stockpiling security shutters to protect its nearly 100 stores across Greece in case of riots. The planning, says Dixons chief Sebastian James, may look alarmist but it΄s good to be prepared, according to Reuters.
Company bosses around Europe agree. As the financial crisis in Greece worsens, companies are getting ready for everything from social unrest to a complete meltdown of the financial system.
Those preparations include sweeping cash out of Greece every night, cutting debts, weeding out badly paying customers and readying for a switch to a new Greek drachma if the country is forced to abandon the euro.
Europe΄s No 2 electrical retailer, Dixons, owns Greece’s market leading but loss-making Kotsovolos chain, which has a 25-percent market share selling iPads and laptops as well as washing machines, televisions and air conditioning units.
Greece accounts for just over 3 percent of Dixon’s annual sales of around 8.2 billion pounds. The company competes with Europe’s No 1 electrical chain Metro and with a number of local players which James says may struggle to survive in a crisis.
The group’s sales dipped 9 percent in Italy, Greece and Turkey in the year up to late April. The group does not single out Greek sales, but these three nations make up around 7 percent of the group΄s annual sales.
Diageo, the world΄s biggest spirits group and the name behind Johnnie Walker whisky and Smirnoff vodka, has reacted by slashing its marketing spending in Greece, reducing stock levels, and pulling cash quickly out of the country after it saw its Greek sales halve in the last three years to less than 100 million pounds.
Diageo has weekly meetings aimed at cutting its exposure to Greece, protecting remaining sales by bolstering its own in-house distribution network, halting supplies to some small bars and focusing on high-end hotels and clubs.
The world΄s biggest luxury car group BMW says it is already prepared for the worst after seeing a quarter of Greek BMW dealerships go out of business since 2008, and its national annual deliveries slashed by more than two thirds from a peak of around 7,000.
Holiday firm TUI AG took early action last November when it asked Greek hoteliers to sign new contracts to pay them in drachmas if a new currency were introduced using an exchange rate which would be set by the Athens government.
It also has contingency plans to move customers to other destinations if civil unrest does break out, similar to measures it put into place last year following turmoil in North Africa during the Arab Spring revolutions.
Major drugmakers such as Britain΄s GlaxoSmithKline and Switzerland΄s Roche are working with European authorities on emergency plans to keep vital medicines flowing into Greece if it exits the euro.
They know that turning off the supply tap is not an option as this can lead to protests and damage to their reputations as many view them under a moral obligation to continue to supply medicine.
Mobile phone giant Vodafone says it has plans to cope if the Greek banking system is frozen and civil unrest breaks out. It says the experience of recent unrest in Egypt showed it how it had to protect its buildings and make pre-paid top-up phones a priority.
British banknote printer De La Rue is drawing up plans to print new drachma notes in the event of a Greek euro exit, according to an industry source with knowledge of the matter. The world΄s biggest security firm G4S expects to be involved in distributing notes around the country.
De La Rue, which as the world΄s biggest commercial banknote printer produces more than 150 currencies, has made no comment. Analysts say Greece could have to turn to outside printers because of the sheer quantity of banknotes that would be needed.
(source: Reuters, Capital)

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