“We have projects, we are growing, we still have good outlooks. At the level we reached today, details have started making the difference,” said Raul Ciurtin, majority stakeholder in Albalact, in an interview with ZF.
In the first quarter, the company’s sales rose by 10% from the year-ago period. Albalact, which holds over 20% of the milk market, had announced a 23% revenue increase to 423 million lei (EUR95.8 million) in 2013.
“We’ve started branching out, tapping new categories, this is where growth comes from. Starting 2013 we’ve had a EUR8 million investment program in the plant of Alba and now we’ve finished installing the new production-packaging lines and equipment. The investments are aimed at boosting output, as well as plant efficiency,” said Ciurtin.
A doctor by training, Raul Ciurtin, 41, became the company’s general manager in 1999, when he “had to learn quickly how to turn around a bankrupt company”. And the company with EUR2 million in sales in 2000 is now a market leader on the milk segment (20.7% market share in 2013), sour cream (12.6% market share) and butter (21.8% market share), according to the company’s own data.
On the yoghurt segment, Zuzu brand in 2013 held 10.2% (third position in the industry), while all the yoghurt brands in the portfolio place the company on the second position on the segment, after French Danone.
“For growth in the next two years, we are counting on investments operated in 2013-2014,” says Albalact shareholder, who prefers not to put any figures forward.
The growth rates it registered would allow the producer to think of sales of EUR125-130 million by 2016, enabling it to fight for the leading position in the industry. The leader is now Danone Romania, but neither the French group, nor the Dutch FrieslandCampina (coming second by 2012 figures) have reported 2013 figures so far.
With a strong portfolio (Albalact now holds over 100 types of dairy products), Albalact boss says he gets offers to buy smaller plants of Transylvania area each day, but that such a move would not make any sense.
The only large independent player that is left in the industry, Albalact is still the main acquisition target on a market worth EUR800 million-EUR1 billion where high cost and profitability pressures have led to the collapse of hundreds of companies in recent years.
“There have always been talks, but nothing concrete at present,” states Ciurtin, who had offers of above EUR150 million on the table for the company he runs, but which he would not sell.
“Had I sold, I could have made wrong investment decisions, and I wouldn’t have seen the company reach the current figures, either. The crisis taught me to focus on what I can do best and this is what I’m doing now, without thinking of new investments in another field or another activity”.
In 2007-2008 period, the most “wooed” companies in the milk industry were Albalact and LaDorna (founded by Jean Valvis), both with sales of around EUR50 million. Valvis sold LaDorna in 2008 for EUR70-90 million to French Lactalis, which has not managed to go beyond EUR50 million in Romania since the acquisition moment.
Albalact, on the other hand, doubled its business (EUR95.8 million in 2013), betting on production investments and a major acquisition, Raraul of Campulung, a plant that was the Romanian entrepreneur’s bet on the cheese market, the only major category Albalact did not hold a major presence on several years ago.
While its revenue doubled against 2008, Albalact’s capitalization is still far from the boom years. In 2007, the producer had a capitalization of EUR150 million, in 2012 it hit a low of EUR18 million and at present it amounts to EUR29 million. What is Ciurtin’s explanation? “Albalact’s capitalization is in line with Bourse liquidity”.
“We’re considering where we may still grow and there still are such categories, but we are not interested in exports. The chance of a Romanian producer of entering foreign markets is to manufacture private labels for retailers and I am not willing to go to Hungary or Germany, for instance, to deliver for a store network. Entering external shelves with our own brand involves high costs”.
Portfolio expansion is one of the factors that turned Albalact from an outsider into a top player in the industry, a position from which the relationship between the producer and major retailers also changes.
(English version by Catalina Apostoiu)