“2012 has been the most difficult year after 2009, starting from the exchange rate fluctuations to the uncertainty of payment collection and to the political instability that froze new investment plans. The biggest challenge now is to be able to develop safely. I think the construction supplies market won’t return to growth of 10% to 15% any sooner than 2014,” Titeiu said.
The construction supplies market peaked at EUR4.5 billion to EUR5 billion during boom years and now stands at about EUR3 billion. Estimates for this year show it to be flat to up slightly, according to the data of the Association of the Constructions Materials Producers of Romania (APMCR).
Arcon makes bituminous membranes (used in the waterproofing of homes, roads or bridges), expanded polystyrene and paint and posted EUR27.9 million revenue in the first ten months of the year, up by more than 17% on the year-ago period. On the other hand, gross profit fell by one third in January-October to EUR1.6 million.
“Profitability was influenced by the financial losses caused by the fluctuations of the exchange rate due to the political instability, as well as the significant increase in raw material costs. We could not pass the raw material cost increase on to our customers, because of the fierce competition on the market,” Titeiu said.
The company expects to end the year with EUR31 million or EUR32 million in revenue, up from the EUR27 million of 2011, as a result of its distribution network and to the increase in bituminous membrane export.
Exports of bituminous membranes amounted to EUR3 million in the first ten months, up 58% on the year-ago period and should reach EUR3.5 million to EUR4 million by yearend. The countries buying such products are Greece, Bulgaria, Hungary and Cyprus, with Malta, Czech Republic and the Arab countries added this year.
Arcon decided to buy Corina Gealan and Amvic in 2012, two rival companies owned by businessman Marian Crutescu. The deal is now in the due diligence phase, which is due to end in the second half of December, after which the actual takeover will take place.
“We decided to go ahead with this takeover because we want to relocate a polystyrene production line to Bucharest, as polystyrene transport costs are high and we sell 40% of our production in Sfantu Gheorghe there. We wanted to be closer to Bucharest’s construction sites,” Titeiu said. He did not reveal the value of the deal, only saying it would be self-funded.
Arcom’s rivals in the expanded polystyrene business include Austrotherm, member of Austria’s Schmid Industrie Holding and AdePlast, owned by Marcel Barbut.
(English version by Loredana Fratila-Cristescu)