The overall decline of the cement market is due to the slide of the infrastructure segment, which used to drive the market during the crisis period.
The cement market saw a slight decline in the first three quarters of the year as the state’s investment projects have been increasingly few, while private investors were reluctant to start new projects.
French Lafarge for instance estimates the volumes of cement sold on the Romanian market declined by three to six percent in the first nine months of the year.
“The overall decline of the construction market because of the low number of new projects (infrastructure, residential and non-residential projects), as well as the still low absorption of European funds have been the main challenges in 2013,” says Costin Borc, country CEO of Lafarge Romania.
He adds the company has seen low demand for construction materials even in full season and another challenge has been the increase in energy costs.
Swiss Holcim and German Carpatcement Holding also talk about declines.
“At the beginning of this year we expected a slight rise of the market, mainly in the second part of the year. (…) We estimate that in the first nine months of 2013 the market saw a slight decline against the similar period of 2012,” says Florian Aldea, general manager of Carpatcement Holding. He adds that for the full year the Romanian cement market could decline by two to seven percent.
Daniel Bach, general manager of Holcim Romania, also talks about a decline of three to five percent of the Romanian cement market.
“2013 was a year when the construction market contracted: despite the rise of the resident segment, the infrastructure one fell,” Bach said recently at a conference at Holcim’s plant in Alesd, Bihor county. Holcim Romania posted a turnover of around EUR213 million last year.
Return to profit
Although he expects the company’s turnover to see a slight decline this year, Bach says Holcim will return to profit in 2013 after last year it saw losses for the first time in more than a decade, of EUR8.5 million.
Bach expects the company to record a similar profit to the 2011 one. In 2011 the company recorded an 8% profit margin, i.e. a profit of around EUR18 million, according to Finance Ministry data.
“In 2012 we recorded losses because operations were closed down and costs were transferred to assets, but the situation has not been replicated this year,” Bach explained.
Holcim Romania’s cement and clinker sales fell by around 2.4% in volume in the first nine months of the year, while the average price of cement on the Romanian market climbed by 2.7% during the same period, according to a report of the Swiss group.
Aldea of Carpatcement Holding says the turnover of the company he runs will most likely be in line with the market, which could see a slight decline.
Carpatcement Holding had a turnover of around EUR181 million last year, while its net profit was EUR34 million, according to Finance Ministry data.
(English version by Daniela Stoican)