Next are the energy and gas monopolies, companies that operate in non-competitive sectors and rely in their business on regulated tariffs, as well as Apa Nova, the French-held company that raised water prices in Bucharest by 15 times since 2000.
Starting from the ranking of the 150 largest companies in Romania by revenue in 2014, ZF reorganized it by the profit margins these companies posted last year. Calculated as a ratio of net profit and revenue, this indicator shows how much of the sales of a company turns into net profits, and is one of the most relevant indicators for the health of a business.
Companies on the free market can hardly reach the top of the profit-making ranking, where mostly monopolies are.
The most profitable company among the top 150 largest local companies is CNADNR, which posted 1.1 billion lei (EUR248.2 million) revenue and RON429 million net profit, which means a net profit margin of almost 40%.
CNADNR is a company whose revenue comes from mostly from the funds allocated by the state budget and the European Union, and is not an entity that derives revenue from selling its production or from various commercial operations (except for the Romanian road vignette and road and bridge tolls). Moreover, most of its spending is actually investment in construction and repair of roads, so a high net profit has always raised questions.
CNADNR explanation is that although its goal is not to make net profit, accounting-wise it works like a company whose purpose is precisely that and used its net profit to offset the losses in the previous years.
Among the most profitable companies in Romania are Romgaz, the largest natural gas producer and Transgaz, the national natural gas transmission company. Romgaz’s high profit margin can be explained almost entirely by the rise in the gas price in line with the deregulation schedule, as production and sales volumes did not increase. Transgaz’s profit margin can be explained by the regulated tariffs the company gets for its business since the amount of natural gas going through its pipelines went down last year.
Hidroelectrica, an insolvent hydropower producer, became one of the most profitable companies in the country following the reorganization steps taken by its court-appointed trustee, Euro Insol. Such steps included cost cutting, and, more importantly, terminating the bilateral contracts that had it sell the power generated below market prices.
Electricity distribution companies, too, are among the most profitable companies in Romania. Distribution tariffs account for about one third of the electricity bill of a household consumer and this tariff has seen one of the highest raises in the EU in the past ten years. Eurostat data show the average bill per household was almost 70% higher in the first half than in the same time of 2005.
Apa Nova Bucuresti (the water and sewage company in Bucharest) is another company among the ten most profitable. Its 2014 results show its profit margin was 19%. The French-held company has raised water prices 15 times since 2000. It says its 2014 results are not solely because of price hikes, but also because of improvements in efficiency and investments.
(English version by Loredana Fratila-Cristescu)