“It will be a range of products made solely for Dedeman. We are now working on fulfilling an order and I think we’ll roll out at least two types of vacuum cleaners for them in September,” Ion Gavrila, deputy general manager of Electroarges, told ZF.
The Curtea de Arges (southern Romania) based company is already making vacuum cleaners and other cleaning equipment for Germany’s Kaercher under a toll-manufacturing contract and exports most of its production.
The products made for Dedeman will be sold in the 38 stores of the retailer, which plans to expand its network to 50 units by 2016.
The partnership with the DIY market leader will help Electroarges sales rise by at least 5% next year. The company expects 185 million lei (EUR42 million) revenue in 2014, up 10% on 2013.
“We intend to get products in specific colors and packaging in the Dedeman retail chain. We will begin with vacuum cleaners and fans,” Ion Gavrila said.
Delivery of said products will begin in September, following almost two years of negotiations, after which the partnership will progress “steadily in small steps.”
Electroarges gets nearly 95% of its revenue from toll manufacturing for Kaercher. Ziarul Financiar reported at the beginning of the year that Kaercher was considering opening its own plant in Romania on a five-hectare plot of land in the same city as Electroarges, but its officials did not confirm the plans at the time.
Anyway, such an investment would not mean the end of Kaercher’s partnership with Electroarges, Ion Gavrila said.
“They bought the land a few years ago and are considering applying for state aid to develop a greenfield production facility. To my knowledge, the plant will have nothing to do with the manufacturing operations at Electroarges, it will be making bigger products that we are unable to,” he added.
The products coming out of the new plant would go to Nordic countries and the facility might open some time in the next couple of years, Electroarges official said.
The remaining 5% of Electroarges’ revenue comes from sales of its own branded products (Argis) to France, Hungary, Poland and Greece. After net profit rose by 19% in the first half on the year-ago period, the management expects full-year profit to rise by 10%, a pace it should keep next year, as well.
“Products made in China are reaching Europe increasingly slower and at higher and higher prices and Chinese manufacturers no longer fulfill orders for Europe any sooner than 100 days and only if they get large orders. This benefits us because we are flexible and can take their orders from European customers,” Ion Gavrila said.
“We had a higher than usual production volume in the first half and expect about the same volume for the second half. Still, given the economy in Europe and the freeze of exports to the Russian Federation I am cautious and expect to see some orders cancelled unless the situation gets resolved.”
Deliveries to Russia and Ukraine accounted for less than 10% of Electroarges’ exports (Argis and Kaercher products) this year.
(English version by Loredana Fratila-Cristescu)