The most optimistic forecasts come from the car parts industry, which could grow 11%. The bleakest forecast targets the cold cuts segment, where a decline of up to 15% is expected.
Some of the stagnating sectors will be the energy sector, the steel industry and the car industry.
ENERGY
Oil: 0%
The oil market will probably see flat demand in 2013, according to estimates of companies in the sector, after last year ended with a slight decline of 1-2% in amounts sold. According to ZF calculations based on data from the National Statistics Institute, as well as from oil companies’ data, the fuel market amounts to around EUR4.5-EUR5 billion.
Electricity: 0%
Electricity consumption is most likely to be flat this year after last year had seen a less than 1% consumption decline, according to data from Transelectrica, the national energy transmission company.
Gas: -5-0%
Natural gas consumption followed the same trend as the other energy markets, falling by around 3% in the first nine months of last year, according to data from energy market regulator ANRE. So the market is expected to record a slight decline or a stagnation this year, as well, especially given the announced price increases. Roxana Petrescu
BANKS & INSURANCE
Banks: +10%
Assets in the banking sector rose by 9% in the first nine months of 2012 and reached RON373 billion (EUR82 billion) amid the acquisition of government bonds and of a slight rise of lending. Lending froze again towards the end of the year amid lower liquidity on the money market. Bank assets could rise by a single-digit figure this year.
Non-life insurance: +5%
The general insurance market stopped its decline last year, recording a 1.5% rise in the first nine months. General insurance is one of the economic sectors hardest hit by the crisis, with many companies recording two-digit turnover declines for three consecutive years. The market rebound is expected to be slow, with the 2013 rise estimated at a maximum of 5%.
Life insurance: +5%
The life insurance market started to fall last year amid client reticence to unit-linked policies, with a 0.5% decline recorded in the first nine months. The 2013 growth is estimated to be 5% at best.
Leasing: +5%
The financial leasing sector collapsed by over 80% in 2009 and 2010 amid a decline in car sales. The businesses of leasing companies rebounded in 2011, when the market grew 20%, but returned to a decline last year. The sector fell 2% in the first half of last year. Market players expect the market to grow by maximum of 5% this year. Ciprian Botea
CONSTRUCTION & REAL ESTATE
Construction: 0%
The construction market, worth around EUR9-10 billion, stagnated in 2012, despite early-year optimism from market players, who said 2012 would be the first year of rebound since the start of the crisis. A stagnation is expected in 2013, or a slight increase, at best.
Distribution of construction materials: 0%
DIY and construction material distribution companies will face a difficult year in 2013 as major real estate projects fail to emerge. In the last few years, turnovers have grown only because companies have continued to expand. One hope on this sector could come from the plan to turn the “First home” scheme into the “New home” scheme, which could encourage investments in new homes.
Varnish and paint: 0%
The varnish and paint market, worth EUR130-160 million per year, continued to be driven by renovations and individual projects last year but has been hurt by the low purchasing power and the increase in the cost of raw materials. Companies in the sector estimate a 10% decline for 2012 and a stagnation in 2013.
Cement: 0%
The cement market, valued at around EUR600-EUR700 million in 2011, stagnated or slightly declined last year, according to ZF estimates based on information from the three top players in the sector, Holcim, Lafarge and HeidelbergCement. In 2013 the cement market is most likely to stagnate. Andreea Neferu
FMCG
FMCG distribution: 0%
The value of FMCG goods intermediated by the largest players on FMCG distribution rose slightly in 2012 amid expansion of the distribution area (Interbrands) and amid a development of own brands (Macromex). 2013 perspectives are not very optimistic. Adelina Mihai
Beer: 0-5%
The beer market will pursue the trend started in 2012, a rise of a few percentage points. In 2012 the beer market rose for the first time after a longer difficult period, by 5% in the first ten months of the year against the similar period of the preceding year, according to a ZF analysis based on data from the National Statistics Institute (INS). The beer market is worth around EUR1.7 billion per year. Ioana David
Dairy: +1-5%
The dairy market, valued at around EUR1 billion, was significantly hurt by the drought, with 2012 being much weaker in terms of milk production than 2011. Ilias Pliatsikas, general manager of Olympus Dairy Industry, one of the leading market players, estimates 2013 will be much better for the dairy industry. Madalina Panaete
Bakery: 0%
The break market has been fluctuating for many years around the EUR1 billion mark. This can be explained both by the fact that bread and bakery products are staple products whose demand is inelastic, with relatively steady consumption. A large part of the market is not taxed. Gabriel Razi
Mineral water: +5%
Last summer’s heat wave brought the mineral water market to a rise again after three years of decline, with mineral water consumption rising 5% last year, according to data provided by Adrian Feru, research manager of the National Mineral Waters company (SNAM). Feru estimates that if the weather is hot and there is a drought in 2013, growth will be approximately the same as in 2012. Madalina Panaete
Cold cuts: -10 to -15%
The cold cuts market fell in 2012 for the fourth consecutive year, with the decline estimated at 10%. The market, which is almost entirely controlled by Romanian entrepreneurs, fell from EUR1 billion before the crisis to around EUR700-EUR750 million at the end of last year. Some estimates suggest a decline by a further 10-15% this year. Gabriel Razi
Wines: -5-0%
The wine industry is still on the decline, with 2013 to continue the same trend. The wine market is estimated at around EUR350 million. Ioana David
Confectionery: +5-10%
On a market where one single Romanian chocolate producer is left after Heidi Chocolat was taken over by Kandia Dulce, the year 2012 was one of slight growth. The year 2013 could bring a 5-10% rise if economic conditions are better than last year. Madalina Panaete
Spirits: +1-5%
In 2012 the spirits market, valued at around EUR1 billion, stagnated or slightly declined, shows a ZF analysis based on the predictions of the largest importers, such as BDG Import, Pernod Ricard and Cristalex. They estimate 2013 will not bring significant changes to the spirits market, but a maximum 5% rise and that international drinks such as vodka and whisky will continue to be favored by Romanians. Madalina Panaete
INDUSTRY
Steel: 0%
Romania’s steel market went through a serious crisis in 2012, and steel prices plunged to levels unseen since 2009, when the financial markets collapsed. The steel industry lost about 17% last year and its main actors do not expect any improvement in 2013, either. Still, sales may stabilize in 2013 as a result of a rebound in export and consumer spending in the EU, considering most Romanian-made steel products are exported. Adrian Cojocar
Tobacco: 0%
The local tobacco market amounts to more than EUR3 billion, the largest segment of the consumer goods market. The three companies operating on it, BAT, JTI and Philip Morris, posted higher sales in 2012 because of export increase and reduction in illegal cigarette trade, as well as because of the rise in cigarette prices. There can be no accurate 2013 forecasts, considering the business of the companies in this industry is greatly influenced by the tax policy, the legislative framework and the trend of the cigarette black market. Adelina Mihai
Textile: +5%-10%
The arrival of H&M in 2011 and the aggressive expansion of the other major retailers, Zara, New Yorker and Takko, kept the market up after big names like Kiabi decided to leave and others like House of Art are struggling to overcome insolvency. Still, 2013 prospects are optimistic, as major retailers will continue to expand. Moreover, the big brands will always have people lining up to buy something regardless of the weather or state of economy. Cristina Roșca
Pharmaceuticals: +1.4%
The pharmaceutical market will see slight growth of 1% this year, reveals the latest forecast of market researcher Cegedim Romania. The forecast is valid for the performance of the market calculated in lei; if it were calculated in dollars or euros, it would point to a decline. This is the gloomiest forecast Cegedim has ever made, considering expectations of growth the past were always double digit. Ioana David
Wood and furniture: -10%
Furniture manufactures will seek growth through exports this year again as they expect a decline of the local market. The furniture market amounts to about EUR700 million – EUR1 billion. Few retailers will open stores in 2013. On the other hand, the wood industry expects new investments and higher exports. Ioana David
Shipyards: -5%
The shipbuilding business has been coping with an abrupt decline in demand for new ships and dwindling prices for a number of years now, as has the international market. The ship stocks show the trend will likely continue in 2013 but be less serious than in 2012, when it was estimated at 15%. The rebound of this business is up to international demand, and especially demand from the EU. Adrian Cojocar
Paper and cardboard: Slight growth
The main local producers of corrugated cardboard packaging, Rondocarton, Vrancart, VPK Packaging, Dunapack and others, are a good barometer of the real economy and consumption. Economic growth of 1% translates into growth of 2% on this market. All the companies in the cellulose and paper business produced 240,000 tons of corrugated cardboard in 2011, according to the officials of the industry’s business owners association. Mirabela Tiron
Non-ferrous metal business: +10%
The non-ferrous metal market in Romania witnessed a slight decline in 2012, when companies were less affected than the steel producers, because prices, and especially aluminum prices did not go down as much as steel’s did. On the other hand, demand was driven by China, and therefore the market only went down 5% in 2012. Expectations for 2013 point to growth because of export rebound and production increase at Alro, the country’s main aluminum smelter, as a result of the end of the force majeure of electricity producer Hidroelectrica. Adrian Cojocar
SERVICES
Mergers and acquisitions: 0%-5%
The M&A market will follow about the same trend as in 2012 and be flat to slightly up in 2013. More than 50 deals worth over EUR1.3 billion were closed last year, according to a ZF analysis based on the data announced by companies or its own estimates. Most deals were signed at the end of the year, with 10 to 15 of them finalized in November and December. Ioana David
Restaurants: 0%
The restaurant market should be flat in 2013 after having been hurt by the crisis in each of the last four years. The main reason why revenue will not increase is that Romanians no longer have that much money to spend on going out. The main events in this business are the openings and closings of new restaurants in Bucharest’s Old Town. Seventy percent of the eateries and bars there close after the first three months in business, but there are always more waiting to replace them. Cristina Roșca
Hotels: 5%
Hotels made up an almost EUR700 million market in 2011, judging from the revenue posted by the companies operating hotels and other accommodation facilities, according to consultant Fivestar Hospitality. The market grew by an estimated 4.5% last year, the same source said. It might increase by 5% this year, as shown by the budgets of some hotel operators. Mirabela Tiron
Travel agencies: +1%-3%
Although the largest competitors in this industry posted double-digit growth the overall market increase was only single digit and the industry is expected to be flat to slightly up. It is hard to estimate the value of the travel agency market, companies in this business say, because a holiday package goes through several intermediaries before reaching the end client and shows up on each invoice on its way there. Mirabela Tiron
Private clinics: +5%-10%
Private healthcare market will continue to increase in 2013, but the main actors are cautious about offering growth prospects, merely saying they expect single-digit growth. The performance was worse than expected in 2012, which was the first year when ‘saturation’ was mentioned. Investments will continue, but only in a handful of projects. Ioana David
Law market: +5%
Lawsuits and insolvencies will be keeping lawyers busy this year and the growth might come from an improvement of the privatization segment, which was almost frozen in place in 2012. The M&A market was somewhat more active towards the end of last year, as owners cut back on demands. Lawyers have proven in the last four years that they can make themselves useful and make money in just any economic climate. Cristi Moga
Human resources: +10%
Recruitment, personnel leasing and executive search saw significant growth during the crisis to almost EUR200 million, because of the increase in temporary workers. Whereas the number of temporary workers continued to go up in 2012, because employers did not want to take on too many risks, but needed people, the executive search market declined, as the major companies did not allocate too much money for top executive recruitment. Adelina Mihai
Real estate consultancy: +5%
There can hardly be a slower year as 2012 for real estate consultants at least where shopping centers are concerned. The only malls that did open last year did not have exclusive rental brokers, as the retailers in Ploiesti Shopping City and Palas Iasi were largely attracted by the developers’ in-house teams. There is room for more transactions on the office space rental segment, because many leases signed in 2008 are due to expire and tenants will look for better cheaper options. As for investments, consultants have been expecting the active investors in Poland and Czech Republic to turn to Romania, too, but that has not been the case yet. Cristi Moga
Audit and consultancy: 0%
The audit and consultancy market dominated by the Big Four was unable to fully recover last year. The audit continued and will continue to be the main driver of business. Consultancy firms have pursued strengthening of their positions over the last few years, focusing on existing operations. They tried to shift focus from M&A consultancy services to areas of significant growth even during the crisis such as restructuring, insolvency and commercial and fiscal lawsuits. Whereas demand for tax audit and consultancy services remained about the same, business consultancy was mainly affected by the decline in the number of deals.
Security and protection: 0%
The revenue of the largest companies in this industry reached almost one billion euros and was flat in 2012. Signs for this year are not that optimistic, either. Adelina Mihai
Market research: 0%
Market surveys conducted by Romania did not exceed EUR30 million in 2011, according to sources in this business, but the market value estimated based on the revenue of the largest companies exceeded EUR65 million. How can this be? Ipsos Interactive Services, the market leader, posted more than EUR38 million revenue in 2011, but it conducts online market research for customers in France, UK, Switzerland, Germany, Italy and Spain. Adelina Mihai
AUTO & TRANSPORT
Car parts: +11%
The car parts market, where over 800 subassemblies manufacturers operate, has proven to be the most dynamic of the past few years. While Dacia’s production fell slightly and Ford Craiova’s was half that expected, companies such as Michelin, Pirelli, Continental and Bosch announced new investments of hundreds of millions of euros and personnel increases. Bogdan Alecu
Land passenger transport: slight increase
Competition on the land transport market (railway and road transport) is strong. Road passenger carriers seek to gain as big a share of the market as possible the duration of train travel is long given the lack of investments in a railway upgrade. Operating on the railway segment are state-run CFR Calatori and private companies, while road carriers include Atlassib and Eurolines. Mirabela Tiron
Freight transport: increase
The leader of the railway freight transport market is CFR Marfa, with a turnover of EUR516 million in 2011, followed by privately-held Grup Feroviar Roman (GFR), with turnover of EUR190 in 2011. GFR, held by Gruia Stoica, announced an 8% turnover increase and a double-digit rise in the 2012 profit, but the final results are yet to be released. Mirabela Tiron
Cars: 0%
Companies on the car market expect car sales to stop declining in 2013 and stabilize at a similar figure to last year’s around 70,000 units. 2012 was the fifth consecutive year of decline for the car market, down by almost 80% against 2007. Bogdan Alecu
Commercial vehicles: 0%
Commercial vehicle sales returned to a downward trend in 2012 after in 2011 they recorded a 22% rise to over 15,200 units.
Regular airline transport
Tarom, the leader of the regular airline market, had a 22% market share in 2011, and carried 2.1 million passengers. Last year’s results have not been released by the company. The other airline operators have not published last year’s results, either, but companies such as British Airways, Air France and the Lufthansa group estimated a rise in passenger numbers in 2012. Mirabela Tiron
Courier: over 5%
The market leader, Fan Courier, owned by three Romanian entrepreneurs, boosted its turnover by almost 10% last year and estimates a 9% turnover rise for this year, which could be an indication of the market trend. On the Romanian courier market there is no data on the value of the market. Mirabela Tiron
Low-cost transport: rise
Low-cost market leader Wizz Air boosted its passenger number to around 3 million last year, from 2.7 million people a year before and revenues also rose, being estimated by ZF at around EUR250-300 million. This year Wizz Air launched new flight destinations, which will lead to higher passenger traffic. Mirabela Tiron
RETAIL
Cosmetics: +5%
Romanians did not give up buying cosmetics and personal care products but looked for lower prices and discounts in the last four years. This year’s prospects are no different, considering the purchasing power will not significantly improve and the consumers’ appetite for shopping will remain moderate.
TV sets: +5%
Flat screen TVs drove sales of electronics in 2012 and this year’s expectations are optimistic because Romanians tend to replace old products more frequently. The growth of the market will be small, though as TV set prices are set to decline over the coming period.
Detergents: 0%
Romanians spend EUR140 million to EUR170 million on laundry detergent a year, be it powder or liquid. Each Romanian spends about EUR7 to EUR9 a year on Ariel, Dero, Bonux, Tide and Persil, and the biggest names in this business are P&G, Unilever and Henkel. There are no major changes in sight for this year as companies compete by new product or new packaging launches. Cristina Roșca
(English version by Daniela Stoican and Loredana Fratila-Cristescu)