“From what customers tell me, there are several growth drivers. Residential construction is doing quite well in the center of the country, and work has begun on the highways and railways in the west of the country or on the Sebes-Turda highway,” Borc told ZF in an interview.
“Things are going well, the year started well but we shouldn’t be expecting a surge.”
Available data show that construction works rose by 12.9% in January compared with the January 2014 and this is the first time of January growth in three years, according to the National Statistics Institute.
Borc says the bulk of construction work is done in cities at this time of the year, but rural areas might see an increase, too, depending on the how good the crops are this year.
“We are still heavily dependent on the agricultural year. If the year was good, people got some money, which means they will start to build. One can see at what time of the year construction starts by looking at crops and their harvesting season. For instance, customers in Craiova say they depend on the melon crop – if it’s good, we get cement sales,” Borc says.
Lafarge Romania, whose assets will be sold to Ireland’s CRH, following last year’s merger of France’s Lafarge and Switzerland’s Holcim, posted about EUR200 million consolidated revenue last year and Borc estimates revenue might increase by 5% to 8% this year. He also sees the cement market growing by as much as 6% in 2015.
“There’s room for growth. I can see optimism on the market.”
The cement market saw an about 40% decline during the crisis, in line with the entire construction sector, reaching 7.6 million tons last year, according to its trade association, CIROM.
Cement sales rose by 5% to 6% last year, largely on the back of residential and non-residential projects. Asked why the construction market is unable to return to the level of the boom days, Borc says that investors are much more selective now.
“Investors and banks are much more careful about investing their money safely than they were in the years before the crisis. Back in 2004-2006, apartments would change hands three or four times before being built. Now developers build a 20-apartment building, sell it and then start building a second.”
One of the potential growth drivers for the local construction sector over the coming years is the projects included in the General Transport Master Plan, which includes Romania’s priorities in terms of transport infrastructure for the next decade and a half and is waiting for approval from the European Commission.
(English version by Loredana Fratila-Cristescu)