Despite the crisis being just around the corner in 2007, Rautaruukki bet on the Romanian market, where it started the company’s largest greenfield investment outside Finland.
The company built a plant in Bolintin-Deal (S Romania), on the side of the Bucharest-Pitesti highway. It attracted over EUR35 million in financing and later became a European manufacturing hub, with some of the equipment of the Czech Republic and Hungary plants being relocated there in 2009.
Pirvu believes the crisis’ psychological effect on the construction market is larger than that of the lack of financing.
“People don’t invest unless they are sure they will get their money back sooner or later,” says Pirvu in an interview with Business Construct.
Marian Pirvu, manager of Ruukki Romania and Bulgaria, as well as business manager of the group for the two countries plus Serbia, Croatia, Slovenia, Hungary, the Czech Republic and Slovakia, joined the Ruukki team in early 2010, when he left the helm of rival ArcelorMittal Construction.
He expects the construction market to grow slightly next year because, despite the unfavorable international context, things have stabilized in Romania: people have waited enough and will start to invest.
But have investors learned the lesson of the crisis? They did as early as two years ago, believes Pirvu.
He cites the example of Finland, where the period that some call the second crisis translates as “the new normal,” and those who use this phrase are well prepared for anything that might happen. “Those who say a new crisis will follow I would say have not learned anything from the first crisis,” added the manager, who expects growth for next year, as well.
Towards turnover of EUR35 million
Ruukki’s local business grew 70% in the first nine months of the year against January-September of 2010, according to Pirvu, who forecasts a similar increase for the full year.
Last year the company reported a turnover of 82.2 million lei (EUR18.8 million) to the Finance Ministry, so the company could reach a turnover of nearly EUR35 million in 2011, the equivalent of the investment in the Bolintin plant.
The main growth factor of the business is the local plant and the gradual increase of production, to which adds a supply chain that functions well.
Exports, another growth driver, went up by over 40% this year this year, but their share to the overall turnover was down to 30% in 2011, amounting to around EUR10 million.
The company has yet to finalize its 2012 budget, but company representatives expect two-digit growth of the Ruukki Romania turnover next year.
Money from the parent company
The data supplied by the company to the Finance Ministry show significant losses in 2010, of RON53.9 million (EUR12.3 million). This amounts to the financial costs of the interests on a loan taken out from the parent bank.
He says the group expects a sufficiently strong recovery of the market before it repays the loan in order to make sure the Romanian subsidiary withstands the crisis and that it does not run out of capital.
(EUR1=RON4.3588)
(English version by Daniela Stoican)