Marius Vacaroiu, 36, took charge of Orgachim, the Bulgarian part of the group, last year and has been in charge of Policolor since January 2012, after Italian Achille Bardelli ended his term. Vacaroiu has been working for Policolor since 1995, when he first supervised the IT department and in 2008 became group controller.
“We did not set out to make significant strategy changes compared with the previous years,” Marius Vacaroiu told Business Construct magazine in an interview.
Policolor-Orgachim remained one of the leading players on the local paint and enamel market last year as the group posted EUR88.5 million revenue, about EUR35 million generated by sales in Romania. The total business grew by 10% in 2011. “Revenue has been constantly rising over the last few years by 5% to 10% and we expect similar growth for 2012, both for the group and in Romania,” Vacaroiu says.
Although he expects the business to grow in 2012, the new CEO says the market will most likely stagnate at 2011 level this year.
“The really harsh winter, which lasted quite a while, prevented sales from reaching the expected level and many projects, especially exterior work, were delayed. Furthermore, many customers would rather not invest in major refurbishment projects for now, settling for redecorating or doing small repairs.”
Vacaroiu would not provide exact figures about the size of the local paint and enamel market. “What I can tell you is that we use a EUR165 million figure as a reference in our company,” he explained, specifying that was merely an indicative figure and did not necessarily reflect the actual size of the market.
One of the trends on the paint market as on other markets, for that matter, is the shift in customer preferences to low-quality products priced as low as possible. Things are much worse when it comes to public tenders where most of the times the lowest bidder wins over everything else.
“What we can do under the circumstances is to help by innovation and try to steer the market towards quality products. If cheap paint is used, there are bound to be cases of unhappy customers, because such a product does not have a very long life span,” Policolor-Orgachim’s new CEO explains.
One of the challenges paint producers will face this year is keeping their products’ shelf prices reasonable while not skimping on quality, considering the raw material prices are rising, the group’s official believes.
Another challenge is the decline of the traditional retail market, because a number of small stores have gone into default. Cash flow problems may happen to major dealers or producers, too. “On top of that, the major retailers are putting a great deal of pressure on producers, both through permanent promotions and through promoting their private labels,” Vacaroiu says.
On the medium term, however, once the construction market and especially the real estate market have thawed up, the companies on the paint market will be faced with a new challenge.
“We might say those who will be able to survive the crisis will be successful, but the real challenge will only come after the market rebounds,” Policolor-Orgachim’s CEO says.
“The customers who bought the cheapest products during the crisis will have to make repairs soon and the producers that sold them the respective products will be harshly penalized in terms of trust.”
(English version by Loredana Fratila-Cristescu)