Construction supplies producers do not hope to see a significant rebound of the sector in 2014, either, expecting growth of no more than 5% largely because of investments resumed by government or major private companies.
“Construction materials market amounted to EUR3.2 billion in 2013, 2% or 3% higher than in the previous year. The growth is because of the price hikes in the fall season, as overall volumes did not increase,” says Claudiu Georgescu, president of the Association of Constructions Materials Producers in Romania (APMCR).
The association members are some of the most important companies in the business such as cement producer Lafarge, adhesive, polystyrene and paint maker AdePlast and brick maker Wienerberger.
The construction supplies sector, which employs some 36,000 people, accounts for about one third of the construction business, which stood at some EUR8.5 billion to EUR9 billion in 2013. After the peak of 2008, when the construction materials market reached EUR5 billion, the crisis caused an almost 40% decline, forcing many producers to operate below capacity.
The main challenge of last year for the construction materials sector was the lack of big projects compared with the boom period, says Liviu Stoleru, general manager of brick producer Cemacon. As a result, companies in this business had to rely on small projects conducted by individual investors, which had the funding secured for the respective investments.
“The residential construction market is more relevant to us than the infrastructure, or civil engineering and industrial construction work. Based on our estimates and the figures [we got] from various sources, we believe the residential construction market shrank by some 5% last year,” Stoleru says.
The company he runs posted more than EUR10 million revenue last year, according to ZF estimates.
On the other hand, Ileana Nicolae, general manager of construction supplies producer Sika Romania, the local subsidiary of Swiss group by the same name, says the building materials market fluctuated in 2013 compared with 2012. It rose in the first half and suddenly dropped in the second due to the lack of cash and investment in infrastructure.
“The final quarter (of 2013 i.e.) saw an improvement so we think the market was flat in 2013 compared with 2012 at best or went down 5%. We expect slight growth for 2014 (…),” Ileana Nicolae says.
“We estimate an at least 5% increase in the volume of works compared with 2013, because of governmental investments announced, of private investments of major multinational companies and of the expansion of the do-it-yourself networks.”
Sika Romania posted some EUR20 million revenue in 2012.
Another company official that sees the construction materials market rising 5% this year is Horatiu Tepes, owner of the Brasov-based metal roof tile maker Bilka Steel, which posted more than EUR23 million revenue last year.
“Smaller growth is very healthy, or else we’d be talking artificial growth. There is construction materials consumption in Romania if we compare to the European Union,” says Tepes.
He budgeted growth of about 15% of Bilka Steel’s revenue this year.
“We sought to grow on the back of exports in 2013 but eventually domestic consumption was enough to ensure growth of business and sales to foreign markets reached 5% to 6% of our revenue. We want to develop exports in 2014, as well as our presence in the do-it-yourself networks.”
Many companies in the construction supplies business are turning to exports to grow their business, such as AdePlast, Arcon, Optimedia, MCA Group and Saint-Gobain Glass.
Despite their efforts to sell as much as possible to customers abroad, exports still account for little of the total sales. Construction materials exports stood at merely EUR100 million last year, according to APMCR.
(English version by Loredana Fratila-Cristescu)