In a year of many challenges, orders from renovation projects, sales conducted through modern retail channels and new product and service launches kept the market going.
“The renovation and upgrade segment was the most dynamic of all market segments, comparable to last year’s level (growth of 1%), followed by new residential construction, now in its fifth year of decline in a row (9.4% in the first half) and (…) by the new non-residential construction (office, retail, logistics space, healthcare and tourism), which lost 16.4% in the first half,” says Constantin Hariton, general manager of Saint-Gobain Construction Products Romania.
Talking about sales channels, the Saint-Gobain representative said that even though sales per store went down, modern retail channels remained attractive, especially because of organic growth. Traditional retail, however, despite significant support from the slight rebound of renovation projects, dropped compared with 2012.
“It should also be said that besides the sales of traditional products, the new products launched on the market with their added value contributed to sales, as did the new services made available to customers (logistics and consultancy services, online information, personalized marketing programs),” Hariton added.
In the absence of official data, Hariton estimates the market will go down to EUR85 million to EUR90 million this year and less than 40 million square meters.
The shrinking of the market this year caused plants to operate at lower capacity and at higher costs, also putting pressure on sales prices.
Under the circumstances, customers chose to buy cheap products primarily over products with a higher price/quality ratio.
Hariton also says that a negative factor is the sluggish pace of updating design and construction standards, as well as the lack of a responsible policy of the State Inspectorate for Construction (ISC), which should create thorough construction site inspection programs, because observing guidelines, according to producer standards and recommendations is “far from being the usual practice.”
The representative of the subsidiary of French construction supplies producer says that another factor negatively influencing the business of producers is the lack of governmental programs to stimulate construction sector, as the First Home and weatherization schemes were launched quite a while ago and are far from reaching their purpose.
“Last but not least, the high number and especially value of insolvencies and bankruptcies of construction companies should be taken into account. The negative financial effect on construction materials suppliers should not be overlooked, as the current legislation is not favorable to the creditors of the insolvent companies,” he said.
Despite the crisis that started in late 2008, Saint-Gobain Rigips continued to invest EUR1.2 million to EUR2.2 million every year towards three major goals: ensuring sustainable growth, energy efficiency and environment protection.
“The EUR1.3 million investments our company budgeted this year mostly went to the gypsum quarry and to the plaster plant,” the official of the French group said.
Investments scheduled for 2014 amount to EUR2.1 million, he added, and would go towards the same priority targets set by the group. The main investment will be a new packaging, palletizing and foil-wrapping line, which will boost the plaster plant’s production capacity and improve its energy efficiency, Hariton added.
The Rigips unit owns a processing facility, two plants and a warehouse in Romania.
Saint-Gobain Construction Products ended last year with 284 million lei (EUR64 million) revenue, according to its filings with the Finance Ministry, and deliveries of plasterboard account for more than 50% of it.
Rival Siniat Romania, of Belgium’s Etex, is preparing investments in plasterboard production and announced it planned to start building a EUR50 million plant in the country. Another competitor is Germany’s Knauf. (EUR1=RON4.4527)
(English version by Loredana Fratila-Cristescu)