The company produces chemical materials for constructions and industry and has a plant in Brasov.
Ileana Nicolae talks in an interview to Business Construct magazine about the company’s expansion strategy, its turnover expectations, the measures taken in crisis and the impact of political turmoil on the market.
With a varied portfolio of products and a business mainly driven by imports, Sika Romania intends through expansion to increase competitiveness on the dry mortars segment by manufacturing them locally and eliminating excessive transportation costs.
The expansion plan was first discussed in 2007, but was not put into practice because of the crisis.
“What has happened in Romania in the past few months has not been good for us, it dampened our plans. (…) We are now pondering this further,” says Nicolae, who has been running Sika Romania since 2002, ever since the Swiss group entered the Romanian market.
She says the company is currently in talks with three local producers of dry mortars for a prospective takeover.
If it chooses to build a plant, Sika’s focus is to make high-quality products, so it doesn’t plan to build a very extensive production capacity.
The manager of Sika Romania says an investment in a new dry mortars facility can start from EUR3 million and reach EUR15-20 million, depending on the capacity and on the location of the plot.
As for the budget allocated for the expansion, Nicolae says the investment doesn’t have a pre-established maximum limit, but that it needs the group’s approval.
“It is very possible for us to finance the project with the company’s cash flow. We made a profit from our first year of activity,” she says.
The decision expected in 2013 at the earliest
When could a decision on expansion be taken at the earliest? “Next year,” say Nicolae, who is currently waiting to see what impact the change to the group’s management as of January 1 2013 will have.
The Swiss group opened its only Romanian plant in Brasov in 2008. The additives manufactured here account for 25% of the turnover of the Romanian subsidiary, with the difference being accounted for by imported products.
The company is structured into two divisions – constructions and industry – and supplies products for sealing, repair works, hydro-insulation and protection.
Growth slows down
The first half of the year was “very good”: the company’s turnover grew by 20% year-on-year thanks to infrastructure projects launched by the authorities. The same pace was preserved in July and August, but September started off below expectations, with the lack of financing being acutely felt.
“The growth will slow down towards the end of the year because the effects of the political crisis are felt, unfortunately. Even with poor performance towards the end of the year, our rise so far has already been significant, so I can rely on a 10% overall rise,” Nicolae says.
On the other hand, profit margins are down this year. One of the factors is the more expensive fuel, while the company’s selling prices have been “quite stable.”
In 2011 the turnover of Sika Romania amounted to 77.88 million lei (EUR17.2 million), up 21%, and its net profit remained at around RON1.3 million, according to data reported by the Finance Ministry.
What will 2013 be like? “In our company budgeting is done in October. The budgeted growth for 2013 is 10%, which we think is realistic, irrespective of what happens with the market because we introduce new systems, we rely on distribution and on DIY stores,” says the Sika manager.
The company is present in DIY chains such as Hornbach, Dedeman, Bricostore, Ambient and Leroy Merlin, which generate a quarter of deliveries. The rest of the turnover is accounted for by direct sales through various channels, to concrete stations, prefab manufacturers, infrastructure constructors, general contractors, construction materials storage facilities, car servicing centers and wind power farms.
Sika’s manager says the company she runs continues to rely on infrastructure works, where she estimates the company supplies to around 70% of the existing projects, having a wide range of products. (EUR1=RON4.514)
(English version by Daniela Stoican)