Electroprecizia Sacele, a producer of electrical engines and equipment, saw its profits slump by 30% in the first half of the year, compared with the corresponding period last year. The fall in profits is seen as the result of the strong RON exchange rate, with most of the company''s production going to export.
The Brasov-based company generated net income of 0.4 million euros (1.46 million RON), down from 0.57 million euros (2.3 million RON) in the first half of 2004. This came despite a 17% growth in turnover to 27.8 million euros (101.9 million RON).
"The increase in turnover does not tell much about our activity. More important, we believe, is the added value in the company''s profits, which fell in the first half due to the negative effects of the RON/EUR exchange rate. Everybody acknowledges that the strong RON is hurting exporters, but nobody is doing anything to limit this phenomenon and nobody is providing any estimates on which we can base our calculations. This is causing us to be increasingly pessimistic, since we will be negotiating contracts for 2006 in the coming period and we don''t know what to take into consideration," explained Constantin Zavarache, general manager of Electroprecizia. The majority of Electroprecizia''s production goes to export, accounting for 77.6% of company turnover over the first six months, 18.7% up against the equivalent period last year.
The increase in exports comes primarily from the 124% surge in sales of electrical equipment to foreign markets. The company''s main export market is Italy, which takes nearly 47% of the total.
This year Electroprecizia is expecting a turnover of 44 million euros (160 million RON calculated at an average exchange rate of 36,500 ROL), 7% down on 2004. Their profit forecasts, however, are more pessimistic, at around half last year''s level.
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