Mihai Rohan, Carpatcement Holding chairman, states the current crisis is not as severe as the one of 1998, when inflation rose by even as much as 300%, there were no foreign investors and the RON posted steep declines.
"Cement consumption in the first three months dropped by even as much as 50% from a year earlier in some areas, but still the current situation is not as dramatic as the one of 1998. Now, inflation is under control and foreign investors are further expanding their activities domestically. The cement market started booming in 2004, when demand did not cover even half the quantity we were able to produce," explains Rohan.
The plants of Carpatcement Holding, the domestic subsidiary of Germany's HeidelbergCement, in Bicaz, Deva and Fieni, reached full capacity last year, with the Germans deciding to embark upon an extensive project to double existing capacities by 2011.
Carpatcement Holding this year will finalise the around 100m-euro investments it started last year to boost production of Fieni and Bicaz plants. "I believe this crisis will last for five years, but not with the same intensity as this year. We can expect the construction market to rebound starting 2011 and we'll not halt investments underway," states Rohan.
Carpatcement Holding cement sales dropped by around 30% in the first quarter, amid the lower number of new projects and the lack of financing for the ongoing projects.
"Sites that operated in the first quarter were opened back in 2008 and no other extensive new projects were launched. The hardest hit areas are the western part of the country and Bucharest, while a number of projects to build single-family homes are being carried out in the eastern part (...)," says Rohan.
Sales to housing projects weighed 30% in the company's overall turnover, and have climbed to over 50% since the beginning of this year. "The biggest hopes for this year came from the state, but the anti-crisis plan is not realistic as revenues from firms have plunged and projects can no longer be financed. I believe next year will be as bad as this year," says Rohan.
The cement market will decline by around 10-15% from the 800m-euro value reached in 2008.
Prices have dropped by around 2-3% at producer level since the start of 2009, to 60 euros/tonne, but Carpatcement Holding does not plan to operate further price cuts.
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