Somaco Grup Prefabricate, the constructions materials producer held by Swedish investment fund Oresa Ventures, has decided to sell only to those clients that can afford to pay, after sales of aircrete and precast concrete products fell by 30-40% and 50-60% in the first half.
In May, Oresa Ventures replaced the management of Somaco Grup Prefabricate, which owns three factories in Adjud, Buzau and Roman, taken over for 32.5 million euros in September 2008 and also changed the strategy of the company investing in a productivity boost.
"Although we have just started with the new full team in May, with the new Somaco brand and aircrete, the sales volumes in the first half are below those budgeted and below last year's, but satisfactory in the current harsh market conditions - we estimate we have and are still gaining market share. Despite market and sales decline, the company posted operating income in the first half," says Cornel Marian, chief executive of Oresa Ventures.
Somaco Grup Prefabricate has budgeted about 18-20 million-euro sales for this year, slightly down from the 20 million euros in 2008 and a tripling of its turnover, to 60 million euros until 2013-2014.
Marian estimates that projects postponed in the first half of the year might be resumed in the second half, especially in the retail sector. The first signs came in July, when the volume of sales exceeded the level posted last July.
"Revenues in euros are still affected by the lower prices and by the depreciation of the RON, but we managed to preserve profitability through significant cost cuts. We are confident we can take on a few good projects this year, projects with reliable partners that can pay on time," Marian says. He believes default risk management will become even more important in the second half and in 2010, once the recession deepens.
The aircrete market reached 220 million euros, and the precast concrete products market reached 150 million euros in 2008, yet Somaco anticipates at least 20-25% decline for each of them this year to 160-170 million euros and 110-120 million euros.
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