The Russians at TMK, the world's number two piping manufacturer, saw their Artrom Slatina business double to 26 million euros last year. Moreover, the company made operating income for the first time in five years.
The increase in the sales of the unwelded pipe maker was caused by the severe depreciation of the ROL against the euro last year (17%), by the increase in the steel and steel products price on the foreign markets, as well as by the higher exports. The company exports most of its output to the EU and the US.
Artrom's sales totalled 1,065bn ROL (26 million euros) last year, according to the preliminary financials, 114% higher in ROL compared with 2002. The sales in euros went up 83%. The operating profit amounted to 25.6bn ROL (0.6 million euros), compared with a 6bn ROL loss (150,000 euros) in the same time last year. Inflation in the period was of 14.1%.
Artrom's net profit amounted to only 8.9bn ROL due to financial expenses. "We had large expenses with the exchange rate gaps due to a debt to AVAB (Banking Assets Resolution Agency) that was still registered in the accounting books," Adrian Popescu, Artrom's general manager stated. The company had logged 2.8bn ROL profit in 2002.
The growth of the piping maker's business occurred against an increase in exports, especially of those to the United States and to the European Union countries, as well as to dropping production under outsourcing deals. "We would operate under outsourcing deals in the past years because of insufficient working capital. Our clients were practically buying the raw materials for us," Adrian Popescu said. Last year's output under outsourcing deals accounted for 4% of the turnover and was actually comprised of deliveries carried over from the previous years.
Artrom is held 80% by Sinara Handel, a branch of Russian TMK Group, and is the only production facility TMK has outside Russia. This group is Russia's most important and the world's second-largest piping manufacturer. The Russians are currently negotiating the takeover of the Combinatul Siderurgic Resita (Resita Steel and Iron Plant), following failure of the privatisation at the hands of the Americans at Noble Ventures.
TMK's entry on the Romanian market did not start out as a strategic decision, but as a way to collect the debts from one of its business partners. TMK took over Artrom's debts from AVAB, which were later swapped for equity. vlad.nicolaescu@zf.ro
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