Turbomecanica Bucharest, Eastern Europe''s only producer of jet and turbo engines, which produces for Rolls Royce and General Electric, has seen its profits fall sharply amid the depreciation of the European single currency and higher utility prices.
The company ended the first quarter with gross profits of 1.9 billion ROL (50,000 euros), around 84% lower compared with the same period in 2004 when profits reached 12.4 billion ROL (0.3 million euros).
In line with the report submitted to the Bucharest Stock Exchange, the company''s turnover reached 4.17 million euros (154.8 billion ROL), remaining almost flat on 2004.
The main factors behind the drop in profits were the price hikes for utilities (especially electricity) and the appreciation of the exchange rate for domestic currency given that exports make up a significant proportion of the company''s turnover. In the first quarter this year, Turbomecanica was still using materials and parts imported in previous periods at a higher exchange rate.
Company representatives were unavailable to comment on the results.
In 2005 Turbomecanica is expecting its profits to climb 10% to 4.8 million euros, while it anticipates total revenues to increase to 26.5 million euros, from 25 million euros in 2004. Last year the company signed a five-year contract with Rolls Royce for the production of parts and sub-assemblies needed in the manufacturing of aircraft engines.
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