Romanian Daily

AVAS takes Kastamonu to court

IulianBulandra — 2006-07-19T07:46:00+00:00

Kastamonu Entegre, the owner of Romania-based Prolemn Reghin and the biggest player in the Turkish wood industry, was taken to court by the State Assets Resolution Authority (AVAS) for not complying in due time with the investment commitments it had undertaken. Under the clauses in the contract for the takeover of Prolemn, Kastamonu committed to invest 75 million dollars (59.8 million euros) in the August 1998 - December 2002 period. The Turkish group, however, only managed to invest 50 million dollars (40 million euros). "At the time when the contract was closed, the legal norms then in place exempted foreign investors from the payment of certain taxes, but the budget law introduced in 1999 annulled these incentives.

Under the circumstances, Kastamonu was rendered unable to invest the 75 million dollars in the period established under the contract. In addition to this, Kastamonu representatives notified the AVAS that the investment would span beyond 2002," said Zoltan Bodu, legal adviser with Prolemn.

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Furniture production goes up 5% to 317m euros in Q1

IulianBulandra — 2006-07-13T07:38:00+00:00

Furniture production in the first quarter of this year advanced slightly to 317 million euros, rising from the 301.2 million euros registered in the similar period of last year, amid rising domestic demand.

Under the circumstances, furniture sales on the domestic market reached 124.88 million euros, up 8.2% from the corresponding period of 2005, according to the data released by the Association of Furniture Producers in Romania (APMR).

"Q1 figures are pointing to an increase in the value of furniture production and exports compared with last year, but the respective increase is insignificant. These increases are not satisfactory, considering the trend over last few years, namely the 2000-2004 period," stated Aurel Rizea, chairman of APMR.

Players have diverging opinions regarding the trend of the furniture industry this year. Some maintain the market is going to follow the same slightly upward trend, while others state decline has already begun.

Last year, 90% of Alprom production went to export, with this percentage expected to shrink to 86-87% this year. Its main markets in 2005 were France, UK, the Netherlands and Germany.

On the other hand, the representatives of Samus Mex, one of the plants that are part of the Mobexpert group, believe both production and sales were lower compared with 2005.

Representatives of the Green-Forest furniture producer in Timisoara believe the upward trend of production was triggered by rising domestic consumption of furniture and by flat export prices for the Romanian furniture.

After the first three months of this year, an increase in the RON value of production can also be noticed, after APMR's data last year indicated a decrease for this indicator.

Under the circumstances, opinions differ regarding the progression of the Romanian furniture market in 2006.

This year the number of employees in the industry will continue to drop, continuing the trend in 2005, when approximately 10,000 people lost their jobs, according to data released by the association.

"I believe this trend will become more visible, as the effects of the efforts to increase the competitiveness of companies, on one hand, and the massive migration of workers in the Romanian industry, on the other, will produce their combined effects," believes Mihai Gadei of Samux Mex.

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Camelia Sucu hires PwC

IulianBulandra — 2006-07-12T08:08:00+00:00

The financial consultancy firm of PricewaterhouseCoopers (PwC) Romania, a branch of one of the professional services giants, will advise Camelia Sucu in the sale of the shares she owns in the Mobexpert group of firms, leader of the furniture industry. "Mobexpert is the leader of the furniture production and distribution sector in Romania, which leads me to believe investors will show a major interest in becoming part of a group that has a significant share of a continuously growing market," stated Camelia Sucu, who currently owns a 40% stake in Mobexpert. Mobexpert's majority shareholder is Dan Sucu, with 60% of the shares.

Dan and Camelia Sucu decided to file for divorce two years ago. Several investment funds showed an interest in Camelia Sucu's stake in Mobexpert. The whole stake held by Camelia Sucu in Mobexpert could be worth somewhere in the region of 50 million euros, according to estimates of consultants in the mergers and acquisitions sectors, who were interviewed by ZF.

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Alprom: bigger income, smaller business

IulianBulandra — 2006-07-11T06:32:00+00:00

Pitesti-based furniture manufacturer, Alprom, estimates an increase in profit by 142%, to 1.9 million RON (0.45 million euros), while turnover will fall by 4.4% to 74.3 million RON (20.7 million euros), stated the company's financial manager, Ovidiu Suta. "Turnover will drop in 2006, as the three departments that manufactured fibreboard, timber and aesthetic veneer are now separate entities, with Alprom being a majority shareholder in each of them," explained Suta. At the same time, the company changed its production structure, by increasing the share of furniture made from solid wood, which would lead to a significant increase in profit. "Previously, we also used beech or resinous wood as raw materials, which, as they were cheaper, set a lower price of the finished product.

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7.8m-euro business for Famos SA

IulianBulandra — 2006-07-10T07:14:00+00:00

Furniture manufacturer Famos SA from Odorheiul Secuiesc closed 2005 with a turnover worth 28.5 million RON (7.8 million euros), up from 26.9 million RON (6.6 million euros). The profit for the same period stood at 0.7 million RON (0.2 million euros). Company representatives could not be contacted for further information. The company's main products are those made from solid wood and veneered panel, specifically living room, bedroom, bookshelves and small furniture items. Over 90% of the products of Famos target the market of the European Union and that of Eastern Europe. The company's main competitors are importers, most of which from Poland, Slovakia and Slovenia.

The number of employees of Famos SA stood at 804 people at the end of last year.

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IKEA's acquisitions from domestic market up 10%

IulianBulandra — 2006-07-10T06:47:00+00:00

Hendrik Notmeijer, trading area manager with IKEA Trading, says that in the first half of the year the company's acquisitions in Romania were 10% higher against the similar period of last year.

"This percentage could have been higher, but lack of sufficient (production) capacities and quality problems were the reasons that it is only 10% more," said Dutchman Hendrik Notmeijer. IKEA opened its Romanian office in 1992, although its purchases on the local furniture market started in the '80s. IKEA is the world's biggest furniture retailer, selling functional and easy-to-assemble, low-price products.

According to the latest available information on the market, the value of acquisitions in Romania in the 2005 fiscal year (September 2004 - August 2005) stood at some 200 million euros.

The main products that IKEA acquires from Romania are those made of solid wood, upholstery and ceramics.

"Foreigners see Romanian furniture products as competitive, but a lot of monitoring is necessary to get and hold the right quality," said Hendrik Notmeijer.

In Romania, the company buys furniture from about 40 suppliers.

"Our main suppliers are the solid wood ones, but their overall number has decreased because we are closing close down non-performing suppliers and at the same time we open new promising suppliers," says Notmeijer.

Besides the representative office, IKEA also owns the Swedwood plant in Siret, Suceava county. "IKEA and Swedwood are part of the same company, but Swedwood is the independent production part and Trading is the independent purchasing part of the family," explained IKEA Trading representative.

At present, he added, IKEA Trading has more than 100 employees in the Balkans, of whom 70 are in Romania. Romanian producers working with the Swedish giant are almost exclusively directing their supplies to it. Some of them started collaborating with IKEA more than 6 years ago. Such is the case of Buzau-based Nikmob producer.

The year 2005 was for the furniture industry, one of Romania's traditional domains, one of the toughest years after 1989, with both exports and production having witnessed a slum in value in euros. Nevertheless, the first part of 2006 saw these indicators stabilise. "The Romanian furniture industry has to increase its efficiency dramatically in order to stay competitive, the more so as Romania is close to joining the EU and domestically prices for raw materials and utilities continue to rise," Notmeijer also said.

In his opinion, the most dynamic segment of the Romanian furniture industry is the upholstery business.

The Swedish retailer's rising interest in Romania is also proven by its announcement related to the opening of the first store in a franchise system. Swedwood International also plans to strengthen its presence by opening a new plant.

IKEA

The biggest furniture retailer in the world, with functional, easy-to-assemble, low-price products
Entered Romania by opening a representative office in 1992
Began buying furniture from the Romanian market as early as the '80s
Acquired 10% more products from the Romanian market in the first half of this year
Mainly purchases solid wood products, ceramics and upholstery
In Romania buys furniture from around 40 suppliers

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Silvarom to maintain position on current markets

IulianBulandra — 2006-07-06T07:02:00+00:00

Ioan Marginean, financial manager with Bucharest-based Silvarom furniture manufacturer, one of the main players in the industry, says no investments will be made this year in order to boost the production capacity.

"As a result of the uncertainty related to the trend of furniture sales abroad and on the home market, there will be no investments made in production capacities," specified Ioan Marginean. In the first quarter of this year, Silvarom registered turnover worth 15.5 million RON (4.4 million euros), 6% below the value reported for the similar period of last year. For this year, Silvarom has budgeted turnover standing at 54.

8 million RON (15.4m euros), 3% higher than last year's figure.

"Gross income in absolute value amounted to 2.1 million RON, the lowest income Silvarom has posted since privatisation," Marginean also said.

As regards estimates for this year, Silvarom's representative specified the spending and revenue budget included an income forecast of 5.4 million RON (1.51 million euros), but that the end of the year might bring only 3.3 million RON (0.92 million euros).

"Inconsistency in projecting income is related to the difficulty of foreseeing the trend of the RON/EUR exchange rate for the remainder of the year and despite the growing demand for furniture from abroad, the current exchange rate of 3.6 RON/EUR places the efficiency of exports at a zero profitability threshold. Then there's also the flat demand for furniture on the domestic market during summer months, with demand estimated to pick up toward yearend or even during next year, as house constructions will be finalised," said Marginean.

The best selling products in Silvarom portfolio are bedrooms, office and school furniture.

"Silvarom furniture products are grouped in around 28 programmes, each programme including about 15-20 items, which in their turn are sold in minimum 3-4 colours," specified Silvarom representative.

In the first three months of this year, the company's export revenues stood at around 5.5 million RON (1.5 million euros), from 6.6 million RON (1.7 million euros) last year. The main export markets for Silvarom were Germany, Austria, England, France and Russia.

"The export volume of 8-10 million euros, Silvarom's export capacity, does not secure enough mobility for the company to be able to easily penetrate new markets. The company's strategy is to maintain its position on current markets by changing the existing models with novel ones and to enter new markets with the possibility of expanding exports," added the Silvarom representative.

At present, Silvarom operates three furniture plants, mainly producing for the export, and a plant manufacturing office furniture. Silvarom operates on the Romanian market through a distribution network made up of 34 trading companies headquartered in the main cities of the country.

Silvarom

# One of the main players in the Romanian furniture sector
# In this year's Q1 posted turnover worth 15.5m RON (4.4m euros), 6% lower than the figure reported in the same period of 2005
# For this year has budgeted turnover worth 54.8m RON (15.4m euros), 3% higher than last year's figure
# Has included a 5.4m RON (1.51m euros) income estimate in the budget, but the yearend might bring just 3.3m RON
# Operates three furniture plants mainly producing for the export and a plant manufacturing office furniture.

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Furniture exports up

IulianBulandra — 2006-06-16T07:43:00+00:00

Furniture exports increased in the first quarter of the current year by 10 percent compared to the similar period of 2005, amounting to 272 million euros, according to the National Prognosis Commission. Wood product sales increased by 13 percent, up 25 million euros compared to the similar period of 2005. Furniture imports increased by approximately 30%, to 86 million euros in the analyzed period. The import-export trade balance for wood and furniture products reported a 197 million euros surplus. The imports and exports of paper and paper products showed a trade balance of 135 million euros.

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First Ikea Store To Be Ready By December

IulianBulandra — 2006-06-05T07:33:00+00:00

The first Ikea store, located in the Baneasa real estate project in Bucharest, will be completed by the end of this year, according to Conarg, the company which will build the complex.

Fewer Workers To Make 1.6bn Euros Worth Of Furniture 2010

IulianBulandra — 2006-05-15T06:17:00+00:00

Furniture production is set to advance gradually to 1.6 billion euros by year 2010, while the number of employees will decrease. Furniture consumption is going to get close to 900 million euros, backed by imports and Ikea's entrance.