One of the most competitive construction materials sectors, the paints and varnishes, will see sales reach 260-270 million euros by 2010, approximately 70% more compared with the level of last year”s revenues, some market players estimate.
The Romanian paint and varnish market currently has two major advantages that make it a favourite target of strategic investors and investment funds: the still low level of consumption compared with the other European markets, hence the huge growth potential, and a demand that is permanently fed by the renovation of old buildings and particularly by the new residential projects.
This is now translating into a minimum growth rate of 10-15% per year and a long-term sustainable profitability level.
Hence investment funds” rush onto a market that appeared set to become dormant several years ago.
The massive demand coming from the segment of new developments, as well as from the segment of works related to the renovation of old buildings, has yielded an increasingly stable and predictable profit rate for players.
US investment fund Advent and Sweden”s Oresa Ventures realised the opportunity of a business due to generate long-term profit and bought top five players.
The market is growing above the rate of the overall economy, and so is the entire constructions sector, which will this year witness sales worth about 170-180 million euros.
“The paint and varnish market may over the following years advance by around 10%, depending on the legislative framework, while paint and varnish consumption should get to about 9-11 kg per capita to cover the market”s needs,” Stefan Barna, Köber”s manager in charge with strategy, told ZIARUL FINANCIAR.
At present, consumption stands at 4-5 kg per capita and will continue to rise over the following years.
The Romanian market is dominated by four main players: Köber, Policolor (held by three investment funds), Dufa Romania (bought by Advent in 2005) and Guzu Chim (where Oresa Ventures owns 49%).