Aerostar: not free-fall, but hardly skyrocketing

Aerostar plans to boost its net income by about 5% in 2006 and increase turnover by 4%.

The Romanian aircraft producer Aerostar Bacau is targeting a profit of around 5.87 million RON (1.7 million euros) next year, while the target for net income during 2005 stood at 1.6 million euros.

In the first nine months of this year, the company registered net gains worth 3.88 million RON (1.07 million euros). The Revenues/Expenses budget approved by the company”s General Meeting of Shareholders stipulates turnover worth 98 million RON (28 million euros) for year 2006, in a context in which the company”s officials are forecasting that turnover will exceed the threshold of 100 million RON (about 27 million euros) this year.

“We are targeting a viable growth pace for next year, in line with the sector we operate in, where 5% growth is considered as being extremely good. This growth rate can be sustained during the following years as well,” said Doru Damaschin, economic manager within the company.

In 2006, Aerostar intends to make investments worth around 11.53 million RON (3.2 million euros). The investment programme will focus on the modernisation of production facilities, retooling, the modernisation of infrastructure, the rehabilitation of buildings, on improving labour conditions and on cutting down energy costs. “We will also make financial investments should we see solid investment opportunities in the share capital of other companies,” specified Damaschin.

Investments will be financed from the company”s own sources, with the company holding about 2.8 million RON (0.8 million euros) accounting for amortisations.

The rest of the required sum will be secured from banking loans. “Should the capital market allow it and should funds from shareholders prove to be cheaper than banking loans, we are likely to also turn to capital increases,” added Damaschin.

In the second half of November, Aerostar signed a contract worth 6.6 million dollars (5.55 million euros) for aircraft engine repairs. The contract will largely be delivered next year, with the beneficiary being a foreign customer from the military aviation domain.

During the first three quarters, Aerostar exported about 30% worth of its turnover, with the company”s main foreign customer being India”s Defence Ministry.

Two years ago, Aerostar also entered the domain of civil aviation, with almost 30% of the company”s turnover now coming from this segment. For next year, the company”s representatives forecast the civil aviation segment will grow by another 10 percentage points.

Aerostar is controlled by the company Iarom Bucharest, which owns more than 71% in its stock. stelian.vezentan@zf.ro