Argus will halt investments over the coming period

Vegetal oil producer Argus Constanta, one of the top five players on this market, announced it is to slow down its pace of investments over the next two years, after having invested more than 15m euros over the last ten years.

“I believe all companies should have a break period in activities, so that they do not crumble under credits,” stated Vasile Leu, general manager with Argus Constanta.

In 2003 the company made the highest volume of investments in 5 years, of over 6 million dollars (6.5 million euros), however this year the pace of investments slowed down, and for 2006 the company”s representatives say even fewer investment will be made.

This year Argus made investments of more than 2 million euros in a new bottling line for 2-litre oil containers, as well as modernising environmental installations and raw material storage capacities.

Last year, the company invested about six million dollars to increase its production capacity by 60 percent, to 250 tonnes per day, with the decision being made following increasing demand on the market.

Argus representatives announced they would end the year 2005 with some losses, amid the appreciation of the domestic currency and higher supply levels on the market.

Turnover will revolve around 150 million RON (41 million euros), equal in RON to last year”s turnover, but profits will be worth less than 2 million euros, the value registered at the end of 2004.

“The supply of edible oil on the market is higher than it”s currently necessary, so each player has operated price cuts. Though physically we had higher sales, our profit is lower because of the slashed oil prices. We hope we”ll see an improvement starting January,” Leu also said.

The company was also hurt by the appreciation of the domestic currency, since it had credits worth almost 60 million RON (16.7 million euros), contracted last autumn.

“We are contracting these short-term loans every year, to be able to buy raw material in the autumn, just as most of the vegetal oil plants in Romania do,” Leu added.

Leu is among the local entrepreneurs who have permanently denied any interest in selling their business. “I wonder if the existence of Romanian players is being questioned, just because everyone expects us to sell.

Maybe we are too big to be considered by multinationals, which have been buying small players. I have received no concrete offers so far and we have not been trying to sell, either,” Leu stated.

dana.ciriperu@zf.ro