Romanian construction retailers see profits double

The biggest Romanian-held distributors of construction materials, Dedeman of Bacau, Arabesque of Galati and Ambient Sibiu, registered profit increases of between 60% and 100% last year, according to preliminary reports.
Domestic companies have managed to gain a strong foothold on the market in recent years compared with foreign retailers, which have operated massive investments in order to expand their business on the Romanian market.
Last year, Arabesque SRL generated a net income worth 19 million euros (against the NBR exchange rate for 2006 of 3.5245 RON/EUR), 60% higher than the previous year. The company’s turnover registered a similar growth rate revolving around 330 million euros. The company’s financial results for 2006 are consolidated and include the results for subsidiaries in the Republic of Moldova and Ukraine, according to company representatives.
Arabesque, the only domestic distributor of construction materials to expand outside Romania, plans to contract a 56 million-euro loan from the International Finance Corporation to develop its operations on the markets of Romania, Ukraine and Moldova, and plans to enter the Serbian and Bulgarian markets.
“Forecasts for the future are equally upbeat because there’s still room for investments on the Romanian market to accommodate both domestic investors and major foreign players,” Dragos Paval, general manager and shareholder of Dedeman Bacau, told ZF.
Last year, Dedeman Bacau generated a turnover worth 112 million euros, up 60% on 2005, while its net income margin amounted to about 13%.
In 2006, the largest distributor of construction materials in Transilvania, Ambient SRL reached a net income worth 6.7 million euros, double the level from the previous year, while its turnover amounted to 170 million euros, according to the company’s preliminary results.
Domestic players on this market are set to invest hundreds of million euros to develop their businesses in order to cope with foreign rivals. International DIY firms are expected to aggressively develop. According to foreign players’ plans, by late 2008 a network of shopping centres will include over 60 retail stores selling constructions products.