Turbomecanica forecasts 20% decline in income

Turbomecanica Bucharest, Eastern Europe”s only manufacturer of jet and turbojet engines, estimates its gross income will fall by more than 20% in 2005.

The company has forecast gross profits of 174.6bn ROL (approximately 4.8 million euros at an average exchange rate of 36,500 ROL), compared with 218.6bn ROL (5.4 million euros) in 2004. A decline in total revenues to 965.7bn ROL is also expected in 2005 from the 1,008.9bn ROL seen in 2004.

The company management explained the falling profits at the General Meeting of Shareholders on Wednesday as the effect of the decline in export revenues caused by the strengthening of the local currency, with Turbomecanica having no foreign currency loans to compensate for the decline.

Company representatives were unavailable for comment yesterday by the time of going to press.

The same General Meeting of the Shareholders approved the proposal to pay out 90% of last year”s net profits as dividends.

The gross value of dividends disbursed to shareholders is 9,922 ROL/share, up 30% on the previous year.

The total value of dividends paid by Turbomecanica for its 14.7 million shares will amount to 3.6 million euros (calculated at the average exchange rate announced by the NBR for last year).

In 2004 Turbomecanica made 4 million euros in net profits (165bn ROL), up 44% on 2003. Turnover in 2004 was close to 24.2 million euros, 28% higher than the year before.

Last year Turbomecanica signed a five-year contract with Rolls Royce that will see it manufacture and supply aircraft components and subassemblies.

The contract is worth several million euros and is expected to influence company revenues this year.

However, its main client still remains the US” General Electric. Back in 2001 the Romanian company set up a joint venture with the American giant to make several million euros” worth of aircraft engine subassemblies per year, with the entire output purchased by GE Aircraft.