Who said beer ain't profitable in Romania?

Brau Union Romania, branch of the Austrian BBAG Group and the top player on the Romanian beer market posted 8 million euro net profit last year, up from the 53,367 euro in 2001, the Board of Directors’ report shows.
The beer market in Romania, where Brau Union accounts for some 34% share, has had a rather poor development over the last two years, with most of the brewers repeatedly complaining the low purchasing power did not allow them to operate the proper prices in line with inflation or with the increase in the exchange rate.
Brau Union Romania is listed on RASDAQ and its spectacular profit growth took many analysts by surprise, particularly because of the 21.49bn ROL losses it had logged in H1, 2002.
Furthermore, the company has never granted dividends until now, so that the brokers associated its plan to pay 2,300 ROL/share gross dividend (almost the entire net profit) this year with another event about to occur in Brau Union Romania’s life in 2003.
The company is 94.81% held (directly and indirectly) by Brau Union AG – BBAG’s beer division, with the rest of the shares owned by small investors.
Brau Union is therefore bound by the new capital market legislation to put out an offer to buy all the shares held by the minority shareholders and have the company delisted from RASDAQ.
Brokers have speculated that Brau Union had decided to suggest payment of dividends during today’s General Meeting of Shareholders in order to get the necessary financial resources for putting out the offer, as it is the shareholder that stands to benefit the most from dividends.
Werner Schneidhofer, Brau Union Romania chairman, however, says the spectacular profit surge and the initiative to suggest payment of dividends are in no way connected to the offer.
“It is true we have not paid any dividends until now, but this is precisely why we thought we should. We improved our financial results in 2002 so there’s no reason why we should not pay dividends. We see no connection between this initiative and the public takeover bid,” Werner Schneidhofer told Ziarul Financiar.
The Austrian manager also feels the profit trend has nothing spectacular to it. “We feel this growth is the result of the final success we enjoy after several mergers and restructuring. The acquisition of Brewery Holdings has finally started to produce the desired cost cuts; moreover, we have also gained by buying the raw materials from the domestic market and cutting energy costs following modernisation,” Schneidhofer explained.
On the other hand, the Board of Directors report says the company was affected by “the failure to attain the planned delivery prices, the higher costs of the power used, resorting to expensive banking loans for the necessary cash and setting up provisions worth 51.8bn ROL.”
Brau Union Romania bought Brewery Holdings, a company that held three breweries in 2000, this way doubling its market share.