Azomures favours sales over profits

Last year’s financial performance of fertiliser producer Azomures Targu Mures was much lower than in the previous year and below the target in its spending and revenue budget. At the same time, a declining market has forced the company to cut its profits in order to maintain sales at about the same value as in 2001.
Subsequently, although its 2002 turnover ($125.1 million) was only slightly lower than in 2001 ($130 million), Azomures’ preliminary net profit was half the 2001 net profit, having gone down to $3.1 million from $8.7 million.
The fertiliser producer operated at a loss in Q4, 2002, with the profit in the first three quarters reaching $4 million.
Azomures had set out to attain 285bn ROL ($8.5 million) in net profit in 2002, as shown in its S&R budget, while revenues should have reached 5,315bn ROL ($158.6 million).
The domestic chemical fertilisers market, one of the main fields where Azomures operates, is shrinking, which impacts on all the producers on this market.  Azomures managed to keep its profit from going further down only through exports, which had increased by 19% in the first half of last year, whilst sales on the domestic market had decreased 22%.
The company is planning to expand its fertilising product range this year. It will also get additional orders worth $35 million due to the small farmer subsidisation programme, started by the Romanian State for this spring. The financial effects of the orders placed by the State will only show as soon as the second half of 2003.
Azomures and Romgaz SA Medias in September 2002 established a joint venture, Depogaz Mures, specialising in methane gas storage in underground facilities. This will expand the storage capacities in the Targu Mures area, which will allow for an improved natural gas supply for both the plant and for other consumers in the region.
Azomures is listed on the Bucharest Stock Exchange and last traded for 2,500 ROL, down 7%, in February. Its market capitalisation reaches $29 million.