In full process of drawing up budgets for 2010, the RON/euro exchange rate is the biggest challenge Romanian executives are facing. A ZF survey shows any option is possible between 4.2 and even 5 RON for Romanian managers.
RON budgets, monthly plans or an exchange rate climbing to 5 RON per euro are the main alternatives Romanian companies’ managers are taking into account for 2010.
After 2009 completely lacked predictability, and budgets in any industry were overturned even tens of times, outlining a budget for next year seems to be rather a gamble. Still, managers are trying such an exercise these days and the main unknown they are facing is the RON/euro exchange rate.
“I don’t know what will happen in 2010, but to be as close to reality as possible I take into account a 4.7 RON/euro average rate. I expect the fashion market to drop further from this year, and the trend to maintain in other industries, as well (…),” says Vicentiu Zorzolan, manager of AAV Group.
In the oil industry the exchange rate generates monthly losses of millions of dollars. “A 4.5 RON/euro rate for the yearend and the situation of the US dollar are scaring me,” states Constantin Tampiza, general manager of Lukoil Romania, a major oil market player.
Companies whose budget has been seriously upset this year include Centrofarm, now at its 33rd budget draft, or Rafar, the fashion unit of RTC, planning out the sixth budget. Businessman George Copos is at the third budget version for the firms part of Ana Holding, and salaries are paid depending on the RON/euro exchange rate, frozen at below 4 RON.
Industries where estimating an accurate exchange rate is crucial include the pharmaceutical one, as most products are imported. “We’ll work with two exchange rates: 4.5 RON/euro in the first half and 4.8 RON/euro for the second half,” said Dimitris Sophocleous, CFO of A&D Pharma, the biggest player in the drug industry.
He also explained the pharmaceutical group has a budget that is built on a monthly basis, but also a projection by 2012.
In the same pharmaceutical industry, Ioan Nani, general manager of Antibiotice Iasi, counts on a 4.25 RON/euro exchange rate. “We’re close to finalising the budget for 2010. It’s more complicated than in previous years because of the very low predictability degree,” Nani says.
Dragos Simion, a member of Flamingo’s managing board, also states he is working with scenarios, having a more conservative version and a “mainstream” scenario. “We can see the exchange rate at 4.5 RON/euro, but not way above,” states Simion.
RON budget drafts are a solution mainly taken into account by Romanian entrepreneurs such as Dan Sucu (Mobexpert) or Radu Enache (Continental).