Holcim: Romanian decline continues

Holcim: Romanian decline continues
Published: 07 July 2010

The fall of the Romanian real estate market, a long winter and delays in major infrastructure projects have hit the domestic cement market, which is dominated by three producers - Lafarge, HeidelbergCement and Holcim.

This year the unstable economic environment and Government-backed austerity measures will affect consumption and are unlikely to bring a bright perspective on the market, the general manager of Holcim Romania, Markus Wirth told The Diplomat.

“In the months to come the purchasing power will decline due to the recent Government decisions,” says Wirth. “As a result, people will be more reluctant to spend and fewer investments will be made in the market. The cement market will further decrease. We also expect lower turnover and volume for Holcim.”

In the first quarter of 2010 cement production fell by 29.9 per cent, against the first quarter of 2009, to 704,000t, according to the National Statistics Institute (INS). Sales also declined by 37 per cent, from 1.08Mt to 682,300t during a similar period of the year.

Last year Holcim Romania’s turnover dropped to EUR250m, from EUR269.76m in 2007 and the firm reduced its number of employees by 200 to 1200.

The general manager believes that after the implementation of the cost saving measures proposed by the IMF, which should lead to a certain political stability, the foreign direct investment will return to Romania and boost the cement market.

“An important factor to attract new investments is transport infrastructure development,” says Wirth. “To transport the goods produced in Romania to the main markets of Europe we need predictable times of transport through Romania.”

This year Holcim plans to invest EUR20m in its facilities in Alesd (Bihor county), Turda, Campulung and Bucharest, but will not expand further.
Source: The Diplomat, Bucharest