Balkan Incorporated |
With Greece as one of this country’s most willing partners, Corina Mica talks to Thanos Dendoulis, Greek Ambassador to Romania, months before Romania joins the bigger EU family
Greek Ambassador Thanos Dendoulis
was not kept out of the picture when
his appointment to Romania was made.
“I was aware of how amazing this
country is, mainly because of the rumours
of how rapidly Romania changes,” he
tells The Diplomat. “Friends kept telling
me the changes in this country and
mainly in Bucharest were admirable,
so when I heard there was an opening, I
requested to be posted to Romania.”
His expectations were then met. “Of
course, not everything is rosy, not all
the problems are solved, mainly in the
infrastructure field,” he adds. “But still,
so many companies have set up here
in the past four to five years. Many
people came, with so many ideas and
an important inflow of capital, that one
can only see the quick pace at which this
country develops.”
Road ahead
With Romania set to join the EU
family in less than a year, Dendoulis
says accession will not bring radical
changes to the bilateral relations in
economics and politics, which are pretty
good already.
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However, stability within the greater Black Sea area - one of the bulwarks of Basescu’s foreign policy - is complex.
Geographically, there is no real international consensus on which nations constitute the greater Black Sea area and economic and political cooperation, particularly between Romania, Bulgaria and the CIS states, has not been very forthcoming in the last 15 years. But with Romania and Ukraine recently announcing they will form a joint venture to exploit energy resources in the Black Sea, the Ambassador can only emphasise the importance the region is starting to gain.
“We all have a common ground to build on: which is that one of the grey areas in terms of security worldwide is the Black Sea,” says Dendoulis. “All countries in the region have to see how cooperation can be improved in trying to pinpoint security issues and find solutions.”
The establishment of US Military facilities on Romanian soil can only strengthen this, argues the Ambassador.
“It will help improve cooperation on a military basis, solve security problems and it can act even on the psychological side to help consolidate stability,” he says. “We desperately need poles of stability in this region, and Romania, Bulgaria and Greece can be these poles.”
He adds: “Politically we have a similar stand on important issues and have more or less the same perception on the Euro-Atlantic orientation. Greece has one extra asset to bring to Romania: a very good and increasingly ameliorating business presence in the country.” With total invested capital approaching three billion Euro from Greek origins, things should continue to flourish.
Europe calling
EU accession is a tough line to walk,
it seems.
“In pre-accession times, one has to
follow a specific path, from which one
can deviate to a very short extent,” he
says. “And if in terms of policy there
are not many differences, the current
administration seems to try to be
much more effective in meeting EU
requirements. It’s like it has a hot potato
in its hands and is afraid to drop it.”
There are many problems the current
administration is now grappling with
from justice reform to corruption.
“The problem now is how to digest
them,” he adds. “[Hot issues] won’t
delay EU entry, but such ‘potatoes’ have
to be digested within five to six years.
It is wrong to say that all problems will
be solved once Romania gets to the
EU, on the contrary, in practical terms,
problems will then begin.”
Romania is “lagging behind” in terms
of educating and training people, says
the ambassador, and not just the civil
servants, but the common Romanian
citizens, from the neighbourhood
merchant to the family-run businessman,
who will not know how to survive in the
EU market.
“This reminds me of what 1970s Prime
Minister Karamanlis said when Greece
joined the EU, and most businesses were
complaining about tough challenges: ‘I’m throwing you into high waters, you
have to learn to swim’. Lots of people ‘drowned’ when Greece joined the EU,
as this brings along radical changes.”
Going regional
More Greek businesses are set for Romania, as economic and commercial counsellor Lambis Kounalakis spearheads a drive to promote Greek investment opportunities nationwide
Greek businesses have found fertile
ground for development in
Romania, and the signs point to further
increase of investment, the Greek
economic and commercial counsellor
Lambis Kounalakis tells The Diplomat.
“I believe in Romania,” he adds. “This
is not El Dorado, but it has become a
competitive country that is ready to enter
into the EU. Companies coming here
should be serious and they have to know
what to do, despite the still present bureaucracy
and general confusion that
still exists in Romania.”
But accelerated growth comes with
risks.
“This country is moving faster than it
should from the point of view of mentality,”
he adds. “This means that, although
the country is prepared for EU accession
in 2007, the mentality of the people at
large still lags behind.”
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However this does not match the calculations of the Romanian Trade Registry as official statistics only account for the direct inflow of FDI, due to many companies registering in Cyprus, Luxembourg or the Dutch Antilles.
According to the most recent data from the Romanian Trade Registry (December 2005), Greece ranks ninth among foreign investors with 3,164 companies and total invested capital of 505.5 million Euro, which equals 3.8 per cent of total FDI in Romania.
“Regardless of how you count, Romania has so far attracted the largest share of outward Greek investment in the Balkans,” he adds.
Part of this outward Greek investment means that almost 200 Greek companies have established in Romania in the past year and a half.
“We are talking about medium-sized companies in fields as diverse as IT, media, services, metallurgy and construction,” he says. “And things will not stop here, as we constantly inform companies back home about development opportunities in Romania through the business events we organize in Greece.”
Starting in 2005, the economic counsellor has taken on an ambitious plan of developing Greek business communities in other Romanian cities.
“We’ve started with Ploiesti and continued with Cluj-Napoca, and targets for this year include cities like Constanta, Timisoara, Braila and Iasi,” says Kounalakis.
Corina Mica
Telecom
PLAYING A BIG HAND
Though Greek-based phone operator
Cosmote began operations in its home
country five years after its competitors,
it managed to become the leading mobile
operator.
Could history repeat itself in Romania,
where the market is dominated by
Orange and Vodafone?
Local leaders of the newest addition
to the mobile market are confident
the market will move in this direction.
Stores, billboards, TV commercials
and magazines have spent the last three
months splashed in the light green brand
to announce the presence of something
ambitious.
“It’s the time for a new player in
Romania,” says Cosmote Romania
general director Nikolaos Tsolas. “The
Romanian market is competitive, but divided.
We are determined to break this
duopoly. This market will grow with a
third entrant bringing lower prices and
good services.”
Cosmote Romania launched commercial
operations at the end of 2005, on
the basis of near-obsolete Cosmorom,
a Greek endeavour in the telecom business
that was dying before it was able
to grow.
In July last year, Cosmote Greece
took over 70 per cent in Cosmorom in
a deal valued at 120 million Euro, with
Romtelecom, another Greek venture in
Romanian telecom, taking the remaining
30 per cent.
“We plan to invest 450 million Euro
in the next two years to expand the network,
improve the coverage and become
a major player on the local telecom market,”
says Tsolas. “We don’t worry about
the late start.”
Now the company has 55 to 60 per
cent territorial coverage.
“By the end of 2006 we will be at the
same level, or even at a better level than
our competitors,” he adds. “By June this
year 92 per cent of the population and
about 70 per cent of the territory will be
covered.”
Ghosts from the past make no difference.
“I think Cosmorom’s biggest mistake
was that it did not invest enough,” says
Tsolas. “Now this obstacle has been
taken out. With the money and commitment
available, such a poor performance
won’t happen again.”
Picking up 3G
The company is interested in acquiring
a 3G license, when the Ministry of
IT & C auctions two this year. The firm
aims to bring a much higher data speed
and [mobile Internet service] i-mode,
which also works on GPRS.
Cosmote Romania has also developed
a sales network in ten exclusive Cosmote
shops, 75 Romtelecom stores and 175
partners outlets, including Germanos.
Internet focused
Romania currently has a low presence
of alternative phone operators compared
to the dominant phone company,
Romtelecom, which is the only major
player on the landline network, with 4.2
million subscribers.
Romtelecom has spent the past three
years digitalising the network and implementing
modern support systems.
Corporate affairs director Dan Pazara
previously said Romtelecom will be
investing over the next five years in
the Next Generation Network (NGN)
technology. According to Pazara, NGN will allow Romtelecom to offer broadband
services, such as very high speed
Internet access, content services such as
video on demand, interactive games and
data services for business customers.
But things have changed in six
months. “Romtelecom postponed its planned
investments of approximately 500 million
Euro in NGN as long as Romania
doesn’t have a regulatory environment
to promote significant investments and
to allow a return on such investments,”
Pazara says.
Plans are changing: the company has
announced a move towards becoming an
entertainment service provider.
Pazara adds: “For any Internet provider,
which Romtelecom is continuing
to become, content ranks high among
priorities. There are ongoing negotiations
for several projects in the content
provision area.”
Also the IT & C Ministry is planning
to privatise the remaining stake in
Romtelecom through the stock exchange
this year.
“The impact of this privatisation depends
on how many shares will be sold
and on how many investors will be preferred:
many, but small, or just a big
one,” says Pazara. “All these details will
be established by the Ministry and the
consultant hired.”
Last year the company tackled the
Internet market with broadband services,
with a pick-up that exceeded by 20
per cent the initial target set for 2005.
“Now, we sell about 10,000 ADSL
products per month, which is the target
number for all 2005. It can be expected
that in 2006 Romtelecom will have more
than 100,000 clients for broadband products,”
adds Pazara.
Public partner
Technology is needed to bring local
and regional Government and its agencies
into the 21st century and many
opportunities for private firms working
with the public sector are beginning to
emerge.
In this sector, telecom equipment
provider Intrarom’s latest win is a 19
million Euro contract recently signed
with Romania’s Ministry of Justice and
Public Ministry for the supply, through
financial leasing, of IT equipment necessary
for judiciary and penitentiary
system in Romania.
“This is a huge contract, money-wise
and work-wise,” says general manager
Nikos Doukakis. “We have to deliver
and install equipment for the implementation
of the IT infrastructure for the two
ministries within three months.”
Doukakis says the project is due to
become operational in April and its
physical size makes it a challenge.
“For example, the 4,000 printers that
are part of the project will be loaded into
60 trucks,” he says.
“This is just the beginning,” says
Doukakis, adding that he expects lots of
similar projects to launch in the second
half of the year.
COSMOTE |
ROMTELECOM |
INTRAROM |
| Mobile Phone operator 70 per cent owned by Cosmote Greece 30 per cent owned by Romtelecom Debuted in Romania: 2005 Investment plan (2006 and 2007): 450 million Euro |
Landline operator No of clients: 4.2 million Owned: 54 per cent OTE 46 per cent Romanian state Prediction for broadband customers 2006: 100,000 |
Telecom equipment and
service provider Part of the Intracom Group of Companies Previous projects include: cooperation with the National Lottery, Transelectrica and Bucharest City Hall |
Financial services
Still in the running
Georgios Michelis, general manager of
Bancpost, says its parent company EFG
is still interested in buying the savings
bank CEC, although the Government
has postponed its privatisation.
“It is part of the local market, with two
appealing characteristics: a big network
and large potential,” he says.
For now, Bancpost is focusing on three
main directions: mortgage, consumer
loans and small enterprises.
Asset-wise, Bancpost ranks sixth in
top Romanian banks, with assets approaching
1.6 billion Euro.
The bank did not post a profit last
year, due to “heavy investments in
restructuring the bank”, including
reshuffling about 18 per cent of the
personnel. 620 people left Bancpost last
year.
Despite heavy restructuring, the bank
has grown, says Michelis.
Bancpost, now Romania’s second
largest card issuer (1.38 million cards),
is looking closely at issuing EMV cards
this year.
“We have a good development in that
respect, this multi-usage (EMV) card is
much more safe and friendlier. This year
we will definitely start working with
chip cards,” says Michelis.
The bank is the exclusive local partner
for American Express and the general
manager says Bancpost expects about
50,000 AmEx card holders this year.
Michelis says development plans in the
card business will continue.
“From all the cards that we issue, the
majority are debit cards and Visa cards,”
he says. “But we are making some efforts
to convert debit into credit cards,
as Romania is still a cash-oriented society.
Our goal is to make it spread
countrywide, which is a gradual thing,
as customers don’t change overnight.”
Elsewhere, Bancpost will focus on
strengthening its mortgage segment. “The real estate market will be growing
and lots of people will be coming to
Romania,” says Michelis. “Romanians’
incomes are increasing and people are
looking at improving living conditions.”
The general manager says the bank
will not launch a real estate fund, but
will focus on its core banking business.
Having recently launched two mutual
funds, Bancpost is going to open its own
insurance company this year, “mainly
focused on life insurance,” according to
Michelis.
Casting off
Piraeus Bank is pulling up its anchor
and setting sail this year into new territory,
undertaking a massive branch
expansion programme, tackling the financing
of real estate and launching its
own securities company.
Sofronis Strinopoulos, general manager
and CEO of Piraeus Bank, says the
bank has a budget guideline of about 30
million Euro this year targeted mainly at
developing branches.
The bank will double its number to
60 by the end of this year, around 25 of
which will be in Bucharest.
“In the next three to five months we
will launch a real estate fund for south
eastern Europe, called Trieris [the Greek
word for boat, the bank’s logo],” says
Strinopoulos.
The fund’s total value will be 50 million
Euro. The bank will reveal how
much money each country will receive
when it launches the fund in June this
year.
“It is meant to have a balanced portfolio,
but as Romania is the largest market
of all these countries, it will most likely
be the largest beneficiary,” the CEO
says. “We will not rule out any option,
be that residential, office or industrial
investments.”
Piraeus plans to develop a group of
companies in financial services and
Strinopoulos says the bank will launch
a securities company.
“We are now finalising the preparations,
and the company should become
operational in three months’ time,” he
says.
By May an insurance brokerage firm
should also open. “The next step is to set
up two or three mutual funds in the second
half of this year,” he says. “On top
of that, our leasing company is growing
and doubling its financials every year.”
The CEO says the Greek group,
present in Greece, Bulgaria, Albania,
Serbia-Montenegro, Romania and
Egypt, is looking at investments in other
countries in the region, including the Republic of Moldova, but has no specific
expansion plans for the moment.
While the fashion in banking is to
merge to expand, Strinopoulos says:
“Acquiring banks is part of our strategy,
but it will only come after a cost-benefit
analysis… The truth is that at this moment
there is nothing on the Romanian
market that we
might be looking
at.”
Branch expansion
Between 2006
and 2008 Alpha
Bank Romania
will open 120
branches countrywide,
40 of which
will be this year,
mainly outside Bucharest.
“This can
only show the importance
and seriousness that are put by
the group in developing the Romanian
business,” says Alpha Bank executive
president Christos Giampanas.
Demetrios Mantzounis, managing
director of Alpha Bank Group, says the
bank aims to become customers’ first
choice in the wider south eastern European
region, a market with 60 million
inhabitants.
With network development in Serbia-
Montenegro, Bulgaria, Albania
and Macedonia, the bank aims to reach
1,200 units by 2010 and a regional market
share of ten per cent.
Territorial ambition
Celebrating five years of activities locally,
since it took over the Romanian
operation of BNP Dresdner Bank, Egnatia
Bank Romania is now looking at
territorial expansion, to capitalise on its
corporate and retail presence.
Egnatia Bank has
planned investments
of around 1.2 million
Euro for this year,
aiming at financing
the development of the
branch network and
the implementation of
a new IT system, says
president Stylianos
Sofianos.
“We registered a
significant development
within the last
period and we will
continue to grow,”
Sofianos adds. “Our
plans predict an organic development,
but we are monitoring also acquisition
opportunities.”
The bank’s development strategy aims
for a market share of at least one per cent
in owned assets for 2006 from its current
0.3 per cent. “We intend to reach almost
three per cent market share within the
next five years, but this will be different
in the case of any acquisition opportunities
which may appear,” says Sofianos.
The bank is presently mostly focused
on the corporate segment, but Sofianos
says this year it will look into the retail
market, the traditional speciality of its
mother bank. In the next two years Egnatia
plans to open eight
new units.
Keen player
National Bank of Greece
(NBG) was one of two
international banks to
express interest in both
Romania banks slated for
privatisation in 2005, BCR and savings
bank CEC.
While BCR was bought by Erste
Bank, the privatisation of CEC is likely
to be postponed for one to two years. “NBG is still interested in CEC,” says
Andreas Maragkoudakis, general manager
of Banca Romaneasca (part of the
NBG Group). “If the process is delayed
for so long, maybe the concerns will be
different, but our interest still remains.”
Now the focus is placed on growing
Banca Romaneasca, which the Greek
concern bought in 2003. Since the takeover,
assets have doubled to 600 million
Euro at the end of 2005.
The general manager says the bank
aims to expand to 65 branches nationwide
by the end of this year from its
existing 45, in all of Romania’s large cities,
as well as in Bucharest, with a focus
on retail and corporate banking.
“There is a big demand in the retail
sector as most banks are focusing on
this,” he adds. “Our plan for the end of
2006 is to have a breakdown of 55 per
cent versus 45 [in bank’s activity] in corporate
and retail respectively. Our main
asset in corporate banking is the fact that
we are seen as one of the fastest banks
in processing
requests.”
Banca Romaneasca
is now
proceeding with
organic growth.
“But we don’t
exclude any
acquisitions in
Romania,” he
adds. “Nothing is set for now, as for example,
Banca Transilvania’s [would-be]
price has gone through the roof.”
Ambitious plans for this year include
launching Internet banking and mobile
banking and establishing a new credit
centre in Bucharest, as well as redesigning
the layout of branches.
NBG is present in Greece, Bulgaria,
Serbia, Albania, Romania, Macedonia,
and there are also plans to go to Ukraine,
says Maragkoudakis.
Combining forces
Part of the National Bank of Greece
(NBG)’s group in Romania, insurance
firm Garanta is capitalising on close
cooperation with all NBG-owned companies,
says its general manager Costas
Argyropoulos.
“But we are focusing on the banking
clientele for insurance: the type of client
who needs life insurance products when
they take on a mortgage loan,” he says.
“We insure all tangible assets and [broker
firm] Eteba handles all transactions
on the stock exchange.”
Garanta started operating locally in
1998 and is in the final stages of merging
with Alpha Insurance, part of the
Alpha Group, a move which has gained
approval from the Competition Council.
“By the end of the year the two
companies will function as one,” says
Argyropoulos, “putting out a larger
portfolio of clients and a wider spread of
risk premium income.”
The general manager says Alpha Insurance
brings along a premium income
of almost five million Euro, half of Garanta.
Smartening up card business
Worldwide the payment card business
is shifting from using black magnetic
strips towards chip-and-pin format
(EMV smartcards). Romania will need
to follow.
This is a concern of card processing
company PayNet, which is focusing on
expansion abroad and new developments
in EMV this year, says CEO John
Chrissoveloni.
“I want to migrate towards EMV cards
this year, and this will require massive
investments from all parties concerned,”
says the CEO. “The main reason for
which the card business worldwide is
switching from magnetic stripe to chip is fraud. It’s much more expensive to try
to copy a chip versus magnetic stripes.
The transition will take a lot of time, but
I think that in two years’ time the process
can be completed.”
Besides consolidating in Romania, the
firm wants to increase its market share
in countries like Serbia and Montenegro
and Macedonia.
“We are pretty well placed in the
number of banks we work with,” adds
Chrissoveloni, “we just need to work a
bit at increasing the volume.”
| Piraeus Bank |
No of branches: 30 |
| Egnatia Bank Romania |
| Estimated profit 2005: 1.5
million Euro Estimated total assets 2005: 100 million Euro Market share: 0.3 per cent |
| Alpha Bank |
| Established in Romania: 1994 Between 2006 and 2008: 120 new units to open in Romania |
| Banca Romaneasca (National Bank of Greece) |
| 2005 preliminary profit:
3.6 million Euro Bank’s assets: 615.7 million Euro Market share: 1.9 per cent (October 2005) No of branches: 45 Forecast for 2006: 65 |
| PayNet |
| Payments systems processor Works with: 14 banks in Romania, four outside the country, two consumer credit companies. Third party processor for Visa members |
| Bancpost |
| Majority owned by EFG
Eurobank No of cards issued: 1.38 million No of ATMs: more than 500 Total assets: 1.6 billion Euro Market share: 4.8 per cent No of branches forecast for end 2006: 200 |
| Garanta |
| Life insurance company, part
of NBG . Merged with Alpha
Insurance (January 2006) Income end of 2005: 12 million Euro. Operational profit end of 2005: 350,000 Euro Local insurance tanking (Q3 2005): 21st |
Retail
BRAND VALUE
Expanding its sales of ten leading
brands under one roof is this year’s
strategy for Elmec, the importer,
distributor and retailer of top western
clothing names, which is planning
a grand project at the retail heart of
Bucharest.
The firm last year created its ‘Famous
Brands’ retail concept for Romania, a
move that brings together Nike, Calvin
Klein, Converse, Miss Sixty, Energy,
Polo, Marlboro Jeans, Replay, Dockers
and Camper.
The firm’s latest plan is to open a 6,000
sqm six-floor clothing retail complex
store in a reconstructed building on the
corner of the premium space of Str Ion
Campineanu and Blvd Balcescu in an
eight to ten million Euro investment.
This could act as a clothing retail
anchor for the capital’s main street and
will rival the new Debenhams opening
in Unirea Shopping Center.
Ilias Kalamaras, general manager of
Elmec, hopes to open it this year, but
says this depends on the renovation of the
building, which is a public monument.
The firm also plans to have an estate of ten Famous Brands shoe stores in the
future.
“In Europe, today’s popular fashion
brand is Converse. Even Romanians have
caught on to this trend,” says Kalamaras.
“They have started to develop the taste
for famous brands.”
In 1999 Elmec opened its first Nike
store in Romania. Today the company
has 35 stores countrywide and plans to
open another five by the end of 2006.
Last year Elmec also created a fitness
club, Wellness in Plaza Romania, which Kalamaras says is now gaining
awareness, especially among companies.
For the moment the company has no
plans to open a second.
Also the firm plans to expand its
range of outlet stores, selling clothing
lines from previous years. Elmec, which
has a chain of Nike outlet stores, aims
to open a Famous Brands outlet store in
Bucharest.
Making its marks
Greek company Marinopoulos,
owner of a joint venture for Beauty
Shop and the local franchise for Marks & Spencer, is planning a launch this
year for cosmetics retailer Sephora and,
hopefully, Starbuck’s coffee shops.
Beauty Shop and Marks & Spencer
opened their first stores in Romania in
2000 in Bucuresti Mall. “The result
was great for us from the first year, so
we decided to expand the brands,” says
Georgios Bethavas, general manager of
the company.
Now Marinopoulos has six Beauty
Shops and two Marks & Spencer stores.
“We want to open at least four Beauty
Shops per year and two to three Marks & Spencers, spreading the brands over
Romania,” Bethavas says.
The third brand, Sephora, is about
to break onto the market. A joint
venture between Sephora France andMarinopoulos, some of its
products have been available
inside Beauty Shop since
2005. Their popularity has
prompted Marinopoulos to
open a 350 sqm shop in Feeria
Center (Baneasa) in April.
“Sephora is something new,
something different, totally
trendy and I think that the
market is ready to accept the
new brand,” says Bethavas.
Two million Euro will be
invested in the new Sephora
outlet and the new M&S in
Feeria. Marinopoulos plans
to launch the online shop for
Sephora in 2007.
Bethavas hopes that
2006 will be the year when
Romanians will welcome
Starbucks into their lives.
“There are not enough coffee
shops in Bucharest,” he adds.
“In the weekends you cannot
find any place to sit and drink
a coffee. They are all full.”
Marinopoulos owns the
franchise for Starbucks in
Greece and Romania and
will develop the brand in
Bucharest and then over the
country, which could rival the
expanding Turabo Café empire (over
seven stores) and eastern European
chain Coffeeheaven, which plans a local
launch this year.
“For the moment we’re negotiating the
location. It could be in the centre of the
town or in malls,” he adds.
The firm also plans to open three more
Beauty Shops and three more Sephora
stores this year. “We found the locations
more or less, there are a few things left
to be solved,” Bethavas says.
Tech Savvy
“We caught the train of technology,”
says Nikos Kakoulidis, general manager
of Germanos. The group of companies
started out in Romanian with one store
in the Unirea Shopping Center back in
1999 selling batteries.
Now it focuses on selling phones and
telecom accessories in Greece, Bulgaria,
Romania, Ukraine, Macedonia and
Poland, with over 1,000 stores, 85 in
Romania.
“This makes us Europe’s second
retailer in the sector,” says Kakoulidis.
Development plans for this year
include opening 30 new stores in
Romania, in towns with more than
35,000 inhabitants.
The company works with almost
all large mobile phone operators in
Romania, namely Connex and Cosmote,
but dropped an agreement to work with
Orange Romania.
“It would be a lie to say that we are not
interested in working with Orange,
but we believe it’s only a matter of
time,” says Kakoulidis.
“Competition is good for the
consumer as long as it pushes the costs
down and consumers have places to
choose from,” he adds. “This does
not mean that the situation cannot
change over the next few years. There
is always room for another phone
operator to step in.”
Kitchen confidential
Furniture company Neoset
will launch its kitchen line on the
Romanian market this April, firstly in
the retailer’s Otopeni store and then
in large cities around the country.
In 2006 the home and office
furniture company plans to open
another eight stores, all franchises
outside of Bucharest. Now there are
18 Neoset stores in Romania, 14 of
which are franchises. An investment
for a store in a rented unit varies from
30,000 to 50,000 Euro depending on
the space.
“We believe in franchising because it
is a very efficient system for both sides
involved,” says Angelos Petropoulos
general manager of the company.
This year Neoset will make another
investment in producing sofas in
Romania.
“We have seen a very big sales increase
in sofas and we want to give Romanians
the same quality for a cheaper price,”
says Petropoulos. “Let’s not forget that
the sofas are the central feature in the
living room.”
| ELMEC |
Clothing retailer and distributor |
| GERMANOS |
| Retailer and distributor Turnover 2005: over 100 million Euro No of employees: Over 450 No of stores: 85 Forecast end 2006: Around 115 |
| MARINOPOULOS |
| Business: Retail operator Turnover 2005: 15 million Euro Stores: Six Beauty Shops, Bucharest (4), Constanta, Brasov, Marks and Spencer’s (2) |
| NEOSET |
| Furniture producer and retailer Established in Romania: 1992 Investment in Romania: 4 million Euro No of stores: 18 (14 franchises) No of stores to open in 2006: Eight (all franchises) |
FMCG production and distribution
Rising interests
Producers of the market-leading local
cognac, the Alexandrion Group is now
branching into real estate, wine and the
import and export of machinery. Its latest
move is the opening of an office in
Beijing to develop trade.
“We are trying to find opportunities
in the market to import to Romania,”
says Magoulas Nondas, general manager
of Alexandrion Grup Romania. The
company has recently completed a deal
to become the exclusive importer and
distributor for Romania and Greece of
fork-lift machinery from a Chinese factory
in Shang Li.
Soon the firm could open four strategic
offices in the UK, USA and Latin
America - most probably in Brazil - by
the end of 2006. Russia is also an option.
Alexandrion Romania saw growth of
about 25 per cent last year.
“We plan a large increase this year,
since we are growing the sales from the
distribution point of view,” says Nondas.
The company is looking to make deals
with global manufacturers to enter other
segments such as whiskey or vermouth. Nondas says this means the firm will
cover both cheap, medium and premium
segments.
But the brand looks likely to stretch
even further.
“Agriculture is interesting to us and
we now own about 5,000 hectares. Also
because we are consuming a large quantity
of wine to use in our brands it is a
only a matter of time before we enter
also into the bottling wine industry.”
adds Nondas.
In real estate, Alexandrion Grup is interested
in using its land in Bucharest for
building residential space in the costly
French Village with three to four storey
buildings with luxury apartments. Also,
in eastern Bucharest, near Pantelimon,
the company will invest 25-30 million
Euro in residential and office towerbuildings
covering about 40,000 sqm.
Consumer push
Household cleaning product
company Interstar, which
manufactures and distributes
its Romanian-made products
in the Balkans, is this year
focusing on a large advertising
push and investments of
around one million Euro.
Starting out in Romania in
1995, Interstar now makes
the majority of its products in
Bucharest.
Last year Eureka Group
and Vectis Capital, a Greek
investment fund acquired 100
per cent of the share capital of
Interstar. Now part of Eureka
Group, which has extensive
experience in the household
products business, Interstar
aims to be a key player in this
competitive market.
Its carpet-cleaning product
Bio Carpet has the largest
market share, of around 60
per cent. Enlarging the product
portfolio is the strategy for
this year as well as launching
additional categories locally
such as insecticides and air
fresheners.
Interstar has recently entered
Ukraine, but Romania
remains the Balkan headquarters
of the company.
Products made in Romania
are exported to Bulgaria, the
Republic of Moldova, Kosovo
and recently Russia.
Last year Interstar’s turnover
stood at 14 million
Euro and new products are
expected to boost this year’s
turnover.
“The plan is to spend much
more than in 2005 on advertising,
so we will invest more
than one million Euro to increase
sales and establish our
position,” says Chrisis Nicolaou,
chief financial officer at
Interstar.
Stock ambition
Distribution company Elgeka
Ferfelis, which works
with Reckitt Benckiser, Podravka
and Chupa Chups,
is preparing to be listed on
the first tier of the Bucharest Stock Exchange this year.
General manager of the
company, Ioannis Ferfelis,
expects fast growth this year
by around 33 per cent to a
turnover of 54 million Euro.
“We want to offer high
quality services to our customers
and to observe closely
the business environment and
orient ourselves to a further
expansion through strategic
moves,” Ferfelis says.
In 2000 Romania was the
first country in the Balkans where the company chose to
expand its distribution plans.
The initial investment approached
12 million Euro.
Elgeka Ferfelis offers commercial
services, comprising
sales, merchandising, marketing
and logistics.
Flourishing business
Nikolaos Voudouris, president
of flour and bakery
firm Loulis in Romania says the group has a market share
of 20 per cent in the flour
business in Greece, Romania,
Bulgaria and Albania.
But there is room for improvement.
“We are looking at a possible
expansion to Ukraine in
the next two to three years,
but nothing is settled right
now,” Voudouris says. “It is
logical because Ukraine is a
big country with lots of fields
that produce good wheat.
There is an opportunity andif the analysis turns out good, we’ll do it.
Our main aim as a group is to expand to
other countries as distances are getting
smaller and smaller.”
However, this strategy has little on the
agenda for Romania.
“We have more than one shareholder
and any such move has to be a combined one,” he says. “If the opportunity to acquire
one of out local competitors will
arise, we’ll have to consult our partners.”
The company has just completed an
investment in a new frozen dough production
line and in the automation of the
line for packaging sliced bread. Voudouris says investments will continue
in the frozen dough area, but nothing
serious, like manufacturing facilities or
capital increases.
“We’ll focus on investing in logistics,
sales and marketing, less on manufacturing,
which will bring the total for 2006
to about 800,000 Euro.”
| ELGEKA FERFELIS |
Distribution company |
| ALEXANDRION GRUP ROMANIA |
| Came to Romania: 1994 Brandy producer and mixed interest company Turnover for beverage division 2005: 35 million Euro |
| INTERSTAR |
| Household cleaning products
producer and distributor Came to Romania: 1995 Turnover 2005: 14 million Euro Main brands include: Rivex, Bio Carpet, Peak, Snow and Trim |
| LOULIS |
| Flour, bread and breakfast cereal
producer Total investment: 80 million Euro Turnover (end 2005): 43 million Euro Profit (end 2005): Six per cent (around 2.5 million Euro) No of employees: 950 |
Packaging, print, construction
Packaging futures
Producer and distributor of packaging
products MJ Maillis has finished
a 600,000 Euro investment in its third
factory in Buftea and now continues expanding
the production of its packaging
machines for export to Europe, USA and
Canada.
For 2006, the firm’s new investments
will exceed three million Euro.
In Romania the company produces
both consumables (Polyethylene shrink
film) and packaging machines, importing
the rest of the group’s portfolio. The
film produced is only sold locally.
“Another investment will be the movement
of some production facilities from
factories in western Europe to Romania,
because here we see the advantages of
low labour costs,” says Stratis Molinos,
country manager of MJ Maillis. “We are
producing labour intensive products. In
total production costs we will see a difference
between producing in Italy and
in Romania.”
MJ Maillis was the first foreign company
to be listed on the Bucharest Stock
Exchange (BSE) and in 2006 the company
intends to increase its free float, with
the percentage now under discussion.
Currently the firm has around 11 per
cent of its shares available at the BSE.
“Initially, the advantages of listing it
at the BSE weren’t many, but the group
believes that now there is the moment to
invest more in this area,” says Molinos.
Another plan for 2006 for MJ Maillis
is to invest in the printed films sector.
Comparing 2005 to the previous year
the turnover increased by 20 per cent up
to 13.5 million Euro, though the profit
decreased by five per cent.
“Some of the main reasons for that were the appreciation of the currency
[the company is selling locally in Euro]
and the lower gross margin in the stretch
film business due to intense competition,”
says Molinos.
Getting in print
Boom in the interest in printing forms,
bills and statements, tickets, safety seals
and packaging boxes has helped transform
Greek company Inform Lykos into
the market leader in its category. Today
the company is preparing two investments,
including a new building in the
Otopeni area, over 18,000 sqm, which
will be ready by the end of 2006.
“We plan to move all the activities,
production facilities and offices into
the new building,” says Petros Schilizzi
general manager of the company.
The firm is also implementing SAP’s
Enterprise Resource Planning (ERP)
software application to improve efficiency.
The management of Inform Lykos
hopes to cover the Romanian market
and sales abroad. “We plan to expand,
to increase our production capacity and
to focus also on other markets,” adds
Schilizzi, but will not give any further
details.
Lykos Group is Greece’s largest printing
company and has invested more than
ten million Euro in Romania.
New build
Last October, two representatives of
important Greek companies joined forces
to create Octagon Contracting and
Engineering in the construction field and
are now already working on office buildings
Delea Noua and Cathedral Plaza.
Alexandros Ignatiadis, previously
with Diekat and Paschalis Paganias,
previously with Terom Temeliodomi established the new general contracting
company.
“We are former competitors but we
decided to work together so this is how
this company was born,” says Ignatiadis.
“We are aiming to become one of the
most important players in the construction
sector.”
Built to last
With projects in the public and private
field, Diekat intends to focus around 70
per cent of its work towards private investors
this year, but also to win 20 per
cent more auctions than last year, says its
general manager Athanasios Manousos.
Construction work includes Class A
offices for Beauty Star international,
Alexandrion’s residential Class A building
and projects for Cosmote. There are
also contracts with public institution
such as Romanian Railways (CFR).
Another role of the company is to act
as an investor on the real estate market,
with the purchase of class A office
building Bucharest Corporate Center on
Strada Polizu.
| MJ MAILLIS |
Producer and distributor
packaging products |
| INFORM LYKOS |
| Commercial printers Turnover 2004: 24 million Euro No of distribution centres: 152 Employees: 450 Customers: Around 5,000 including BRD, Metro Cash & Carry, omtelecom and the National Printing House |
| DIEKAT |
| Construction company Clients include: Danone, Praktiker, BCR Entered market: 1998 Turnover 2005: 13 million Euro Profit 2005: 700,000 Euro |
Report by Corina Mica and
Ana-Maria Smadeanu