Business Review Issue 14 2009

FOREIGN INVESTORS ISSUE RECOMMENDATIONS ON TAX AND LABOR; SEE PAGE 5 ANALYSIS

The Economy Ministry received wind farm proposals totalling over 17,000 MW, while the national grid’s current capacity is just 1,500 MW See page 9

ANALYSIS

The beer market will be flat this year, but brewers are going against the tide and continuing investments in production units and new brands See page 15

ANALYSIS

Local catering firms have seen their budgets shrink but still expect demand from corporate clients and events this year See pages 16-17

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PASSION FOR CHEAP FASHION

Discount fashion retailers have seen their sales falling like the rest of the market, with the same number of customers in their stores spending less per shopping spree. But the market is primed for new entries, and existing brands also plan further expansion LAURENTIU OBAE

See pages 10-12

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NEWS

BRIEFS

ACCESSORIZE GROWS LOCAL CHAIN WITH NINTH STORE IN CORA PANTELIMON é British brand Accessorize is expanding its presence on the local market with its ninth store, in the Esplanada fashion gallery of commercial center Cora Pantelimon.

So far, the company owns five stores in commercial centers in Bucharest, in Bucuresti Mall, Baneasa Shopping City, Plaza Romania and a high street store in the Magheru area.

Outside the capital, it has four stores in Polus Center Cluj, Iulius Mall Cluj, Felicia commercial center in Iasi and City Park Mall in Constanta.

4

The subscription period runs from April 15-29

Erste Group Bank has announced that it will offer investors participation capital in the bank as part of its EUR 2.7 billion deal with the Austrian government, according to bank officials. The combined offer consists of a rights offer

and a public offer. The issue price of the participation capital securities is EUR 1,000 each, equal to 100 percent of their nominal amount.

The subscription period will run from April 15-29, with the participation

Diverta previously bought the Noi book shop chain in Romania

RTC Holding’s retail division Diverta has acquired a unit in Polus Center Cluj-Napoca from the Hungarian book store chain Libri, the company has announced. Following the deal, Diverta will add 630 sqm to its current 23,000 sqm of retail space countrywide.

In the last quarter of 2007, Libri opened a store in developer Trigranit’s mall in Cluj, and hoped at that time to expand its network following its partnership with Trigranit. The Hungarian company’s ambition was to become a market leader in Romania within five years of its first opening.

capital securities to be issued on May 13. The annual dividend starts at 8 percent for 2014 and will rise to 9.75 percent for 2017.

Under the deal, Erste will raise participation capital, a non-voting, nontradable security similar to preferential shares, which pays 8 percent annual interest, from both the government and private investors. By offering the capital to existing shareholders and outside investors, Erste plans to avoid dividend restrictions and higher coupon payments on the capital, which would have been required under European Union rules for a pure state capital injection.

According to Erste Group Bank, participation capital securities for which subscription rights are not exercised will be offered to retail and institutional investors in Austria, Germany, the Czech Republic, Romania and Slovakia and to institutional investors in certain other countries.

Dana Ciuraru

Paroseni thermo power plant needs EUR 76 mln investment

Diverta buys book store Libri

COURTESY OF RTC

BCD TRAVEL GETS EUR 11 MLN TURNOVER FROM BUSINESS TRAVEL IN 2008 é Travel agency BCD Travel made an EUR 11 million turnover from business travel contracts in 2008, the company has announced. According to BCD, 80 percent of its clients are multinational companies from the corporate segment. Globally, the travel management group reached a turnover of EUR 14 billion in 2008.

In Romania, the group established its first office in 2007. In 2006, BCD Holdings NV acquired TQ3 Travel Solutions Management Holding GmbH and the majority stake in The Travel Company, the resulting entity being BCD Travel.

LAURENTIU OBAE

CMU POSTS EUR 3.34 MLN TURNOVER IN Q1 é Medical services provider Centrul Medical Unirea (CMU) posted a turnover of nearly EUR 3.4 million at the end of Q1 this year, and doubled its result on the retail segment and corporate sales from the same period of 2008, the company says. The firm plans to increase revenues from its retail division in 2009 by opening and expanding new clinics in Bucharest and countrywide. In H1 2009, CMU will complete projects in Cluj, Constanta and Ploiesti and investments in its Bucharest-based projects, a stem cell bank and a new clinic in Sema Parc. This year, the firm forecasts a 50 percent increase in sales, to reach EUR 16.5 million.

Erste Group gives green light to participation capital offering

”Even though Libri had good sales in Cluj-Napoca, the current ongoing economic situation and mall development plans have held back our expansion plans,” said John Holm, general manager of Libri Romania.

The acquisition comes following Diverta’s plans to consolidate its presence in Romania’s large malls. It will benefit from the suitable location of Libri’s already developed space, according to Emilia Canea, CEO of Diverta. In 2008, the chain made a similar deal, acquiring Bucharest-based book shop chain Noi. Magda Purice

State-owned energy company Termoelectrica needs to invest about EUR 76 million in environmental projects at its Paroseni unit, Hunedoara County, by 2012, according to the Economy Ministry. The investment is said to be vital for the future functioning of the unit.

“Not completing these investments by the deadline would mean immediate withdrawal from exploitation of this unit, after the expiry of the transition time in 2010,” said ministry officials.

The completion of these investments would allow the power plant to continue to function and supply several cities in Valea Jiului – such as Petrosani, Vulcan, Aninoasa, Lupeni and Petrila – with cheap electricity, thus reducing the energy and gas imports.

The investments would also ensure 400 ongoing jobs at Paroseni, another 180 at Termoserv Paroseni and 1,600 at CNH Valea Jiului. “Not making these investments would lead to massive lay-offs at these three companies,” cautioned Economy Ministry representatives.

Dana Ciuraru BUSINESS REVIEW / April 20 - 26, 2009

NEWS

Foreign investors call for tax and labor changes

The Foreign Investors Council (FIC), in its recently issued 2009 White Book, recommends several simplifying measures for VAT and taxation, including the introduction of profit tax groups and exemption from Romanian tax for foreignbased investment funds. The council has also called for the introduction of full deductibility for writtenoff expenses resulting from sales of bad debts to specialized recovery companies, as well as for inventory or asset write-offs.

Measures to simplify VAT include the re-introduction of simplified arrangements for construction companies and firms in the real estate sector, the re-introduction of the system that allows VAT payment on goods imported from outside the EU

LAURENTIU OBAE

STOCKEXCHANGE

The FIC suggests that firing poorly performing staff members should be made easier

to be delayed until they reach their final user in Romania or another EU Member State, as well as the extension of VAT groupings to cover all taxpayers.

Next on the FIC's agenda was the labor market. The organization suggest that dismissal for poor performance should be made easier, and that employers should be able to make assessments through their own evaluation systems. It also recommends that additional restrictions on the dismissal of trade union members for non-union activity be eliminated.

While EU accession has made it easier for employers to hire other EU citizens, procedures for granting residence and work permits to nonEU nationals as well as the recognition of diplomas are still complex and should be simplified.

The council has also recommended measures to stimulate the local labor market: allowing employers to conclude work on call contracts, based on hourly rates, following EU best practice; giving employers more flexibility to set probation periods of up to six months for management positions; and allowing them to set longer notice periods than the current 30 days, up to six months for management positions. The 2009 White Paper also debates the absorption of EU funds, energy and agriculture, among other issues.

Corina Saceanu

MedLife turnover gets 73 percent healthier in Q1 of 2009

The company has opened a hyperclinic at Unirii

Private medical services provider MedLife said it had increased turnover by 73 percent in Q1 of 2009, compared with the same period of 2008, from its hyperclinics, Life Memorial Hospital, healthcare subscriptions, labor healthcare services and laboratories.

In Q1 of 2008, its USD 7.2 million turnover was double the figure for the same period of 2007. One year ago the company had completed a EUR 2.5

million investment in opening its Unirii-based Hyperclinic MedLife, the construction of Medlab laboratory in Cluj-Napoca and the purchase of equipment.

Since January 2009, the company has treated 200,000 patients, the majority at the Life Memorial Hospital and three hyperclinics in Bucharest: Grivita, Unirii and Favorit. At the beginning of 2009, it estimated a turnover of EUR 31.5 million for 2009, and allotted EUR 5 million to developing new units and a new opening in the Obor-Iancului area of Bucharest.

According to Ciprian Ciobanu, sales and marketing director at Medlife, the firm’s results are due to increasing demand from patients willing to invest more in healthcare services provided by specialized professionals within integrated medical clinics. The medical company also posted an increase of 85 percent on the corporate segment in early 2009 compared with the same period of 2008.

Magda Purice

3M puts local factory plans on hold American technology producer 3M (Minnesota Mining & Manufacturing) has decided to put its plans to open a production unit in Romania on hold, but hopes to be able to reconsider them at the end of the year, according to company representatives quoted by local media. The producer had not bought land for the project, nor had it chosen a location for the factory.

3M, which runs a EUR 30 million business in Romania, based on its 2008 turnover, recently appointed 42-year-old Andrei Holban to the helm of the local subsidiary, replacing Karim Sarahni, who had held BUSINESS REVIEW / April 20 - 26, 2009

the position for the last three years.

3M runs distribution and marketing activities for its products in Romania, which include Post-It stationery products, Scotch-Brite sponges, car accessories and touch screen systems. The company employs 64 staff in Romania.

The producer has factories across the world on 45 technology platforms, and operations in 60 countries.

Its products are sold in 200 countries. 3M's worldwide sales reached EUR 25.3 billion last year, out of which international sales contributed EUR 16.1 billion.

Staff 5

NEWS

BRIEFS

STAER INTERNATIONAL HALVES IMPORTS AND UPS PRODUCTION IN 2009 é Furniture retailer Staer International plans to halve its imports and increase production at its Galati plant to 85 percent, following its strategy for 2009, the company has said. In 2008, the firm posted a turnover of EUR 26.8 million,12 percent down from the EUR 30.44 million it made in 2007. In February, Staer opened a 4,000-sqm showroom in Brasov and plans to open four more offices in Braila, Targu Mures, Bacau and Focsani in local retail parks. The total investment is estimated at EUR 2 million.

6

Several brokers have been suspended from brokerage activities

Twenty other Broker Cluj employees were fined and some were suspended from brokerage activities from between one to three years.

The CNMV has started an inves-

tigation into Broker Cluj's activity after finding some irregularities in the activity at its Deva unit, and one of the firm's unit directors was accused of a EUR 200,000 fraud.

Among the irregularities were the initiation of transactions on behalf of clients without their consent and the lack of accounting registration for payment bills during 2008.

These are the harshest sanctions given out by the CNVM in recent years on the local capital market.

Last year, the heads of Mobinvest and Orizont were also suspended from activity but only for three years.

Petru Prunea, who set up Broker Cluj, one of the biggest brokerage companies in Romania, in 1994, is also a member of the Bucharest Stock Exchange Council.

Corina Saceanu

FDI grows in first two months to cover current account deficit, investor sentiment improves Foreign direct investments (FDI) in Romania grew by 38 percent in the first two months of the year, to reach EUR 1.37 billion, compared to the same period in 2008, according to data recently released by the Romanian Central Bank (BNR). FDI was twice the current account deficit, while in January and February last year, when FDI in Romania reached EUR 995 million, the sum covered only 40 percent of the current account deficit at the time.

The deficit in February this year was at a historic low, EUR 89 million, from EUR 525 million in January. The figure was 12 times lower than in February last year. The average monthly current account deficit in 2008 was EUR 1.4 billion, but it began to decrease from December, when imports also started to decline. In 2008, foreign investments only covered 55 percent of the deficit.

In February of this year, money sent home by Romanian workers abroad reached EUR 1 billion, a

STOCKEXCHANGE

BDT MOTORS HIKES SALES BY 40 PERCENT IN Q1 OF 2009 é BDT Motors, the Chrysler, Jeep and Dodge dealer, has reported a 40 percent hike in sales in Q1 of this year, compared with the same period of last year. The best sold models were the Dodge Nitro and Dodge Avenger, followed by the Chrysler Sebring. “Although we’re going through a period in which the entire car industry is affected, we think that what made the difference was our customer promotions, as well as after sales services,” said Claudiu George, sales manager at BDT Motors. The firm is part of BDT Group, which deals with brands such as Ford and Mazda.

The Romanian National Securities Commission (CNVM) has suspended several employees of brokerage company Broker Cluj from brokerage activities for between one and five years and issued fines of some EUR 30,000 to individuals and a EUR 176,000 fine to the company. The commission has also decided to withdraw the licenses of the firm's units in Deva and Baia Mare.

The former head of Broker Cluj's administration council, Petru Prunea, has been suspended from brokerage activities for five years and fined RON 25,000, the biggest fine given to an individual. The head of the Baia Mare unit, Mihai Stefan Ungur, has also been suspended from activity for five years and received a RON 10,000 fine.

The company's vice-president, Adrian Ceuca, got a three-year suspension and a RON 10,000 fine.

MEDIAFAX

CISCO CAPITAL AND UNICREDIT LEASING SIGN IT FINANCING PROGRAM é Cisco Capital and UniCredit Leasing have signed a financing facility program targeting SMEs that wish to acquire IT equipment. The facility offers a leasing service for transactions from EUR 7,000200,000, with a variable interest rate of the Euribor (Euro interbank rate) plus 1 percent, according to the bank. For financing granted for three years, companies must put down an advance of 20 percent and pay commission of 2 percent. The IT equipment must be 80 percent comprised of Cisco products, of which 30 percent are software and 70 percent hardware.

Securities Commission bans Broker Cluj heads from trading stock for up to five years

EUR 1.37 billion in FDI entered Romania in January and February

record level of remittances, which has also helped the balance.

The current account data is in line with envisaged external adjustment, according to Citi group analysts. “We’re looking at a considerable narrowing of the current account gap to around EUR 9 billion or 7.4 percent of GDP this year from almost EUR 17 billion or 12.3 percent in 2008, due to the combination of economic weakness and a more

competitive exchange rate,” they said.

The predicted narrowing of the current account deficit bodes well for efforts aimed at reducing the country’s external financing requirement. “Assuming FDI inflows of about EUR 5 billion, a 70 percent rollover ratio and the BNR tapping its reserves for EUR 3 billion, we estimate Romania’s external financing gap at around EUR 12 billion this year. In view of this, we believe that the EUR 20 billion package from the IMF should be adequate to alleviate concerns on the external financing side,” said the Citi report.

“We acknowledge that the recovery of the RON in response to the IMF agreement and the recent improvement in investor sentiment have been somewhat stronger than our expectations. Against this backdrop, we’re looking for a slightly stronger RON against the EUR of around 4.12 by year-end, compared with our previous forecast of 4.20,” it added.

Corina Saceanu BUSINESS REVIEW / April 20 - 26, 2009

NEWS

Dacia sales on the local market slide by 59.5 percent in Q1

MEDIAFAX

The carmaker expects exports to grow to 75 percent of total sales this year

French carmaker Dacia’s sales on the local market fell by 59.5 percent in the first quarter of this year, to 8,682 units. Last month, sales reached 4,073 cars, down 44 percent from March 2008, but with a slight increase compared with the previ-

BUSINESS REVIEW / April 20 - 26, 2009

ous month. Romania became, in February, the third largest market for Dacia sales, after Germany and France.

Francois Fourmont, the company’s GM, estimates that exports will reach 75 percent of total sales this

year, in the conditions in which last year accounted for about two thirds of the total.

Since 2006, exports have exceeded imports, after, in 2004 and 2005, the local market absorbed more Dacia cars than were sold abroad. Dacia sales decreased by 16.7 percent last year on the local market, from 101,799 units in 2007 to 84,709 vehicles. Worldwide, Automobile Dacia total deliveries climbed 8.33 percent last year to 239,964 units. According to the GM, the local car market saw 35,000 units sold in Q1, equal to a single month’s sales from last year.

In Q1 last year 82,000 cars were sold, meaning a slump in sales of 57 percent year-on-year.

Fourmont estimates that the local car market will drop by 45 percent to 180,000 units this year, the level last recorded in 2004.

Dana Ciuraru

BRIEFS CREDIT BROKERS SELL EUR 352.4 MLN LOANS IN 2008 é The Romanian Association of Credit Brokers (ARBC) sold EUR 352.4 million of loans in 2008, 4.66 percent of the total managed retail credits on the Romanian market. The greatest number of credit loans (42 percent) were granted in Swiss Francs, amounting to EUR 148 million, while EUR-based loans represented 40 percent and reached EUR 140.9 million.

FARMEC CLUJ-NAPOCA ENDS Q1 WITH EUR 4.6 MILLION é Cosmetics producer Farmec ClujNapoca posted a a turnover of EUR 4.6 million in Q1 of 2009, up 6 percent on Q1 last year. The growth in monthly turnover was calculated at 15 percent in March over February 2009, with brands such as Aslavital and Farmec contributing 30 percent and 20 percent of the overall result respectively.

7

CALENDAR / WHO’S NEWS

EVENTS, BUSINESS AND POLITICAL AGENDA APRIL 22 é 11.00 – UniCredit Tiriac Bank, Unidea Foundation and the Social Alter-

natives Association start the campaign “Migrations – Counteracting the Negative Effects of Migration Among Children and Old People Left at Home” at Pavilion Unicredit.

APRIL 23 é 11.30 – Press conference marking 80 years since the founding of the

Rotary Club in Bucharest takes place at Sutu Palace.

APRIL 24-26 é Executive coach Robert Dilts will be holding a workshop called “Iden-

tity Coaching”.

APRIL 29 é 09.00 – Conference “HR 2.0. The 2.0 web impact on HR strategies”

takes place at Intercontinental Hotel.

MAY 22-23 é eLiberatica, the international IT event, takes place at Politehnica Uni-

versity in Bucharest.

NEWS

WHO’S RALUCA MANOLACHE has joined DPD (Pegasus Courier SA) Romania as manager of the collection department. She has wide experience in collection activity, payment terms negotiation and credit control. She has also worked in public relations, communications and journalism and has a specialist degree in Communications and Public Relations from the Irecson Institute. Manolache studied International Economic Relations at the RomanianAmerican University in Bucharest. She is fluent in English.

CELIA-IOANA DUTA has joined DPD (Pegasus Courier SA) Romania as collection specialist. She has wide experience of collection activity having previously worked for several companies in the fi-

nancial field such as EOS KSI, BCR Asigurari and Carpatica Asig. She studied International Relations and European Studies at the Lucian Blaga University in Sibiu. She is fluent in French, English and Italian.

MIHAI NODEA, 30, was appointed GSM sales manager on the customer relations side at LG Electronics Romania.

Nodea has worked in the telecom industry for eight years. Previously, he was key account manager at Sony Ericsson Mobile Communications International AB, responsible for relations with Orange Romania. Between May 2007 and April 2008, he worked as key account manager for GSM operators at LG Electronics Romania. From 20042005, Nodea worked for Danfoss and Sauer-Danfoss in Denmark.

He started his career in 2000 as customer care representative at Orange Romania.

Business Review welcomes information for Who’s News from readers.

Feel free to contact us on 206 0680 (10 lines), by fax at 335 3474 or e-mail: otilia.haraga@bmg.ro

Garrigues opens Portuguese desk, brings in two Portuguese lawyers Praktiker appoints Michael Krahn as new

The local office of law firm Garrigues has set up a Portuguese desk and has welcomed two Portuguese lawyers, Miguel Marques dos Santos as partner and Goncalo de Almeida Costa as associate, the firm has announced. The decision to add Portuguese lawyers to the Romanian team came as a result of the firm's expansion across Central Eu8

general manager for Romania

LAURENTIU OBAE

COURTESY OF GARRIGUES

Mihai Mares, managing partner of Garrigues

rope. “The establishment of the Garrigues Portuguese desk and arrival of Portuguese lawyers in Romania is a response to the market needs, as the Portuguese business community has grown to a considerable size,” said Mihai Mares, managing partner of Garrigues Romania.

Garrigues entered the Romanian market last year through a merger with Mares & Asociatii law firm.

Following the move, Mihai Mares became equity partner at international level.

The firm has 27 offices in the Iberian Peninsula with another seven in Brussels, Bucharest, Casablanca, London, New York, Shanghai and Warsaw. Garrigues Portugal has two offices, in Lisbon and Porto, and works with multinational and locally listed companies, mid-market firms and large private entities. It has ten partners and more than 100 practitioners.

Corina Saceanu

Praktiker runs 25 stores in Romania

Do-it-yourself chain Praktiker has appointed Michael Krahn manager of Praktiker Romania as of next month. He was previously general manager of Praktiker Poland for five years.

He replaces Guenter Vosskaemper, who will be transferred to the Turkish branch of the company.

Krahn was a member of the administration council of Praktiker in Ro-

mania between 2002 and 2007. He was also part of the team which set up the chain’s local operations in 2002. Krahn has been working for the business since 1990.

The German DIY retailer announced a fall of 1 percent in its overall sales in 2008, and has dumped its profit targets for the entire fiscal year. In 2008, Praktiker's sales reached USD 5.32 billion, while sales registered in Q4 dropped 1.2 percent, to EUR 893 million.

The company's sales were also hit by the depreciation of local currencies, especially in Eastern Europe where the German has a network of 100 subsidiaries.

In Romania, the group currently runs 25 units. The DIY market, a highly competitive one in Romania, has welcomed several new names in the last two years, including Obi, Hornbach and Mr. Bricolage.

Staff BUSINESS REVIEW / April 20 - 26, 2009

ANALYSIS

By Dana Ciuraru

STOCKEXCHANGE

The Economy Ministry has received wind energy proposals of more than 17,000 MW of power

Wind energy: many call but few are chosen About 17,500 MW worth of wind farm projects are sitting in the Romanians authorities’ in-tray, while the national grid for wind energy is connected to just 1,500 MW. The projects could whistle up over EUR 1 billions of investments and jobs for local communities, especially in the Dobrogea region, an epicenter for the wind energy business. But the authorities declare themselves incapable of dealing with the schemes. Year after year only a few projects are authorized to connect to the national energy transportation system. Who are the lucky ones?

BUSINESS REVIEW / April 20 - 26, 2009

In a crisis, the billion euro plus of announced wind power plant projects are likely to hike FDI in Romania in a time of need. “There is a real interest from local and foreign companies in investing in renewable energy, especially wind energy production. Big investors like the Spanish group Iberdrola and Italian company Enel have expressed their intention to develop wind farms in Romania worth EUR 1.5 billion,” said Gabriel Baleanu, an Economy Ministry expert. Among interested companies BR can also name Electrica, Eviva (subsidiary of the Portuguese group Martifer), Czech company CEZ, German energy firm E.ON and Verbund of Austria.

But it isn’t enough to find a good piece of land and have the money to invest. The national energy transportation system is underdeveloped and cannot sustain such demand. “The Economy Ministry has received a significant amount of wind energy production projects. Their total capacity is of 17,680 MW of installed power, much more than the capacity of the national energy transportation system, which is approximately 4,000-5,000 MW. We are dealing with an over-subscription for wind energy production,” said economy minister Adriean Videanu.

Moreover, Transelectrica, the national energy transporter, announced at the end of February that it had had requests to connect some 4,000 MW in wind energy to the national grid, 25 percent of the total value of the projects. Transelectrica gave the green light for just 1,500 MW to be connected to the grid.

Portuguese firm Martifer is discussing with a local developer the possibility of acquiring a 35 MW wind farm project in the Babadag Dobrogea region. According to market sources, the price could reach EUR 7 million.

Eviva Energy, a subsidiary of the Portuguese group, bought a 10 percent stake at the end of last year in local firm Ground Investment Corp, which is developing the EUR 675,000 project. Market specialists say that Martifer has another on-going project in Babadag with a capacity of 35 MW. Its goal is to have wind farms with a total installed capacity of 400 MW in Romania by 2012, which could cost EUR 600 million.

Meanwhile, Danish company Vestas announced that it had received an order from another Portuguese firm,

EDP, for 228 MW of capacity locally.

“By the end of 2008, Romania had a total of 76 MW installed capacity in wind power,” said Hans Jorn Rieks, president of Vestas Central Europe.

Three investment funds from Spain which usually invest in renewable energy are also exploring the possibility of investing in local wind farms. According to Mihai Mares, coordinating lawyer on the local market for international law house Garrigues, the three have at their disposal about EUR 200 million for this kind of project.

“There are investors specialized in the energy sector, venture capital funds focused on renewable energy projects, interested in developing wind farm projects with local partners, and in two or three years, making their exit,” said Mares. According to him, these funds plan to sign several agreements for projects of between 30 and 100 MW. Also interested in investing in wind farm projects is the Italian firm Energia&Servizi. Its officials have contacted the local authorities from Botosani to discuss investments in the region. “Company representatives are keen to start the project this year. They said that the results of the tests carried out in this area have increased their expectations,” said David Salgau, a Botosani local authority official. According to him, the Italian firm has already decided to install the first generators in the Stefanesti area, as they could connect to the grid at the unit in Stanca-Costesti.

Such wind farm projects mean incomes of 1 percent from the energy value delivered into the grid and, perhaps more importantly, jobs for local people. The Dobrogea region still attracts most of the investors. Tomis Team announced a EUR 900 million, 600 MW wind farm project which is to be completed this summer. And in Tariverde, Costanta County, Iberdrola and Eolica Dobrogea will develop a wind power plant of 1,500 MW, which will be operational next year. Similarly, Eco Power Energy Production is developing a 80 MW wind farm near Ramnicu Sarat, a EUR 130 million investment.

Energy companies have announced hundreds of millions of euros worth of investments in wind energy projects and continue to express their interest in this direction. But the undeveloped national grid and the legislative instability are proving even more of a scarecrow than the current economic crisis. dana.ciuraru@bmg.ro 9

COVER STORY

By Corina Saceanu

LAURENTIU OBAE

The number of customers of discount fashion retail stores has stayed relatively constant but the value of their average purchase has dropped

Discount fashion retailers gain momentum on market despite lower sales Customers are cutting shopping budgets, and this seems to be hitting all retailers on the Romanian market. Even those that traditionally sell discount clothing and footwear are feeling the pressure. Some are going from one promotional offer to another to keep customers coming, although they’re not seeing a drop in the number of customers, but in the value of their average purchase. On the bright side, rents in shopping malls have fallen and retailers can cut some costs.

10

Local fashion retail has seen new names coming onto the market and existing ones expanding in the last two years, with the boom of the real estate market, which has brought on one hand new shopping malls to open stores in, but high rents on the other.

The current state of play is however more favorable to new brands entering the market, as rents have dropped.

True, there are not so many shopping malls being built at the moment, but they seem enough to match the need of the retailers that still have expansion plans.

C&A is one of the latest entrants on the Romanian fashion retail market. The retailer, known for its discount fashion products, has been preparing its market entry for about two years. “The decision to enter Romania was taken due to time planning and hadn't anything to do with the current situation,” Herbert Asamer, spokesperson for C&A, tells Business Review.

The retailer's store in Militari Shopping Center is the first of four shops planned to be opened this year.

“The next one is planned in Buzau in May and two stores in autumn in Bucharest. For the next year we will take the decision in autumn after having half a year of experience,” says Asamer.

Without giving too much detail about the sales of the first C&A store since the opening, Asamer says the brand was “very much welcomed” on the Romanian market.

The recently opened addition to Militari retail park has also welcomed several other brands, among which the footwear retailer Deichmann.

SALES DROP EVEN FOR CHEAP CLOTHING, WITH SOME EXCEPTIONS German retailer Takko, which already runs 27 units in Romania, has also recently opened a store in the same Militari center, and has exceeded management’s expectations. “It sold EUR 50,000 of products during one weekend since the opening, ten times higher than we were expecting,” Cosmin Ulmean, managing director of Takko Fashion Romania, tells Business Review. This result came after the retailer, like many others on the market, saw sales dropping since the beginning of the year. Takko has seen its sales decreasing in Romania by around 25 percent since BUSINESS REVIEW / April 20 - 26, 2009

COVER STORY

LAURENTIU OBAE

LAURENTIU OBAE

Georgis Dyonisatos, general manager of Sprider Stores in Romania

January, says Ulmean. “People have started to buy less. The same number of people come to our stores but the value of their purchases has decreased. Some buy only accessories and not fashion products,” he explains.

Greek firm Sprider, also a discount fashion retailer, has witnessed something similar on the Romanian market. “The number of customers in Sprider stores hasn't dropped, but the value per purchase has, from EUR 25 on an average last year to EUR 21.7 this year,” Georgios Dyonisatos, general manager with Sprider Stores in Romania, tells Business Review.

“The crisis is psychological. I can see it in other countries as well. It's the same in Greece – people are holding on to their money,” he adds.

Cosmin Ulmean, managing director of Takko Fashion in Romania

After February this year, sales slightly decreased, “but usually March is a hard month for retailers, as it comes after the holidays and the sales. Not only in Romania, on other markets too, March sees drops. In April we started to sell better, but we also have a promotional offer,” says Dyonisatos.

Promotional offers may be effective, but not all players think discounting products is the answer in times like these. “This is one of the mistakes fashion retailers make in Romania. In tough times they start reducing prices. It is normal to have promotional offers, but not to give discounts on products. It confuses the customers – it affects their confidence level, because they start waiting for more promotions. It elimi-

Sprider in Romania

SOME

STILL EXPANDING, OTHERS GOING FOR ALTERNATIVES

Despite seeing falling sales, Takko hasn't given up on expanding its network of stores in Romania. In

the May 2008-May 2009 fiscal year the firm is set to have opened 18 stores, and plans for next year are to add 15 to 18 outlets by May 2010.

The Romanian market has the potential for 100 to 120 Takko stores, says Ulmean, adding that the retailer targets cities with a minimum of 30.000 inhabitants.

“In Germany, for example, we have stores in smaller towns, but the purchasing power there is higher than in Romania,” Ulmean explains. He believes Takko could reach 100 stores in four years, but it all depends on how the real estate market evolves. So far, Takko has seen cases of delayed or canceled projects where it was planning to open stores. But in some cases it turned out for the best, as another project, a better one or one

Takko Fashion in Romania

German Takko entered the Romanian market in 2007, when it opened its first store in Arad, due to the proximity to the Hungarian market, where the brand was already known. It now has 27 units in Ro-

mania, with the latest opening scheduled for Fagaras last week. Its next openings will be in Constanta, where it already runs a unit, Piatra Neamt and Tecuci, all due by May this year. It is also negotiating for further units in Bucharest. In the 2008- 2009 fiscal year, Takko also entered the Slovenian, Croatian, Estonian and Latvian markets. It runs stores in Austria, Holland, Hungary and Poland too. The biggest simultaneous opening in Romania was of three stores in a day, while, for example, in Slovenia, Takko once opened nine stores on the same day. Takko produces the clothing it sells, with production units in Asia. ■

SOURCE: THE COMPANY

SOURCE: THE COMPANY

2008 it opened nine more shops, reaching a 14-unit network. The retailer runs outlets in Greece, where it has a 100-unit network, in Bulgaria, with five stores, three in Cyprus and one in Poland. Romania is its second biggest market both in terms of number of stores and revenue wise. In Romania it has three shops in Bucharest – in City Mall, Liberty Center and Iris Shopping Center, in Pitesti, Buzau, Bacau, Iasi, Suceava, Timisoara, Cluj, Oradea, Arad and Targu Mures. It employs 180 staff and hasn't axed any, nor does it plan to lay people off. Sprider produces the clothing it sells in factories across Europe. ■

COURTESY OF TAKKO

LAURENTIU OBAE

Greek company Sprider entered the Romanian market at the beginning of 2007, when it opened its first store in City Mall in Bucharest. That year it added four other stores across Romania. In

BUSINESS REVIEW / April 20 - 26, 2009

nates profits for retailers, which is not normal in a market economy,” says Cosmin Ulmean of Takko Fashion.

Apart from the two sales seasons, from December to February and from May to September, retailers have developed the habit of reducing prices throughout the year. During the usual sales, retailers sell products at the price they paid for them, sacrificing their added value, and the Romanian market only regulates those types of sales.

11

COVER STORY

LOOKING

FOR CHEAP CLOTHES AT THE MALL, STILL A PSYCHOLOGICAL ISSUE

Price and traffic keep discount fashion retailers like Takko and Sprider in shopping malls, retail parks and shopping gallerias. High

street spaces would be too expensive.

“If the real estate market moves at this pace for the next six months to a year we might consider high street retail spaces too,” says Cosmin Ulmean. “We have high street stores in other countries, but in Romania it is too expensive. Also, Romanian cities don't have pedestrian streets like in other countries,” says Ulmean. He doesn't think the Lipscani area of Bucharest can sustain retail businesses now because it doesn't generate enough traffic. A Takko store requires between EUR 100,000 and EUR 250,000 in investments, depending on the level of furnishings needed.

The Romanian market is mallled, in Georgios Dyonisatos's opinion. “The system drives people to malls. I don't know if we can choose something outside malls because it is hard to find a space over 1,000 sqm, and rents are too high. The shopping mall is also a ‘destination’ for customers,” the Sprider general manag-

er explains. Lately he has seen traffic falling in shopping malls too. “I’ve been to shopping malls and I've seen traffic decreasing, it is something visible. People are spending more time in cafeterias than in stores,” says Dyonisatos.

The customers targeted by discount type fashion retailers have average salaries and are price conscious. Takko, for example, doesn't target the upper market, nor those on the lowest budgets, who in Romania still frequent second hand stores or buy their clothes from bazaar type outlets, according to Ulmean.

“This second category of customers is yet to go to a higher level, at least from the awareness point of view,” says Ulmean. It is a psychological issue, and low budget customers still perceive shopping malls as places where they can find only expensive products – when this is not in fact the case, he concludes. corina_saceanu@bmg.ro

Deichmann in Romania

German footwear retailer Deichmann, which also entered the market in 2007, runs stores in 11 cities

– Pitesti, Arad, Roman, Cluj, Sibiu, Suceava, Bacau, Buzau, Oradea, Fagaras and Bucharest – and plans to continue expansion.

At the beginning of May it will open a store in Promenada Mall in Braila and at the end of the same month another in Tecuci. The retailer wants to reach a 20-unit network in Romania by the end of this year and plans a similar expansion pace for 2010 too. The retailer aims to invest EUR 165 million across all of its 17 markets this year. Deichmann runs 164 stores in South East Europe. ■

SOURCE: THE COMPANY

12

been very expensive,” says Dyonisatos of Sprider.

Sliding rents may be a draw for new retailers. “The current state of the market is even more favorable for retailers’ moving in, because the prices on the real estate market have dropped. Leasing contracts, which are usually signed for five to ten years, are more favorable to retailers now,” explains Cosmin Ulmean.

Takko doesn't pay premium rents, which is one of the reasons it manages to keep similar prices across its entire chain of stores, which spreads across Central and Eastern Europe. Selling its own products is a second reason. More than 90 percent of the fashion retail products it sells are made by the company. Takko has production units in Asia only, a move which keeps the production and transportation costs lower than if the production were based somewhere in Europe.

In terms of product pricing, Greek firm Sprider has to adapt prices to the Romanian market. “If a T-shirt costs EUR 7 in Greece, I cannot bring it to Romania for the equivalent in RON, because then it would be too expensive. I can't sell it for RON 30, it is still too expensive, I sell it for RON 22,” Dyonisatos gives by way of an example. Sprider manages to keep prices low also because it makes the products it sells, although it has no factory in Romania and hasn't given serious thought to opening one here.

Herbert Asamer, spokesman for C&A, says the retailer plans to reach four stores by year-end

COURTESY OF DEICHMANN

with an earlier deadline could be chosen instead.

But Sprider, who had planned to reach 30 stores by 2010, from the current 14 units, has halted development plans because of the financial crisis. Instead, it intends to further grow the network in Romania by switching to the franchise system, with plans to start the process towards the end of May this year. No details have been confirmed for the costs of the franchise, but the Sprider Stores Romania general manager says the average investment the firm has put into its stores in Romania so far is about EUR 500,000, clothing stock included.

These are not the only plans Sprider has for Romania. The Greek retailer, which also runs stores in Croatia and Bulgaria, wants to add home products to its stores, under the Sprider Home brand, which will be launched in Romania in autumn.

“We will start by adding Sprider Home in four existing stores, two in Bucharest, one in Timisoara and one in Cluj-Napoca,” says Dyonisatos.

The home products area, which will fall into the discount pricing category too, will cover around 200 sqm of the stores, which usually range from 1,100 to 1,700 sqm.

With such large areas come high rents. But rents in shopping malls have started to fall, since developers realized they had to lower their expectations too. Ulmean of Takko fashion has seen rents dropping by around 30 percent in the last year, “because developers have reduced their expectations over the level of rents too.”

“We have started negotiations with all shopping malls where we have stores, and we are not the only ones doing it. In Romania rents have

COURTESY OF C&A

COURTESY OF C&A

C&A opened its first store in Romania within Militari Shopping Center in Bucharest

BUSINESS REVIEW / April 20 - 26, 2009

Estates&Construction

MARKET

APRIL 20 - 26, 2009 / VOLUME 14, NUMBER 14

BUSINESS REVIEW FORUM

Manage your business environment !

Sale prices of Bucharest’s old apartments post record 15 percent drop in March

LAURENTIU OBAE

Property slump: The lack of transactions on the old apartment market has resulted in a huge drop in asking prices

Asking prices for old apartments on the capital city’s residential market, calculated by Colliers’ Bucharest Real Estate Index (BREI), posted a significant drop of 15 percent in March compared with February. Colliers reports that the prices of old apartments and new flats built in residential complexes are following different paths, with prices of the latter static last month.

Homes in the six postal districts of Bucharest posted monthly price falls of between 5 and 20 percent in March, with District 1 being hardest

hit, after several months of managing to hang onto its sales value.

District 2 posted the smallest change, with a drop of 5 percent in the sale price of old apartments, Colliers reports.

An apartment in the old blocks of Bucharest’s District 6 can now be acquired for less than EUR 1,000 per sqm.

In January of this year, the BREI indicated a fall of 20 percent from its peak in April 2008, when it posted a value of EUR 1,888 per sqm.

With a slight decrease registered

in Q2 of 2008, the second half of last year saw five falls in value in six months, from EUR 1,844 per sqm in July to EUR 1,540 in December.

In percentage terms, the BREI fell 16 percent in the second half of 2008, with a total April-December peak to trough decrease of EUR 350 per sqm, meaning a slump of 20 percent.

In 2009, the general value of the BREI lost 9.5 percent in only one month, from February to March.

Magda Purice

ESTATES & CONSTRUCTION MARKET

Gap enters Romanian market through Bricostore sees RED for space in Armonia Satu Mare project Baneasa Shopping City

COURTESY OF BANEASA

Mind the Gap: This is the brand’s first local store

American fashion retailer Gap has entered the Romanian market, opening its first store in Baneasa Shopping City in Bucharest, through the Greek Marinopoulos Group, the franchise owner for the South-Eastern Europe region. Skordalakis Stelios, marketing manager of Marinopoulos Group, added that the Romanian opening comes after four store launches in Greece. Besides Gap, another fashion retailer, Debenhams, a brand managed by Rafar, RTC Holding’s fashion division, has opened a

store of 1,000 sqm.

The 300 stores that comprise the fashion retail area of Baneasa mall consist of brands such as Peek & Cloppenburg and those under the Inditex umbrella (Zara, Massiomo Dutti, Zara Home, Stradivarius, Bershka, Oysho, Pull & Bear) to name a few. The mall required a EUR 1.8 billion investment and is currently the subject of a heated dispute involving Gabriel Popoviciu, the investor behind the Baneasa project.

Magda Purice

Diana Metiu – about real estate promotion

14

in H2 2009, according to the company’s representatives.

Armonia Satu Mare covers 163,530 sqm and has 1,625 parking spaces. The retail park’s current area will be expanded by 12,000sqm.

So far, RED, controlled by the American investment fund Warburg Pincus and Spanish Ged Group, has invested EUR 700 million in developing commercial centers and retail parks in Romania. Locally, RED development is managed by businessmen Teodor Pop and Andrew Stear.

Magda Purice

Romania makes 67 percent of CEE deals, DTZ reports finds On a decreasing investment market in six Central and Eastern European countries analyzed by real estate consultant DTZ, Romania did well for mixed portfolio transactions, with three large deals on this segment in 2008: the EUR 340 million Upground Project & Office acquired by RREEF Real Estate, Black Sea Global Properties’ EUR 50 million residential and office portfolio and the EUR 45 million Parklake retail and residential mix sold to Sonae Sierra.

These Romanian transactions made up 67.4 percent of the total mixed-use deals in CEE. The Czech Republic recorded 15.1 percent of total similar transactions, and Poland 17.5 percent.

According to the DTZ study, direct investment in CEE commercial property has been weakening gradually since early 2007. The firm estimates that around 160 properties were traded in the six main markets of Poland, Hungary, the Czech Republic, Romania, Russia and Ukraine in 2008, constituting a total transaction volume of EUR 8.9 billion.

This represents a 43 percent fall on 2007 volumes, underscoring the continued

uncertainty and risk aversion across CEE. To date, total capital allocated to the six markets has reached almost EUR 50 billion. Regarding investments on specific sectors in Europe, Russia dominated with the largest slices of the entire investment market on office retail and industrial in 2008. Romania contributed 2.2 percent to the total European investment volume for offices and 4.5 percent for the industrial segment. Retail investments in Romania reached a bigger 18.3 percent within major European countries. Prime yields analysis found Romania with office yields going from 5.7 percent in 2007 to 8.5 in 2009. The same trend could be seen in retail, with yields of 6.5 percent in 2007 and 9 in 2009, while the industrial segment saw a prime yield of 7.5 percent in 2007 reaching 10 in 2009. Overall, prime yields in all sectors in the six markets moved out by up to 200 basis points. Moscow, Prague and Budapest saw the strongest yield decompression. A further repricing of assets in 2009 is expected across all sectors, DTZ says.

Magda Purice

Residential property investment gets full-service web tool

ADVERTORIAL

This is a time for big decisions concerning the real estate investors and now they need – more then ever - to promote their projects.

Many developers want PR services in these times, because they need new ways to attract new clients.

“We advise our clients to direct theirs efforts through branding their sales team. When you want to buy a house that you can see only as a project, in a sketch or as a model and especially when the offer is varied and you don’t know much about the investor or the developer, you only can have trust…or not.

And this is the thing that a PR specialist does: he builds a foundation of confidence in the name of the company and for its services and then all the brokers of the company take a little part of this, offering it to their clients,” said

Diana Metiu.

How does the PR work? What is this direct or “undercover” promotion and what is its impact on real estate selling?

Wanting, as first objective, to obtain a capital of trust from the potential clients and to make company’s name known and respected, the PR campaign does, practically, a single important thing, using procedures more or less conventional: it builds a brand, makes it known as an important one, then forms a special position for him in the mind of the target, individualizing it from its concurrency.

Based on communication, on human interacting and on human psychology, DMI invest all its knowledge, alongside a lot of imagination, passion for the job and dedication to the client so that the final result is that every client is treated in a special, unique, innovating, completely different but always efficient style.

DMI launched some of the most important residential projects of the country and represented investors, developers and real estate agencies of international reputation. The DMI team is always there when it’s about real-estate and that is why they know the players of the market, the place and the way that forms strong and important partnerships. For this reason, DMI covers entirely his client’s needs.

For other details or a dedicated campaign you can call at 021 225 03 15 or e-mail at office@dmi.ro

Real estate developer RED Management Capital has leased a 9,370-sqm space in Satu Mare retail park Armonia to French DIY operator Bricostore, the company has announced. The new contract brings the second anchored unit into the park, after hypermarket Carrefour rented 13,100 sqm.

Carrefour has previously signed leasing contracts for three other projects

by RED, in Constanta, Braila and Arad.

With its investment in the new site, Bricostore has consolidated its existing 13-unit chain in Romania and is developing three new locations to be opened

A new website, www.servicecasa.ro, aims to provide potential buyers with all the necessary information on the local residential property market – market indicators, prices and other comprehensive details.

“On an estimated EUR 2.5 billion yearly market of housing services, we have launched a site where suppliers can clearly display their offer and

buyers can chose from these services,” said Alexandru Rogalski, managing partner at www.servicecasa.ro.

The company developing the site signed a partnership with credit broker Kiwi Finance to offer a new service called “Pretul pietei” (market price), a tool providing market trends and financial information on credit facilities.

Magda Purice BUSINESS REVIEW / April 20 - 26, 2009

FEATURE

By Otilia Haraga

Ale-ing market: brewers are proceeding with their plans, although the market has lost its fizz

Brewers defy market droop While the beer market won’t grow this year, brewers are going against the tide and cracking on with investment plans. Just last week, Ursus Breweries completed a new set of investments in one of its production units in Buzau, while Heineken Romania has also announced it intends to go ahead with its plans for this year. Both firms have also released on the market new products which they aim to promote with marketing campaigns.

BUSINESS REVIEW / April 20 - 26, 2009

“The market has clearly slowed. I think it will be flat this year,” says Stephan Maria Weber, president of Ursus Breweries. He adds that brewers’ performances depend on the weather, which so far has disappointed. Weber says he is being stoical – practicing when the weather is rough to prepare for the storm. “We had growth rates in the high double digits last year but that is the exception, not the rule. It will be a tougher year,” he says. “We continue to invest because we believe in this market.

We did not cut investments this year, unlike many others. I hope in a year’s time I can tell you that all the sales are still up and we didn’t lose a mast in the storm.”

Weather, promotions, events and communications will be the main factors that will influence beer sales this year, according to Inbev representatives. In 2008, the Romanian beer market rose 5 percent, the most dynamic segment being international super premium, which is due mainly to an increase in consumer demand and expectations, according to an AC Nielsen study. Broken down by segment, super premium reached a 9.3 percent market share, premium 11.7, mainstream 36.2, economy 40.3 and non-alcoholic beer 2.5. “It is likely that in the current economic context some consumers will buy cheaper beer. But we must not lose sight of the fact that many remain faithful to a brand or segment,” Marius Melesteu, Heineken Romania commercial manager, tells RB. Just last week, Ursus Breweries announced it had finished investments of EUR 42 million in increasing production capacity in its Buzau plant by 50 percent. The brewer expanded and modernized its production facilities and set up new equipment that allows it to produce new brands such as Redd’s and Ursus Alcohol-free. Initial production capacity of 1,900,000 hl rose to over 2,500,000 hl. The entire production capacity of Ursus Breweries, excluding the recently acquired Azuga brand, is now 7.3 million hl. The works lasted for a year. “We can actually talk about a newly created plant. We developed a parallel production flux to the existing one. We replaced more than half of the equipment too,” says Sorin Harabagiu, manager of the Buzau plant. The firm has also employed 20 people since January and is looking at employing another 23.

“We have at the moment 400 employees, most of them from Buzau,” he says.

Ursus Breweries, with a portfolio that includes Peroni Nastro Azzuro, Ursus, Redd’s, Timisoreana, Stejar, Ciucas

and Pilsner Urquell, has four production units (in Cluj, Timisoara, Buzau and Brasov) and over 1,500 employees. Last year, it expanded brewing capacities in Timisoara and invested in water treatment plants. “We renovated Timisoara as a location and it is now one of our nicest breweries. In Cluj we made some small investments in technology and in giving the brewery the look it should have since Cluj is the pumping heart of our Ursus Breweries and we wanted to make that fact crystal clear,” says Weber.

Ursus Breweries recently acquired part of Azuga. “We haven’t completely finalized the acquisition of the Azuga share package. How we move forward, specifically on the production side, is still unclear. We started the acquisition process in February and are still waiting for written Competition Council approval,” says Weber. The firm has finished its investments for year.

InBev Romania has over 730 employees and two production units in Bucharest and Blaj. Its best sold brand is Bergenbier, on the mainstream segment, which contributes over half its sales.

Then come Noroc and Beck’s. InBev also produces Stella Artois and Lowenbrau on the value segment and imports Belgian brands Leffe and Hoegaarden.

The local beer market is “consolidated, mature and competitive”, say reps, in third place in size and importance in CEE for Anheuser-Busch InBev. InBev Romania’s market share for 2008 was 19.2 percent, according to the Annual Report 2008 on www.ab-inbev.com.

Heineken Romania, with a portfolio including Heineken, Ciuc Premium, Golden Brau, Neumarkt, Bucegi, Edelweiss and Zipfer (both imported), Gosser, Schlossgold, Silva, Gambrinus, Harghita and Hategana, posted a 20 percent growth in last year’s turnover to a gross value of RON 960 million (RON 829 million net). The engine of growth was the Heineken brand, whose sales were up 26 percent on 2007. Last year, Heineken Romania reached a market share of 29 percent, according to AC Nielsen 2008. Heineken Romania has five production units in Constanta, Craiova, Hateg, Miercurea Ciuc and Targu Mures, and about 1,500 employees in total.

“We will continue to invest in our brands in 2009. This year we have already launched a new brand of beer, Edelweiss, which marks the company’s entry on the segment of unfiltered white beers,” says Melesteu. The company has started image campaigns for Golden Brau and Bucegi, while continuing the one underway for the Heineken brand, adds the manager. ■ 15

ANALYSIS

Caterers lick lips at prospect of market potential Catering companies are coping with the unappetizing economic conditions and showing a keen appetite for information regarding the ongoing talks over the new Fiscal Code stipulations. Players on this segment have posted tasty business increases in the last three years and are hoping for even larger growth in 2009, backed up by a corporate and events segment which continues to bring most of their revenues, like last year.

By Magda Purice

STOCKEXCHANGE

Catering companies too saw falling budgets for this year but still count on corporate revenues

16

Catering company Salt&Pepper has developed quickly in the last two years, going from a turnover of EUR 120,000 in 2007, to EUR 416,000 in 2008 and an estimated EUR 1.2 million in 2009. For 2010, it has even more ambitious plans, aiming to more than double the figure. Like most catering companies, 90 percent of its revenues come from the corporate segment.

“Due to the current economic trend and it being the beginning of the year, we can’t talk about a specific increase. Demand is down and the company’s overall budget saw a cut of up to 20 percent,” GM Bogdan Ciubotariu told BR. To differentiate itself from its competitors, Salt&Pepper has focused on food design and trying to introduce exotic meals.

At the start, any company has to invest and reinvest profits in logistical equipment and business infrastructure. Salt&Pepper did this at first but now, says Ciubotariu, the focus is on marketing and PR strategies through different partnerships. The firm doesn’t pre-assign budgets for TV, radio, outdoor or printed media, due to the costs.

“We assign budgets and PR costs according to our cashed-in profits and we estimate it will be up this year,” said Ciubotariu.

The new widely discussed Fiscal Code stipulations will distress SMEs and, according to Ciubotariu, the impact will be seen in diminishing profits as a result of increasing taxes and VAT. “Consequently, investments in logistics, promotion, salary increases and overall business development will slow down,” he said.

But Georgiana Diaconul, GM of Gala Catering, said that she could not foresee whether the new fiscal rules would have a positive or negative influence. “We’ll wait for things to settle down,” she told BR. Similar to other companies’ strategies, Gala Catering advertises the business with prudent and steady budgets, using the company’s website and other online advertising tools.

“We are not economical in assigning budgets for advertising but we think that spotless services bring the best advertising,” Diaconul said. So far, clients from direct market recommendations and the fact that Gala Catering focuses on events, corporate and social, have resulted in a turnover of EUR 900,000 in H2 of 2007 and a total exceeding EUR 1.35 million in

BUSINESS REVIEW / April 20 - 26, 2009

ANALYSIS/FILM REVIEW 2008.

As a general strategy, the firm’s ambition is to achieve a 10 percent turnover growth rate each operational year.

But not everyone will survive the current economic conditions, even though it is said that food industry is one of the safest. On an internet site, one catering business owner was asking EUR 12,000 for a business delivering “good location, already set-up business, completely furnished and debts.”

CORPORATE AND EVENTS SEGMENT SERVES UP PALATABLE REVENUES Pasta firm Frufru has been one of the most active and visible brands in catering in Bucharest since 2007, when the owner company, Mondo di Pasta, established its restaurant and catering services. The company itself has been registered since 2005 and for two years delivered consultancy services for management and business administration.

Frufru was created by a “young professional” at that time, Mihai Simiuc, who, back in 2005, came up with the idea of creating a company together with four friends. They first wanted to start a franchise, and even had talks with some big companies but with no result.

Finally, Simiuc linked his name to the Frufru brand on a developing market, as the food industry proved to be, and started a business which had a turnover of EUR 1 million last year.

So far, the company has two locations in Bucharest and much potential in the capital – the owner doesn’t plan to go outside Bucharest just yet.

“We plan to open two other locations in Bucharest, because here we find the right retail market. We won’t necessarily think of expanding outside the city until we consolidate op-

BUSINESS REVIEW / April 20 - 26, 2009

erations,” says Simiuc.

Frufru started as brand through an investment estimated at EUR 500,000 following the opening of the first restaurant and simultaneously started to deliver its products on a very promising market at that time.

But while Mondo di Pasta invested a significant amount in its first restaurant, other players on the same market have not had to to dig so deep down in their pockets. For example, Liviu Moreanu, owner of Argentin restaurant, who also runs Argentin Events, the catering division of his business, said that a minimum investment in such business would be about EUR 30,000-40,000, which would mainly go on acquiring the logistical equipment.

The investment might be even smaller, according to Ana Catering representatives. The owner of the company, Ana Oprescu, estimated that it would cost EUR 15,000 to start a catering service but, if the entrepreneur wanted to make it a serious business, the amount should climb to some EUR 200,000.

“We do only events catering, of which 50 percent are corporate and the other half for family events,” says Oprescu.

Last year, the company counted in its portfolio institutions such as the embassies of France and Germany, plus companies from different industries such as Siveco, Deloitte, Mercedes, Unicredit and Rom Silva. It also signed deals with event organizers such as Bon Mariage and Cochet company for the family events business division.

Regarding the HR input for this kind of business, catering companies have an average of 20 staff. Ana Catering employs 16 while the Frufru brand is represented and delivered by a total of 22, according to Ministry of Finance reports. ■

FILMREVIEW:

The International The timing could not have been better. As the world economy goes into meltdown, thanks largely to the financial sector, here is a political thriller in which the bad guy is a bank. Boo! Following Bond and Bourne, which have decided that today’s arch-villains are no longer cat-stroking egomaniacs with facial deformities and quirky bodyguards, but cabals of faceless moneymen, The International focuses on fictional lender IBBC , which has not merely been heaping illadvised loans onto flaky borrowers, or amassing huge exposure to unfathomable financial instruments, but is up to its neck in money-laundering, weapons-trafficking, funding coups in African nations and murder.

But one man has the courage to stop it: Louis Salinger (Clive Owen), a maverick Interpol agent with a past and a few days’ worth of designer stubble. After a shadowy IBBC hitman kills his partner and their potential informant, Salinger teams up with New York district attorney Eleanor Whitman (Naomi Watts) to take on the bank. This results in some unintentionally funny lines.

When Salinger wonders, “How can we bring down the bank?” American viewers will feel tempted to respond, “Get it to invest with Bernie Madoff,” while their British counterparts might suggest “Put Fred Goodwin in charge of it.”

But Salinger and Whitman instead dash from one glamorous international locale to another, pursuing anonymouslooking, sinister Europeans in designer suits around menacingly imposing office buildings. Despite being presented as an omnipresent, omnipotent malign force, the bank inexplicably elects to use just

one assassin for all its murders, and he has a false leg with a unique footprint, allowing the agents to easily track him.

Well, I suppose it’s no more ridiculous than asking us to believe that banks would throw piles of cash at borrowers who had no hope of paying it back.

Since the new Bond and Bourne films decreed that secret agent types can no longer be urbane, cheerful and witty, but must be troubled and serious, Owen plays Salinger as downbeat and traumatised, while Watts’s Whitman spends the film looking very worried about him.

The International clearly aspires to be a Bourne film, but isn’t anywhere near as good. The dialogue is too bombastic.

When the bank chief demands of Salinger, “What do you want?” and the reply is “I want some ****ing justice”, I almost expected Jack Nicholson to pop up and yell, “You can’t handle the truth!” And the cod-Confucianism of pronouncements such as “Sometimes you find your destiny on the road you took to avoid it” also provoke laughs.

But Owen always brings a brooding sex appeal and presence to his movies, no matter how silly they are. The film is slick and stylish, and a preposterously brilliant shootout at New York’s Guggenheim art gallery is worth the ticket money alone. But it’s all too similar to Bourne to avoid comparison, and inevitably emerges wanting.

Debbie Stowe Director: Tom Tykwer Starring: Clive Owen, Naomi Watts On at: : See press for showings

17

Rock legends AC/DC (in pic) will no longer play in Romania on May 31 as part of the Bucharest Rock Arena festival, representatives of the One Event organizing company have said. The festival has been moved to a new date that will be announced later, they said. As reported last week, AC/DC should have played as part of the festival Bucharest Rock Arena at a location 15 kilometers from Bucharest. The festival was delayed for reasons which had to do with the organization. However, the official AC/DC site reported that the organizers resorted to “fake publicity” by claiming that AC/DC would headline the Bucharest Rock Arena fest.

STOCKEXCHANGE

COURTESY OF AC/DC

EVENTS

A project to counteract the negative effects of migration on children and old people who are left at home will be implemented between 2009 and 2011 by UniCredit Tiriac Bank, Unidea Foundation and the Association for Social Alternatives. In Romania over 350,000 children grow up without the support of one or both parents who have left to work abroad, half of these children being under 10 years old. The aim of the Migrations project is to protect these vulnerable social categories who suffer after the departure of their close relatives.

Rock band Limp Bizkit are set to hold a concert June 28. The event was announced on the official site of the band, limpbizkit.com. The group recently reunited in its original line-up – Sam Rivers, John Otto, DJ Lethal, FRED DURST (pictured) and Wes Borland – for the first time in eight years, saying: “We decided we were more disgusted and bored with the state of heavy popular music than we were with each other.”

The band’s comeback tour is called Unicorns N' Rainbows. The concert has not yet been claimed by any organizer.

neurs should make a presentation of their activity and business ambitions.

The selected projects will receive visual identity services such as logo, site design and print creation, depending on their strategy. Three projects will be selected monthly.

Otilia Haraga

STOCKEXCHANGE

Start-ups invited to enter program for free creation and consultancy services Young entrepreneurs and student associations can enter a project called Start Young, by Brandaffair advertising agency. The project targets people under 26 years of age, who can access creative and consultancy services from the agency. In order to be included in the Start Young project, young entrepre-

COURTESY OF DAVID SHANKBONE

COURTESY OF NATIONAL MUSEUM OF ART

A temporary exhibition with drawings and plans by famous architect Ion Mincu has been launched at the National Museum of Art. In total, 35 of the architect’s drawings and projects and three sketch notebooks will be displayed for the first time in a museum and can be seen by the public until October. Mincu, who lived between 1852 and 1912, was the founder of the neo-Romanian style of architecture, having been inspired by Byzantine church architecture, the architecture of old manors and peasant houses as well as the specifics of the Bucharest outskirts which retained elements of oriental influence.

at the Arenele Romane venue in Bucharest on

Earth Day, marked worldwide on April 22, will see the Romania Green Building Council and World Wide Fund for Nature (WWF) organize a workshop entitled “Creating Greener Workspaces.” The aim of this event is to educate the public in Romania on the advantages of “green” policies, designing and renovating sustainable work spaces. Presentations will be held by experts from the Romania Green Building Council and the Green Office initiative of WWF Finland.

Showing the connection between environmental and efficiency-increasing measures, the workshops could prove of use to managers and office administrators, architects, designers and engineers.

Serbian artist opens exhibition on Kosovo in Bucharest COURTESY OF FRENCH INSTITUTE

The 2009 Pasarela fashion festival may have as a special guest Carla Bruni, artist and composer, former model and currently wife of the French president Nicolas Sarkozy. However, Bruni has not yet confirmed her presence officially. The festival, which addresses young designers, has now reached its second edition and will take place in May, organized by the French embassy in collaboration with the French Institute with the support of the French Fashion Institute in Paris.

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A photography exhibition by Milinko Stefanovici, one of the most renowned photographers from the former Yugoslavia, entitled “Kosovo and Metohija in Tears” has opened in Bucharest.

The exhibition is a photographic diary from 1999, when the Yugoslav army withdrew from Kosovo and Metohija and NATO forces and the Albanian military force took over the region. Stefanovici witnessed the reprisals against

the people who were not Albanian in that region, which is when he took the photos displayed in the exhibition. He also chronicles the fate of the orthodox churches in the Serbian province.

The exhibition can be visited on 19 Verona St. “Kosovo and Metohija in Tears” is being supported by a partnership between The Order of Architects in Romania and the Predania publishing house.

Otilia Haraga BUSINESS REVIEW / April 20 - 26, 2009