Romania: Every market has a silver lining
Authorities should continue to adjust their models of economic growth and put more emphasis on the absorption of EU funds and infrastructure development, according to the private sector, for the country to become more attractive for local and foreign investors
Alexandra Cioboata and Petre Barac talked to top Romanian companies to see their views on the current economic development of the country.
he model of economic growth should allow greater inclusion of Romanian companies in the value chain than growth based on private consumption. Romania is no longer a low-cost country as the salaries have started to grow due to the lack of qualified people. Furthermore, Romania must face the challenge of regional competitiveness, as some say the country has started to lose ground to other countries which offer higher facilities when it comes to international clients.
Overall, Romania's macroeconomic situation is one of the strongest in the EU in terms of real GDP growth, fiscal deficit and public debt, inflationary pressures and current account balance, with positive evolutions expected by some credit rating agencies, according to InvestRomania, the government organization dedicated to providing professional support and advice to foreign investors in Romania. The output gap is projected to close in the second half of 2016 amid strong recovery of the internal demand, especially in the private sector. The real GDP growth rate was 3.8 per cent in 2015 Q4 compared with 2014 Q4, one of the highest in EU28, with forecasts maintaining a positive outlook.
Current forecasts estimate growth at 4.2 per cent in 2016 and 3.7 per cent in 2017, according to the European Commission's forecasts for Romania following the pro-growth fiscal policy, including tax cuts. Next, The Diplomat - Bucharest talks to several Romanian companies to highlight their 2016 business strategies.
Hidroelectrica wants to achieve a total turnover of more than one billion Euro
Hidroelectrica, an energy generation leader and the main supplier of the ancillary services required in the National Energy System, is a vital Romanian company in a strategic sector with implications also in the national safety. Pursuant to a decision pronounced in a public meeting at Bucharest Court, the insolvency procedure for Hidroelectrica was closed.
"Before insolvency, Hidroelectrica faced a harsh period with a lack of concern for public funds spending," says Petronel Chiriac, member of the management board of Hidroelectrica. "Now we have a profit of around 1.1 billion RON [244 million Euro], 15-20 per cent higher than last year in the same period. We also have an interesting tool for investors, the so-called flash report with monthly updates on our activity. 2015 was a great year for us and 2016 seems to be the same."
According to Chiriac, Hidroelectrica's listing on the Bucharest Stock Exchange will enhance the company's current financial performance. "We have some problems that we need to sort out before the listing, such as ongoing investments that are not yet finished even though they were started many years ago," he stresses.
Hidroelectrica wants to achieve a total turnover of more than one billion Euro, but the current production capacity is not enough to achieve this goal, no matter how much it might rain. "We want to increase our capacities; the future is all about expansion and acquisitions," says Chiriac, who also states that the company is trying to sell their micro-hydropower plants, because it is not "a core business for the company."
State-owned energy producer Hidroelectrica remains the most profitable company in Romania, after announcing a gross profit of 1.1 billion RON (244 million Euro) in the first nine months of 2016, with a turnover of 2.4 billion RON (533 million Euro).
The gross profit for Hidroelectrica is 29 per cent larger compared to the first nine months of 2015. The radical process of restructuring and increasing efficiency, which the company has gone through during the last years, made Hidroelectrica the most profitable company in Romania, by the end of H1 2016 registering an operational EBITDA of 67 per cent of the turnover.
EximBank has concluded the third quarter with a profit of 40 million RON
Authorities should continue to adjust the models of economic growth, which must put more emphasis on the absorption of EU funds, on infrastructure development, reindustrialization and increasing the share of exports and Romanian investments to countries outside the EU, where it can create a higher added value, according to Traian Halalai, executive president of EximBank.
In his opinion, such a model of economic growth will allow greater inclusion of Romanian companies in the value chain than growth based on private consumption.
"The main objective we have set for this year, and which I can say that I have managed to achieve, was to infuse as much funds into the real economy, to companies, and to achieve this we acted in two directions," says Halalai. "First, we focused on increasing the utilization of financial instruments which the bank granted on behalf and account of the Romanian state, given that EximBank is the main tool through which public funds are distributed in the economy for increasing the competitiveness of local companies."
Although many people still perceive EximBank as a bank dedicated exclusively to e xporters - the bank′s very name maintains this perception - the business environment should note that this is no longer a reality, according to Halalai.
In the last four years, the bank went through a complex process of modernization and adaptation of products and services to the standards required by the market and competition.
"Now, in 2016, EximBank is ready to go out into the market fully prepared to have a complex portfolio of products and services, attractive for all Romanian companies," states Halalai.
EximBank has concluded the third quarter with a profit of 40 million RON (8.8 million Euro), 54 per cent higher than budgeted for this period. "In 2015 we have followed the same solid and prudent route that we had in the past years," adds Halalai, who goes on to say that EximBank stimulated its activity but in the same performance parameters: "we grew our lending to maintain profitability and good asset quality."
At the end of 2015, the bank had 337 employees. Regarding 2016, the data after the first three quarters entitles the bank to be optimistic about the outcome for the full year, as the executive president says.
"We therefore aim to increase our business and customer base and we remain focused on supporting and promoting exports and Romanian investments abroad," adds Halalai. "We also want to offer financial support for significant local and regional projects but also for increasing the competitiveness of SMEs."
Bodea, Adrem: "We have ongoing projects worth about 200 million RON, in different stages of development"
The energy sector will face a rebalancing of interest going from the network into the client area and it is a normal change, according to Corneliu Bodea, CEO, Adrem Group.
In his opinion, liberalization of the energy market had to come and it is a good change for the consumers because they are now more important.
"This is how we came up with the idea of making Adrem Link, a company which develops products and services for energy consumers," says Corneliu Bodea. "We focus on several main directions. The first one is still in preparation and we want to test together with E.ON the maintenance services for the consumers' electrical facilities. Another direction would be the energy management for municipalities or industrial consumers."
Adrem Link provides energy management and smart home solutions, a product that has several subcomponents such as electrical efficiency, thermal efficiency and surveillance cameras.
"We are still in the pilot phase of the solution, but the product will be available on the market starting in 2017," adds Bodea. "Public lighting is another activity that goes in the energy efficiency category for municipalities and it faces a great expansion in Romania, as we switch from classic lighting to LED lighting."
According to Adrem's CEO, the problem is with the local authorities because despite some steps toward creating an energy strategy and for energy management, "the municipalities still need time to develop a structured approach to this matter."
He goes on to add that they would need support from central authorities to have access to specialists and consultants.
"All city halls with whom I had contact have an energy efficiency strategy or they are working on it," says Bodea.
According to him, other cities are more daring and have smart city projects. This sector has a bright future where you can currently make profit just by replacing old lighting systems with LED.
Adrem has ongoing projects worth about 200 million RON (44 million Euro) in different stages of development. "We are talking about energy services, smart metering, maintenance for the distribution network and so on," adds Bodea. "Our main clients, the electricity distributors, are in that period when they have to make massive investments because they are governed by ANRE regulations, aimed at covering a certain amount of investment. They are all very focused on fulfilling their investment plans. There are a lot of calls for tenders so the competition is very high."
Adrem had a growth period in 2016, but with a lower profitability because the competition was very high, according to its CEO. He relies on increasing Adrem's capacities for 2017 and 2018, which, in his opinion, should be two good years for public energy investments.
"We won around 10-20 per cent of the calls for tenders that we attended and we have a market share of 20 per cent," adds Bodea. "I am counting on rebalancing the demand-supply ratio somewhere in the middle of 2017. But there is a risk that demand in 2018 could be higher than the supply."
Dedeman to reach one billion Euro in turnover by year-end
In its autumn forecast, the International Monetary Fund (IMF) noted that Romania will have an economic growth of five per cent in 2016, the highest economic rise in Europe.
"The Romanian business environment has a reserved approach on this forecast, until we can be certain about its durability and sustainability," says Dragos Paval, CEO of DIY retailer Dedeman. "There are various challenges that Romanian entrepreneurs have to face, but we managed at Dedeman to overcome these obstacles with a lot of work, dedication, high training for our employees, and through calculated decision-making".
Talking about legislative changes that have influenced the activity of his business, Paval states that the new Fiscal Procedure Code encouraged consumerism in the first place, followed by future investments. "For us it is a huge chance to improve our turnover," says Paval. According to its CEO, Dedeman's development in H1 2016 went according to plan, slightly better compared to last year in the same period.
"We expect to exceed our targets that we had at the beginning of the year," says Paval.
The company's plan for every year is to enhance its position on the market and to further extend the Romanian network.
"An important aspect was to consolidate our business in the north-west of Romania and a step in that direction was opening new shops in Satu Mare and Oradea, an investment of about 25 million Euro," adds Paval.
"We are also working on integrating new technologies and facilities into our business, especially for online purchases. As a matter of fact, we are developing the online shop and our Dedeman mobile app, which can also be used for online purchases. On the long term, our goal is to extend our network beyond the borders of Romania."
Last year, Dedeman reached a total turnover of around 980 million Euro and the company forecasts a turnover of one billion Euro by the end of 2016. Presently, Dedeman has over 9,200 employees with a total number of 44 shops in Romania.
By 2020, Teamnet plans to have 50 per cent of its business from international projects
For Teamnet Group, one of the leading system integrators in Central and Eastern Europe, the next years will bring further focus on Public Safety, Robotics, Cadastre, Smart Cities, Health, and Agriculture, both in public and private sectors, according to George Stan, chief investment officer of the company. According to him, the new office that Teamnet plans to open in Dubai in 2017 will serve as the hub for GCC countries, and in the future, it will be the starting point for the Group's expansion to Africa and South East Asia. In addition, by 2020, Stan estimates that 50 per cent of the Group's business will be from international projects, based on stand-alone products or those created with other international partners.
"Our performance [in H1] follows the existing forecast - we're above the market average in most indicators," Stan tells The Diplomat - Bucharest. "Although this has been a more difficult year for the industry, we expect the year-end results to be in line, compared to 2015. A distinct advantage for Teamnet is its international presence that helps us offset local market trends. For Teamnet Group, international expansion is one of the main business goals this year given the opening of new subsidiaries in Switzerland and Turkey [Ankara, the second after the one in Istanbul]."
For this year, the company prioritized its investments in consolidating and extending Teamnet's portfolio of products in areas such as Emergency (EmerGIS, EmerCONF and EmerSIM as core products), Robotics (Hirrus UAV product) and Cadastre (complete products and services suite like Cadastre SurveyER for land management, land measurement with Enterprise drones, creating orthophotoplans with GIS technology). Another objective stressed by Stan is to continue the implementation of such products on new markets where they are needed. For this year, he estimates a 70 per cent increase of the business on international markets, compared to 2015.
Discussing the local market, Stan explains that over the last years, Romania has made some steps in adapting the economic framework to the realities prompted by the digital transformation necessity. He notes that the country is one of the EU countries which has the INSPIRE Directive implemented (the infrastructure for spatial information in Europe), the standard set by the EC for all Member States, as well as the best 112 Emergency Calls system in the European Union in 2015, according to the results reported by the European Emergency Number Association.
Moreover, he says that a major contributor to the economic development is the fiscal framework, where more clarity, stability and predictability is needed. "More effort should be invested in collecting data in a digital, integrated manner, applying the same rules and standards," he says. "For example, an online application for reporting receipts would increase revenues and reduce tax evasion, thus offering a neutral context for all companies. In the same way, an online system for invoice reporting would significantly reduce the risk faced by businesses when authorities charge them for not checking thoroughly enough the fiscal behaviour of their customers or suppliers."
Teamnet is present on the local market since 2001. In 2015, the company registered a consolidated turnover of over 110 million Euro. Currently, it has a team of 800 professionals that Teamnet aims to consolidate further, by running an extensive recruitment campaign in Romania and abroad.
Patrascanu, FAN Courier: "We have a lot of ideas and projects; we only need manpower to implement them"
Express courier services leader FAN Courier is another successful story of Romanian entrepreneurship. Founded in 1998 by Felix Patrascanu, Adrian Mihai and Neculai Mihai, the company has seen almost 20 per cent growth year on year in the last five to six years, closing 2015 with around 88 million Euro. This year is no exception and FAN Courier estimates another 15 to 20 per cent growth, to almost 105 million Euro revenues and over 5,000 employees, including collaborators (15 per cent increase y-o-y). The company has had plenty of activity this year and keeps several expansion projects up its sleeve for the following period, as Patrascanu discloses them one by one for The Diplomat - Bucharest.
According to the co-founder, FAN Courier opened its Brasov regional hub this June, after an investment of five million Euro and doubled the capacity of a third of its working centres across the country at least until late October when this interview was conducted. Other locations are under expansion, the company upgraded its Bucharest headquarters with another sorting line and purchased a 5.7-hectare plot to build an additional 12,500 sqm hall. Moreover, the company has invested over 12 million Euro in trucks and vehicles this year, increasing its fleet to around 3,100 units, and is planning to keep investing in other projects also.
"The courier industry is rising and e-commerce remains the main growth driver, with a 30 to 40 per cent increase," Patrascanu tells The Diplomat - Bucharest. "We have forecasted a moderate growth of 15 per cent, but the increases registered 25 to even 30 per cent; not only for FAN, but for the entire courier market. We have a lot of ideas and projects; we only need manpower to implement them. For instance, we plan to equip around 600 couriers in Bucharest with mPOS [mobile POS] early next year, to reduce cash management and, afterwards, expand it to the rest of the country, to all 2,000 or so couriers. Another important aspect is that we have started to install lockers. The first one is set up in Bucharest′s Promenada Mall and we intend to have ten by the end of the year."
However, Patrascanu goes on to add that one of the main challenges Romania is facing is the lack of human resources. According to him, last year, the country has last lost two midsized cities due to both negative natural population and continuous emigration. This lead to the increase of wages for those who remained, as there is not enough manpower left.
"Romania is no longer a low-cost country as the salaries have started to grow due to the lack of qualified people," he says. "We have problems in finding human resources mainly in Timisoara, Arad, Brasov and Cluj, the latter registering a deficit of more than 20 people. However, to attract them, you need to reset the company's value and increase the wages. We have increased them by ten to 15 per cent every year."
The co-founder also adds that, in order to try to cope with this issue, FAN Courier will launch an online educational platform, e-Academy FAN Courier, where both entrepreneurs that might need courier services and people that want to work within the industry can learn about the market. For 2017, the company estimates another 15 to 20 per cent growth. This year, it opened an office in Bulgaria and, according to Patrascanu, Serbia could be "another interesting market to take a look at."
evoMAG plans to reach a 100-million Euro turnover by 2021
At the beginning of the year, the plan for 2016 of evoMAG, one of the largest online consumer electronics stores in Romania, was to reach a turnover of 20 million Euro, representing around a nine per cent increase compared to the end of 2015. However, until late October this year, the company has registered a growth of over 20 per cent, showing thus that evoMAG will exceed the first estimate. In addition, the company also expects to have an advance in profitability and is estimating an increase in gross profit margin by almost 40 per cent. As for 2017, evoMAG expects to have at least the same growth rate as this year, according to Mihai Patrascu, CEO and founder of Evolution Prest Systems, the company that manages the evoMAG brand. He also adds that the company has ambitious objectives set for the next five years.
"We have lots of projects," Patrascu tells The Diplomat - Bucharest. "For example, we intend to develop our own marketplace platform and we want to expand our business in other countries. Regarding our plans for opening new online stores in other countries, this project can go faster if we can finalize some discussions of receiving investments. Overall, our business objective is to reach a turnover of 100 million Euro by 2021. (...) As for the estimated figures for 2016, our plan is to have a turnover of over 20 million Euro."
The company has invested around 350,000 Euro in the e-commerce platform in the last three years. It was developed with evoMAG′s partners from CustomSoft and, starting last year, the platform became a self-sustained product, sold accordingly and already used in eight online projects from areas like home & deco, fashion and IT&C.
This year, evoMAG has also invested around 100,000 Euro in a new twice-as-large storage facility, showroom and headquarters. This decision came as a result of the company's sales growth and, at the same time, it is part of the strategy that targets the preparations for Black Friday and the busiest season of the year. The investment will allow the company to work with larger stocks, to be more flexible, in order to have a better turnover and deliver products faster to its customers.
"Industry-wide, we see a strengthening of the e-commerce market," says Patrascu. "We witnessed several acquisitions this year, which is a good thing, especially for ICT. It means that there is room for growth, and evoMAG has all the prerequisites to have good results. At the same time, consolidation also means a higher level of professionalism in the market, but also greater competition. And as you know, the competition in the e-commerce market in Romania is very high. But also, the competition is good for the end customers, and we are committed to continuously investing and gaining their trust. For example, we introduced services that our competitors don't have: delivery within an hour. Another example is delivery of the products with our own fleet in Bucharest."
Patrascu's evoMAG now has 70 employees, but he intends to hire new personnel, as there are 12 new available jobs in departments like Customer Service, Merchandise Receptions, Marketing, and Product Management. However, the online retailer is witnessing what other local investors are facing nowadays: the lack of human resources. "We are having some difficulties in finding qualified personnel," he says. "We are working in a relatively new segment: online sales, which has existed only for ten years in Romania. Thus, it is pretty hard to find the right employees with the proper set of skills," he concludes. The evoMag brand became operational in 2005 and last year posted a turnover of 18.4 million Euro.
Sucu, Mobexpert: "I think we find ourselves in one of the best economic times"
Dan Sucu, the president of Mobexpert Group, one of the largest local furniture retailers, founded in 1993, talks to The Diplomat - Bucharest about Romania's current economic perspectives. Sucu believes that the country finds itself in one of the best economic times, as in the first half of the year he has seen a strong rebound in consumption and double-digit growth of businesses. There are all the reasons for this cycle to continue a few years from now, he says.
"For me, the assessment of the economy and opportunities always go from our customers," he says. "From this perspective, since 2009, there has been a long period where people were afraid of tomorrow. By 2012, there were very few grounds for optimism and many reasons that tomorrow might look worse than today. By default, the spending and consumption shrank. By reducing the shopping, the market followed suit. Fewer apartments have been built, fewer goods have been produced, which led to fewer jobs and fewer people productively engaged. However, things changed in 2014. People began to feel more optimistic. In terms of legislative framework, the promoted fiscal packages, especially reducing VAT on food and then reducing VAT on other products, have changed the mindset. Tomorrow looks better than today." Sucu adds that the drop of oil prices and subsequently of energy expenses, low inflation and higher wages have contributed to the return of optimism among citizens. However, in order for this to last, the Romanian state should not hamper the development of private companies, he says, where bureaucracy might be the biggest threat for them.
"Lately, we see absolutely abnormal interferences of state bureaucracy in daily businesses," he says. "The examples are numerous. From the Form 088, which leads to a situation where the fiscal authority can decide who has the right to have a company in Romania or not, to the law which states that 51 per cent of food sold by a trader must be of local origin, deciding which kind of products a retail network should bring in its own stores. Every law and provision which intervene in the economic activity create the need of bureaucracy to apply them. And we talk of a double bureaucracy: an internal one, within companies, and an external one, within administration, supported by the taxes. In addition, the uncertainty it induces is highly dangerous. Unfortunately, the biggest threat that I see for my country in the future is the increase of bureaucracy, both in volume and involvement," he concludes. According to local press, Mobexpert Group posted last year a turnover of 125 million Euro.
Eximtur has seen 40 per cent increase for internal destinations this year
Romanian-based Eximtur travel company, founded in 1993, registered a 14 per cent increase in revenues in the first half of the year, the business travel division being the most dynamic business lines, accounting for almost 70 per cent of the total turnover. However, the leisure division has also recorded a positive development: although foreign destinations have seen flatness due to the geopolitical context, the internal ones have totalled a 40 per cent rise, where the seaside, health resorts and regions with hotel units owning spas are the most popular destinations among Romanians, according to Lucia Morariu, general manager to Eximtur.
"Currently, tourism is on an upwards trend," Morariu tells The Diplomat - Bucharest. "I think that, by the end of the year, the growth of the overall travel industry in Romania will surpass the five per cent estimated for the economic increase. Regarding Eximtur, our cautious forecast is at least ten per cent growth on our revenues, to 47 million Euro, by the end of the year. However, we have noticed a higher interest for Romania due to several reasons: we find ourselves within an election year and, usually, people directly involved in politics travel across the country, the terrorist attacks weighed a lot, Romania remaining a safe country, while holiday vouchers have started to gain ground. Eximtur has seen a 40 per cent increase for internal destinations."
Regarding external destinations, Morariu discloses that Turkey dropped by 40 per cent, the others taking over the volumes. The preferred destination remained Greece, followed by Bulgaria and Spain, the latter registering over 30 per cent increase. As for exotic destinations, Maldives, Dominican Republic, Seychelles and Mauritius were on top of the list this year.
Speaking about challenges, the GM notes that finding qualified personnel is quite difficult, as Romania "does not have a performant school for tourism agents and travel." Nevertheless, the company managed to grow from 155 employees last year to 165 in 2016. "I must be honest with you and confess that, in our industry, some of the competing agencies have shut down and we managed to hire their people," she says. "This way, we have completed our teams more easily than others. We also benefit from a good image and financial stability, which help us attract people. It may be easier for us than other agencies, but it is still difficult," she concludes.
Eximtur′s network consists of 28 travel agencies in 18 cities across the country, of which 18 are its own agencies, and ten are franchised agencies. The activity of the travel company is organized into four divisions: business travel and events organization, leisure travel, incoming and tourism school. Eximtur estimates it will surpass over 200,000 clients by the end of the year.
Tremend plans to increase its business by 50 per cent this year after it doubled in 2015
Tremend Software Consulting, a Romanian business established in 2005 by Ioan Cocan and Marius Hanganu, registered an accelerated and sustained development of business in recent years, recording an increase in turnover of over 100 per cent in 2015, to 2.2 million Euro. This year, the company plans to keep growing and achieve revenues worth 3.3 million Euro by the end of 2016, another 50 per cent growth.
"For us, this constant growth is a challenge as it implies several internal changes which must be carefully managed," Marius Hanganu, managing partner of Tremend, tells The Diplomat - Bucharest. "However, I think that our main growth driver was the quality of the services we deliver. We have three main business lines: an embedded software department especially working for the automotive industry, customized solutions for banking, and for e-commerce. All three of them have seen constant increases and are at the same level. We plan to keep developing them."
Tremend's managing partner adds that he plans to keep hiring team members to sustain the growth of the company, intending to reach over 100 employees by the end of the year (up to 50 per cent rise y-o-y). However, Hanganu believes that Romania's main challenge lies in the availability of qualified personnel, as the market's needs total up to 12,000 IT professionals and specialized universities assure only around 7,000. "This is a pretty large gap that needs to be filled with alternative methods," he says. "There are several alternative schools who try to do so. However, each one of us manages the way he can. For instance, we have an internal programming course which lasts for several months."
Hanganu stresses another challenge of the local market: regional competitiveness. According to him, Romania has started to lose ground to other countries when it comes to international clients as they offer higher facilities. According to him, in 2015, Romania produced 2.09 billion Euro from exporting IT software and services, 31 per cent more than 2014. To keep this growth rate, Romania needs to invest in becoming more competitive on the global market, he says.
"Just recently, we were nominated as the fastest growing Romanian company in ′Deloitte Fast 50 Central Europe', a ranking gathering tech players from 11 countries, with an average growth rate of 1,057 per cent," says Hanganu. "This is a good sign for local tech companies. Still, it is important to keep a clear perspective of where we are. There are many companies from Poland, Czech, Croatia and Slovakia in the same top, outranking Romanian tech companies, so it is important to keep investing in maintaining a high competitiveness, compared to other companies in the region."
So far, Tremend has delivered over 300 projects for clients in 15 countries and three continents. The solutions developed have over 60 million users and serve top companies in banking, finance, telecom, automotive, professional services and medical services. This year, the company also established a R&D centre.
Omifa expects up to 20 per cent growth at the end of the year
Romanian-based Omifa, the solutions provider for office space planning, which currently counts 20 employees and posted last year a turnover of more than 9.6 million RON (around 2.2 million Euro), is hoping for a growth at the end of this year of 15 to 20 per cent, according to Mihai Olaru, general manager of the company. The first part of the year was very productive and better than the similar period of the last year, he says, delivering 21 projects more than last year, and still having work in progress that is going to extend throughout the rest of 2016.
"This year is almost at its end, and we are already putting the 2016 investment plan into practice," Olaru tells The Diplomat - Bucharest. "Right now we are focusing on finishing the projects that we have in progress and thinking about the next year's investment plan, according to the new business objectives that we are considering to take into focus. We are expecting a better turnover at the end of the year, in comparison to the previous ones, and we are planning to take on bigger and more complex projects. (...) Counting the contracts, this year we had an increase of 21 projects versus last year, two of which are external, one of which is still ongoing in Algeria. This year, we registered both demand and execution in Republic of Moldova for three projects compared to two last year and we also see an increase in the supply of materials for office interior partitions in Italy."
Speaking about the effects of Romania's positive economic outlook, Olaru discloses that, for the companies, one visible aspect was that they have afforded to employ more personnel and to invest more in new projects. However, he believes that most of the companies kept a cautious line when it came to taking either of these actions, because of the lack of legislative stability that Romania has been facing for the past several years.
In terms of bottlenecks offered by the local market, infrastructure and availability of qualified personnel were also on the list of the Omifa general manager. According to Olaru, the company tries to cope with these situations the best as it can: through alternatives and adaptation.
"A big impediment is indeed the infrastructure, especially for a company as ours that collaborates with producers from abroad," he says. "Of course, we would like the transport to come faster, to be less expensive; everything is related to one another. When it comes to personnel, this is an equally ardent problem that has persisted for years. Since we were just speaking about the economic growth and the ability of the companies to employ more, and perhaps even pay better, apparently this is not yet a good enough reason to stop the exodus to a better, stable life. Romania may be taking baby steps for a better situation in all sectors, but on a daily basis, it does not seem enough."
Omifa was established in early 2002 and is specialized in interior and exterior design, design consultancy, 3D rendering and project management. The company works with clients ranging from leading mobile telecom operators to world-renowned law firms, among which include Emerson, Clifford Chance Badea, Hidroelectrica, Nobel Oil Downstream, Wrigley Romania and Qualitance Bucuresti.
Secom plans to surpass 15 million Euro this year in turnover
In 2015, Romanian-based Secom, an integrative medicine solutions provider specialized in food supplements imports, registered a turnover of 54.8 million RON (12.2 million Euro), up 19 per cent compared to 46.1 million RON (10.2 million Euro) in 2014. For 2016, the company estimates that the turnover will increase by 25-30 per cent, to over 15 million Euro, according to Lucia Costea, managing partner of Secom. In addition, the company's retail network saw increases as well, following the opening of a store in Timisoara (this April) and a store in Sibiu (this October), an investment of around 75,000 Euro for both, reaching thus ten units.
"In the first half of the year, Secom had very positive development compared to the same period last year," Costea tells The Diplomat - Bucharest. "We developed a comprehensive process of strategic planning, including a better organizational structuring and a coherent and consistent business plan and the results started to show. Secom is an entrepreneurial business which we grew step by step. Now we find ourselves in the moment we want to strengthen this development, and also to grow."
Early this year, the company completed the expansion process of both its administrative headquarters and its warehouse space, the investment amounting to over 500,000 Euro. Secom has developed the e-commerce component, secom.ro, to provide consumers with a quick access to the entire product portfolio. Substantial investments have been made in marketing and educational projects as well.
Regarding the local economic growth registered this year, Costea notices a positive impact on the Romanian business environment. However, she believes that one should treat the economic rise cautiously as according to her, recent experience has shown that an unrealistic development plan, conducted during the optimism of an economic growth period, can have repercussions on the company structure and the entire business.
In terms of challenges Secom faces, the managing partner indicates that the company has to deal with a poor understanding of the food supplements category and a sustained wave of negative messages from the media. The main factors which have led to those issues are the companies that promote food supplements unethically, poor monitoring by authorities, a lack of consumer information and the media that does not come with an objective position on this market problems, she says.
"Certainly there are still things to be improved in the Romanian economy, but it does not seem constructive to us to just complain without trying to change something," Costea says. "It is important that we structure our messages and dissatisfactions and communicate them to the responsible institutions and persist with them until things change. (...) Another aspect that makes it difficult for us is finding trained, responsible people who correspond to our values. Thus, we have implemented an internal strategy through which we train our people, we invest in them and we offer them conditions for development."
Launched in 2013, the Secom retail network comprises ten stores, four in Bucharest and one unit in Bacau, Brasov, Iasi, Ploiesti, Sibiu and Timisoara. The company intends to end 2016 with a team of 145 employees compared to 114 at the end of 2015.
The 25-million Euro investment plan of last year is set to bring Transavia growth and predictability in the years to come
One of the local success stories, Transavia group, the largest producer of poultry meat in Romania, has registered increases every year due to a sustainable business strategy. Last year, the company launched a comprehensive investment programme that is expected to bring growth in the coming years including 2016, company representatives say. Last year, Transavia made several upgrades; it expanded its mixed fodder factory (Fabrica de Nutreturi Combinate) by 70 per cent, bought high-end machinery and equipment, built greening platforms and completed 72 new halls for poultry farming. All investments amounted to almost 25 million Euro.
"Transavia is a solid business that has grown and survived in more difficult periods, of economic crisis," say representatives of the company. "One must always adapt to changes, should have the ability to capitalize on opportunities and innovate. Investing in the latest technology, constant upgrades, as well as adopting innovation as a source of business growth have brought us a sustainable development, but also predictability for the future."
A strategic decision that the company has made in recent years was to give up outsourcing services and develop its own system to assure full control of the production chain for quality management. Through the development of its production capacity, the company managed to have one of the most modern integrated systems of farming, processing and distribution of poultry meat in Romania, with working points located in eight counties: Alba, Sibiu, Cluj, Brasov, Mures, Harghita, Timis and Caras-Severin.
"This year, Transavia continued its investment process and concluded strategic partnerships with major retail chains," say the representatives of the company. "The Fragedo product is present within the largest and most important retail chains in the country and even within some retail chains in the European Community."
In 2015, Transavia generated revenues amounting to 140 million Euro and currently has over 2,000 employees. Transavia currently has a collaboration agreement with the University of Agricultural Sciences and Veterinary Medicine Cluj-Napoca, Faculty of Food Science and Technology, and offers students the opportunity to do internships or technological practice visits within the company.
Transavia also has 314 halls in 24 poultry rearing farms and four plant production farms, a mixed fodder factory, three slaughterhouses and one meat processing factory. Around 15 per cent of the annual production of the company goes on the export market to several European countries such as the United Kingdom, Ireland, France, Netherlands, Hungary, Greece, Slovakia, Bulgaria, Spain and Croatia, according to its website. The company is a family business with 100 per cent Romanian capital started 25 years ago.