BR Analysis: Romania’s EUR 1 billion companies

Newsroom 09/07/2018 | 08:40

Automobile Dacia, OMV Petrom, Rompetrol, Dedeman and Kaufland are the biggest companies in Romania, with turnovers over the RON 10 billion mark in 2017, but around 20 local players have businesses of over EUR 1 billion, Ministry of Finance data show.

By BR Team

Turnovers increased in 2017 for most businesses in Romania, foreign and local. By GDP increase based on consumption, sales increased especially in the retail, auto and energy sectors.

Automobile Dacia, owned by French group Renault, is the biggest company in Romania, posting a total turnover of RON 23.14 billion (EUR 5.07 billion) in 2017, up 11.5 percent from the previous year. Dacia produces passenger cars such as the Logan, Sandero and Duster at its manufacturing plant in Mioveni, Arges County. The carmaker had more than 14,000 employees in 2017. Dacia’s net profit rose by 18 percent in 2017, to RON 539 million.

OMV Petrom Marketing, a local subsidiary of Austrian group OMV, is the second-largest firm in Romania, with a total turnover of RON 15.06 billion (EUR 3.3 billion) in 2017, up 4.6 percent from 2016.

The company, which runs OMV Petrom’s fuel distribution network, registered a 17 percent decline in its net profit in 2017, to RON 320.5 million.

OMV Petrom, the other major subsidiary of OMV in Romania, is the third largest local company, with a turnover of RON 14.76 billion last year, up 18 percent year-on-year.

OMV Petrom manages OMV’s upstream businesses in Romania and increased its net profit by 164 percent to RON 2.4 billion.

It should be noted that OMV Petrom Marketing is a major client of OMV Petrom, so their businesses are closely related.

Rompetrol Rafinare, which runs Romania’s biggest oil refinery in Navodari (Black Sea coast), is the fourth largest local company, with a turnover of RON 11.19 billion (EUR 2.45 billion) in 2017, up 28 percent compared with the previous year.

The firm, controlled by Kazakhstan’s state-owned group KazMunayGas, recorded a net profit of RON 418.8 million last year, six times higher than in 2016.

Kaufland Romania is the biggest local retailer, with almost 14,000 employees, and the fifth largest company in the country, with a total turnover of RON 10.09 billion (EUR 2.2 billion) in 2017, up 4.1 percent from the previous year.

The company, owned by a German group, saw its net profit rise by 2.6 percent last year to RON 670.3 million.

Carrefour Romania ended 2017 with net revenues of RON 6.75 billion (EUR 1.477 billion), net profit of RON 209.7 million (EUR 45.9 million) and 9,939 employees. In 2016 net revenues were at RON 5.67 billion (EUR 1.24 billion) and net profit at RON 164.1 million (EUR 35.9 million). The number of employees was also lower at 9,101. Discounter Lidl Romania had a turnover of RON 6.51 billion (EUR 1.42 billion) and a net profit of RON 352.76 million (EUR 77.2 million). The number of employees was 4,815, up from 4,265 in 2016, when it registered a turnover of RON 5.58 billion (EUR 1.22 billion) and a net profit of RON 217.7 million (EUR 47.65 million).

Auchan Romania registered a turnover of RON 5.22 billion (EUR 1.14 billion) in 2017 and a net profit of RON 74.99 million (EUR 16.4 million). The number of employees was 9,290, down from 9,337 in 2016. The same year, turnover was at RON 4.89 billion (EUR 1.07 billion), and the retailer registered a net loss of RON 23.9 million (EUR 5.23 million). Mega Image, the retailer that keeps expanding all over the country, had a turnover of RON 4.91 billion (EUR 1.07 billion) last year and net profit of RON 201.78 million (EUR 44.17 million). The number of employees stood at 9,313, up from 8,658 in 2016, when the firm’s turnover was RON 4.32 billion (EUR 945 million) and its net profit was RON 134.84 million (EUR 29.5 million).

Profi Romania, the other discounter on the market, posted a turnover of RON 4.73 billion (EUR 1.035 billion) and a net profit of RON 163.84 million (EUR 35.86 million) in 2017, with 11,662 employees. The number of employees was up from 9,469 in 2016, when the company registered a turnover of RON 3.55 billion (EUR 777 million) and net profit of RON 148.26 million (EUR 32.45 million).

Romgaz, one of the two main producers of natural gas in Romania, posted a 34.4 percent increase in its turnover last year, to RON 4.58 billion (slightly over EUR 1 billion), and net profit of RON 1.85 billion (EUR 406 million), up 81.3 percent from 2016 and equivalent to a profit margin of 40.4 percent. The RON 1 billion net profit from 2016 turned into RON 1.8 billion in 2017 with a relatively stable number of employees, around 6,000.

SINGLE EUR 1 BILLION ROMANIAN-OWNED PRIVATE COMPANY

Dedeman has become, during the last few years, a unique company in Romania: it is, by far, the biggest Romanian-owned business built by local entrepreneurs (its turnover in 2017 was EUR 1.13 billion), posting higher growth rates than the economy and impressive profit figures. And there is little chance of other Romanian-owned companies catching it up: the second biggest local business had half its turnover in 2017.

Dedeman’s success story is one of a first major player in a small market, shunned for decades by large foreign firms. The company was founded in 1991, but changed its strategy in 2001 to become a leading force in the DIY sector. The strategy change came after a visit by its owners to Austria and Italy.

“I saw their big DIY stores and I thought that when they came over, they would eliminate us. I said we had to do something to keep up,” Dragos Pavel, one of Dedeman’s owners, said in 2011, quoted by Adevarul.ro. And the strategy they adopted proved successful. The company took advantage of the lack of major foreign investment in the local DIY sector until the late 2000s and built the first major national DIY network in Romania. Dedeman’s owners, brothers Dragos and Adrian Paval, were small local entrepreneurs in Romania’s poorest region, Moldova, owning a local network of furniture and interior design solutions. Now, Dedeman is by far the largest DIY retailer in Romania and the biggest business with Romanian owners.

Official data also show that a growing number of local businesses exceeded the EUR 1 billion threshold in 2017, including retailers, car manufacturers and automotive suppliers Ford Romania and Star Assembly Sebes (Daimler), a tobacco manufacturer (British American Tobacco), telecom operators (Orange, Vodafone) and energy companies (E.ON, MOL, Engie, Romgaz and Hidroelectrica). Some firms’ 2017 balance sheets are not available.

TOP 3 oil companies in Romania in 2017

The three biggest oil companies active in Romania, OMV Petrom, Rompetrol and Lukoil, which combine production with distribution operations, had a total turnover of EUR 7.8 billion in 2017, up by around EUR 1 billion versus the previous year.

The energy giants made around EUR 595 million in net profit, over EUR 280 million more than in 2016.

OMV Petrom, covering the whole market, with gas, oil, and electricity production, leads the market with a huge chunk of the profits, EUR 525 million in 2017, but by turnover it ranked below Rompetrol, at EUR 3.23 billion versus EUR 3.53 billion.

The three companies own the last operational refineries on the Romanian market, Brazi (Petrom), Petromidia and Vega (Rompetrol) and Petrotel Lukoil (Lukoil).

Rompetrol, which is controlled by KMG International, has seen a EUR 500 million growth in turnover, from EUR 3.03 billion in 2016, to EUR 3.53 billion in 2017. Its net profit decreased from EUR 48.7 million in 2016, to EUR 18.6 million last year. The company has around 2,000 employees.

Lukoil, the Russian energy company, made around EUR 1.02 billion in turnover in 2017, slightly up on the EUR 972 million it posted in 2016. The net profit figures follow Rompetrol’s road, down by EUR 15 million in 2017 at EUR 49.2 million from EUR 65.5 million in 2016. The number of employees grew from 426 in 2016 to 445 last year.

TOP 3 IT&Tech  companies in 2017

RCS RDS, Huawei Technologies, Oracle Romania, IBM Romania, Accenture Services and Luxoft Professional have reported cumulated net profits up by 72 percent in 2017 (up by EUR 65 million) compared to 2016, according to the financial reports they submitted to the Ministry of Finance. Their total turnover was EUR 2.3 billion, up by almost EUR 300 million.

RCS RDS, one of the biggest telecommunication operators in Central and Eastern Europe and the largest cable and satellite television company in Romania, had, in 2017, a record net profit of EUR 64.31 million, after a huge loss of EUR 12.94 million in 2016. The turnover marked a slight gain of EUR 9.60 million. The number of employees was down by 581 in 2017 year on year, from 11,703.

Huawei Technologies Romania had a net profit decrease of 80 percent in 2017 (EUR 4.4 million) compared to 2016 (8.02 million). Its turnover was slightly up to EUR 294.19 million. The number of employees was also down by 95, to 1,352.

The Romanian division of software producer Oracle exceeded the RON 1 billion turnover threshold in 2017 (some EUR 219 million), 13.3 percent higher than in the previous year. Its profit, however, fell by 4.1 percent, to RON 22.81 million. Oracle Romania increased its number of employees by 14 percent in 2017, to 4,142. The Romanian subsidiary is Oracle’s second largest in Europe, after the one in the UK. Oracle, with USD 40 billion in yearly worldwide business, has offices in 145 countries and over 130,000 employees.

Top 3 electricity & gas companies in 2017

Most Romanian companies operating in the electricity and gas sectors – producers, transporters and distributors – expanded their businesses in 2017 and posted higher profit margins, but only two of them – state-owned Hidroelectrica and Romgaz – reached the threshold of EUR 1 billion in turnover, according to Ministry of Finance data.

Romgaz, one of the two main producers of natural gas in Romania, posted a 34.4 percent turnover increase last year, to RON 4.58 billion (slightly over EUR 1 billion), and net profit of RON 1.85 billion (EUR 406 million), up 81.3 percent from 2016 and equivalent to a profit margin of 40.4 percent.

Hidroelectrica came close in terms of profit margin. Last year, the company posted a turnover of RON 3.2 billion (EUR 712.2 million), down RON 100 million compared with 2016, and net profit of RON 1.3 billion (EUR 284.6 million), RON 130 million more than in 2016. The hydropower company lost 120 employees between 2016 and 2017 and finished last year with 3,279.

Nuclearelectrica managed to reach a turnover of RON 1.9 billion (EUR 415.9 million) in 2017 and net profit of RON 303 million (EUR 66.5 million). The company posted a turnover growth rate of 15 percent, while net profit increased almost threefold. The nuclear power company, which runs Romania’s sole nuclear power plant with two reactors in Cernavoda, has close to 2,000 employees.

Top 3 retailers in 2017

The biggest retailers in Romania had a great 2017 with consumption going up by 7.5 percent compared to the previous year. The top ten retailers had a higher growth in turnover, the numbers going up from EUR 9.96 billion in 2016 to EUR 11.144 billion in 2017, an 11 percent rise. The number of employees went up year-on-year by just 6 percent, from 70,897 in 2016 to 75,160 in 2017, which means players made more sales with fewer employees. Net profit climbed by 19 percent, from EUR 347 million in 2016 to EUR 414.2 million in 2017.

Kaufland, the biggest retailer on the Romanian market, finished 2017 with a turnover of RON 10.09 billion (EUR 2.21 billion) and net profit of RON 670.3 million (EUR 146.7 million). The number of employees was at 13,519, down from 14,070 the year before. In 2016, revenues were RON 9.69 billion (EUR 2.12 billion) and the net profit was RON 653.32 (EUR 143.02 million).

Carrefour Romania ended 2017 with net revenues of RON 6.75 billion (EUR 1.477 billion) and net profit of RON 209.7 million (EUR 45.9 million) while the number of employees was 9,939. In 2016 net revenues were at RON 5.67 billion (EUR 1.24 billion) and the net profit at RON 164.1 million (EUR 35.9 million). The number of employees was also smaller at 9,101.

Discounter Lidl Romania had a turnover of RON 6.51 billion (EUR 1.42 billion) and net profit of RON 352.76 million (EUR 77.2 million) in 2017. The number of employees was 4,815, up from 4,265 in 2016, when it registered a turnover of RON 5.58 billion (EUR 1.22 billion) and a net profit of RON 217.7 million (EUR 47.65 million).

 

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