No drama: Greeks adjust to post-crisis market

With over EUR 4 billion invested in Romania up until 2013, Greek investors have continued to seek local business opportunities, with close to 300 new companies with Greek capital having been registered last year

Ovidiu Posirca

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The Hellenic business presence has remained intact in recent years, and even developed further, despite the ripple effects of the global economic crisis, according to Efrossyni Mita, counselor for economic and commercial affairs at the Embassy of Greece.

Greek foreign direct investments to Romania exceed EUR 4 billion, if the figure includes investments by companies of Greek interest via third countries such as Luxembourg, Cyprus or the Netherlands, according to estimates by the office for economic and commercial affairs at the Greek Embassy.

According to the national trade registry (ONRC), Greek FDI reached EUR 1.7 billion last year, accounting for 4.7 percent of total FDI. The National Bank of Romania (NBR) said that FDI from the Balkan country amounted to EUR 2.5 billion at the end of 2012, accounting for 4.3 percent of total investments. However, the central bank uses a different methodology to draw up data.

“A significant number of new Greek companies were registered during the years in question (e.n. the crisis period), 2013 included. This included big investors, as well as small and medium-sized companies. In addition to newcomers, many Greek companies, already active in the market, proceeded with their investment plans,” Mita told BR. Romania is home to 5,790 firms with Greek capital, out of which 295 were founded in 2013. They have created around 45,000 jobs in various sectors including banking, retail and manufacturing.

Meanwhile, trade between the two countries rose 5.5 percent to EUR 1.1 billion, with Greek exports to Romania gaining 6.3 percent to EUR 604.3 million, while Romanian exports to Greece rose by 10.9 percent to EUR 604.5 million.

“This positive trend shows that there is much room for further improvement,” said Mita.

Banking and telecom stand out

Greek investments are particularly notable in banking, with a 12 percent market share in terms of assets, and in telecom.

Four large Hellenic banking groups are present in Romania. Banca Romaneasca is owned by the National Bank of Greece (NBG), while EFG Eurobank controls Bancpost. Meanwhile, Alpha Bank and Piraeus Bank operate under their own brands.

According to daily Ziarul Financiar, NBG will withdraw from Romania, having struck a deal with the EU’s anti-trust body. Banca Romaneasca’s assets amounted to RON 7 billion (EUR 1.5 billion) at the end of 2012. Aside from the lender, NBG’s Romanian operations include an insurer, a financial investment firm and a leasing company.

Meanwhile, Eurobank registered a EUR 40 million loss in Romania 2013, up by EUR 5 million over the previous year. Its assets fell 6 percent to EUR 3.8 billion.

Last year, Piraeus Bank sold a 93.2 percent stake in ATE Bank Romania to Romanian businessperson Dorinel Umbrarescu, in a EUR 10.3 million deal. The lender has been rebranded as Banca Romana de Credite si Investitii and will be run in a dualist system. Piraeus registered a gross profit of EUR 3.3 million last year, while its assets amounted to over EUR 2 billion. Meanwhile, Alpha Bank posted a pre-tax loss of EUR 4.7 million in Romania last year on the back of higher provisioning for bad loans.

Moving to telecom, Romtelecom’s total revenues amounted to EUR 609.5 million. Greek OTE controls 54 percent of the company’s shares, while the rest are held by the Romanian state. The state is planning to sell its stake through an initial public offering (IPO). Meanwhile, telecom operator Cosmote Romania, in which OTE holds a 70 percent stake, recorded revenues of EUR 458 million last year. Both Romtelecom and Cosmote registered a slight decrease in revenues year-on-year.

The two companies will be rebranded as T-Mobile by September, which could represent another step in their merger, according to news portal hotnews.ro.

Gauging Greek investment sentiment

BR asked the heads of Greek firms active in various sectors about their experience in Romania and their outlook for 2014.

Ilias Pliatsikas, general manager at Olympus Romania, said the company had launched new products locally last year and that its turnover had grown by 41 percent to EUR 55 million in the same period.

He said this had allowed Olympus to register its first profit since starting production at its Brasov-based plant in Halchiu. This year, the company expects a 30 percent hike in turnover.

Olympus relies solely on milk from Romania for its plant and exports 70 percent of its output. “2014 is important for the dairy sector. The price and quality of the raw material will play a key role in the industry,” Pliatsikas told BR.

Dimitris Nikolakis, CEO of Druckfarben Romania, a manufacturer and supplier of inks and solvents for the flexible packaging industry, architectural paints and related products, said the company has been impacted by the economic crisis, which has changed consumption patterns.

“Romanian consumers’ shift towards more economical solutions in the last couple of years resulted in a slight decrease in the local turnover for both business units in 2013, offset by increased export activity to neighboring countries,” said Nikolakis.

“Due to the prevailing market conditions, the previous year was a transitional one for Druckfarben, in which the foundations were laid for the future strategic positioning of our brands and the expansion to previously unexplored areas,” he added.

He said the construction and building materials industries were expected to slightly decline or remain flat this year, depending on political developments. However, Nikolakis expects the paints business, represented by the brand Kraft Paints in Romania, to yield double-digit growth this year. He said the company holds 40 percent of the market for flexible packaging inks.

The company is part of the Druckfarben group, which is active in the Balkans region with a consolidated turnover of over EUR 50 million.

The turnover in the local construction sector continued to fall in 2013, although some of the sector registered a revival, mainly due to private initiatives, which continued in the first quarter of this year, according to Alexandros Ignatiadis, owner of construction firm Octagon Contracting & Engineering.

“Unfortunately, as this year is an electoral year, most of the public funds will be allotted to pensions and other areas that can bring votes, so the construction sector will not be a priority for public investments. At the same time, for pretty much the same reasons, the effervescence of the private sector has started to flatten out,” he told BR. He said this year will be broadly similar to the previous one for construction. The company more than doubled its turnover to EUR 19.6 million last year against the previous one. In 2014 the company is aiming to reach a turnover of EUR 16 million and to maintain its portfolio of clients.

Effie Valsamaki, general manager at Dirent Group, said the firm had seen its turnover in the operating leasing service fall due to a weak market, while the short-term rental service has increased since its launch in Romania three years ago. “Although the car rental market in Romania has not seen huge fluctuations over the last three years since the big drop of 2009-2010, Dirent’s specific service has gained a bigger market share every year. The expectation for this year is to increase the turnover of the rent-a-car service by 50 percent,” Valsamaki told BR.

“The used car business has faced various obstacles, mainly due to additional taxation and low demand, but the local market started to move much better at the beginning of 2014. For executive used vehicles with high engine capacity, the local market is still very difficult, the taxation very high, and prices would have to drop even more before local drivers would buy them. Otherwise these vehicles will have to be sold on foreign markets,” she added.

Ilias Papageorgiadis, CEO of the MORE Group of companies, a consultancy, said that brokerage activities in the real estate sector recorded 7-8 percent growth last year. The company started to focus on income properties and investments in 2009. It grew its renewable energy business by 3.5-4 percent.

In April 2013, the group decided to focus solely on biogas and biomass projects, due to changes to the incentives system.

“Biomass and biogas will attract Greek capital, as Greece does not have the advantages of Romania in this sector and lots of companies are scoping the market and moving onto the next steps. Once the situation is 100 percent clarified, you could witness a new wave of investments in this sector that could surprise an outsider,” the CEO told BR. He added that demand in the real estate sector, especially for income-generating properties, such as farmland and forests. Greek investors hold a 20-25 percent share in the overall portfolio of clients.

For Divertiland, the outdoor water entertainment park in eastern Bucharest, the first year of operations attracted over 100,000 people.

“This year we will concentrate our efforts on developing a complete customer experience and position Divertiland as a city break destination within the city. Some of our efforts will go into the development of additional activities, such as events and parties,” Alejandro Poulakis, the park’s CEO, told BR. He added that 20 percent of the total number of visitors last year were foreign.

ovidiu.posirca@business-review.ro

Greek investments

5,790 – number of companies with Greek capital in Romania

45,000 – jobs created by Greek companies in Romania

EUR 4 billion – Greek FDI to Romania since 1990, according to estimates by the office for economic and commercial affairs at the Greek Embassy

EUR 1.1 billion – value of trade between Greece and Romania in 2013

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