Austrians advance in defiance of crisis

Some of the biggest companies active in Romania based on turnover have Austrian shareholders. Petrom, owned by Austrian OMV, is the largest local company and has recently been ranked as the largest in South East Europe, based on its 2008 revenues. BCR, with Austrian Erste Bank as main shareholder, is also among the biggest companies in SEE, according to a report from Roland Berger. In fact, Austria is the second largest source of foreign capital for Romania, based on data from the Romanian Trade Registry calculated in June this year. The value of Austrian investments in Romania, based on subscribed capital, was EUR 3.2 billion in June this year, which was almost 18 percent of the total FDI for Romania at the time. Austria was only outranked by the Netherlands, which is also a favorite offshore destination. In June, there were 5,500 Austrian companies active in Romania. However, it is not the number of companies that has proven to be the most important issue, but their position within the local economy, as Austrian firms control several players ranked top in certain fields. Austria also comes second in the list of countries by FDI origin when calculating the amounts invested between 1991 and the end of last year. EUR 2.6 billion came from Austrian companies during this interval, which means Romania attracted EUR 600 million from Austrian firms in the first half of this year. Also, around 125 new companies from the country have started activity in Romania during the six-month span, according to Trade Registry statistics. While staying in second position in the table of foreign investors in Romania, Austrian companies have managed to increase their ratio from the total FDI in the country from 12 percent at the end of last year, to 18 percent in June this year, making them some of the most active investors here. Data reported to the Trade Registry and actual data reported by the investors may vary, as the Trade Registry calculates only the subscribed capital, while there are other ways of incorporating an investment into a local subsidiary.
Austrian shareholders are on the money with top banking and finance slotsWhere have Austrian companies set foot? The banking and finance sector has been one of the attractions for many foreign investors, but Austrians have managed to fill the top positions on the local scene by taking over the biggest firms active locally or by creating the top players through a series of takeovers. Austrian Erste Bank owns the biggest local lender BCR, which it took over in a privatization process back in 2006. The Austrian lender now owns 69 percent of BCR, a bank which reached EUR 16.2 billion of assets mid this year. In the first half of this year, the bank made a EUR 144 million net profit, which was down 20 percent on the same period of last year due to expenses incurred by increasing provisions and a decrease of revenues fueled by the drop in consumption. “The results mirror the extremely difficult times our clients are facing. Despite this situation, the bank has managed to increase its operational performances by 10 percent over the first half of 2008,” said Dominic Bruynseels, executive president of BCR. The poor lending activity in the first half of this year has also affected Raiffeisen Bank, another Austrian lender active in Romania. Raiffeisen saw a drop in its net profit in the first half of the year. It posted a EUR 52.6 million net profit, compared to EUR 74 million in the first half of last year.”The H1 results are very good given the current economical context. We have managed to compensate to a large extent for the increase in expenses with provisions, for the slight drop in revenues and for the unfavorable depreciation of the RON/EUR exchange rate through careful cost administration,” said Steven van Groningen, president of Raiffeisen Bank. The lender holds EUR 4.6 billion of assets in Romania. So far it has invested EUR 313 million in the country, but it has also brought its shareholders EUR 60 million in dividends last year, according to data from the company. Austrian companies dominate the list of top insurers in Romania too. Vienna Insurance Group controls three insurance companies in Romania: Omniasig, which ranked top in terms of subscribed premiums in the first half of the year, Asirom, in fourth position, and BCR Asigurari, one place below. VIG took over Omniasig in 2005, Asirom joined the group in 2007, while BCR Asigurari and BCR Asigurari de Viata followed in 2008. Last year the Austrian insurer sold local company Unita to a compatriot, Uniqa. Uniqa Asigurari is ranked sixth on the Romanian general insurance market with a countrywide network of 170 branch offices, agencies and points of sales.
Petrom puts its foot on the gasOil and gas giant Petrom, the biggest company in Romania based on turnover with EUR 4.85 billion last year, is 51 percent owned by Austrian OMV. This year the company began the exploration of two new offshore wells in Marea Neagra, while starting a greenfield project for energy generation at Brazi. The total value of the project reaches EUR 500 million, which will be covered through loans from the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD). In the last four and a half years, Petrom has invested around EUR 4.5 billion in Romania. “Under the difficult market conditions, Petrom will stay focused on its strategic direction while reviewing the company's mid-term investment program. Specific targets might therefore be adjusted in order to ensure our development is sustainable while fully capturing the existing potential,” Petrom representatives told Business Review. Last year, Petrom's shareholders did not receive any dividends. In what concerns profit, in the second quarter of the year, Petrom made a EUR 50 million contribution to OMV's EUR 237 million EBIT. The first half of the year brought EUR 127 million of profit for Petrom, out of a total EUR 503 million EBIT for OMV.
Austrian players branch out into wood productionKronospan, an Austrian wood panel producer, is preparing an investment in a sawmill in Romania, while continuing to invest in its Sebes and Brasov production units. Kronospan has been operating in Romania since 1999. In 2004 Kronospan bought the Sebes-based plant from MD Fratti and has carried out additional investments amounting to EUR 75 million.continued on page 17 continued from page 15The last investment in Sebes was completed this year. The firm put EUR 12 million into environmental protection: filters which already comply with the requirements to be imposed by the European Union from 2012. In Brasov it has invested EUR 200 million to date, and the production unit there should be commissioned in this autumn. In Constanta, Kronospan has invested EUR 15 million in an operation terminal and a warehouse with a surface of 8,000 sqm.Austrian Egger, a producer of wood based panels, has announced an investment program of EUR 500 million in production units in Romania. The producer will put EUR 53 million of this sum into a unit in the Radauti area, in the north of Romania. A EUR 40 million adhesives factory is also on the cards. Egger opened a production unit in Radauti last year, following an investment of EUR 210 million. This plant should bring the firm sales of EUR 150 million in 2010, according to data from the company.
Austrians keep it realThe local real estate and construction market has attracted Austrian investors too. In fact, it was Austrian investment funds that started making real estate deals in the country back in 2006. Take funds such as CA Immo, then Europolis, and finally Immoeast. Each have marked premieres on the Romanian market in the last couple of years, and each still has an interest in local real estate. After taking over office and industrial properties in Romania, Europolis went on to develop office space here. So did CA Immo, although the fund has scaled down its development until better times. Immoeast was the most active buyer of Romanian properties in 2007 and even 2008, but has decreased the pace of its activity in Romania and even plans to sell assets in the country after the real estate downturn forced it to restructure its portfolio across CEE. Other segments of the real estate market have caught the Austrians' eyes as well. Wienerberger spotted the local demand for bricks and clay tiles and has set up production units in Romania. It now owns three factories in the country but the recent contraction of demand for its products has prompted it to scale down production. It will temporarily close down two of its factories, in Cluj and Dambovita counties, and keep only the one in Sibiu operational, according to recent media reports. Last year, Wienerberger posted a EUR 73 million turnover, up 13 percent on the previous year. Do-it-yourself retailer BauMax has focused on construction materials too, but on the selling end. It came to Romania in 2006, and has expanded to reach seven stores in the country. Last year, the company posted a EUR 130 million turnover, which was double the figure from the previous year. The reduction in customers' budgets for DIY products has prompted BauMax to delay its planned openings for the country. The stores in Constanta and Pitesti, which were initially scheduled to open this year, will now be completed in spring next year.
corina.saceanu@business-review.ro