Firms hope for a less dramatic climate

Newsroom 02/04/2012 | 09:02

The business climate improved last year for Greek-owned companies doing business locally, with Greece ranked as the fifth or sixth most significant country among the top foreign investors in Romania. By September 2011, more than 5,100 firms with Greek shareholders were registered in Romania, ONRC data show.

Otilia Haraga

Greek investments amount to EUR 1.6 billion, representing 5.3 percent of the total value of FDI in Romania, according to the National Trade Registry Office (ONRC). However, data from the National Bank of Romania indicate that Greek investments exceed EUR 3.1 billion, or 5.7 percent of total FDI. Meanwhile, the Embassy of Greece puts current Greek investments at over EUR 4 billion.

The business climate improved last year on 2010, but a significant number of Greek-owned companies continued to struggle in 2011. “The number of unpaid invoices is still high and risk assessment management is still more difficult than during the growth years. Insurers are not willing to cover certain clients, who they dropped in 2009 and 2010. Banks are still hesitating over granting higher credit lines. Greek companies hope that 2012 will be better and they are therefore patient,” Ioannis Paschalis, minister counselor in economic and commercial affairs at the Embassy of Greece, told BR.

Complaints by Greek investors in Romania center on long delays in getting VAT refunded, the confiscation of goods imported from Greece because the Romanian importer did not pay the VAT, various obstacles to trucks crossing the borders and the high tax evasion which harms fair competition. Also, investors in agriculture suffer many difficulties in searching for suitable land, according to information from the Embassy. “But the fact that year by year we receive fewer complaints leads to the conclusion that in many areas significant progress has been made,” says Paschalis.

Major Greek companies doing business in Romania continued to make investments and optimize their business in 2011. For instance, Octagon invested EUR 2.5 million in acquiring the majority share package in Comat Electro’s construction material base. Octagon’s participation in Comat is now 58.8 percent. The company put EUR 250,000 into opening an office in the Iraqi capital, Baghdad. It reported EUR 12 million in turnover last year and a EUR 465,000 profit, a result in line with the levels reported in the previous year. In 2010, the company’s turnover amounted to EUR 14.3 million.

“In 2012, we aim to consolidate our activity on the Iraqi market where we target geotechnical, civilian and infrastructure projects. We have also proposed capitalization and adding equipment and personnel to our office. Another investment project we have is upgrading the real estate assets of the Comat Electro base,” Alexandros Ignatiadis, general manager of Octagon Contracting & Engineering, told BR.

Greek dairy producer Olympus estimates the turnover of its local division will almost double this year to EUR 40 million. Last year, it amounted to EUR 23 million, out of which EUR 20 million came from exports. Olympus obtained a loan of EUR 30 million from the Black Sea Trade and Development Bank which will be used mainly to increase the production capacity of the company’s dairy factory in Halchiu, Brasov county. The firm’s total investment in Romania since 1999 is estimated to reach EUR 70 million by the end of this year. Olympus also owns a 23 percent stake in local dairy firm Prodlacta and it acquired local cosmetics producer Elmiplant in 2007.

Investment-wise, since establishing a presence on the Romanian market, Greek group OTE, which controls telecom operators Romtelecom and Cosmote, and GSM retailer Germanos, has put EUR 3 billion into developing its subsidiaries in Romania, which employ over 10,000 people. Cosmote posted stagnant revenues of EUR 468.2 million in 2011, but its EBITDA went up by 35.8 percent to EUR 100.1 million. Romtelecom’s revenues declined by 8.6 percent to EUR 655.1 million, while its EBITDA also fell by 23 percent to EUR 119.1 million.

Greek banks fought to keep their heads above water and mostly managed to do so. Piraeus Bank, the local operation of Greek group Piraeus, ended the first half of 2011 with a gross profit of nearly EUR 10.5 million (RON 44 million), down 28 percent on the same period of 2010.

Meanwhile, Bancpost, which had been struggling with losses for some years, managed to end 2011 with a net profit of EUR 3.8 million (RON 16.6 million). In February and March 2012, Bancpost announced nearly 380 sales of land, houses and apartments at auction, in an attempt to recover EUR 15 million in bad loans.

Last but not least, Alpha Bank strived to optimize its business, closing 14 subsidiaries and branches, mostly in small towns, giving it a territorial network of 165 units at the end of December 2011. The Bucharest network was maintained at 43 units, of which 12 are subsidiaries.

BR Magazine | Latest Issue

Download PDF: Business Review Magazine December (II) 2023 Issue

The December (II) 2023 issue of Business Review Magazine is now available in digital format, featuring the main cover story titled “A Visionary Leader Entrusted With Consolidating CPI's Portfolio
Newsroom | 21/12/2023 | 14:13
Advertisement Advertisement
Close ×

We use cookies for keeping our website reliable and secure, personalising content and ads, providing social media features and to analyse how our website is used.

Accept & continue