HOLIDAY TICKETS HAVE JOINED MEAL TICKETS, A EUR 1.3 BILLION MARKET; SEE PAGES 18-19 NEWS
Creativ Global Property, owned by Marius Ivan, received EUR 180,000 in a North Gate sale contract breach payment from Immoeast See page 4
INTERVIEW
The British Ambassador to Romania Robin Barnett says plenty of British companies are looking at the local market despite a tough year ahead See page 9
ANALYSIS
Companies from retail to brokerage services and travel agencies go for promotions and special offers to secure at least constant levels of sales See pages 10-11
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NEWS
BRIEFS PROPRIETATEA FUND TO BE LISTED ON BSE BY YEAR-END é Proprietatea Fund is poised for Bucharest Stock Exchange (BSE) listing by year-end, according to Mircea Ursache, president of The Authority for the Recovery of State Assets (AVAS). The listing is still in stand-by especially since the selection for the fund’s manager is overdue. FARMACEUTICA REMEDIA DEVA EXPECTS EUR 500,000 NET GAIN THIS YEAR é Pharma company Farmaceutica Remedia Deva expects a net profit of EUR 500,000 in 2009, with a growth of 8.6 percent in the company’s revenues, after having posted a EUR 700,000 loss in 2008. The company is valued at EUR 4.04 million based on the value of its shares traded on the Bucharest Stock Exchange (BSE). COMPA SIBIU HOPES FOR SEVEN-FOLD PROFIT IN 2009 é Car parts manufacturer Compa Sibiu plans to post EUR 700,000 in profit this year, a seven-fold increase compared to last year, but expects its turnover go down by 15 percent. In April, the company announced it would layoff staff and pursue other cost cutting measures in order to make up for the poor results. The company’s market value is of EUR 9.4 million based on its stock value on the BSE. UNIMPRESA SUGGESTS A SIMPLER FISCAL CODE AND LABOR REGULATIONS é Unimpresa, the association of Italian companies in Romania has recently suggested the Romanian government simpler labor regulations and fewer fiscal taxes, in order to sustain SMEs, many of which are Italian companies. According to Stefano Albarosa, president of Unimpresa, the 558 taxes and fiscal strains develop in a “wicked system”. The representatives of Italian companies running businesses in Romania have suggested the reduction of VAT for production equipments’ purchase, among other fiscal exemptions. 4
Creativ Global Property gets EUR 180,000 contract breach payment from Immoeast Real estate developer Creativ Global Property, controlled by local businessman Marius Ivan and Irish investor Tom Quinn has received EUR 180,000 from Austrian investment fund Immoeast as penalty payment for withdrawing from a real estate deal. “Immoeast and Creativ Global Property signed the memorandum of understanding for the sale of North Gate project in November 2007, but Immoeast withdraw from the deal. The payment represents the penalty clause in that contract,” Theodor McCann, partner with Constantinovici, McCann & Asociatii law firm told Business Review. The firm represented Creativ Global Property in the arbitration. The process started in the summer of last year and lasted for eight months and was judged locally at the International Arbitration Court near the Romanian Trade and Industry Chamber. The agreed deal was supposed to require a EUR 70 million payment from Immoeast, if it was to be carried on. Im-
Marius Ivan, one of the owners of Creativ Global Property
moeast was represented by Popovici, Nitu & Asociatii in this arbitration procedure. North Gate building is leased out to Renault and BCR and was Creativ's first project on the Romanian market. The developer was planning to start works on its PiperaCity project in April
or May this year, according to previous announcements. "We have been taking a very cautious approach to the market.[...] We are tendering at the moment and we have already seen a dramatic reduction in construction prices from four months ago," Jonathan Youens, managing director with the developer, has previously told BR. He expected to start construction works on the project in April or May, "but this will be subject to a further review of market conditions over the next few months." Previously, Creativ was planning to start construction works at the project at the end of August last year, when it announced it would deliver two office buildings on 80,000 sqm in 2010. "We have not as yet finalized our financing plans as we consider that banks at the moment are still recovering from the shock of the past few months and are not taking a realistic view on the way forward," the Creativ Global Property managing director went on. Corina Saceanu
GreenWEEE puts EUR 10 mln in Buzau waste recycling plant GreenWEEE International Buzau has put EUR 10 million in building an electric and electronic products recycling plant in Buzau, which delivers a processing capacity of over 50,000 wastes tonnes per year, the company has announced. The plant covers a total area of around 10,800 sqm, of which 6,100 sqm represent the production area. This is the largest private project developed in Romania and South-Eastern Europe re-
gion, the company said. The investment, which includes the price of land price has been carried on by a group of investors comprising SC Romcarbon SA Buzau which participated with 72 percent, two Swiss investment funds which totaled 18 percent within the overall investment and a private investor which contributed with 10 percent. GreenWEEE International SA is part of Romcarbon group, headquartered in Buzau and run-
ning operations in Romania and abroad, in countries like Ukraine, Serbia, Macedonia and Greece. The group posted a EUR 85 million turnover in 2008 from Romanian recycling activities of electronic and electric equipment, PET gas cylinders and plastic containers. GreenWEEE International Buzau runs a network of 150 collecting points countrywide and employs 2,000 people. Magda Purice
Romania keeps budget deficit below IMF agreed threshold The Romanian consolidated budget deficit was of 1.5 percent of the GDP in the first three months of this year, slightly below the amount agreed with the International Monetary Fund upon signing the financing memorandum, according to government data. In April, the amounts collected to the state budget were only three percent below those in April 2008, after the January budget collection saw a drop of 6.2 percent compared to the same month in 2008, according to
Gheorghe Pogea, the Romanian finance minister. Overall the revenues in the general budget dropped by 5.5 percent in the first quarter of the year compared to the similar period of last year. The VAT collection, the biggest resource in the state budget, saw a drop of RON 1.72 billion. The collected taxes in profit dropped by RON 336 million, while the collected taxes on salaries grew by RON 796 million. The Q1 state budget amounted to RON 38 million. Budget expenses grew by 14 percent in this first quarter
of the year compared to the same period of the last. Finance minister Pogea said the EUR 5 billion Romania will soon receive from the European Commission will be used to finance the budget deficit, and will not fund salaries or pensions. The amount is expected at the end of June. He also announced that 34,000 employees in the state system will be axed by year-end, when only 1.2 million staff will be paid from the state budget. Staff BUSINESS REVIEW / May 4 - 10, 2009
NEWS
CEC bank sees assets up by 20 percent in Q1 Local lender CEC Bank, majority owned by the Romanian state, saw its asset growing by 19.9 percent in the first quarter of the year to some EUR 3.85 billion. The amount of gross loans increased by 7.4 percent in this period, to reach EUR 1.91 billion. However, the bank said it would stop lending towards the end of the year if a share capital increase will not happen. The Romanian government has issued a set of anti-crisis measures meant to sustain the local banking system, which included a RON 900 million capital increase for CEC Bank. In September of October we will have to stop lending even with the capital we have because the Romanian Central Bank will stop us when the loans will be more than eight times our capital. If we will receive
CEC Bank has recently been re-branded
the promised RON 900 million, we will be able to continue lending,” said Radu Ghetea, president of the bank. The bank's structure of loans is 60 percent distributed to individuals, but it hopes to decrease the ratio to 50
percent, according to Ghetea. In the first quarter of this year, loans granted to companies by CEC Bank grew by 22.6 percent. CEC Bank, the former Romanian Savings Bank, made almost EUR 100 million in profit last year, much of which was due to the sale of its shares in insurance company Asiban. The profit, which was five times higher than the figure posted in 2007, was boosted by the bank's cashing in some EUR 87.5 million from the sale. CEC Bank's profit excluding the Asiban sale was some EUR 44.5 million, up 40 percent on the previous year. The bank grew its assets by 25 percent to EUR 3.4 billion, while its loans reached EUR 2 billion, up 56 percent in the Romanian currency. Staff
Asesoft Distribution buys online retailer eMAG Local Asesoft Distribution bought a 51 percent stake in online retailer eMAG. The value of the transaction was not disclosed. “After more than one year of discussions, even with external investors, we decided to go further with a partner who has been very close to us over the past seven years. The agreement between the two companies is strictly financial. Every company will continue independently with its own business line
and will keep its focus on the market it is active in: Asesoft in distribution and eMAG in online retail,” said Radu Apostolescu, marketing director and cofounder of eMAG. “We will not favor eMAG as client of Asesoft. We will continue to support all Asesoft partners. eMAG brings bellow 10 percent of Asesoft sales, eMAG sells over 15,000 products from over 500 producers, while Asesoft sells approximately 2,000 products from 50 pro-
ducers,” said Razvan Zieba, the executive director of Asesoft. Asesoft Distribution had a turnover of USD 127 million last year. It took over the indirect distribution contracts of retailer Flamingo this March, after buying 50 percent of distributor Combox last year. eMAG had an estimated EUR 110 million turnover in 2008. In 2007 it had a profit of EUR 600,000. ■
EBRD takes EUR 40 million stake in WAZ Media Group’s Eastern European operations The European Bank for Reconstruction and Development (EBRD) plans to invest up to EUR 40 million for a stake in the Eastern European operations of Germany’s WAZ Media Group. The joint aim is to support the further development of politically and economically independent media in the region. In Romania, WAZ group owns the company which runs Romania Libera daily. Besides the investment in traditional media, the WAZ Group and the EBRD emphasize the importance of the Internet for fostering BUSINESS REVIEW / May 4 - 10, 2009
sustainable economic development in Eastern Europe, particularly through mobile services and onlinebased companies. WAZ Media Group, a major German media house, sees a strategic focus on the media industry of Eastern Europe and plans further expansion there. “The development of independent media, bringing high-quality content across the EBRD region, helps to strengthen democracy and build up the knowledge-based economy that is crucial for the future of these countries”, said EBRD Presi-
dent Thomas Mirow. “The EBRD is very happy to support the WAZ Group in this endeavor”, he added. The WAZ Group sees in the EBRD a strong partner that after 18 years of commitment in the region enjoys an excellent reputation there. The EBRD will initially invest EUR 20 million for a stake in Ost Holding, the Vienna-based company which manages its media interests in Eastern Europe. A further EUR 20 million is being reserved for future capital increases. ■
BRIEFS BEGA TURISM SEEKS ADDITION TO SHARE CAPITAL é Bega Turism, a company controlled by businessmen Marius and Emil Cristescu, which manages Timisoara hotel, plans to increase the company’s share capital by RON 40.56 million, a decision to be taken during the shareholders’ meeting scheduled for June 2009. Bega Turism is valued at EUR 15.8 million, based on its BSE stock trading value. Marius Cristescu, the majority shareholder holds 59.33 percent in the company, while his brother Emil owns the remainder of the shares. Bega Turism is part of Bega group of companies which also comprises Begachim, Chimforex, Foraj Sonde Craiova, Bega Com, Bega Trans Auto and Bega Imobiliare. ROMPETROL RAFINARE ESTIMATES FIVE TIMES SMALLER LOSSES IN 2009 é Rompetrol Rafinare, the administrator of Petromidia refinery estimates it would decrease its loss by five times this year, to USD 37 million net losses. The company’s turnover could also halve to USD 1.73 billion, compared with USD 3.43 billion last year, according to the financial report voted by the company’s board. Last year the company posted losses of USD 184.52 million. The company is controlled by Rompetrol group, which owns 75.32 percent of its shares. ELECTROPUTERE CRAIOVA EXPECTS PROFIT IN 2009 é Locomotive manufacturer Electroputere Craiova, controlled by Saudi company Al-Arrab plans to post a gross profit of EUR 3.8 million at the end of the 2009 fiscal year , after it posted a record loss of EUR 26.7 million last year. The company also predicts a turnover of EUR 93.2 million, up 86.3 percent on last year’s result. The investments for this year are budgeted at EUR 7.55 million, following a capital increase of EUR 5 million from the company’s majority shareholder. The company was privatized in 2007 after AlArrab Contracting Company Limited acquired the majority stake in a EUR 120 million transaction. At that time, the buyer said it would invest around EUR 20 million in Electroputere. 5
NEWS
BRIEFS MCDONALD'S PUTS EUR 4 MLN IN NEW BUCHAREST RESTAURANT é Fast food chain McDonald's Romania has recently opened a new unit in Drumul Taberei area in Bucharest, the company’s 59th unit in Romania, following an investment of EUR 4 million. The fast food restaurant in Drumul Taberei delivers 375 sqm and 270 seats in the lobby area and 60 seats on the terrace. The restaurant chain plans to open two more units by the end of May in Sibiu and Piatra Neamt. McDonald's Romania ended 2008 with a turnover of EUR 400 million, up EUR 100 million on the previous year. BIO LOGISTIC FORESEES EUR 2.64 MLN TURNOVER IN 2009 é Bio products distribution company Bio Logistic, which was created after the merger of Bio Markt Retail Group and Natura Land, estimates a turnover of EUR 2.64 million in 2009, up 20 percent on last year. Bio Markt Retail Group posted a turnover of EUR 1 million in 2008, while Natura Land registered EUR 1.2 million in turnover during the same period. For 2009, the company plans to open a stand-alone shop in Bucharest, an addition to the already three existing shops in Timisoara and Bucharest. It will open a franchise
Orange Romania Q 1 revenues drop 14 percent to EUR 264 mln Orange Romania reported EUR 264 million in revenue for the first quarter of this year, a 14.1 percent drop compared to the first quarter of 2008. The plunge reflects the negative evolution of the currency exchange, the impact of tariffs regulation, the combined effects of the drop in retail price, and an overall adjustment of consumption on various segments. The yearly average RPU was of EUR 114. “Although the first signs of the economic crisis started to be felt in the fourth quarter of last year, the impact was more powerful in the first quarter, as it happened in other industries and with other services,” said Thierry Millet, interim CEO of Orange Romania.
The local SIM penetration rate is over 100 percent, which slowed down the growth rate for clients. In the first quarter of 2009, Orange had 10.118.000 clients. For this year, Orange plans to develop its mobile broadband services, a segment where it presently has 1.889.000 clients, 81 percent more compared to the first quarter of last year. Overall, France Telecom’s business growth in emerging markets slowed down significantly. Here revenues were down 0.5 percent on a comparable basis, compared with a 7.2 percent increase in the fourth quarter of 2008. Staff
Ranbaxy Romania reports 8.4 percent drop in first quarter sales Ranbaxy Romania, the local subsidiary of Indian pharmaceutical group saw an 8.4 percent decline in sales in the first quarter of 2009, down to USD 19 million. The local currency devaluation and the new health and pharmaceutical regulations introduced by the Ministry of Public Health are the main reasons for this drop in profit, said the company. Overall, the Indian group reported net sales of USD 313 billion for the first quarter of 2009 ended March 31, a loss of 4 percent compared to the similar period of 2008. For this year, the company expects some USD 1.4 billion in sales. Last year, the Indian group has decided to sell the liquid
medicine division of Terapia ClujNapoca, for USD 20 million, having had talks with several interested companies. At that time, sources on the market said that the decision came as a result of the company's business strategy to rationalize the production costs in order to expand the manufacturing operations in its main production facility in Kluez. Although the Terapia division was profitable, liquid medicines are not a core focus for Ranbaxy, said the firm. The Indian group took over Terapia Cluj for USD 324 million in 2006 when it acquired a 96.7 percent in the company from the American investment fund Advent International. Magda Purice
Zentiva Romania expects 33 percent lower profit
Zentiva’s profit will go down by 33 percent
Pharmaceutical company Zentiva Romania expects the company’s gross profit to diminish by 33 percent in 2009 on 2008, to EUR 4.9 million, but it hopes its turnover will grow by 3.2 percent. Last year, Zentiva Romania posted a net profit of EUR 6.3 million, 5.4 percent more on 2007, while its turnover grew by 13 percent. The Czech pharmaceutical producer Zentiva has reported a double sales figure in the third quarter of 2008 in Romania, compared with the same period of 2007. Last year, Dragos Damian, general manager of Zentiva Romania was expecting the local pharmaceutical market to see a revive in the second part of 2008. “The local pharmaceutical market developed peculiarly, it has reported an increase of the patented drugs segment and a regress on the generic pharmaceutical products segment,” said Damian. Zentiva Romania’s market value is of EUR 41.35 million, based on its 2008 stock value on the Bucharest Stock Exchange. Magda Purice
distribution system from 2010.
6
BUSINESS REVIEW / May 4 - 10, 2009
CALENDAR / WHO’S NEWS
EVENTS, BUSINESS AND POLITICAL AGENDA MAY 4 é 19.00- Garrigues inaugurates new Bucharest office at Hilton Hotel, Le
Diplomate room. By invitation only.
MAY 5 é 10.30- Ringier organizes press meeting to announce financial results for
2008 at Hilton Hotel, Regina Maria room. é 11.00- Uniqa Asigurari organizes press conference at Marriott Hotel, Galati room.
MAY 6 é 10.00- IBM organizes the “IBM Cognos Finance Forum 2009” at Hotel
Pullman. é 10.00- Abbot Laboratories launches Humira, a new treatment for psori-
asis, at Crowne Plaza Hotel, Primavera room. é 11.00- AmCham Romania presents its future objectives during a meet-
ing at Hilton Hotel, Marcu room. é 19.00- The Illusions restaurant organizes press meeting on Dacia
Blvd& 5 Henri Coanda St.
MAY 7 é 10.00- Wolf Theiss law firm organizes media round table at Hilton Ho-
tel. é 10.30- Gap opens first store in Romania in Baneasa Shopping City, 1st
floor.
MAY 13 é 13.00- Beautik Haute Parfumerie launches Caron perfume collection at
Brown Sugar club, 5 Primaverii Blvd.
MAY 15 é 20.00-Inocenti Foundation organizes benefit event at Kentauros Media Studios.
MAY 22-23 é eLiberatica, an international IT event takes place at Politehnica Univer-
sity in Bucharest.
BUSINESS REVIEW / May 4 - 10, 2009
WHO’S
NEWS
RAZVAN STOICESCU, 28, was appointed managing associate with Bulboaca&Asociatii law firm. He coordinated the legal team that assisted the Romanian state in the EUR 750 million Eurobonds issue in 2008. He specialises in finances and capital markets, being a member of the Bucharest Bar since 2004. Previously, Stoicescu was senior associate, having worked for Bulboaca&Asociatii since its founding.
group and sweets producer Kraft.
COSTIN TEODOROVICI, 28, was appointed senior associate with Bulboaca&Asociatii law firm. He is a member of the Bucharest Bar since 2005 and specialises in financing and capital markets. He joined Bulboaca&Asociatii a year ago. Teodorovici gives legal counsel to clients such as Schroders Investment Management bank in the consultancy given to the Proprietatea Fund. IOANA RADU, 27, was appointed senior associate with Bulboaca&Asociatii law firm. She specialises in litigations and labour law and is a member of the Bucharest Bar since 2005. She joined Bulboaca&Asociatii in late 2007. Radu gives legal counsel to clients such as Ringier media
MIHAELA DUMITRU joined DPD (Pegasus Courier S.A.) as DPD classic International product & operations manager. She previously worked as operations manager at GeoPost Romania for three years and international product specialist at Cargus International for five years. She graduated from the Faculty of Finance, Insurance, Banking and Stock Exchanges at the Academy of Economic Studies in Bucharest. RALUCA MANOLACHE joined DPD (Pegasus Courier SA) Romania as manager of the collection department. She has a wide experience in the collection activity, payment terms negotiation and credit control. She has also worked in PR, communication and journalism. Manolache has a specialist degree in communications and PR from the Irecson Institute and studied International Economical Relations at the Romanian-American University in Bucharest. CELIA-IOANA DUTA joined DPD (Pegasus Courier SA) Romania as collection specialist. She has a wide experience in the collection activity having previously worked for several companies in the financial field such as EOS KSI, BCR Asigurari and Carpatica Asig. She has studied International Relations and European Studies at the “Lucian Blaga” University in Sibiu.
Business Review welcomes information for Who’s News from readers. Feel free to contact us on 206 0680 (10 lines), by fax at 335 3474 or e-mail: otilia.haraga@bmg.ro
7
INTERVIEW medium and long term the public finances remain sound. But we have to recognize that the situations of different economies require specific measures. A very positive measure taken by the Romanian government was the announcement that former communist blocks would be insulated. This will clearly help construction companies, an industry which is in a difficult period. It will also reduce energy bills, and at the same time it is a step in the right direction towards reducing our carbon footprint here in Romania as well. But each country has specific circumstances.
turing in the media. How do you think Romania is doing on this chapter? Prime Minister Boc said on coming to office that the new government intended to speed up the process of taking the necessary measures to increase EU cooperation and the verification mechanism. The UK encourages the government in its efforts in this direction. We are trying to make a practical contribution to helping speed up this process, and are currently engaged in working with the Ministry of Justice and the Superior Council of Magistrates. Two British judges are visiting Romania to exchange experience and ideas to help improve the You mentioned several areas of in - efficiency and effectiveness of the core terest to UK companies here. But what judicial system here in Romania. They sort of British companies would come have been to Romania twice already and to Romania now? will be coming back. This is a project Without identifying specific compa- funded by the British government. nies, I can tell you that at the embassy corina_saceanu@bmg.ro we’re continuing to see a lot of companies taking a look at the Romanian maré Romania remains interesting to ket. Perhaps many of them will not have British companies, even though the money to invest in Romania in 2009, 2009 will be a hard year. The but investment decisions aren't taken on main areas of interest to UK the basis of three-four months’ observafirms are railways, ports, the tion anyway. The important thing is that construction sector, the environBritish companies are continuing to take ment, energy and financial serva look at Romania, and as the economic ices (trading and consultancy). situation improves, that means we will é Those skeptical about Romania's have good prospects of seeing signifirate of absorption of EU funds cant new British investments in Romashould remember the experience nia in the future. Even in times of crisis I don't think of other member countries, anybody expects the flow of foreign diwhich had a low rate of absorprect investments in Romania to reduce to tion of those funds in the first zero. A huge range of sectors have potwo-three years but then mantential, in our opinion. Even this year aged to increase it, said the UK there will be projects funded by the EU ambassador. British companies are still looking at the Romanian market for further through structural funds, or by the gové Romania's relations with the UK investments, even though they expect a tough year ahead. They are keeping ernment, which is committed to spendare in good shape, according to ing more on infrastructure. Part of our Robin Barnett, and the two their gaze on several areas, including infrastructure, the environment, energy job is to ensure that British companies countries share similar views on are fully aware of the opportunities several issues, including the and the financial services sector, and although not all of those interested will which arise not just here in Bucharest, presence of troops in the Middle in the rest of the country as well, and East. invest in 2009, there are good prospects for new British investments in the but there are already British companies é Recently, a Romanian delegation spread out all over Romania. future, says ROBIN BARNETT, the British ambassador to Romania. headed by the Romanian foreign affairs minister, Cristian DiaThe remittances sent by Romani conescu, visited London. The By Corina Saceanu that each government has to take a set of ans from abroad as well as the number UK Embassy in Romania has alspecific measures on the short term to of local people working abroad have so lobbied for British companies To what extent do the new fiscal address the effects of the economic cri- decreased. How has the number of Ro which have experienced hard measures drawn up by the Romanian sis. And, let's be honest, raising revenues manians working in the UK evolved in times in Romania. government interfere with foreign in - has to be part of that. the second half of last year and the first é Over 3,300 British companies vestors' activity in Romania? What are part of this year? Are many expatriate are active in Romania. British British companies saying about these What measures has the British gov - workers returning to Romania? investors in the country include measures? ernment taken that would be appropri It is too early to have statistics for Mott McDonald, Copper Beech, From the perspective of British ate for Romania too, in your opinion? 2009, but it is clear that there are still a Thomson Reuters, Royal Bank companies, the overall picture is imporI think that both in the UK and in lot of Romanians in the UK, making an tant. They want to see a stable economic Romania targeted measures have been important contribution to the British of Scotland, Fabian Capital, Alienvironment, as predictable an exchange taken to stimulate the economy. For ex- economy. son Hayes, Freshfields Bruckrate as possible and predictability in gen- ample, measures to ensure that the bankhaus Deringer and Anglo-Roeral. It is very clear that businesses don't ing sector remains sound and solid and We've started to see some activity in manian Bank Limited, among like surprises. As long as these condi- to ensure that, even though in the short terms of the fight against corruption in others. tions are met, British investors accept term budget deficits may rise, in the Romania lately, with several cases fea -
Despite a tough 2009, British companies show bulldog spirit for Romania
BUSINESS REVIEW / May 4 - 10, 2009
9
ANALYSIS By Corina Saceanu
Fashion retailers go from one promotion to another to keep their sales up
Firms charm customers with crisis marketing strategies Special offers and promotions are the words of the day for consumers who started tightening their belts and for companies which saw their sales shrinking. Although companies go for lower profit margins, they are employing various marketing strategies to keep the flow of customers and ideally increase sales – be it in fashion retail, stock market trading or holiday packages. 10
During times of financial restrain, customers go for lower priced products, downsize budgets and like to pick cheap offers. This mind shift was already felt on the Romanian market, where retail sales have dropped since the beginning of the year, with value per shopping spree having reduced by around 20 percent for fashion retail, for example. In top of the products the Romanians buy and/or consume less are the products of furniture and interior decorations, electronic products, as well as clothing and footwear that nearly 40 percent of Romanians say they will buy less, according to a recent Synovate study. To keep customers coming to their stores and encourage spending, retailers have to bring in their marketing tools, and special offers are one way of achieving this. It doesn't cover only fashion retail. Romanian customers nowadays get special offers for car purchases, holiday packages, IT&C products, spa packages, books, banking products and even stock exchange trading services. For sellers, the profit margins shrink, but promotions ensure a flow of sales meant at least to help them survive during the downturn.
FASHION TRIES ON ITS MARKETING SCHEMES Both good and bad news are coming from consumers. On one hand, one in three Romanians says they have reduced their fashion purchase budgets, and 30 percent of them intend to do the same in the future, reveals a study by Synovate carried on in February this year. But on the other hand, food sales could be less affected, as only half of the respondents said they were thinking about reducing their budgets for food. Again on the bright side, there are still 3 Romanians out of 10 who don't intend to decrease their budgets to offer gifts, and only 9 percent have given up on buying branded products. Romanians' perception follows the reality – they think the car industry, construction and agriculture are the worst hit by the financial crisis. In fashion retail, special offers either target a short term increase in
traffic in the stores and consequently higher sales or an increase in the customer loyalty to the brand. “Case by case, such promotional activities can generate an increase in traffic by 10 to 20 percent. But we also organize promotions which aim at increasing the customer loyalty,” Alexandra Dumitrescu, marketing manager with Rafar tells Business Review. The company, which runs fashion stores under diff e r e n t brands in Romania has been running promotions in its stores since the beginning of the year, with discounts up to 30 percent on certain products. “Promotions are something constant in our marketing activity and we organize them based on plans agreed with each brand before the beginning of each season,” says Alexandra Dumitrescu. In Debenhams stores, one of the brands in Rafar's portfolio, the average value per purchase has dropped by 10 percent in Bucharest, and by 15 percent for its stores in the rest of country. The retailer used promotional offers similarly to last years, but came up with new ones too, and says such promotions have led to an increase in sales compared to the period before the special offer period. In Rafar's case, these offers vary from price reductions to cross promotions with other brands on the market to offer complementary products.
FOREX AND STOCK TRADING DO FOR SPECIAL OFFERS TOO Stock exchange trading is by far not as a common activity in Romania as shopping for clothes, and 2008 was not a particularly good year for stock market investors, with stocks falling to historic lows. Deltastock, an online broker of shares and Forex has decided to run a promotional offer to increase its number of clients and raise awareness. Each customer who opens a trading account with Deltastock in April in May will get double the first sum they deposit in their trading account for sums lower than EUR 1,000. This anniversary offer's target is a 50 percent increase in the number of the firm's customers, Cristian Enache, broker with Deltastock tells Business Review. “This offer aims to help those who start trading on external markets and implicitly increase the BUSINESS REVIEW / May 4 - 10, 2009
ANALYSIS number of those who use the Delta Trading platform,” says Enache. The firm targets local traders who want to expand their portfolios, with above average financial power who make investments decisions using trading software for external markets. “In the first month, we have easily reached pour target and the interest we have seen makes us believe we will exceed our initial target,” says Cristian Enache. Moreover, this pilot project could be extended to other markets where Deltastock is active. Most of the trading through Deltastock's platform goes on the Forex market, but the firm has seen an increase in interest for for stocks and exchange traded funds (ETFs) since the beginning of the year too. Last year, for example, the volume of deposits in trading accounts with Deltastock grew five-fold compared to 2007, while eight times more demo trading accounts were opened.
TRAVEL
OFFERS GO THE EXTRA
MILE
Travelling expenses are the first
BUSINESS REVIEW / May 4 - 10, 2009
Cristian Enache, broker with Deltastock
Price cuts go from 10 -30 percent at Debenhams
to fall when budgets shrink, but if they are given the right offers, Romanians wouldn't say no to cheap holidays. Romanians who plan to travel this year go for advance, discounted bookings, promotions and special offers, found travel agency Eximtur after conducting a study in several Romanian cities.
“We realized that in a year of crisis, in order to come up with a realistic holiday budget, the Romanian holiday market needs to be analyzed in a professional way. We didn't do it before because of the clear increase pattern of this market in the past, but now it is necessary,” says Lucia Morariu, general manager of Eximtur.
The firm now runs an off e r which allows customers pay for their travel packages in ten installments with no interest. The budget for trips and holidays suffered a significant decrease due to the financial crisis. Almost 4 out of 10 respondents claim they lowered the budget for trips and holidays as compared to 3 months ago, according to the Synovate study run in January this year. Those aged 3034 years lower their budget significantly more than the average, according to the study. Low cost airlines seem to be favoured by the downsize in travel budget, as opposed to other carriers on the market, although they have felt the shrinking too. Local airline Tarom has recently taken a shift in its marketing policy and introduced low cost tickets for several destinations, competing with low cost companies. The company offers EUR 50 tickets for certain foreign destinations and EUR 24 tickets for local flights during the entire 2009, with these low prices available only with a 30-day advance booking. corina_saceanu@bmg.ro
11
FEATURE
The Moldavian monasteries are among Romania’s tourism trademarks for foreign visitors
“Romania, Land of Choice” precedes country brand creation A new campaign that promotes Romania as a tourism destination was launched following a collaboration protocol between the Ministry of Tourism and BRD Societe Generale. Headed by the key line “Romania. Land of Choice,” the campaign has at its forefront three Romanian sports legendsgymnast Nadia Comaneci, soccer player Gheorghe Hagi and tennisman Ilie Nastase. It precedes the creation of the long-expected country brand for Romania and will run until the latter comes into force next year. By Otilia Haraga “In spite of the remarkable progress that Romania has made so far, it still has an image deficit abroad. It is totally abnormal that so little should be known about the Danube Delta or the country’s cultural heritage,” said Patrick Gelin, 12
president of BRD. “Romania, the Land of Choice” is a campaign that lies on the shoulders of three sports legends, Nadia Comaneci, Gheorghe Hagi and Ilie Nastase. The choice of these figures was not a random one, as Gelin explains. “Ilie Nastase, Nadia Comaneci and Gica Hagi, who have, each in his remarkable way, had a
great impact on the world of sports, can successfully be Romania’s image vectors abroad.” Gelin said the partnership with the Ministry of Tourism is the result of an idea that was tested in BRD several years ago. “The campaign “unique cards in the world” was at that point- and still remains- the only one that has proposed and really succeeded in selling a Romanian banking product abroad. It proved then that the phrase “sports is one of Romania’s best ambassadors” is not a cliché but a verifiable reality,” he said. Stefan Stroe, strategy director with Grey Bucharest says this decision to use Comaneci, Hagi and Nastase is “not bad.” However, beyond their charisma and awareness that will easily reach its limit, the Ministry of Tourism should also think about how they could motivate the Romanians living abroad to advertise their native country willingly, he says. “We have millions of Romanians abroad who would like to hear good things about Romania in their proximity.” He calls these people “advocates in reserve of the Romanian brand”- potential patriots who would make small promotion e fforts for promoting the image of their country in their communities. “I think they should be the first to promote, followed by other wellknown Romanians in the country,” he says. Stroe’s vision of the campaign for promoting Romania as a tourism destination revolves around adventure and the unknown. “I think the strategy of a tourism campaign for Romania should be as realistic and inciting as possible and work first of all on the short term.” He specifically emphasizes that “it does not have to be beautiful.” Romania is, 20 years after the fall of communism, a tourism adventure, so that the tourists that we wish to attract should be those who desire “adventures in the east,” he explains. The agency that is in charge with the creation of this campaign is A DDV Euro RSCG, which has collaborated with BRD over the last five years for the advertising campaigns in which Hagi, Comaneci and Nastase were the driving force. The campaign is scheduled to start in May and will continue until the launch of the country brand. It is supported by BRD and will be promoted by the Ministry of Tourism. According to Elena Udrea, the tourism minister, the entire campaign will cost several million euros,
of which EUR 2 million will be used for running the campaign on two popular international TV channels. For this, a public bidding will be organized. So far, the campaign is only halfway through, as only postal cards and prints have been finalized. There will also be press ads, outdoor and television advertising. “The “Romania, Land of Choice” campaign will promote cultural tourism, eco-tourism, agro tourism, the seaside, Bucharest and Sibiu,” said Udrea. The countries which are most targeted are mostly European countries and the United States. Udrea made clear the distinction between this campaign and the country brand. The deadline for submitting offers for the creation of the country brand was May 4. “We believe we will have the best country brand creators in the world taking part in this competition” she said. “We will most likely start the promotion of the brand next year,” said Udrea. Previous branding campaigns have failed This is actually not the first effort to brand Romania. In 2004, a campaign was made by Ogilvy& Mather, which required USD 1.7 million and which was called “Romania, simply surprising.” The campaign was cancelled three years later by Richard Batchelor, who headed the team of international consultants from the World Tourism Org a n i z ation because “it did not communicate Romania’s essence to potential visitors.” A second failed attempt was a campaign of the Ministry of External Affairs with the slogan “Fabulous Spirit” which cost USD 110,000. Stroe says the reason for which previous efforts have failed is because this was one of the most difficult communication strategy projects. The brand strategy should convey that “Romania equals the most beautiful adventure in Europe.” The symbols and people used in it should be compatible and representative for this direction,” says Stroe. The agency that will create the Romanian tourism brand will be selected following an international bid. Among the criteria that participants will have to meet is to have worked on at least one similar project. The creation of the brand will cost EUR 2 million, while other EUR 73 million will be used for implementing it, which come from the funds of the European Union. ■ BUSINESS REVIEW / May 4 - 10, 2009
Estates&Construction
MARKET
MAY 4 - 10, 2009 / VOLUME 14, NUMBER 16
BUSINESS REVIEW FORUM
Manage your business environment !
Sonae Sierra delays projects in Bucharest and Ploiesti, stops on-site works in Craiova
Sonae Sierra entered the Romanian market in 2007, when it bought River Plaza mall in Ramnicu Valcea
Portuguese real estate developer Sonae Sierra has stopped on-site construction works on a shopping mall in Craiova and reported a loss of EUR 50 million in the value of its Craiova and Pitesti projects. The developer has also halted investments in its planned projects in Bucharest and Ploiesti due to lack of financing. “Following a re-evaluation we realized we had lost over EUR 50 million on the two projects (Ploiesti and Craiova, e.n,), the sum which had already been invested,� said Alvaro Portela, executive manager of the company. The shopping mall in Craiova, the only one of the three projects with works at the site underway, was already 70 percent pre-leased, but this did not
help the developer secure the necessary bank financing. The mall in Craiova required EUR 140 million in investment, according to previous information. The developer had announced plans to build three shopping centers in Romania. The biggest of them was in Bucharest, a 110,000-sqm shopping mall due for completion in 2011, which required a EUR 600 million investment. Sonae Sierra owns the River Plaza shopping mall in the city of Ramnicu Valcea, for which it paid EUR 42 million in 2007, when it entered the market. It also owns 51 percent of shopping center Arena Mall in Bacau, which it bought for around EUR 45 million. The Portuguese developer
wanted to be among the top three developers and mall owners in Romania in terms of lettable areas in three to five years, according to previous statements. Sonae Sierra is one of several real estate developers which have halted their projects in Romania. Hungarian Ablon has abandoned its planned residential projects, as has Copper Beech, which decided to continue only one residential project at which construction works were already underway. Recently, Austrian construction company Strabag suspended construction works at the Asmita Gardens residential project, due to payment delays by its developer Charlemagne Capital. Corina Saceanu
ESTATES & CONSTRUCTION MARKET
BRIEFS SOMMERING INSTALL KEEPS TURNOVER STEADY AT EUR 4 MILLION IN Q1 OF 2009 é Installations producer Sommering Install reported a EUR 4 million turnover in the first quarter of 2009, according to the company’s general manager Rudolf Sommer. This year, Sommering Install plans to invest between EUR 100,000 to EUR 500,000 in local marketing and promotion activities. In March 2009, the company completed a EUR 3 million investment in its Tunari area plant near Bucharest. Sommering Install’s projects portfolio includes projects such as Baneasa Shopping City, Washington Residence, Bucharest Business Park and the Germany Embassy building in Bucharest. STRABAG 2008 NET PROFIT DROPS 8 PERCENT é Austrian construction company Strabag reported an 8 percent drop in net profit last year, to a value of EUR 157 million, due to curency exchange fluctuations and assets devaluation, the company reported. In 2007, the company posted a net profit of 170 million. The group’s financial reports stated a revenue increase by 24 percent to EUR
Bucharest ranks 114 among 215 cities on urban infrastructure development, Mercer study finds Bucharest infrastructure ranks 114th among 215 cities on infastructure development, according to a recent study conducted by HR consultancy company Mercer. Bucharest surpassed capitals such as Sofia, which ranked 144 or Moscow, ranking 126. On the other hand, Budapest ranked 74th while Prague was ranked 76th. The best urban infrastructure systems have been developed in cities such as Singapore, which occupies the first place in this top, followed by Munich or Copenhagen.
Bucharest infastructured earned the city the 114 place among 215 cities ranked by development
At the other end of the top, Baghdad ranks last on both infrastructure and quality of life, according to the Mercer study. In the same top, London was ranked 5th, Paris, 6th, while Swiss cities Zurich and Berna ranked 7th and 8th respectively. Mercer conducted this top taking into account criteria such as general access to basic structures such as power, filtered water, pipelines, telephony and internet networks, public transportation or road infrastructure. Magda Purice
Old apartments make bulk of Q1 deals, Coldwell Banker says Transactions with old apartments represented most of the deals on the residential market in the first three months of 2009, according to a a study of real estate agency Coldwell Banker. The old apartments, representing units built before 1989, registered sales discounts up to even 50 percent in 2009 compared with the same period of 2008. “Areas such as Militari or Drumul Taberei, which have a large amount of residential units have attractive sales prices at this moment, of EUR 1,000 per sqm for 3 and 4-room suits and up to EUR 1,200 per sqm for studios and two rooms apartments. The latest are the most required units,” said Catalin Serbanescu, managing partner of Coldwell Banker’s office in Banu Manta.
Old apartments caught the interest of buyers in the first part of this year
For example, a 34 sqm-studio in Dru-
mul Taberei, Moghioros area is priced at EUR 41,000, while a 3-room 71 sqm apartment in Militari can be sold for EUR 67,000 sqm. “More than ever, a powerful statement in pricing the apartments is delivered by the construction year of the block, before or after 1977. The banks look for this detail in granting the loans but this reference is also taken into account in notaries’ commission calculations or other fiscal taxations,” said Serbanescu. The real estate consultancy agency representative thinks that the months to come will bring transactions related mostly to the old apartments segment, where the prices are expected to be lower. Magda Purice
12.228 million in 2008. For this year, the group expects cash and amount equivalents of about EUR 1.5 billion, and an equity ratio of 30.5 percent. CARPATCEMENT HOLDING PUTS EUR 30,000 IN CSR ACTIVITIES é Construction materials producer Carpatcement Holding said it invested EUR 30,000 in enviromentrelated CSR activities, as part of a program called ”Bucurestiul Respira” (Bucharest breathes) initiated by the company in 2006. So far, the company put over EUR 200,000 in this CSR program and planted around 7,000 trees in the Bucharest area. 14
CBRE: First quarter of 2009 brings lower rents and higher yields in Europe The prime retail location rents across Europe posted a 1.3 percent drop in the first quarter of 2009, with the largest decrease registered in Bucharest with a 30 percent drop to EUR 1,080 per sqm per year and in Warsaw, with a 33 percent drop to EUR 960 per sqm, according to a report issued by CB Richard Ellis. The yields in retail grew by 24 base points in Q1 of 2009, Bucharest registering the highest growth with 300 base points and Moscow posting a 150 base points increase. The prime location rents for offices decreased in the first quarter of 2009, according to CBRE’s office rents index for EU-15 countries, which lost 3.4 percent in this period.
The largest decrease has been registered in Kiev which lost 33 percent and reached EUR 357 per sqm per year, while Moscow’s office rents lost 20 percent, to EUR 918 per sqm. The price of industrial spaces dropped also 2.2 percent in the surveyed EU-15 region, with Dubai posting the largest drop to EUR 33 percent to EUR 67 per sqm per year. Haga posted the sole industrial rent increase in EMEA, with 8.3 percent reaching EUR 65 per sqm per year. The yields in European offices increased by 19 points in Q1 of 2009, representing an increase of 107 base points compared to one year ago, according to CB Richard Ellis. The largest increase has been
registered in Moscow, with an increase of 150 base points to 11.5 percent, while cities such as Sofia, Zagreb, Budapest, Belgrad and Bucharest posted 100 base points rise in Q1 of 2009 compared with the same period of 2008. Conversely, Manchester and Birmingham dropped 15 base points, representing a 7.5 percent drop. The industrial segment in the European region grew by 32 base points, being 120 base points higher in the first months of 2009 compared with the 2008 similar period. Bucharest and Moscow once again posted the largest rise with 150 base points and reached 13.5 percent and 10 percent raise consequently. Magda Purice BUSINESS REVIEW / May 4 - 10, 2009
ESTATES & CONSTRUCTION MARKET
Knauf Insulation Romania plans EUR 9 million turnover in 2009 Padding materials producer Knauf Insulation Romania, part of German group Knauf, estimates a EUR 9 million turnover in 2009, an increase of 20 percent over 2008’s. The increase was due to a growth in the number of clients and in its products portfolio. “We aim for an increase in 2009 also and we plan to acquire a market share of 35 percent on the mineral wool segment in the next three years,” said Adrian Garofeanu, commercial director of Knauf Insulation. So far, Knauf Insulation holds a market share of 15 percent on this segment, according to the company’s latest reports. The mineral wool segment is expected to reach EUR 60 million in 2009. German group Knauf officially entered the Romanian market in September 2009. “The company decided to enter the Romanian market due to its potential for constructions and the need for good insulation
materials. Currently, Romania is lagging behind the other European countries on the insulation standards for constructions,” said at that time Dominique Bossan, managing director for Knauf in Eastern Europe. The company said it would open a logistic center in Romania, from where it plans to distribute all around the country to the local partners’ network. On the short and medium term, the company doesn't plan to open a production plant in Romania. “Due to the already existing production plants in the neighboring countries, we do not think of such a development as a priority, yet,” said Bossan. Knauf Insulation runs factories in Russia, Serbia, Ukraine, Hungary, Slovakia, Slovenia, the Czech Republic and a recently opened one in France. Magda Purice
RADUCANU’S LIST
Diana Metiu was awarded at the Business Woman Gala On 23th April took place the third edition of the Business Woman Hall of Fame Gala, where was launched The 33 Romanian Business Women Hall of Fame Yearbook and The Political Woman Review. The event was lodged by the editorial manager of the Business Woman Review, Andreea Marin Banica and as guests can be mentioned Elena Basescu, who appears on the cover of the first Political Woman edition. At this occasion were awarded 33 Romanian business women, successful women who found solutions to pass the crisis. Diana Metiu, the owner and the general manager of PR and advertising agency Diana Metiu International, was included on the 33th awarded women list, 16
as an important name in the domains which she represents, beside other notorious names of the Romanian business: Adriana Saftoiu, Camelia Sucu, Iulia Dobrin, Gabriela Vranceanu Firea, Venera Arapu, Carmen Adamescu, Despina Andrei etc. DMI is widely the most focused PR agency on the market, with preponderant Real Estate customers while the most part of the profile companies try to have customers from all domains. We found a successful niche and we maximum exploit it. We accommodate quickly and we found unprecedented promotion solutions. I am happy to see that we are appreciated and I am extremely honored to belong to Raducanu`s List, said Diana Metiu. The event, the tribute paid to these exceptional women, is, most part, due to a man – Alexandru Raducanu, the author of Cum sa reusesti prin tine insuti and the owner of The Marketer Magazine, who wished to offer to the public few female models who succeed in business world, since now monopolized by men. Paraphrasing the dictum – mentioned few times during the event – behind every powerful man is a more powerful woman, I could say that behind Diana Metiu there is a powerful women team who build the image of many successful companies, concluded Diana Metiu.
Mentor Finance gets EUR 15 million loan for residential project in Romania
Osnat Peled, marketing director with Mentor Finance
Mentor Finance, a subsidiary of Mentor Group Holdings, said it received a EUR 15 million loan to developing a residential project in Romania. According to the company, the loan has been granted after a joint venture comprising an international fund and a private equity group was set up. “Beginning with the summer of 2008, financial markets were blocked. Due to the financial global cri-
sis, we were facing difficulties in receiveing any loans for real estate projects,” says Osnat Peled, marketing director of Mentor Finance. According to Peled, the company has been contacted by developers over the last six months in order to get assistance on receiving financing solutions for existing but blocked projects. “Due to the international network of business contacts that we have established with funds and private investors, in most of the cases we can grant a solution, both in residential and commercial projects, especially if there are some sales results or pre-lease agreements for the project,” says Peled. The representative advises on the good local opportunity of joining low-risk projects at very good prices and yields. So far, Mentor Finance signed 35 financing contracts in Romania, Bulgaria and the republic of Moldova last year. Recently, it became the subsidiary of an international fund which has interests in renewable energy projects. Magda Purice
REAS: Residential market to recover as prices get closer to a level suitable to buyers According to a study conducted by housing, planning and development advisor REAS, over 64,000 apartments were completed in Romania in 2008, an increase of 36 percent compared to 2007. Even such a rapid production increase creates structural oversupply given the accumulated pent up demand resulting from the persistently high housing shortage and the growing ability to pay of the domestic buyers, according to REAS. The residential construction output in Romania increased by 17,000 units, including individual housing, with the most active regions in Romania being Bucharest-Ilfov, North-West and North-East. In 2008, the housing construction output in the Bucharest-Ilfov region was estimated at 8,326 units, of which less than 35 percent were delivered in the capital city, REAS found. Despite the large construction volumes, the market still shows a strong demand for apartments. Due to the gap between buyer preferences and price expectations, demand for housing is bound to remain largely unmet, according to REAS. Still, even given the completed apartments in Bucharest in 2008, estimated at 2,867 units, the number “is not impressive” when compared to other capital cities of the
CESE region (Central, Eastern and Southern Europe). According to REAS, there were twice fewer apartments completed in Bucharest than in Bratislava, which is one-fourth Bucharest size, and almost 90 percent fewer completions than in the Polish capital comparable in population size. As for the residential prices’ trimmed evolution in 2008, REAS advisors argue that “from the local household point of view, the market should normalize and adjust price levels to their purchasing power. For many developers, this phenomenon may indicate a painful necessity to revise financial assumptions for the implemented projects, resignation from the high margins and a significantly longer period of sales and implementation of projects. Consequently, many developers will have to retarget their projects to the popular and mid-market clients”. REAS predictions for 2009 comprise reduced transactions volumes and lower average prices in the residential market, due to the lack of capital and financing. REAS foresees a relatively robust recovery of the residential market from the present downturn, given this scale of development of the construction market. Magda Purice BUSINESS REVIEW / May 4 - 10, 2009
ESTATES & CONSTRUCTION MARKET
Austrian Sparkassen Immobilien posts EUR 5.7 million profit in 2008 Austrian investor Sparkassen Immobilien AG reported a consolidated net profit of EUR 5.7 million last year and an EBIT of EUR 23.8 million. The investor’s property portfolio in 2010 is expected to reach EUR 2 billion, with significant earnings growth from completion of pipeline projects, according to the company’s report. The value of its portfolio at the end of 2008 stood at EUR 1.78 billion, 15 percent higher than in the previous year. Development projects, which are recognized at cost of construction, made up 16 percent of the total value of the portfolio. Residential property made up 44 percent of the standing portfolio, divided between office properties, some 28 percent, commercial properties with 17 percent, hotels with 7 percent and other properties with 4 percent. More than half of the rental property is in Germany, with 27 percent of the portfolio in Austria and the remaining 22 percent in Slovakia, the Czech Republic, Croatia, Romania and Hungary.
BUSINESS REVIEW / May 4 - 10, 2009
Sparkassen owns Novotel hotel in Bucharest
As for operating results, by comparison to the previous year ,Sparkassen Immobilien AG's revenues and rental income both grew by 14 percent, to EUR 109.2 million and EUR 85.7 million respectively. Last year, the market turbulence and the general sector trends led to a devaluation of the firm’s portfolio by a total of EUR 101.7 million. The CEE portfolio was devaluated by 13.5 percent. The sale of eight properties from its portfolio in
2008 brought a profit of EUR 8.3 million in 2008. Among the successful deals, the reports includes the the conversion of the Novotel hotel in Bucharest, acquired by the company with EUR 29.5 million in 2006. The accumulated investment in development projects at the end of 2008 totaled EUR 160.8 million with 7 developments under construction, including Sun Plaza retail project in Berceni area of Bucharest. The project was launched in 2007 but it has been delayed so far. “The delay is due to the restructuring of the old project, as the initial completion time was too optimistic. Works are advancing and we've pre-contracted 84 percent of the rentable spaces,” said Friedrich Wa c hernig, member of the Sparkassen board. The new project will include an office building with a total area of 10,000 sqm atop the mall, taking the former EUR 185 million investment plan to EUR 200 million, financed wholly by Sparkassen Immobilien. Magda Purice
Kiwi Finance has financial solutions for Esop clients Credit broker Kiwi Finance will provide financial solutions for ESOP Consulting clients, following a recently signed partnership between the two companies. According to Alexandru Petrescu, managing partner of ESOP Consulting, financial consultants are needed now more than ever in providing solutions for clients looking for a residential location. “The new realities of the real estate market led to the partnership between the two companies providing interconnected services,” Petrescu said. Last year, Kiwi Finance, the former Gemini Capital Consult and part of the Swedish investment fund Oresa Ventures' portfolio, said it planned to reach 30 offices in Romania by 2010. Kiwi Finance posted a EUR 3.4 million turnover at the end of 2008, a 2 percent increase compared with 2007, while the company sold credits worth EUR 442 million. Esop Consulting’s partnership with Kiwi is another move made by a local real etate agency in delivering financing services to its clients. Magda Purice
17
FEATURE By Magda Purice
Meal tickets and travel vouchers bring significant revenues for companies which issue them and fiscal facilities for employers
Vouchers provide firms with meal ticket to profit Meal tickets are still perceived by Romanians as a poor substitute for cash, and sometimes even as a salary cut. That is why the local consumer’s habit of using these tickets may differ considerably from the Europeans who also use these tickets, with theirs being three times more valuable than Romanians’. Still, this market brings significant revenues for companies issuing the vouchers, and fiscal facilities for employers. 18
In the last ten years, the meal ticket market has reached a value of EUR 1.3 billion, according to estimations by the companies issuing different types of tickets and vouchers. It has the potential to grow to EUR 1.5 billion, even in the current economic conditions, since the fiscal facilities attached to these tickets continue to be attractive to employers. Still, according to Sodexo Romania, a company which distributes service vouchers and cards on the local market, the meal ticket segment is subject to the economic situation. According to Francois Podeur, general manager of Sodexo Romania, a more pronounced negative impact has been visible in the fields directly hit by the cash crisis, such as construction, real estate and automotive. Conversely, SMEs have started to offer meal tickets. “In the current market conditions, they want to maximize the fiscal advantages afforded through the provision of meal tickets to their staff,” Podeur told Business Review. According to the company’s calculations, half of the Romanian employees are being offered meal tickets as part of their salary package. On this market, Sodexo has a share of 40 percent, according to its data. The company has signed contracts with 50,000 locations countywide so far, including restaurants, shops and other service providers. Unlike other Europeans, the Romanian consumer on this market uses the tickets for shopping at hypermarkets or supermarkets, besides other commercial food stores, while the French or Italian user would rather put the ticket towards a meal at a restaurant. This may also be a matter of mentality, with a Romanian feeling embarrassed to pay with meal tickets at a restaurant, unlike the more pragmatic European consumer. In Romania, meal tickets are still seen as a poor substitute for cash, say pundits. Food vouchers have been introduced in European countries such as France, Belgium, Austria, Italy and Greece as a compensatory package and an instrument of social protection, according to a national company issuing service vouchers, Ticket BUSINESS REVIEW / May 4 - 10, 2009
FEATURE
The local meal ticket market reached EUR 1.3 billion in the last 10 years
Romania is on its way to implementing the holiday tickets system, which has already been done in other European countries
Plus Services. Nona Onica, the company’s marketing & PR manager, says the local market of food vouchers has developed fast in the last ten years, in direct relation with the social and economic background and fiscal facilities. According to the company’s studies, a food voucher is worth EUR 8.65 per day in France, or EUR 7 per day in Belgium, compared with only EUR 2 per day in Romania. For a company to be authorized with issuing these valuebased vouchers, it has to provide a share capital of EUR 3 million for a start, but also make other investments such as in technology and human resources. For instance, Ticket Plus Services recorded a volume of issued vouchers amounting to EUR 86 million at the end of 2008, and forecasts an increase of 30 percent on this amount in 2009. The company holds a portfolio of over 3,000 client companies which purchase these vouchers, most of them private companies with a staff of 100 to 300 employees, according to Onica.
one thing is for sure – tour operators are more than interested in signing partnerships with the issuing companies. Ticket Plus Services is about to sign partnerships with more than 300 such outlets and, according to the company’s estimations, plans to reach a portfolio of more than 2,000 affiliated partners. For all the provided voucher services – meal, gift, etc – the company has 30,000 affiliated shops countrywide, with 3,000 signed contracts with companies and 250,000 users. In April, Chèque Déjeuner Romania received its authorization to issue travel tickets called Chèque Vacances to Romanian employees. The company started a campaign to attract a chain of affiliated tourist agencies, comprising hotels and inns. Chèque Déjeuner Romania plans to attract over 500,000 individual clients for these tickets and to increase the number with public sector employees. “We see this product as a benefit for every employee, employer and tourism institution. Although the opportunity for these vouchers has appeared in troubled market conditions, if the product is trusted enough, the results will appear,” said Elena Pap, general manager of Chèque Déjeuner Romania. The company was set up in 2002 and has
HOLIDAY
VOUCHERS THE NEXT BIG THING
On top of meal tickets, which for several years have been part of a typical negotiated salary package in Romania, 2009 brought a new idea BUSINESS REVIEW / May 4 - 10, 2009
for Romanian employers and their staff, albeit a fairly traditional practice for other European countries: vacation vouchers. Most of the companies which are active on the market of meal tickets and other vouchers have started to seek authorization to issue this kind of ticket, with many of them expecting significant revenues from this segment, “ if the product is trusted,” as one company said. Ticket Plus Services, the Romanian leader on the market of food vouchers, according to its own data, expects the sales of holiday vouchers to make up 15 percent of the company’s overall sales on the food voucher segment, from 220,000 users. “We’ve received positive signals towards holiday vouchers both from the private and public sector. Now that the law is in place for the vouchers, called ‘vacantaPLUS’ in our case, we are counting on employers offering their employees a well-deserved holiday,” said Onica. Holiday vouchers have an impact on three parties: the employer, the employee and the hospitality institutions, such as hotels, inns or other tourism agents. Given that the total outlay per year per person is around EUR 800, which will be spent in authorized Romanian holiday units/agencies,
increased by 300 percent its issued number of tickets following the acquiring of the IFS’s commerce fund. In 2008, the company reached a turnover of EUR 12 million, a rise of 35 percent on the previous year’s result. For 2009, it estimates a 20 percent increase in turnover. In the European region, France introduced a system of holiday tickets in 1982. Chèque Déjeuner Romania, a company issuing meal, present, social and the latest holiday tickets, found out that Hungary had implemented the holiday ticket system in 1998, following a government ordinance which entitled each citizen to such tickets, free of taxes and other charges. According to Chèque Déjeuner’s studies, the system contributed a 25 percent growth to the revenues coming from hospitality and, as a political effect, to the eradication of social inequality. In Romania, Chèque Déjeuner was established in 2002, started to issue tickets in 2003 and recorded a volume of issued tickets four times higher in 2005 compared with its first operational year. Locally, the company holds a 30 percent market share, and this year increased its share capital required for issuing holiday tickets. In 2008, the firm adjusted its share capital by EUR 1.8 million. ■ 19
EVENTS
Best brands awarded in second Superbrands edition The best brands on the Romanian market were awarded during the second edition of the program Superbrands Romania. The awards were handed in during a special gala that took place at JW Marriott Hotel last week. During the Superbrands Gala, the tradition goes that a valuable and respected public figure in Romania is awarded, who has brought a remarkable image capital to the country. This year it was artist Dan Puric who received this accolade. Previous editions saw Raed Arafat, the creator of SMURD (the mobile emergency service), actor Ion Caramitru, initiator of the UNITER theater gala and Bogdan Baltasar, who is held in high esteem by the financial and business com-
munity. On the same occasion, the second volume of the Business Superbrands was launched. The volume includes top brands from domains and industries that are representative for Romania but also two categories that are a first. The first category which includes brands with development potential from neighboring countries is represented by three brands from the Moldova Republic: Agroindbank, Purcari and lawfirm Turcan& Turcan. The second category entitled Brands to Watch includes brands that were up to a remarkable start such as Radisson SAS and RBS, which will be monitored in the future by the business Superbrands programs. Otilia Haraga
A campaign meant to draw attention to the negative effects of plastic on the environment and fauna in the Danube Delta is unfolding. The campaign called “A World Without Plastic Would Be Fantastic” was initiated by Save the Danube and Delta Association in 2008. The aim of this campaign is to ring an alarm bell to the destructive effects that plastic objects that are discarded by tourists pose not only for the environment per se but also for animals. It is estimated that, annually, 100,000 birds and animals die because of plastic ingestion or wounds caused by it. The first three concerts that have been confirmed for the Bucharest Masters of Jazz festival are those of Richard Bona, Power of Three and Jan Garbarek Group. The festival will take place between October 23-25 at the Palace Hall. Norwegian saxophone player Jan Garbarek is a promoter of ambiental jazz who has penned about 60 albums so far. Power of Three is a group made of CHICK COREA, Lenny White, Stanley Clarke who are well-known for their virtuosity and their funk- jazz music. Last but not least, Richard Bona, who is considered one of the best bass players is an artist from Cameroon who is appreciated for his voice and verses. Bona will play on the first day of the festival. The previous edition of Bucharest Masters of Jazz brought to Bucharest artists such as Al Jarreau, Dianne Reeves, Erik Truffaz, Count Basie Orchestra, Monty Alexander Trio, Chick Corea, John McLaughlin and Nigel Kennedy. BUSINESS REVIEW / May 4 - 10, 2009
FILMREVIEW: Thick as
Thieves / The Code
Antonio Banderas and Morgan Freeman
What has happened to Morgan Freeman’s agent? In my limited knowledge of how Hollywood works, I had assumed that a top actor’s agent read the scripts his or her client was sent, and rejected the bad ones. But Freeman now appears to crop up in another dreadful movie every few months. Does he just say yes to every part he’s offered? This is the man, remember, who starred in Driving Miss Daisy, The Shawshank Redemption and Seven. He has an Oscar. Now it’s Bruce Almighty, Lucky Number Slevin and The Love Guru. And Thick as Thieves falls squarely in the latter category. Everybody loves a heist movie. While in real life, the type of person who robs banks is a brutal career criminal who would shoot your face off for a few thousand dollars, on screen bank robbers seem to have acquired an elegance and chutzpah. They are the Fred Astaires of the criminal world, debonair, graceful and ever on hand with a nifty move to surprise and delight the audience. We’re always going to be rooting for the gang, as they ingeniously outwit the dim-witted cops again and again. From the cream of the crop – classics like The Sting, The Italian Job, The Ladykillers and modern day greats such as The Usual Suspects and Inside Man – to the merely diverting – After the Sunset, Matchstick Men, Entrapment – it’s quite difficult to squander all that audience goodwill and make a disappointing caper movie. But it has been achieved here. In debt to thuggish and monosyllabic Russian gangsters (is there any other kind?), legendary diamond thief Keith Ripley (Freeman) is back for One
Last Heist. Think of him as a latter-day Cary Grant in To Catch a Thief, minus most of the charm. But the heist in question – stealing two hitherto unheard of Fabergé eggs – is a two-man job. Of course it is, it’s always a twoman job. So, he recruits young buck Gabriel Martin (Antonio Banderas, who’s pushing 50, so not that young of a buck really) to come in on the deal. We are introduced to Gabriel in the film’s first – and last – exciting sequence, an audacious diamond robbery on the New York subway. Yep, that’s how elite security guards carry USD 100,000 precious stones around the city – on the subway. Distracting Gabriel from the task in hand is Keith’s attractive, blonde Russian goddaughter Alexandra (Radha Mitchell), despite pop’s patronising and sexist warning that he should “stay away from her”. This lame romantic subplot seems at first to be largely a device to allow Banderas to show off his ripped torso in gratuitously lengthy sex scenes, and prove that even at 50 he’s still got it. Perhaps the ripped torso is the reason Banderas was cast, as it certainly can’t have been his acting: at times his oddly camp performance becomes almost painful to watch. Anyway, the two cat burglars set about planning the heist, until everything gets complicated by the thuggish Russian gangsters. Also on their trail is – and prepare to be astonished by this innovative plot direction – a dogged cop who has been chasing Keith throughout his 20-year NYPD career! Imagine. Events culminate in two big twists. One is so obvious that if you weren’t aware it was going to happen with five minutes of the start, your lack of foresight probably qualifies you to trade in sub-prime mortgages. The other is not obvious, and renders most of the preceding events nonsensical. As the credits began to roll, I couldn’t even work out what was supposed to have gone down. By the time they had finished rolling, I had ceased to care. Debbie Stowe Director: Mimi Leder Starring: Morgan Freeman, Antonio Banderas On at: : See listings for details 21
EVENTS Tickets in sector A for the first ever concert that MADONNA will play in Romania are already sold out. The pop icon will play in Bucharest on August 26 in Izvor Park as part of the Sticky & Sweet Tour, the best selling tour of a solo artist in history. According to organizers Emag!c Entertainment, tickets are selling very rapidly. “Tickets are selling the fastest that we have ever seen for a concert organized by us: at this moment, only 20 percent of the tickets are available,” said Laura Coroianu, CEO Emag!c Entertainment. Tickets in the other sectors can still be acquired from the Diverta store chain or online from www.myticket.ro site for prices that reach RON 120 (sector B), RON 600 (Gold Bar) and RON 800 (VIP sector). The Gold packages which include a VIP ticket in a premium area, access to the VIP area and the VIP tent can be acquired only from the site for the price of RON 2250.
Inocenti Foundation holds benefit event for hospitalized children The Inocenti Foundation will hold a benefit event on May 15 at Kentauros studios for the hospitalized children in Bucharest and their parents. The main beneficiaries of the foundation are infants who spend the first months of their lives in the hospital alone. The foundation works at preventing the developmental delays that often result from a lack of stimulation, individual care and attention. Children who are hospitalized due to illness also benefit from our activities, and their mothers receive counselling by psychologists and educators. The charity event is aimed at raising money that will enable the foundation to continue and expand its programs.
Romanian singer Loredana will give a guest performance at the event, as will the Cortez Band, dancers from the Wilmark Academia de Baile Latino, and our very own Elvis impersonator, Tony Tecuceanu. All the performances are free of charge, donated by exceptional artists who support our work with the children. The event will also have an auction and a raffle. World-famous tennis player Ilie Nastase, Andrei Pavel, and actor Horatiu Malaele have donated items, as have Albatross Travel, Carul cu Bere, Arcada Restaurant and others. Place your bid – you may come home with a favorite item. A donation of RON 300 covers the cost of a ticket. ■
Collection Mobility, a project which facilitates the exchange of works of art, was selected for implementation by the European Union. The project was submitted as part of the Culture Program of the European Union and will be implemented between 2009 and 2010. As museums, libraries and archives administer an important part of the cultural heritage, it was deemed important that all this content is made accessible to all. The project brings a positive contribution in the intercultural dialogue among the member states of the European Union. This will be possible by organizing exhibitions, editing publications, facilitating research by updating data basis and using them.
United Way throws anniversary gala
Former prime minister Calin Popescu Tariceanu
The annual United Way gala took place last week, marking 5 years of activity of the non- governmental organization in Romania. The gala featured a special guest: Teresa Hall Bartels, President and CEO of United Way International. 22
Every year, the gala acknowledges and awards the companies, organizations and volunteers who teamed up with United Way Romania to change for the better people’s lives. The gala also marks the beginning of a fundraising campaign that will take place between May and June in partnership with 43 companies and their employees, which is based on donations from the companies and their employees. The proceeds will be used to support 35 programs of education, health and economic and social integration. The programs were selected by the employees of the partner companies who are United Way volunteers. In 5 years of activity, United Way has had so far as partners 60 companies and 3,500 people, mainly employees of these companies. This made possible for the foundation to provide assistance to 15,000 people in total. Otilia Haraga
EUROPAfest, an international festival of blues, jazz, pop& classical music, will reunite over 300 musicians from 40 countries. The event will take place between May 7 and 13 in Bucharest. The series of concerts will be hosted by various venues, both formal ones such as the Auditorium room in the National Museum of Art or spaces of relaxation such as Hard Rock Cafe. Thus, consecrated bands from Austria, Germany, Great Britain, the Netherlands and Romania have been invited to play. An important section of the festival entitled Caffe Festival, which proposes the public to listen to music in an unconventional space, will take place at Hard Rock Cafe. There will be blues, jazz and pop concerts but also jam sessions. Cuban trumpet and piano jazz player ARTURO SANDOVAL will come to Romania to hold a concert during the Jazz Festival in Sibiu. The 39th edition of the festival will unfold between May 11 and 17, and Sandoval will play on the last day of the event. Arturo Sandoval is a famous trumpet and piano player from Cuba who work is highly influenced by jazzmen such as Charlie Parker, Clifford Brown and Dizzy Gillespie. Sandoval’s life was the subject of a movie called "For Love or Country: The Arturo Sandoval Story" in which he was played by actor Andy Garcia. Sibiu Jazz Festival is one of the best seen jazz events in South- Eastern Europe. Apart from jazz, music styles which combine jazz with folk, blues, rock, R&B, salsa and hip-hop. BUSINESS REVIEW / May 4 - 10, 2009