Business Review, Issue 18 by Business Review

VINCI-AKTOR CONSORTIUM WINS THE COMARNIC-BRASOV HIGHWAY CONCESSION; SEE PAGE 19 INTERVIEW

Doru Voicu, business development director at CEZ, says the first wind turbine will be built at Fantanele at the end of the month See page 9

ANALYSIS

Recruitment firms on the local market have been hit by falling demand for staff, with real estate, the car industry and banking the most exposed See pages 13-17

ANALYSIS

Mineral water producers are hoping that the imminent summer season is going to give their sales a boost as consumers sate their thirst See page 18

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ROMANIAâ&#x20AC;&#x2122;S PREMIERE BUSINESS WEEKLY

MAY 18 - 24, 2009 / VOLUME 14, NUMBER 18

PHARMA FEELS THE PAIN Pharma companies active locally have been hit by the new rules on pricing, margins, the foreign exchange rate and the financial crisis itself. Meanwhile, international mergers are likely to shake up the top ten drug producers in Romania STOCKEXCHANGE

See pages 10-12

BUSINESS REVIEW ROMANIA’S PREMIERE BUSINESS WEEKLY

MAY 18 - 24, 2009 / VOLUME 14, NUMBER 18

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NEWS

BRIEFS BANCA CARPATICA SEES EUR 2.7 MLN OF LOSSES IN Q1 é Commercial Carpatica Bank (BCC) posted losses of around EUR 2.7 million in Q1 of 2009, compared with the profit registered in the same period of last year, while total revenues fell by 10 percent to EUR

announced. Its assets increased by 16.5 percent in value in the first three months of 2009. For the entire year, the lender forecasts a 10 times higher gross profit, following a 7.7 percent growth of credit assignment.

BANK LEUMI ROMANIA CLOSES THREE BRANCHES, RELOCATES OTHERS TO SAVE RENT é Bank Leumi Romania has closed three branches this year, giving it a current network of 38 units, and made some relocations, moving branches from Iasi and Bucharest’s

according to the bank. It has also halted staff bonuses and renegotiated some rental contracts. This year, the bank plans to double its 2008 profit to EUR 4 million, while its assets are estimated to grow by 10 percent.

Dust emissions should be reduced by 95 percent

ment began in mid January, as per

the firm’s agreement with the authorities regarding environmental compliance. Works on the new de-dusting equipment from steel shop 1 started last year, as part of the company’s investment program. In 2008, the firm also began the modernization of the filters from lime furnaces no 1-3, an investment of about USD 4.1 million. Furthermore, it started modernizing the equipment at blast furnace 4, following a USD 1.57 million investment. ArcelorMittal Galati has now made environmental investments of over USD 130 million in the past eight years. Dana Ciuraru

CMU and Hygeia open stem cell bank Private medical services company Centrul Medical Unirea (CMU) expects its recently opened Stem-Health Unirea stem cell bank to reach a EUR 1.5 million turnover by the end of this year, from the deposit of almost 1,000 stem cell samples. CMU owns 50 percent of the project, with Greek company Hygeia controlling the rest. The project required a EUR 2 million investment which will be recovered in three years, according to CMU. A stem cell deposit contract is priced at around EUR 1,600 for 20 years, and the stem cell bank is working with several banks which offer customers financing packages to fund stem cell deposit contracts. Overall, CMU expects a EUR 16.5 million turnover this year. The firm

LAURENTIU OBAE

Unirii Square to reduce rental costs,

ArcelorMittal Galati has completed its de-dusting installations for steel shop 1, following a USD 20 million investment, officials have announced. The new equipment allows the more efficient capture of gas and dust emissions and should reduce general dust emissions by almost 95 percent. “The commissioning of this very important project not only demonstrates our commitment to complying with our environmental responsibilities, but also strengthens the sustainability of competitive upstream operations in Galati,” said Augustine Kochuparampil, ArcelorMittal Galati’s CEO. The installation of the equip-

COURTESY OF ARCELORMITTAL

31.95 million, the bank has

ArcelorMittal Galati completes USD 20 million investment in de-dusting

CMU expects its bank to house 1,000 samples

said it would soon put EUR 8 million into a private hospital and proceed with a EUR 25 million investment in a bigger hospital afterwards.

CMU is majority owned by Wargha Enayati, with a minority share package controlled by investment fund 3i. By mid June, the company is set to open five more medical units as part of a EUR 20 million investment program started in 2007. Its most recent hospital opening was a private maternity ward north of Bucharest, which required an investment of EUR 5.5 million. CMU acquired last year a medical unit in Cluj-Napoca and Avamedica units in Constanta. Other operators on the Romanian market, including Cord Blood Center in Cluj, have opened stem cell banks. Others, like the Biogenis, are offering customers the possibility of depositing stem cells in blood banks abroad, like the Memorial Hospital in Warsaw. Corina Saceanu

BUSINESS REVIEW / May 18 - 24, 2009

NEWS

ING Bank Romania reports RON 121 million profit in first quarter

LAURENTIU OBAE

ING Bank Romania has reported a net revenue of RON 259 million (EUR 61 million calculated at the average exchange rate for March) for the first quarter of 2009, 148 percent up on the same period of 2008. Profit was up 248 percent to RON 121 million (around EUR 28 million) compared to the same period of last year. Overall, the banking division of ING Group reported a net profit of EUR 519 million. The number of retail clients increased from 544,000 in Q1 of 2008 to 813,000 in Q1 of this year. SME clients also grew from 4,718 to 10,354. The bank’s total assets rose 37 percent in the first quarter of 2009 to RON 11. 043 million (EUR 2.6 billion).

Misu Negritoiu, general manager of ING

“Although the economic environ-

ment of 2009 was a difficult one, ING Bank Romania proved that it holds a solid position locally and that it has a strategy that pays off on the long term,” said Misu Negritoiu, general manager of the bank. ING Bank NV, the banking division of ING Group, reported a net profit of EUR 519 million in the first quarter of 2009. All three of its banking divisions – Wholesale Banking, Retail Banking and ING Direct – contributed to this result, despite an increase in risk costs. Compared to Q4 of 2008, in Q1 of 2009 the increase in revenue was 168.9 percent. Losses for the first quarter of 2009 amounted to EUR 305 million. ■

Flamingo International sales dive by 34 percent in Q1, 2009 Flamingo International, the second largest local retailer of electronic products, home appliances and IT&C, posted sales of about EUR 23.8 million (RON 100 million) in the first quarter of 2009, a fall of 34 percent from the same period of last year. However, the fall was less than the overall market decline of 40 percent. The company says that, in spite of these lower figures, it will end the year with a positive EBITDA due to having reorganized of the structure of its operational costs. Flamingo International has reduced every category of product on its shelf by 10 percent. The company ended Q1, 2009, with a negative EBITDA of approx-

imately EUR 3.2 million (RON 13.6 million) compared with only EUR 0.14 million (RON 0.6 million) during the same period of last year. At the moment, the Romanian company has ongoing loans totaling less than EUR 30 million and is working with three banks: ING, Unicredit and BRD Societe Generale. According to Jiri Rizek, CEO of Flamingo International, the market will bounce back in the second half of the year, on the back of a substantial drop in the price of some product categories. This price change makes it possible that products such as LCDs, cameras, video cameras and notebooks will reach similar prices to those charged in

Western countries and even the United States, which should encourage consumers to acquire products from Romania rather than shop abroad. Currently, Flamingo International has 90 stores, of which 29 come under the Flanco World brand. The company’s shareholder structure has undergone some changes in recent time after businessmen Dan Adamescu and Alexandru Ion Tiriac became significant shareholders, gradually increasing their participation. According to Flamingo International officials, 50 percent of the company currently lies in Romanian hands. Otilia Haraga

Mobexpert predicts 10 percent drop in sales for the second quarter after lower drop in the first Local furniture producer and retailer Mobexpert saw its sales in local currency drop by five percent in the first quarter of this year, despite initial estimates that sales in this quarter would stagnate. Sales in euro fell by 20 percent. Office furniture witnessed the biggest decline, of 10 percent, while home furniture and decorations were down by only three percent. The company's sales in Bucharest did not decline as much as those in its stores throughout the country. In some Bucharest shops, sales have BUSINESS REVIEW / May 18 - 24, 2009

even increased, for example in its Baneasa store, where sales were up five percent in the first quarter year on year. “Most non-food retailers have kept their prices in euro, increasing those in local currency by the equivalent of the devaluation. After seeing customers’ interest in bargains, they then reduced the prices of certain products by 15 to 20 percent. We at Mobexpert, […] have kept the prices in lei the same, so the prices in euro have dropped by over 20 percent on

last summer’s level,” said Dan Sucu, president of the Mobexpert group. The company has renegotiated contracts with all its suppliers in order to control its costs, and has accepted a drop in profit margins, Sucu added. For the second quarter of this year, Mobexpert expects sales to further drop by 8 to 10 percent, with no anticipation of a short-term improvement in the economy or any foreseeable drop in the cost of lending to help boost consumption. Corina Saceanu

BRIEFS EUROMATERNA ASSIGNS EUR 7 MILLION TO OPENING A HOSPITAL é Local firm Euromaterna plans to put EUR 7 million into opening a hospital specialized in obstetricgynecology in Constanta, the company has said. It started construction three years ago and will develop the unit on 3,500 built sqm. The hospital has four delivery rooms and two operating theaters, besides 20 individual rooms for patients. Euromaterna was established three years ago by doctors Marius Rusa, the current company president, and Emil Nicolae, the hospital’s GM. TROTTER RESTAURANT’S TURNOVER REMAINS STEADY AT EUR 2 MILLION IN Q1 é Trotter Restaurant, which owns chains La Mama and Cafepedia, posted a turnover of some EUR 2 million in the first three months of 2009, according to owner Catalin Mahu. The company saw an increase of three percent in client volume at the chains, reaching 5,000 diners daily. However, customers are spending less, says the owner. For this year, Trotter has assigned only EUR 15,000 to opening a coffee shop in Iasi and plans no further opening in 2009. Of the total turnover, Cafepedia contributed 10 percent, with the rest coming from La Mama. In 2008, Trotter had a turnover of EUR 9 million from its restaurant operations, 35 percent up on 2007. JACUZZI’S ROMANIAN REPRESENTATIVE OPENS SHOWROOM IN BUCHAREST é Jacuzzi’s local representative Hidrotek International has opened a EUR 310,000, 600-sqm showroom in Bucharest, the only such investment it will make this year. In 2008, the firm reached a turnover of EUR 1.1 million, a 20 percent rise on 2007. Profit reached EUR 150,000 last year, according to the company. In Q1 of 2009, the firm suffered a drop of 10 percent in sales, but hopes to recover it by year-end. 5

NEWS

BRIEFS

Citi bank sees rate at RON 3.95 per EUR by year-end

EMPORIKI BANK ROMANIA UPS RETAIL CREDIT VOLUME BY 6 PERCENT IN Q1 é Emporiki Bank Romania increased its credit volume on the retail segment by 6 percent in the first quarter, while retail deposits grew by 4 percent in the same period from slightly above EUR 20 million. The bank’s assets STOCKEXCHANGE

reached just over EUR 183 million at the end of 2008, 5.17 percent up on the previous year. The lender had granted credit worth EUR 10 million by the end of 2008, registering a yearly growth of 47.1 percent, while its deposit volume decreased by 20.8 percent, to EUR 51.45 million. GDF SUEZ ENERGY ROMANIA TO CUT STAFF AND INVESTMENTS é GDF SUEZ Energy Romania, formerly Distrigaz Sud, is planning to introduce cost-cutting measures,

The BNR could intervene if the leu rapidly gains in strength, according to Citi analysts

Citi bank analysts expect the Romanian currency to appreciate to a rate of 3.95 RON per EUR by year-end, from an expected RON 4.1 in the second quarter and RON 4 in the third. Citi's forecast of the EUR/RON indicates a real depreciation of about 6 percent. “In the event of a rapid leu appreciation, the National Bank of Romania may opt to intervene by sell-

ing RON. Moreover, large deviations from the economic program’s fiscal targets and political noise ahead of presidential elections in November may undermine investor sentiment, thereby adversely affecting the currency,” writes Citi in its latest report on the Romanian economy. Citi analysts note the Vienna agreement involving the parent in-

stitutions of the nine largest foreign owned banks incorporated in Romania is also worth highlighting. “The noted banks have confirmed that they remain committed to maintaining their exposure to Romania. In our view, this development, coupled with the IMF-EU led package, constitutes an important step in alleviating concerns over the country’s large external financing needs,” according to Citi. At around EUR 0.6 billion, Romania’s March trade gap, which Citi finds well below its forecast of around EUR 1.0 billion, brings the 12-month rolling deficit to EUR 19.6 billion from 21.1 billion in February. “In our view, the combination of economic weakness and a more competitive exchange rate should help narrow the country’s large current account deficit to around EUR 9.0 billion or 7.4 percent of GDP this year from almost EUR 17 billion or 12.3 percent in 2008,” Citi analysts Ilker Domac and Engin Dalgic note. Corina Saceanu

reducing staff numbers and investments by 25 percent in 2009, according to company officials. Total investments will reach about EUR 50 million in 2009, following the cut. Last year, the company received authorization to provide power, the first strategic step in the company’s offer to its clients. Currently, it targets the industrial segment. CLEAR CHANNEL ROMANIA TO MANAGE OUTDOOR CAMPAIGN FOR RIN GROUP é Outdoor advertising company Clear Channel Romania, part of the American group Clear Channel Outdoor, has signed up to provide Rin Group, owned by the Negoita brothers, with an outdoor campaign set to start in May, advertising a residential complex in Popesti Leordeni. Rin Group will start working on the project this summer. Clear Channel Outdoor entered the Romanian market in 2007, by acquiring local company Klass Advertising. Currently, it covers 30 cities countrywide and runs 700 outdoor locations. 6

OTP private banking customers increase by 50 percent in first 4 months The number of customers of the private banking division of OTP Bank increased by 50 percent in the first four months of the year. Most of them are people who do not wish to keep their money in just one bank. “This is a good moment for private banking since people with a lot of money who have used a single bank until now have come to understand the advantage of diversity,” said private banking & investment services manager Andra Mihailescu. Roughly 80 percent of OTP banking clients are either entrepreneurs or professionals who hold management positions in multinationals. The rest are either people who have inherited large sums of cash or have made money from real estate, according to Mihailescu. The largest balance held by a client is a seven-figure sum, she said. To become a private banking client at OTP, a customer must in-

vest at least EUR 50,000 or have a monthly income of at least EUR 5,000. “In Romania, EUR 50,000 is rather high. We set this sum because we thought in this way we could bring more customers with lots of money. In Bulgaria, the limit is EUR 40,000,” said Mihailescu. At the moment, the division dealing with OTP private banking clients consists of 11 people. “At the moment, the entire team is in Bucharest but we travel if we have potentially good clients,” said Mihailescu. The highest number of customers that a relationship manager can cater for is 120, but this limit has not yet been reached, says Mihailescu. She added that this year will bring new product launches. These include the “personal assistant,” to help clients by providing them with other services aside from the financial. Otilia Haraga

Rompetrol Rafinare reports 38 percent fall in Q1 turnover Oil refinery Rompetrol Rafinare, owned by the Rompetrol Group, has registered a 38 percent decrease in turnover to USD 651 million, while its operational profit (EBITDA) dropped to minus USD 14.3 million, the firm has announced. According to company information, the main external factors behind its Q1 results are the 54 percent drop in the international price of crude oil, 50 percent fall in fuel prices from the same period of last year, fluctuations in the exchange rate and the effects of the international financial crisis. The oil refinery expects net losses of USD 37.08 million this year, down five times versus 2008, while its business could halve, the budget approved by the shareholders shows. The firm has a share capital of some USD 555 million (RON 2.11 billion), divided into 21.1 billion shares with a face value of 0.10 lei. It is held by the Rompetrol Group, owned by KazMunaiGaz. Dana Ciuraru BUSINESS REVIEW / May 18 - 24, 2009

CALENDAR / WHO’S NEWS

EVENTS, BUSINESS AND POLITICAL AGENDA MAY 18

é 11.00 – Cora Romania along with CEFORA CORP and Floyd Advertis-

ing Design & Constructing organize a press conference to launch the training program Promoting Learning Throughout Life. Event takes place at Cora Pantelimon, room 1.

MAY 20 é 10.00 – ANIS organizes event on the topic IT&C Industry – State and

Perspectives at Tulip Inn Hotel, Rotterdam room. (3A Nerva Traian St.)

MAY 21 é 10.00 – Farmexpert organizes a roundtable with management represen-

tatives to communicate financial results and objectives. Event takes place at Hilton Hotel.

MAY 22 é 20.00 – Future Shorts film festival starts at TNB/ Artexpo.

MAY 22-23 é eLiberatica, the largest international IT event, takes place at Politehnica

University in Bucharest.

MAY 26-27 é Tarus Media and the British Medical Journal organize the fourth edition

of E-Health Congress 2009 at Hilton Hotel.

Ursus Breweries ups turnover by 27 percent on better distribution and merchandising

LAURENTIU OBAE

Brewers hope a hot summer will boost sales

Local firm Ursus Breweries increased its turnover by 27 percent in the financial year ended in March on the previous year, the company has announced. The growth was due to a portfolio which covers all pricing segments, as well as increase in the availability of PET and can packaging. Better distribution and merchandising on the retail segment also contributed to the turnover growth. Ursus Breweries, which pro8

duces the Ursus and Timisoreana beer brands, saw its beer volume sales increase by 18 percent in the last fiscal year on the previous one. The Timisoreana brand made up the bulk of sales. This year Ursus intends to end production at its Bere Azuga factory, with the brand to be produced in its four other plants in Buzau, Cluj, Brasov and Timisoara. Urusus, the local subsidiary of SABMiller, has reached a market share of 29 percent, up 4.6 percentage points on the previous year, according to the company, quoting data from market research firm MEMBR. Heineken Romania has also announced a share of 29 percent of the local beer market, quoting data from the research company Nielsen. Beer producers expect the market to stagnate or even see a slight drop this year, with actual results depending on summer beer sales. Weather forecasts for this year predict droughts and high temperatures for Romania, one of the sales drivers for the beer and cold beverage industries. Corina Saceanu

WHO’S DUSAN WILMS was appointed general manager of Metro Cash & Carry Romania and Moldova Republic. He started his career with the company in January 1998 and was appointed general manager of Metro Cash & Carry Romania in April 1999. In 2004, he opened Metro Moldova and at the beginning of 2005 contributed to the expansion of Metro Serbia. M ADALINA S CURTU was appointed partner at Deli & Asociatii law firm. She has seven years of experience, having specialized in commercial, civil and intellectual property law, insolvency and administrative law. Scurtu previously worked for Tuca, Zbarcea & Asociatii. BOGDAN BIBICU has joined Kinstellar as partner and head of the local banking & finance practice. He began his practice with the Bucharest office of Linklaters

NEWS prior to its spin-off as Kinstellar, and from 2005 to 2006 was an associate with the banking practice of Linklaters’ London office. RAZVAN POPA has joined Kinstellar as counsel in the corporate practice. Until recently he was a partner in Costea Jalba Popa & Asociatii. Prior to that, he spent several years as an associate with Hertzfeld & Rubin, and earlier he was in-house counsel at the investment banking arm of Alpha Bank in Romania. CATALIN GEORGESCU has joined Kinstellar as an associate in the banking & finance team. He holds a university degree from the Faculty of Law, University of Bucharest, as well as one in European Law from the French Romanian Institute for European Studies from Paris I – Pantheon Sorbonne University. Georgescu also holds a Master DESS in European and International Business Law awarded by Paris I – Pantheon Sorbonne University.

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

Marius Ghenea, owner of Fit Distribution, opens online toy store Businessman Marius Ghenea, owner of Fit Distribution, has launched an online toy store called ToyFun.ro. With this outlet, the firm aims to obtain a 35 percent slice of the online toy market over the next 12-18 months. The company has announced that it will invest EUR 200,000 in the site in its first year of activity. “Our business objectives for ToyFun.ro are to reach a turnover of approximately EUR 450,000 by the end of 2009. As far as 2010 is concerned, the site’s first complete year of activity, we forecast a turnover of EUR 1.2 million,” said the owner.

Fit Distribution, which was founded by Ghenea in 2002, operates a network of stores which includes PCfun.ro, ElectroFun.ro, ShopIT.ro and the domain 24pc.ro. At the beginning of this year, the firm took over the e-commerce domain 24pc.ro, which ranked among the top 20 e-commerce sites specialized in IT in Romania, and announced its interest in making new acquisitions of online sites this year. Last year, Fit Distribution posted a turnover of approximately EUR 13 million. Otilia Haraga BUSINESS REVIEW / May 18 - 24, 2009

INTERVIEW financing the EUR 1.1 billion investment is handled by the CEZ finance department in Prague. The Czech-based company CEZ is the owner of these two project companies. These days CEZ gets approached by many banks to discuss financing opportunities. I would say that it was a negotiation in progress with any of the banks until something very specific is achieved. Finding finance these days isn’t as easy as before the crisis. CEZ has a good balance sheet and this is why we don’t think that the current crisis will jeopardize the wind farm projects in which we are involved

COURTESY OF CEZ

CEZ starts first turbine at Fantanele next month Despite the current economic crisis and elusive financing, CEZ Romania has not postponed the projects in which it is involved in Romania: wind farms in Fantanele and Colgeac, EnergoNuclear and the joint venture with Termoelectrica in Galati. Company officials have said they will continue their established investment plans and will not cut their funding. DORU VOICU, business development manager with CEZ Romania, told Business Review that the first wind turbine is to be erected at Fantanele towards the end of next month. By Dana Ciuraru

At what stage are the Fantanele and Colgeac projects? They are under construction. We have already started to build the foundations, access roads and everything to do with what we call balance of plan and we are currently working on the main transformation substation. The first turbine should be erected towards the end of next month. BUSINESS REVIEW / May 18 - 24, 2009

Our aim is that this first stage of the project, at Fantanele, will be ready by the end of this year, and to start works at Colgeac. Recently, European Investment Bank officials said that CEZ was negotiating with them the conditions for a loan to finance up to 50 percent of this project. Can you confirm this? As CEZ Romania we are not involved in negotiations of any kind, with any bank. Any negotiation over

Who would administer the project? The two project companies for Fantanele and Colgeac are the constructors, and in the future they will become the operators as well. The management of these assets is done by CEZ. The fact that maintenance will be under contract with GE, for instance, or other entities will be discussed. For the time being our strategy is to try to finish the projects we have started in Romania. We have entered EnergoNuclear which is a very ambitious project and we would like to see it fly. We also have started a discussion with Termoelectrica to create the joint venture company for Galati and we are on the way now and pushing for this to happen. How does the average price of a MW of wind energy vary? The figure is different from country to country. It is true that technology in general has an international price. What we have seen in the market is that when the crisis began the cost of equipment fell, but now the crisis is not creating such a panic among suppliers. So what we are expecting is that prices will stabilize. I think that a reasonable expectation is between EUR 1.3 million and EUR 1.5 million per one MW of wind energy. For biomass it would probably reach almost double, and for solar about four times the figure. Is the project for nuclear units 3 and 4 of Cernavoda on schedule? With EnergoNuclear we have set up a company, selected the management and organized a second meeting of the general board of administration and a general assembly meeting. We have already approved the

budget for this company for a period of one and a half years. What we have to do now is to hire the personnel, owner engineering company and the external legal services, because we need to further organize the purchase of the services and equipment of the actual project, for the construction of nuclear units 3 and 4. Recently, the Canadians said that the Cernavoda project would be more expensive than estimated initially. Do you have a clearer cost evaluation at this moment? The Romanian government announced that the cost of the construction of units 3 and 4 at Cernavoda would be about EUR 4 billion. First of all, we must have a feasibility study done, because everybody could come with their own evaluation and give some figures in this market and what we do not want to do is to send the wrong signal. We know that the Canadians of AECL have a keen interest in being in the project, and in fact for the nuclear island they are probably the most suitable company to do it. But this is still being discussed internally – how we would invite them, whether we will invite them and so on. It is also a matter of negotiating the conditions for doing the project. So, for now I wouldn’t say that the final figure for the investment was settled. All this should be resolved in 18 months. What is the status of the project with Termoelectrica in Galati? Termoelectrica has already started to work on the evaluation report. The structure of the deal is that Termoelectrica will provide assets, most probably the existing ones in CET Galati. The legal entity, which will enter this joint venture, is CET Galati SA. It will contribute and CEZ will come with the money necessary for the development in such a way that CEZ will have a majority stake in the project company. They are now doing the evaluation report and we have selected the consultant for the feasibility study. In parallel, we will start a discussion with Termoelectrica over setting up the shareholders’ agreement and constitutive deed for the new entity. We expect all this to be finished by autumn this year because this is the deadline that both parties settled on. dana.ciuraru@bmg.ro 9

COVER STORY By Corina Saceanu

STOCKEXCHANGE

A bitter pill to swallow: law changes, international deals and the economic turbulence have conspired to hit the local pharma industry

New rules, international M&As and financial crisis to shake up local pharma market The last few months have been especially busy for pharma firms, which have not only had to face the new realities of the financial crisis, but have also had to re-think their strategies after the system's own new structural crisis. Several law changes have affected budgets, and forecasts for this year are grim. The top ten of pharma producers is poised to change, while some players are in search of new management to keep them afloat. 10

There has been both good and bad news for the pharma sector since the beginning of the year, some of which was expected: the changes in prices of generic drugs came with a shift in distribution and retail margins, and the fixed exchange rate in the system increased, although still at a slight difference from the market rate. All this will be reflected in the smaller profits of companies in the pharma industry, although not all will be hit to a similar extent, say pundits. Moreover, the current top ten of pharmaceutical producers is likely to be influenced by the large deals which have happened at international level, while some local mergers and acquisitions are to be expected too. Pundits are finding it hard to determine what the exact effects of the recent legislative changes will be and how much the financial crisis itself will affect the industry. But all still expect the market to post a growth, albeit below the level of previous years. “In the first quarter the new fixed rate had a positive impact, and then in April the new prices came into force. I don't know if this reform is finalized and all prices will stay the same by the year-end, so the 2009 prognosis will probably not be in line with the medium- and long-term trend. The growth will be 10 percent in local currency, while in EUR, we will see a three percent drop, depending on the evolution of the market exchange rate. The scenario assumed an average rate of 4.175 RON per EUR,” Petru Craciun, general manager of Cegedim Romania, tells Business Review. This is below what the market has seen in previous years, but is still a better performance than in other industries, says Craciun. In the first quarter of the year, the value of the local pharma market was EUR 466 million, up 6 percent, while the increase in local currency was 22 percent, according to data from Cegedim. Prescription drugs made up the bulk of the market, while over the counter (OTC) products and hospitals covered less. OTC also suffered a drop in sales, 5.3 percent in EUR, which was mainly due to the tough consumer environment. It is even harder to foresee what 2010 holds. “We are waiting for the results of the next two quarters for an accurate 2010 prognosis,” says the Cegedim representative. But one effect was seen in the first quarter. “As far as the market effect is concerned, a drop of 8 percent in the BUSINESS REVIEW / May 18 - 24, 2009

COVER STORY

COURTESY OF TUDOR PANU

LAURENTIU OBAE

COURTESY OF CEGEDIM

COURTESY FO DRAGOS DINU

Dragos Dinu, partner with Link Resource

Petru Craciun, general manager of Cegedim

Ulrik Rasmussen of Pedersen and Partners

Tudor Panu, pharma market analyst

number of units sold for Q1 this year is significant. The price has grown significantly because of the new exchange rate,” Craciun explains. “The variation in EUR, of almost 6 percent, shows we are still in difficult circumstances for Q1 of 2009 compared to Q1 of 2008.”

industry changed from RON 3.31, which was last year's rate, to RON 4 per EUR, which is close to the current market rate, although still at a slight remove. This should have been good news, but along came April. Then, the state decided to look at the minimum prices in a pool of 12 European countries, and force generic drugs, for which producers used to be free to set their own prices, to charge up to 65 percent of the price of originator drugs. A third ruling eliminated the different margins applied by distribution

companies to imported and local products, which will have same margin irrespective of their origin. However, both distribution companies and pharmacies are allowed to apply certain margins on various price categories, but for products above RON 300, the margin is a fixed amount, RON 30 for distribution and RON 35 for pharmacies. However, distribution costs in Romania are higher than in other EU countries, mainly due to the lack of infrastructure, lack of cash on the market and workforce. “So the RON 30 fixed margin for products

priced over RON 300 is much lower than the minimum distribution cost,” Octavian Iacob, executive manager of Farmexpert, tells Business Review. The measures aim at offering consumers lower prices, but there is also a loss, which is distributed in the chain linking producers and consumers. Its other effect is that it involves a risk for the patient, because it discourages the sale of expensive products, which are usually innovative, last generation products, which target serious illnesses, and it can be harder for patients to find

PRICES,

RATE AND MARGINS, ALL CHANGE IN THE FIRST QUARTER

But what exactly happened in the first quarter to shake the market? Firstly, the fixed exchange rate used in the

BUSINESS REVIEW / May 18 - 24, 2009

COVER STORY such products, Tudor Panu, pharma market analyst and former head of Schering – Plough Romania, tells Business Review. This could further create a downward pricing spiral if the level of prices in Romania is used to benchmark prices in other countries and if the merry-go-round continues, warns Panu. The lack of certain products on pharmacies' shelves may be a problem on the Romanian market later on, because producers are likely to opt to eliminate from their portfolios those drugs which sell poorly or bring the lowest margins. “Companies will not post losses, but when companies are unable to support a product, they will switch their focus from that product. But profit will most certainly decrease,” says Panu. “Producers need to re-think marketing budgets based on current market conditions, so if certain products are on an upward trend, or their internal margins on certain products are high enough to sustain an increase, then they will push those products on the market,” he adds. It is not easy to change the portfolio of products from one day to another, so companies can adapt on the way to the short term and promote those products they believe are better positioned, agrees Petru Craciun of Cegedim.

FOREIGN

PRODUCERS TO PAY THE PRICE OF CHANGE

“It is foreign producers who are paying the biggest chunk of the bill for these changes,” says Dragos Dinu, partner with Link Resource consultancy firm. Now producers must issue their bills in the local currency, so they assume the devaluation risk, which is natural, because they are larger companies and have financial instruments to cover the devaluation risk, Dinu believes. As a result, there will be some price changes for local products. These will initially be reflected in the profitability of local producers, some of whom have already updated their estimations, first,

because of the rate change, and second from these new additions. “It is hard to anticipate the drop in turnover because those who have lost because of price falls will try to make up for it on volume sales, which they can do because there is no threshold for pharmacies. They will try to recover the loss on prescription medicines from the OTC segment, which is a portfolio without regulations. This is why OTC prices have increased. But it is risky, because on the OTC segment, the consumers pay out of their pocket and they are sensitive to prices, so they might go for local products,” says Dinu. Initially, Romanian-made items could benefit from the new rules. “Local products had a 7.5 percent addition before, but now there is no difference between imports and exports, both in distribution and pharmacies,” explains Dinu. But Petru Craciun thinks otherwise. “It is too late to help local producers. A strategy for local drug production was needed in the previous decade, and it didn't happen,” he says. It was important for European laws to end the distinction between imported and local products, but the latest move does not help anybody greatly, says Craciun.

DISTRIBUTION

COMPANIES AND PHARMACIES FEEL THE HIT TOO

TOUGH

Local distribution company Farmexpert says it posted losses in previous years on the devaluation of the Romanian currency, but it plans to keep an operating profit of 1 to 2 percent of its turnover, “although the risks we have to face are higher than in a stable economy,” Octavian Iacob, executive director of Farmexepert, tells BR. “The risk of our customers not paying has grown significantly over the last year. […] Now, with the legislative changes, we have budgeted supplementary revenues from cost reductions connected to the foreign exchange risk and hedging, which are balanced by losses from the drop in margins and the discounts

Top ten pharma producers in Romania in Q1 2009

Moving annual turnover (RON) Market share 572.2 mln 7.6% 532.4 mln 7.1% 513.9 mln 6.8% 481.9 mln 6.4% 443.9 mln 5.9% 391 mln 5.2% 335.7 mln 4.5% 280.6 mln 3.7% 208.1 mln 2.8% 205.2 mln 2.7%

SOURCE: CEGEDIM, MAY 2009

Company Hoffmann La Roche Sanofi-Aventis GlaxosmithKline Novartis Servier Pfizer Ranbaxy Zentiva Astrazeneca Antibiotice

for our clients,” Iacob explains. On the chain between the national health insurance house (CAS), producers, distribution companies and pharmacies, the last two are the most exposed, says Iacob. Pharmacies have expenses like salaries and rents at the same level as last year, but their revenues have fallen in the meantime, and they cannot control when payments are made. For example, for a drug which costs RON 3,500, on which the pharmacy puts a RON 35 margin, which is 1 percent, a delay in payment from the health insurance fund of more than two weeks will generate higher costs than the margin gain, explains the Farmexpert representative. “For pharmacies, making an annual budget and a serious cashflow is impossible,” says Iacob. The delay in payments from the state health insurance budget, which covers more than 60 percent of drug sales in Romania, may spell trouble for all players. And the budget may shrink this year, given the low signals from tax collection. “If the national health insurance house collects all the budgeted sums and the money finances the system, then the market can have a predictable growth,” says Tudor Panu. TIMES CALL FOR MANAGEMENT CHANGES

The last two years were difficult too for the pharma industry. “Although results in previous years were positive, it has never been easy and comfortable on this market. But local subsidiaries already had experience in dealing with a crisis,” says Petru Craciun. The pharma market had a crisis in 2007 and 2008 because of the fixed exchange rate. “The difference between the fixed and market rate was 20 percent at one point. In October last year distribution companies didn’t deliver anything. So the pharma market was in a crisis before entering the financial crisis. Some companies have overhauled their business and even slashed personnel, some have shut down warehouses, and revised costs and commercial policies. So from this point of view I anticipate a good year because these companies entered the financial crisis already prepared for it,” says Dragos Dinu. And all this pressure was felt by managers in the industry, many of whom have been ousted in the meantime. “Due to the increasing competition and recent price regulations, we have seen a trend towards market consolidation through mergers and acquisition, which naturally leads to the

reshuffling of management teams and also increased demand for restructuring, cost optimization and change management specialists,” says Ulrik Rasmussen, partner with Pedersen & Partners. Several companies in the pharma industry are looking for new managers now. “Proven industry (or neighboring industry) and management experience in a similar position is key for clients. Educational background is not that essential,” adds Rasmussen. The recent difficulties herald a new period of expat management, believes Petru Craciun.

M&AS TO UPSET LOCAL RANKINGS MORE THAN LAW CHANGES Companies which were making their turnover from selling only a few products, and which have seen those products suffering massive price reductions, will suffer more, say pundits. Some of these companies even rank among the top few on the market in terms of turnovers. But even if the rankings change, the situation will not become so bad as to force any player out of the market. “I don't think companies will pull out of the market. They could drop some drugs, and some prescription medicines become OTC when sold in a lower molecular concentration. But, anyway, we still lag behind in Europe in terms of drug consumption, so it would be wrong for a company to pull out of the market,” says Dragos Dinu. Mergers and acquisitions may happen at international level too, following several international moves, like the announced Sanofi-Zentiva deal, Pfizer’s acquisition of Whyett, and the MerkSchering-Plough deal. “The top ten producers has already been impacted by the deals which have happened since the beginning of the year, which does not show up in our data yet. Sanofi and Zentiva will go top, Pfizer and Whyatt will rise from fifth to sixth, and Merk and Schering Plough will enter the top ten,” Petru Craciun tells Business Review. An M&A is a long and complicated process, so it doesn't happen from one day to another because of changes in pricing regulations in a certain country in the chain, says Tudor Panu. But Dragos Dinu says he believes there will also be some M&As on the Romanian market between small and medium players. “The pressure of large mergers will extend to local ones too,” he says, and the trend will continue, accelerated by the crisis. corina_saceanu@bmg.ro BUSINESS REVIEW / May 18 - 24, 2009

ANALYSIS By Otilia Haraga

STOCKEXCHANGE

Companies are no longer employing staff and are less willing to spend on training existing employees

Recruitment firms hit by falling demand for staff Recruitment firms are currently finding themselves the victims of a chain reaction: companies in various sectors hit by the crisis are no longer employing staff, and when they do, they prefer to use their internal human resources departments in order to save money. Sectors such as real estate, the car industry, construction and banking are the least active in hiring and the most exposed to lay-offs at the moment. BUSINESS REVIEW / May 18 - 24, 2009

Recruitment firms are dealing with the negative effects of the financial crisis. Most companies have suffered a slowdown in their activity of between 50 and 80 percent, says Loredana Vladareanu, head of recruitment & selection services at HART Human Resource Consulting. It’s a similar picture elsewhere. “Budgets have been drastically cut, few new jobs are being created, and what is mostly being done is replacements. A lot of companies are trying to recruit internally if they have an adequate HR department and are only turning to recruitment companies for positions which are difficult to fill,” says Florin Ochiana, HR operations manager at Lugera & Makler.In 2008, the firm had a turnover of EUR 18.5 million. “This year we will attempt to maintain the same level, or, if the crisis worsens in Romania, at least reach the same turnover as in 2007,” adds the manager. At the moment, the company has approximately 400 open positions for permanent and temporary recruitment. “The volume is down by half since last year, before the trigger of the crisis,” says Ochiana. Demand for staff will shrink and lay-offs are expected in real estate, the car industry, construction and banking, the sectors that have been hit hardest by the crisis. “While all sectors are affected, the only one that remains somewhat constant is FMCG, food and non-food mid-priced cosmetics. Of the nonfood FMCG segment, electronic home appliances have been influenced, says Daniela Necefor, managing partner at Total Business Solutions. Personnel are sought in IT (programming) and engineering and sales (especially middle managers). Specialists, such as electricians and doctors to work abroad, are also in demand. Few positions are available for operators in production, since this sector has been strongly affected by the current economic situation, explains Gabriela Crainic, research driver at Manpower, which posted a turnover of EUR 12 million in 2008. At the moment, it is hard to recruit in IT where candidates “are somewhat reluctant to change their job as the wind blows.” 13

ANALYSIS

STOCKEXCHANGE

Expat professionals cost companies more to hire

“Generally, companies are seeking to hire specialists, since they are trying to take advantage of the current situation and recruit the best people on the market for less than they would have paid this time last year,” she says. Cases in which new positions are created are rare. As far as employees’ financial expectations are concerned, generally jobseekers who have been laid off ask for lower salaries due to the effects of the crisis. However, candidates who have a job in which they have proven their efficiency are asking for a 25-30 percent higher salary compared to their cur-

rent position, says Crainic. “We have noticed that such salary increases are being solicited mainly by middle managers and those who work in domains such as finance, logistics or project management,” she adds. Generally, salaries have been lowered by employers, not employees. Ochiana says salaries in sales have slumped, with a sales representative now having to expect a fall of 1015 percent in remuneration. In the real estate domain, expectations have also dropped. “However, income has remained rather stable because performance bonuses have increased.” Entry-level salaries have decreased for foreign language speakers, who are now earning less than they were last year. “This situation is also a result of the fact that salaries have not been updated to reflect the evolution of the RON/EUR currency exchange rate, while some haven’t even been updated to take account of inflation, so the equivalent in RON of an offer made in EUR is lower,” says Ochiana.

EXPAT

MANAGERS MORE EXPENSIVE THAN LOCAL ONES

When a foreign manager sits at

the helm of a company, things are more complicated, both from a logistics and pecuniary point of view. Firstly, the salary of a foreign manager is much higher – as is the benefits package – than that of a Romanian equivalent. “The net salary of an expat can be 30-50 percent greater than that of a local manager, with the difference in the benefits package reaching approximately 50-70 percent,” says Loredana Vladareanu. If the foreign manager has had to relocate to take up the position, the package of benefits is likely to include the following: well-equipped and comfortable accommodation plus utilities, an annual or bi-annual return ticket to the manager’s country of origin, a top of the range company car, fees for international kindergarten or school for children, high-quality medical coverage, mostly for the entire family, life insurance, performance bonuses and share options, plus paid or part-paid holidays. “For a Romanian manager, the benefits package does not differ significantly in structure but will be much cheaper. It could still include high-quality medical care for the en-

tire family, life insurance, performance bonuses and/or shares, and paid or part-paid holidays. However, the benefits which cost the most disappear: accommodation, return tickets home and school fees,” says Vladareanu. At the highest level, headhunters currently have to look mostly for top managers in pharma, retail, agro-business, industry and production. Top managers are least sought for banking and real estate, and domains such as the car industry, construction materials and IT&C are also on a downward slope in recruiting top managers, says Loreda Dragomir, senior consultant at Stanton Chase Romania. She says headhunters find it most difficult to land chief and senior accountants and professionals for highly specialized positions such as lean manager or PMP certified project manager. In any case, a GM of a real estate company, leasing managers, branch managers and production managers in companies that have slowed down their operations are willing to move to a new industry for a lower salary, says Dragomir. I

BUSINESS REVIEW / May 18 - 24, 2009

WND

100 -

ACTUAL CONSULTING SRL Str. Barajul Arge[ nr. 11 Bucure[ti, cod 014121 office@actualconsulting.ro www.actualconsulting.ro

WND

ADECCO ROMÂNIA Str. Dr. Felix nr. 28 Bucure[ti, cod 011038 office@adecco.ro www.adecco.ro

1,895 1,057

ACCORD GROUP ROMÅNIA SRL member of AltoPartners Str. {tefan Negulescu nr. 54, ap. 1 Bucure[ti, cod 011654 buc@accord-ece.com www.accord-ece.com / www.altopartners.com

AIMS HUMAN CAPITAL ROMÂNIA Str. Mozart nr. 16B Bucure[ti, cod 020256 office@aims.ro www.aims.ro

95 115

Temporary placement services

Candidates placed in 2008 (%): Top managers/ Managers/ Others

Company Address E-mail Web page

Year established Employees Consultants

Industry specialization

Representative clients

Top local executive Title Phone Fax

1998 7 3

all

WND

Sorin Popa Managing Partner 021-230-0660 0744-329-568 021-230-0661

3-5 weeks 1 year

1997 4 2

generalist, banking & financial services, FMCG, industry etc.

international & local companies

Viorica Neagu Managing Director 021-233-2660 031-805-3943 021-233-2660

250 – 25.000 EUR/candidate 90 10 -

1 day – 3 months 5 days – 6 months

2000 68 29

human resources services

WND

Cristina R`dulescu Country Manager 021-300-3546 021-300-3545

WND 100

30 - 45 working days 6 - 12 months

1991 25 16

Real Hypermarchet, retail, pharma, Kaufland, Novartis, constructions, Mota Engil, Colas, automotive, FMCG, real Aviva, Fabryo estate,financial Interamerican/Eureko, services, industrial, Ringier, SCA Hygiene, media & marketing Sealynx Automotive

Mihaela Perianu Managing Partner 021-231-0990 037-287-0520

WND

Dana Patrichi Managing Partner 021-231-0720 021-231-0719

Average annual net salary of candidates (EUR) Candidates in database

Successful placements: 2008 / 2007

RECRUITMENT

Search methods (%): Direct search Advertising & selection In-house database

Minimum & maximum of fee charged to client (EUR) Fee split (%): Success Short list Retained

Search time limit Guarantee to client

WND 28,000

100 -

min. 15,000 34 33 33

4 - 6 weeks 1 year

90 10 -

WND

90 10 -

WND 100

2 8 90

WND > 50,000

20 30 50

aprox. 24,000 60,000

75 3 22

30 49 21 (Financial Controller, Sales Executive, Training Coordinator)

ALEXANDER HUGHES ROMÂNIA Intr. Bitolia nr. 26 Bucure[ti, cod 011677 bucharest@alexanderhughes.com www.alexanderhughes.com

WND

80 20 -

100,000 150,000

100 -

15,000 - 100,000 34 33 33

24 months

1996 14 6

board services / management appraisal, built environment, consumer markets, energy, utilities & clean tech, financial services, industry, life sciences, media & entertainment, professional services, technology, public/ non profit/ education

APT RESOURCES & SERVICES Str. Clucerului nr. 82 B2 Bucure[ti, cod 011368 hr@apt.ro www.aptjob.ro

1,050 1,200

5 25 70

WND > 20,000

25 30 45

WND 100 -

2 – 6 weeks 3 – 6 months

1994 54 12

recruitment, executive search, outplacement, career counseling

IT&C, banking & finance, engineering, sales, customer support

Marilena Petrec CEO 021-222-1303 021-222-1303

45 25 (start-up in 2007)

local placements: commercial/sales staff 20%, administrative staff 20%, retail staff - 10%, technical staff - 10%; international placements 40%

15,000 22,000

10 30 60

300 -1,500 100 -

4 weeks 3 - 6 months

2007 6 4

retail, heathcare, pharma, services, production

WND

Marco Rossetti General Manager 021-310-3218 031-815-2261

1999 45 32

advisors - finance, accouting & banking (BM); IT&C & construction engineering (BM Tech); sales, PR & Marketing (BM Active); HR & admin positions (BM Support); logistics, procurement, production, warehousing (BM Operations)

WND

Samantha Crocker Managing Partner 021-231-5324 021-231-5325

management & HR consulting

Petrom/ OMV, Distrigaz Sud, Dacia Groupe Renault, Carmeuse Central Europe, Faurecia, Michelin Romania, Cabinet Gruia-Dufaut, Honeywell Garrett, Ruukki, Louis Berger, Renault Technocentre Roumanie

Viorel Ghe]e Managing Partner 021-319-2672 021-319-2674 021-319-2675

Mihai Moghior Managing Partner 021-335-4437 021-335-4438 021-335-0454

ARENAJOBS.RO {os. Berceni nr. 104, bl. Turn, et. 7, cam. 2F Bucuresti, cod 041919 bucuresti@arenajobs.ro www.arenajobs.ro

BARNETT MCCALL RECRUITMENT Str. {coala Floreasca, nr. 3 Bucure[ti, cod 011641 bucharest@bmr.ro www.bmr.ro

BPI MANAGEMENT CONSULTING ROMANIA SRL Str. General Praporgescu, nr. 1-5, et. 3, ap. 6 Bucure[ti, cod 020965 romania@bpi-group.com www.bpi-group.com/romania

BRAINSPOTTING SRL (IT&C RECRUITMENT) Str. Titus nr. 23 Bucure[ti, 040166 employ@brainspotting.ro / apply@brainspotting.ro www.brainspotting.ro

CATALYST RECRUITMENT SOLUTIONS Str. Maria Rosetti nr. 8A Bucure[ti, cod 020485 office@catalyst.ro www.catalyst.ro

CONSULTEAM Str. Tudor Arghezii nr. 52 Bucure[ti, cod 020948 office@consulteam.ro www.consulteam.ro

BUSINESS REVIEW / May 18 - 24, 2009

WND

10 50 40 (specialized positions, professionals with up to 5 years experience)

WND

8 25 67 (Cost Analysts, Business Developer, Senior Lawyer, Legal Advisor)

5 30 265 250

136 WND

85 68

65 (Software Developer, Software Architect, Network & System Administrator, Database Administrator, IT Auditor, Business Analyst, Telecom Engineer, etc.)

10 90 (specialists, entrylevel, young talents)

30 50 20 (engineers, sales representatives, customer service representatives, KAM, administration specialists, insurance specialists)

1,500 20,000

WND 2,000

35 25 40

100 -

WND 25 25 50

WND 40 30 30

1 -15 working days 1 month -1 year

6 weeks 6 months

1996 17 14

10,000 – 100,000 45,000 (IT&C specialists & managers)

35 30 35

WND 67 33

2 - 5 weeks 1 - 12 months

2001 12 11

IT & Communication

Microsoft, IBM, HP, Accenture, Bull Romania, Raiffeisen Bank, CitiBank, Vodafone, Orange, Xerox, Coca-Cola Romania, Philip Morris, JTI, ING Life Insurance, Generali Asigurari, Eureko (Interamerican), OMV Petrom, Cap Gemini, ENSIGHT Management Consulting, A&D Pharma, etc.

WND 100,000

30 70

500 - 6,000 60 30 10

5 - 10 days 3 months (entrylevel), 6 months (specialists), 1 year (management)

2006 7 5

IT, Consulting , BPO

WND

Ana Giurca Business Development Manager 021-318-5577 021-318-5577

36,000 > 10,000

70 10 20

800 – 9,000 20 10 70

5 weeks 3 (specialists) to 6 (managers) months

2005 10 6

top & mid management & specialists in all fields of activity

WND

Oana (Botolan) Datki Country Manager 021-316-5978 021-316-6038

Minimum & Search maximum of methods (%): fee charged to Direct search client (EUR) Advertising Fee split (%): & selection Success In-house Short list database Retained

Search time limit Guarantee to client

Temporary placement services

Candidates placed in 2008 (%): Top managers/ Managers/ Others

Average annual net salary of candidates (EUR) Candidates in database

Company Address E-mail Web page

Successful placements: 2008 / 2007

RECRUITMENT

Year established Employees Consultants

Industry specialization

Representative clients

Top local executive Title Phone Fax

Vodafone, ABN - RBS, Perot Systems, KPMG, Unicredit Tiriac Bank, Inditex, Jones Lang LaSalle, Star Foods, Intel, Saint Delia Burnham Gobain, BNP Paribas, Country Manager Siveco, Chapman Taylor, 031-407-0240 Jysk, Norr Stiefenhofer Lutz, 031-407-0243 Ernst & Young, Hyder, Telelink, AIG / Lincoln, Charlemagne Capital, Adobe, Metro, Microsoft GTSC, CEZ, Bogaris

CVO RECRUITMENT ROMANIA Str. General Berthelot, nr. 59, et. 2 Bucure[ti, cod 010165 bucharest@cvo.ro www.cvo.ro

130 110

45 33 22

20,000 120,000 (the Group), >15,000 (in Romania)

50 20 30

WND 50 10 40

15 - 30 days 3 - 12 months

2006 10 7

sales & marketing, finance, technology

DYNAMIC HUMAN RESOURCES GROUP Str. Cpt. Gh. Preotescu nr. 16 Bucure[ti, cod 040175 office@dynamichr.ro www.dynamichr.ro

200 500

10 20 70

WND

30 50 20

WND

1 week - 2 months 1 - 3 months

2004 4 & 10 collaborator 3

IT, FMCG, construction, advertising

WND

Simona Nicolaescu Executive Director 0724-088-400 021-335-5083

E-GO TECHNOLOGIES SRL Str. Av. Vasile Fuica nr. 25 Bucure[ti, cod 012083 bucharest@hudson.ro www.hudson.ro

33 44

WND

WND 5,476

WND

1996 10 7

recruitment & talent management

WND

Stephen Moroz General Manager 021-224-0891 021-224-0890

GEORGE BUTUNOIU Str. Andrei Mure[anu nr. 17 Bucure[ti, cod 011841 consulting@georgebutunoiu.com www.georgebutunoiu.com

50 50

90 10 -

60,000 120,000

100 -

12,000 33 33 33

12 months

1992 7 3

executive search

WND

George Butunoiu Managing Partner 021-233-2090 021-233-2057

HILL INTERNATIONAL HRC ROMÂNIA SRL Str. Tudor {tefan nr. 34, ap. 1 Bucure[ti, cod 011658 office@hill.ro www.hill.ro

HR BUSINESS CONSULTING - member of Friisberg & Partners International Str. {tirbei Voda nr. 92 Bucure[ti, cod 010118 office@hrbc.ro www.hrbc.ro HUDSON LEGAL Str. Vasile Fuica, lt. av. nr. 25 Bucure[ti, cod 012083 orsolya.endrefiy@hudson.com / bucharest@hudson.ro www.hudson.com

WND

30 50 20 (specialists)

62 43

30 45 25 (candidates with high degree of specialization)

WND > 60,000

60 10 30

depending on type of assignment retainer based fee; installments according assignment type

WND

80 10 10

20-25% of the annual gross salary 40 - 50 25 - 30 25 - 30

WND 50 50

1 – 3 months (up to 6 months for cross - border assignments)

1992 17 12

all industries, top & middle management positions & specialists

2003 5 5

industry/ manufacturing, financial & accounting consultancy, banking & non banking institutions, IT & C, FMCG

WND

2003 WND 17

legal recruitment in Emerging Europe

6 - 12 weeks 6 - 9 months

Arcelor Mittal, BMW, BCR-Erste, BRD-GSG, Gaz de France, HP, Monica Hoffmann la Roche, Johnson Wax, JTI, Vr`biescu Kraft Foods, OMV – Managing Director Petrom, OMYA, Rauch, 021-230-7896 Rehau, Robert Bosch, 021-230-7913 Saint – Gobain, Sandoz, Siemens, Swarowski, Zentiva

WND

Dana Pascu Managing Partner 031-107-5499 031-107-5499

Prerna Sujan Consultant major local and Romania International Law Firms, Orsolya Endrefi major corporations Associate Director Legal Emerging Europe

WND

focus on legal recruitment only

WND > 40,000

50 25 25

INTERNATIONAL SERVICE GROUP PERSONNELL MANAGEMENT Str. Viitorului nr. 18, et. 1, ap. 2 Bucure[ti, cod 020612 office@isgpm.ro www.isgpm.ro / www.isg.eu

115 80

25 50 25

15,000 20,000 (from Romania), 180,000 (from all over the Europe)

55 10 35

2,000 - 10,000 40 30 30

30 working days 3 - 6 months

1999 10 7

construction, engineering, industrial sales, FMCG, logistics, automotive

WND

Andreea Anton Managing Partner 021-211-3711 021-211-4514

IVENTA ROMANIA MANAGEMENT CONSULTING Str. Maria Rosetti nr. 8A, et. 4 Bucure[ti, cod 020485 iventa@iventa.co.ro www.iventa.co.ro / www.iventa.at

WND 51

44 32 24

WND

85 12 3

WND 33 33 33

8 weeks project/ position specific

2005 5 3

industry, IT, services, telecom, FMCG, pharma

WND

Anda Bog Country Manager 021-306-0000 021-306-0008

2009 4 2

consumer & retail, energy; financial services & banking,industrial/ manufacturing (including automotive), IT & C, pharmaceutical & medical, professional services, real estate & construction

WND

Heike Meier Cristina Flesariu Managing Partner 037-400-7772 021-212-4060

2006 7 4

automotive, oil & gas, FMCG, telecom/ IT development, construction, real estate/ development, industrial, consultancy

WND

Liana Bra[oveanu Country Manager 0256-202-123 021-232-0846 0722-576-173

KEY TO SUCCESS SRL (K2S) Str. Marcel Iancu nr. 11 Bucure[ti, cod 020757 romania@key2success.ro www.key2success.ro

KILPATRICK EXECUTIVE SEARCH Str. Alba Iulia nr. 3, ap. 3 Timi[oara, jud. Timi[, cod 300077 Str. Ceasornicului, nr. 7, Bucure[ti, cod 014111 liana.brasoveanu@kilpatrick.eu/ olivia.franculescu@kilpatrick.eu www.kilpatrick.eu

LCL FINANCIAL RECRUITMENT Str. George C`linescu nr. 32 Bucure[ti, cod 011694 office@lclconsulting.ro www.financialrecruitment.ro

N/A

52 46

WND (start-up in 2008)

N/A

15 45 40 (software specialists, controllers, recruiting supervisors, planning engineers, senior accountants)

10 60 30

WND > 15,000

50 10 40

WND

average 6 weeks 6 - 9 months

36,000 15,000

85 15

25,000 20 30 50

6 weeks 6 - 12 months

1,800 > 7,000

70 10 20

WND 20 80 -

WND 6 months

2008 3 2

financial professionals as: Chief Financial investment, insurance, Officer, Financial leasing companies & Controller, Financial other financial Analyst, Internal Audit, institutions & Accountant, Tax & multinational Payroll Professionals, companies other Financial Institutions Professionals

Loredana Ladunca Director 0745-072-901 021-350-4950

BUSINESS REVIEW / May 18 - 24, 2009

2,500 1,950

10 30 50 (entry level & specialist positions)

Search methods (%): Direct search Advertising & selection In-house database

Minimum & maximum of fee charged to client (EUR) Fee split (%): Success Short list Retained

Search time limit Guarantee to client

WND 215,000

20 40 40

WND 70 30

2 – 5 weeks 3 – 12 months

depending on type of position WND

2 - 4 weeks 1 - 6 months

3 net salaries - 3 gross salaries 40 60

4 - 5 weeks 1 - 2 year(s)

MANPOWER ROMÂNIA Str. Ion Câmpineanu nr. 11, Union Intl. Center, et. 2 Bucure[ti, cod 010031 romania@manpower.ro www.manpower.ro

WND

40 30 30

MENTOR'S SEARCH Bd. Burebista nr. 1 Bucure[ti, cod 031106 office@mentors.ro www.mentors.ro

32 WND

34 43 23 (engineers IT)

36,000 15,000

70 10 20

Temporary placement services

LUGERA & MAKLER SRL Str. {tirbei Vod` nr. 26 - 28, Union International Business Center II, et. 1 Bucure[ti, cod 010113 office@lugera.ro www.lugera.ro

Candidates placed in 2008 (%): Top managers/ Managers/ Others

Average annual net salary of candidates (EUR) Candidates in database

Company Address E-mail Web page

Successful placements: 2008 / 2007

RECRUITMENT

Year established Employees Consultants

Industry specialization

Representative clients

Top local executive Title Phone Fax

2001 >100 30 - 40

retail, banking, FMCG, IT&C, pharmaceuticals, industrial, etc.

Carrefour, Citibank, BCR, ING, Computaris, Office Depot, Flextronics, Celestica, Ursus, Alcon, Glencore, etc.

Cristina S`vuic` Managing Partner 021-318-7120 021-318-7128

2003 100 70

finance, business services, IT&C, human resources, manufacturing, logistics, communication, retail & wholesale

WND

Camelia St`nculescu General Manager 021-312-1898 021-312-1887

2004 WND 4

IT&C, FMCG, SMCG, industrial, medical

Microsoft Romania, Franke Romania, Philips Romania, Artemis International, Candy Romania, RadiusMed

Drago[ Butuzea Consultant 021-323-8032 021-327-3808

Bramac Lafarge Wienenberger, Schaeffler Romania, Wintershall, Vedag, Velux Romania, Sorin Stinceanu Route 66, Genpact, Grupul Executive Director Semo - Semopac Romania, 0268-543-314 Fabory CZ, Grupul de Firme 0268-543-315 CONEX, Arplama Romania, Automotive Safety Components International, etc.

MONDOJOB SRL Bd. Grivi]ei nr. 70 Bra[ov, jud. Bra[ov, cod 500173 mondojob@mondojob.ro www.mondojob.ro

254 215

5 20 75

5,000 > 50,000 updated

20 80

WND 70 30 -

2 weeks 3 - 6 months

2000 9 6

all

OXYGEN CONSULTING Bd. Decebal nr. 9, bl. S13, sc.1, ap.4 Bucure[ti, cod 030963 office@o2consulting.ro www.o2consulting.ro

54 NA

2 6 92

18,000 > 10,000

50 10 40

1,000 - 4,000 70 30

5 - 30 days 3 - 6 months

2007 1 5

financial - banking, medical, pharma, FMCG, sales, engineering

Muller Romania, Heineken, Coca-Cola HBC, Bank of Cyprus, Phillips Romania

Oana Popa Managing Partner 021-321-1328 021-321-1328

2003 8 4

consumer products, financial services, industrial, media & entertainment, pharma, healthcare & biotech, private equity & venture capital, professional advisory services, real estate, retail & technology

WND

Mona Neagoe Country Manager 021-307-9398 021-307-9399

all

Gewiss, Xerox, Marius Ivan, Renault Trucks, Synovate, Oblique TV, Lactalis, Interstar, Creativ Global Property, Euler Hermes, Brands On

Alina Botezatu Managing Partner 021-211-9322 021-211-9324 021-211-9326

PEDERSEN & PARTNERS Str. Vasile Lascar nr. 30., et. I, ap.1 Bucure[ti, cod 020502 bucharest@pedersenandpartners.com www.pedersenandpartners.com

PERSPECTIVE GROUP Intrarea Arma[ului nr. 6, ap. 1 Bucure[ti, cod 010483 job@perspectivegroup.ro www.perspectivegroup.ro

PLURI CONSULTANTS ROMÂNIA Str. Fabrica de Glucoz` nr. 2-4, CARO Business Complex Bucure[ti, cod 020332 office@pluri.ro www.pluri.ro

ROMARKETING Str. Alexandru Vlahu]` nr. 3 Oradea, jud. Bihor, cod 410086 office@romarketing.ro www.romarketing.ro

ROYALTY JOBS INTERNATIONAL SRL Str. Aurel Vlaicu nr. 126 Bucure[ti, cod 020099 office@royaltyjobs.com www.royaltyjobs.com

SENIOR TECH SRL Bd. Decebal nr. 9, bl. S13, sc. 1, ap. 4 Bucure[ti, cod 030963 office@senior.ro www.senior.ro

STANTON CHASE INTERNATIONAL Str. Daniel Danielopolu nr. 4 - 6, {coala Her`str`u Business Center, et. 1 Bucure[ti, cod 014134 bucharest@stantonchase.com www.stantonchase.com

WND

90 10 -

WND 100

WND

50 50

WND

20 50 30 (specialists)

WND > 30,000

50 10 40

WND

1 - 3 months 3 months -1 year

2004 6 4

> 800 > 1,200

30 40 30

20,000 150,000 > 15,000

100 100 -

12 - 25% 30 49 30

2 - 8 weeks 1 - 12 months

1993 22 18

WND

Ioana M`d`lina Popescu General Manager 021-232-8688 021-232-8736

WND

15 30 55

WND 8,000

10 60 30

WND 10 40 50

max. 45 days 3 - 12 months

1995 7 5

middle & top management

BRD, Bunge, Connectronics, Hexol, Macromex, Masterplast, Stihl, Whirlpool, Ygrec Pagini Utile, Zeelandia

Carmen Sasu Senior Consultant 0259-467-388 0259-411-983

62 76

40 60 (IT specialists, financial specialists, sales & marketing)

WND 11,560

70 25 5

WND 10 90

in average, up to 6 weeks 3 - 9 months

2004 8 3

personnel leasing & outsourcing, recruitment & selection, HR consultancy

B.A.T., GlaxoSmtihKline, Autoitalia, Generali Asigurari, Strauss Group

Isabella Berghoffer Director 021-619-1811 021-619-1812

40 5 55

min. 1,000 70 30

4 - 6 weeks 6 - 12 months

97 WND

2 15 83

20,000 17,000

4 - 6 weeks 6 months /12 months

5 - 30 weeks 3 - 6 months

Orange Romania, Genesys Systems, Andreia Cheque Dejeuner, UTI Dimitrescu Systems, Oracle Managing Partner Romania, Perot 021-321-1328 Systems, Cosmote RMT, 021-321-1328 ING Bank, Piraeus Bank, RBS

2005 7 5

IT, telecom, IT sales, IT marketing

2004 10 4

consumer products & services, financial services, industrial, professional services, life sciences & health care, technology, logistics & transportation

WND

Mihaela Damian Managing Partner 021-233-0338 021-233-0344 021-233-0340

60 115

75 20 5

WND

100 -

WND 100

TARGET INTERNATIONAL EXECUTIVE SEARCH Str. Gen. Ion Dragalina nr. 12 Bucure[ti, cod 050565 romania@targetfuture.com www.targetfuture.com

WND

49 95 5 (Senior Legal Advisors/ Lawyers, Controllers)

WND > 30,000

average 72, but is different from project to project 28

WND 34 33 33

min. 4 – 6 weeks 12 months – top management

1999 5 - 10 in Romania 5

FMCG, energy, automotive, legal services, construction, retail

WND

Felicia Beldean Managing Director 021-319-4563 021-319-4564

TOTAL BUSINESS SOLUTIONS Str. Matei Basarab nr. 108, bl. 74, et. 4, ap. 54 Bucure[ti, cod 030679 tbs@tbs.ro www.tbs.ro

WND

WND > 30,000

80 10 10

depending on the position negotiable

3 - 6 weeks 3 - 12 months according with the position

2000 5 4

all

major multinational, investment funds, banks, start-up & greenfield

Daniela Necefor Managing Partner 021-320-6027 021-323-7015

Companies are listed in alphabetical order. The information in the list was provided by companies. Only those companies answering our questionnaire were included. 2009 Business Review. The list may not be reprinted or reproduced in whole or in part without permission from the publishers. Corrections or additions to the list should be send to research@bmg.ro or by fax 021-335-3474. BUSINESS REVIEW / May 18 - 24, 2009

ANALYSIS

COURTESY OF BUCOVINA

Sparkling sales still to come: Mineral water firms have a spring in their step as the busy summer season approaches, heralding a spike in consumption as thirsty drinkers seek to stay hydrated

Mineral water producers hope summer will see sales hot up Mineral water producers are waiting for the hot season to boost their sales, having either completed investments, or planning to focus on consolidating their position on the market or invest in their brands. Sales always peak in the winter holidays and summer season, the latter because of the heat and the opening of terraces, open-air restaurants and street sale points. The biggest market move of late was the sale of the mineral water division of Heineken Romania to businessman Ioan Balan, for an undisclosed sum. By Otilia Haraga

A recent move has created a splash on the mineral water market. It was the sale of Heineken Romania’s mineral water division, which was part of the former company Bere Mures, took over by Heineken in 2008. The legal integration of Bere Mures into Heineken Romania was 18

completed at the end of April. Once the merger was finalized, Heineken decided to sell the mineral water division of Bere Mures to local businessman Ioan Balan. “Our basic line of business lies in making beer. In Romania, we will continue to focus on making quality beer brands. The announcements we made regarding the sale of the mineral water division are in accordance with

our business strategy,” said Jan Derck van Karnebeek, general manager of Heineken Romania. The brewer has a strong position on the local beer market, having a share of 29 percent, according to an AC Nielsen study carried out for 2008. It will now continue to invest in developing its production unit in Targu Mures and in the Neumarkt brand. At the time of the 2008 sale, Bere Mures owned a beer plant in Ungheni, Mures, and a mineral water plant in Bacaia, Hunedoara. The company produces beer brands Neumarkt, Dracula and Sovata and also had in its portfolio mineral water brands Cezara and Cheile Cibului, which will now pass to Balan. The transaction between Heineken Romania and businessman Ioan Balan was advised by KBC Securities, while Heineken was assisted by Schoenherr Romania throughout the process. Other firms are also investing. One major player on the mineral water market, Pepsi Americas, has recently completed an investment of USD 10 million in modernizing and increasing the capacity of its production line for the mineral water Roua Muntilor at its Covasna plant. The investment was made to support the repositioning of the brand on the premium segment. “With the new brand Roua, through which we have entered the premium segment of mineral waters, we will focus this year on Horeca sales. We count on high-end consumption, especially in clubs,” say company officials. In 2007, PepsiAmericas took over Quadrant Amroq Beverages, the authorized distributor of Pepsi, Pepsi Max, Pepsi Light, Mountain Dew, Mirinda, 7up, Prigat, Lipton Ice Tea, Gatorade and Roua Muntilor for Romania and the Republic of Moldova. One of its major competitors, Coca-Cola Romania, has registered relatively similar sales for Dorna Izvorul Alb, its still mineral water brand, and Dorna, a sparkling mineral water, in its total mix. The company aims to keep Dorna in the top two brands, although the drink posted lower sales in the first quarter of this year, and has subsequently recently launched a TV ad created by McCann Erickson. Elsewhere, another firm is completing its outlay for 2009. This year, Rio-Bucovina intends to concentrate its efforts on its sales and distribution segment. “More than 95 percent of the necessary investments were made in the first part of 2009, and in at most 40 days, they will be 100 percent finished,” says Diana Nita, head of the

company’s public relations department. Over the past three years, the company’s financial efforts have been channeled into making some investments that were necessary to keep pace with the increase in the consumption of bottled water. It also made investments in marketing, which amounted to a little over EUR 500,000, in 2008. “In 2009, we propose to allocate roughly the same sum to marketing,” Nita tells Business Review. Company representatives are not interested in making acquisitions at this point. “We have very good water, sufficient bottling and logistic capacities and a good sales team. We have everything we need to consolidate our position on the market,” says Nita. Bucovina uses the springs in the Dorna Candrenilor region, which it has the right to exploit for a period of 49 years after entering a concession agreement. “The sums we pay as annual rent are confidential – but are rather substantial,” says Nita. Bucovina is in line with the “European trend” with more than 70 percent of its total sales in 2008 being still water. “In fact this trend has been visible for us ever since 2005 when sales were balanced between still and sparkling mineral water, but the increase in sales of still water was above that of sparkling,” says Nita. Sales of sparkling water increase monthly by 2.5-3 percent during the hot season compared with the cold season. By contrast, sales of still water can rocket by up to 50 percent in the hot season from the off-season period. About 50 percent of Bucovina’s sales take place through retail networks. “The rest is traditional commerce and HORECA, from where less than 5 percent of our annual sales come. We have, however, plans to boost our sales in the HORECA segment with the launch of the Bucovina water in glass bottle of 0.33 liters,” says the PR head. The company has at the moment approximately 500 employees. “As far as lay-offs are concerned, we are watching the evolution of the market in 2009 very carefully,” says Nita. The company’s consolidated market share in 2008 exceeded 8 percent. “We ranked fourth and we believe we will consolidate that position in 2009,” says Nita. In 2008, Bucovina posted revenues of approximately EUR 21.9 million (RON 80,677,430) and a net profit of approximately EUR 1.12 million (RON 4,130,518). ■ BUSINESS REVIEW / May 18 - 24, 2009

Estates&Construction

MARKET

MAY 18 - 24, 2009 / VOLUME 14, NUMBER 18

BUSINESS REVIEW FORUM

Manage your business environment !

French-Greek Vinci-Aktor consortium wins Comarnic to Brasov highway concession

STOCKEXCHANGE

The long road ahead: the highway project, a public-private partnership, will start in 2010 and last for four years

A consortium made up of French companies Vinci Concession and Vinci Construction Grand Projets plus Greek Aktor Concession has won the concession bid to build the 58-kilometer long ComarnicBrasov highway portion, the Transportation Ministry has announced. This is the first construction contract awarded through concession for a highway in Romania. The project, a public-private partnership, will start in 2010, when construction works will begin, with a duration of four years. The selected construction companies will finalize the technical project this year, according to previous data. The Comarnic-Brasov portion of the BucharestBrasov highway will be under the winners'

concession for 30 years, after which the contract can be extended. The same project attracted two other bidders, the Astrada Concession consortium, made up of Strabag AG, Egis Projects, Eurovia Construct International, Housing & Construction Holding Co. Ltd, and the Autostrada A3 Comarnic-Brasov consortium, consisting of Bilfinger Berger and Porr. Another bidder, made up of Colas SA, Bouygues Travaux Publics SA, DTP-Terrassement SA, Intertoll Europe Zrt and Meridiam Infrastructure Finance SARL, was pre-selected but failed to submit an offer. The state will pay the winning construction companies EUR 180 million per year for 26 years after the highway is com-

pleted, according to representatives of the Transportation Ministry. Around 80 percent of the land which needs to be expropriated for the highway to be built belongs to state companies. The next highways to be built through concession contracts will be Pitesti-Sibiu and the big Bucharest ring road. The Brasov-Bors highway, another highway project for Romania which is now under construction, started in 2004, when the EUR 2.24 billion contract was signed. The contract was re-assessed in 2005, when a new government stepped in. Bechtel completed the first five kilometers of highway of the 25km sector connecting Gilau and Campia Turzii last summer. Corina Saceanu

ESTATES & CONSTRUCTION MARKET

Thomas Lundin moves to development Heberger Constructii expects EUR 22 mln while Century 21 enters survival mode from three construction projects in H1 2009

Real estate developer Advanced Development, which owns share packages in a portfolio of office and residential projects in Bucharest, is currently working on a block of flats in the Vasile Lascar area and has two other office projects in the approval stage, said Thomas Lundin, partner with the firm. The company owns participations

Infrastructure projects to make up major part of Alpine’s 2009 turnover

lion in construction equipment. “Infrastructure projects could become a majority in the firm’s overall turnover and reach up to 70 percent of all the works in 2009,” MD Ionel Giuglea told Business Review. Before returning to Alpine, which Giuglea managed between 2000 and 2007, the businessman was MD of the local real estate division of Austrian group Raiffeisen Evolution (RE) for a year and a half. During that time he was involved in the EUR 250 million mixed project Floreasca City in Bucharest and in acquiring the EUR 90 million plot from Petrom. “I felt like I needed to learn something new and wanted to understand the business system from the investor’s point of view after 21 years in construction,” explained Giuglea. When he left RE, Floreasca City had obtained construction permits and was finalizing the design details and construction contracts. Of the local real estate market, Giuglea told BR: “I think the expectations of achieving gains on the local market have been exaggerated, on top of a pretty unhealthy pressure on bank loans to sustain real estate projects.” Magda Purice

Heberger’s GM believes the crisis has made firms on the construction market more efficient

German group Heberger’s Romanian arm Heberger Constructii, operating on the local market for five years, has announced that it has completed and launched one of its largest construction projects, Floreasca Business Park. “Many projects which were started before the global crisis are ongoing. Floreasca Business Park is fully leased and already nearly fully occupied, and none of the tenants has cancelled the lease agreement,” GM Claus Kegel told Business Review. He added: “In 2008 we were all complaining about the shortage of qualified engineers and laborers. Material prices were rising monthly.

We were all operating less efficiently than possible. The crisis will also help to cool down the overheated construction business and help it operate more efficiently and profitably.” The construction contract of Floreasca Business Park was estimated at EUR 64 million and comprised three contracts, for the design, the pit construction and eventually the main contract, according to Kegel. Besides the project in Floreasca, Heberger is involved in two other projects, the residential compound Residenz Cartierul German in Chitila and the Felbermayr project in west Bucharest. “Three out of four phases of Residenz Cartierul German are completed and handed over. The client had a problem in deciding how to treat phase four, where the structure is also completed, but decided recently that it should be mainly completed, leaving only some flexibility for buyers in the internal finishing. The Felbermayr project in Bucharest West is proceeding to schedule. The client has added a public OMV fuel station and extended the scope of our works significantly,” said Kegel. From these three projects, the company will derive a turnover of nearly EUR 22 million in H1 of 2009. Magda Purice

Lafarge puts EUR 1.6 mln in aggregates deposit

COURTESY OF LAFARGE

Alpine Romania, the local subsidiary of Austrian construction company Alpine Bau, has forecasted a turnover of up to EUR 95 million on the local construction market in 2009, up from EUR 80 million in 2008, due to ongoing projects, the biggest being the EUR 130 million Petrom City office building, of which EUR 80 million represents construction works. The project delivers a total area of 100,000 sqm in five building and a 1,000-space car park. Alpine Romania has also been involved in retail and logistic projects for clients like Billa, Kaufland and Praktiker, office complex Iride Business Park, Egger’s plant in Radauti and infrastructure projects such as the widening of the DN1 highway to six lanes. The firm’s overall local construction projects reach some EUR 250 million. By the end of 2008, it had delivered turnkey projects worth EUR 400 million since setting up on the Romanian market. Of its entire portfolio, Alpine’s infrastructure projects made up 40 percent, the same portion as industrial and civil works. In 2009, Alpine plans to increase its involvement in infrastructure projects, after investing over EUR 20 mil-

COURTESY OF HEBERGER

COURTESY OF WOLF THEISS

Thomas Lundin, partner at Advanced Development and GM/owner of Century 21

of between 10 and 25 percent in a portfolio of projects such as the 10,000-sqm Oracle Tower, the 8,500-sqm Hippodrome office in Ploiesti, the 3,700-sqm Casa Mosilor office building and the 1,100-sqm Smart offices in Bucharest. The firm has built, along with AST Austria, a block of 11 flats in Aleea Alexandru in Bucharest. Among the projects still in the planning phase is a residential development in Pantelimon, which will deliver 1,000 flats, according to Advanced Development, and Airport Shopping Park, a 75-ha land development near Henry Coanda airport, intended to become a commercial and logistics center. Lundin, who is also general manager and owner of the Century 21 Romania master franchise, says the real estate agency is now more in a survival than an expansion mode. The firm, which was launched in Romania in 2007, has eight franchised units so far. Upon launching, its target was to affiliate 100 individual agents. Corina Saceanu

The deposit will serve the south of the country

Construction material producer Lafarge Agregate Betoane has invested EUR 1.6 million in an aggregates deposit in Oltenita, Calarasi county, which was opened last week. The deposit was built on two hectares of land and will serve the

south of Romania. “The new deposit is meant to meet the needs of the Bucharest market and the surrounding area, allowing us to avoid transportation by car over very long distances,” said Bruno Roux, director of the firm’s aggregates division in Romania, Poland and Ukraine. Lafarge started working on the project in February last year. The firm recently sold its division in Turkey to Turkish group Uyak Cement in a deal worth EUR 163 million. The transaction is part of a larger asset sale plan, which should offer the company a EUR 1 billion liquidity by year-end. So far, Lafarge has obtained EUR 230 million from asset sales. Last year, it posted a EUR 1.6 billion profit, slightly down on the 2007 results. Staff BUSINESS REVIEW / May 18 - 24, 2009

ESTATES & CONSTRUCTION MARKET

Sun Plaza opening on schedule for October, Proges assigns EUR 1 million to two new superstore locations in Targu Mures and Bacau currently in final development stage project will deliver 210,000 sqm of built area, comprising 80,000 sqm of commercial space and 8,300 sqm of rentable space within an A-type office building, to be built in the project’s second development stage. The complex’s main anchors are Cora hypermarket with 23,000 sqm, DIY store Baumax which rented 10,000 sqm, a Flanco unit on 2,500 sqm, Mobexpert with a rented area of 10,300 sqm and a cinema multiplex operated by Cinema City, delivering 15 halls and a total of 3,000 seats. According to Friedrich Wachernig, 85 percent of the space has been rented. “We are heading fast towards the end of construction works, which sets the definite opening date for October. Cora hypermarket will be the first to begin implementing the final works,” said Michaels Richard, general manager of EMCT Romania. Magda Purice

Diana Metiu International agency doesn’t sell real estate projects, but it helps them be sold by their own power

Local firm Proges, an importer and distributor of interior design products, has launched two superstores in Targu Mures European Retail Park and Bacau European Retail Park, with a total investment of EUR 1 million. The site in Targu Mures is located within the European Retail Park and delivers 1,200 sqm of total area, while the one in Bacau has 850 sqm. Besides these developments, Proges has also opened in the Bucharest-based West Park Militari, located near the outlet-type complex Fashion House Outlet. The shop in Militari delivers 1,350 sqm of total area and represents the pattern

COURTESY FO GINDI

The Proges concept has been exported abroad, to both Moldova and Hungary

for all the company’s developments. “Proges focuses on the superstore type of development,” says marketing manager Annamaria Anton-Bakó. The firm went abroad with the superstore concept, launching a similar shop in the Republic of Moldova, delivering 1,000 sqm and requiring an investment of EUR 600,000. In Hungary, the company has opened three Proges stores in Nyregyhaza, Debrecen and Szeged and a logistic center in Szolnok. This year, the retail developer is planning three new openings and to increase the corporate segment of its client portfolio. Magda Purice

Gindi Rom sees demand from 700 medical professionals for apartments in G-ViTown

The company has been targeting professionals

ADVERTORIAL

The real estate agencies, as the developers too, are working into a changing market, with a huge concurrency. Many residential projects are finished today, their prices went down, special offers are everywhere and the developers already used all their trumps trying to sell their houses. In Romania we already have few big real estate companies that people trust and they are still selling. But they have the advantage of a huge trusting foundation, many real estate

projects finished perfectly in the past and also they are an active part of the community were they build. The PR agency is the one that suggests and organizes this kind of promoting events but also the one that guarantees that the information is getting to the target, raising the trust in the promoted company. Based on communication, on good relationship between people and on human psychology, DMI invests its whole knowledge in these campaigns, doubled with passion and creativity; the result is every time a totally new, unique, complete different, but prolific campaign for each client. For those who understand the extraordinary impact of those promotion campaigns and the way that they can make a product or a service to sell by itself, Diana Metiu can be contacted at 0744 552 446 or office@dmi.ro.

COURTESY OF PROGES

EMCT, the developer of the south Bucharest commercial complex Sun Plaza, has said it will open the complex in October. The project, launched in 2007, was previously supposed to be operational by the end of 2008, but the opening was postponed due to restructuring works. "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 Wachernig, member of the Sparkassen board. The investor in the project, Austrian Sparkassen Immobilien, the real estate arm of Erste group, put the delay down to project adjustment, comprising a top floor with offices and an underground passage linking the center to Piata Sudului subway station. It raised the projected investment from EUR 185 million to EUR 200 million so far. By the time of completion, the

Developer Gindi Rom, part of the Israeli company Gindi Group, a new name on the Romanian real estate market, has announced it has received some 700 requests for apartments on sale within its first project on the local market, G-ViTown. The complex in located in the Vitan area and comprises four blocks of 10 levels each, totaling 324 apartments.

The developer exhibited the complex at a medical event. “Our strategy to focus on professional communities has paid off and now we’re planning an event in June dedicated to the medical community in order to sign the first presale contracts for the apartments,” said Kfir Gindi, administrator of Gindi Rom. The developer has officially announced its entrance on the Romanian real estate market, holding the view that a crisis may also provide investment opportunities, according to a company statement. So far, it is present with residential, commercial and office developments in Israel, Hungary and Switzerland, and aims to reach new European markets with projects built from its own capital or loans from banks and the capital markets, the company says. As a business strategy, Gindi Group's projects are developed on a short-term schedule, following the land purchase deals. Magda Purice BUSINESS REVIEW / May 18 - 24, 2009

ESTATES & CONSTRUCTION MARKET Office space delivered in Bucharest will decrease 25 percent this year, JLL study says

BUSINESS REVIEW / May 18 - 24, 2009

like Romania, Poland, Slovakia and Hungary falls behind the supply in Western Europe, where the density is calculated at 203 sqm for 1,000 inhabitants. Regarding commercial retail completion estimations, Romania is forecasted to deliver 460,000 sqm by yearend, a similar value to the 403,000 sqm seen in 2008. For 2010, the country is estimated to downsize the retail space delivered to 310,000 sqm. On the topic of rent, JLL sees a prime rent for Bucharest of EUR 100 to EUR 115, compared with EUR 60 to EUR 80 to be found in Romanian’s regional cities. On the theme of investments in the property market, of the overall amount, Romania attracted 19 percent of regionally invested cash into local developments in 2008, compared with Poland which recorded 28 percent, Czech Republic representing a slice of 21 percent and smaller investments recorded by countries such as Slovakia with 1 percent and Hungary with 9 percent of the overall CEE investments in real estate. Magda Purice

LAURENTIU OBAE

In a European market where demand for office space is expected to decrease to 30 percent in 2009, delivered Bucharest-based office stock is estimated to fall 25 percent compared with last year, with the result a stock and supply pipeline of 180,000 sqm, according to a study published this month by the real estate consultant Jones Lang LaSalle (JLL). For the next two year, the firm expects a significant pipeline shrinkage, which will help balance the oversupply on the European markets caused by any anticipated reduction in overall occupier demand. Tomasz Trzóslo, head of capital markets in CEE for Jones Lang LaSalle, says that yields in Central Europe have increased materially, and are now around 7-7.5 percent for prime office and retail product and above 8 percent for distribution and logistics space. On retail markets, Romania has a current total of 1.05 million sqm of shopping centers, with 49 sqm of density for 1,000 inhabitants, in 45 shopping centers. The density in countries

Regus Group opens third business center in Bucharest in Floreasca Office Park

The location is the firm’s third in the capital

Office solutions provider Regus Group has opened its third Bucharest business center, in Floreasca Office Park in the north of the city, the firm has announced. Its two other developments in the capital are City Centre and the company’s first location in Romania in the World Trade Center building. Previously, the complex in Floreasca was set to have been opened by the end of last year, delivering 2,000 sqm on one floor for approximately 100 offices. According to the company’s estimates, Regus will make available in its

three business centers in Bucharest a total surface area of approximately 6,000 sqm. The company is offering offices for lease by the hour, day, month or longer. The office complex in Floreasca has signed up tenants such as Citroen, Skoda and Peugeot so far, according to company officials. The firm says that a tenant which rents space within one of Regus’s office developments might decrease its location costs by 60 percent. Regus’s strategy is to attract clients such as Romanian companies and multinationals which are expanding in the region and target locations in Romania. “There is a direct link between the local country’s position as a strong financial center for businesses in the region and the increasing demand for flexible and cost-efficient work places,” said Garry Gürtler, general manager of Regus Regional. The group has clients such as Google, GlaxoSmithKline and Nokia, from a total of over 400,000 clients worldwide, located within 1,000 office developments in 75 countries Magda Purice

RESTAURANT REVIEW

Magnificent or not? IL MAGNIFICO, STR OLTENI 9, TEL 0726 730500, 021 327 0454 othing pisses me off more than when my Romanian friends say how much they like Italian cuisine. They have NO IDEA of what Italian cuisine is, because they think of their favorite Italian chophouse in Bucharest – and it is absolutely NOT Italian. To clarify this issue, what you get in 99 percent of so-called Italian Romanian chophouses is tourist-tat bullshit called ‘Trattoria’. You will see the same rubbish menu in virtually every non-Italian restaurant in this country. So look out for ‘Steak Gorgonzola’, ‘Spaghetti Bolognese’, ‘Pizza’… and so much more of the same. Beyond belief, this tourist rubbish is sold to ignorant tourists in Italy. And when the local Italian waiter in a tourist Trattoria stops laughing at his ignorant customers (mostly Romanian, Russian and Swedish), what do you think he does when he goes home? Let me help you. His loving wife will give him everything that he does NOT serve to his stupid customers. So he will dive into local cured hams, perfect local olives, fabulously baked meat and fish dishes (al forno) homemade hot bread, dishes infused with seasonal herbs, and so much more. Our satiated waiter will thank his loving wife, kiss his kiddies and then leave home to make love either to his mistress or his best friend’s daughter. You see, the point I am making is that food in Italy is a passionate affair of the mind, the heart and the libido. None of these rules apply here in Romania because virtually every bullshit, phony Italian restaurant is ROM-ALIAN, simply using Romanian produce with Italian names attached! So along comes Il Magnifico restaurant. Two things caught my attention. The name was outrageous, until I saw the menu, and I realized it was named after a Medici thug, Lorenzo the so-called Magnificent, in the 17th century, a mere buffoon who has since disappeared into historical oblivion and is only famous for both incest and appointing a

LAURENTIU OBAE

murderous Pope or two as his paid assassins. Well, this House has got something right, namely; ALL real Italian cuisine is based upon regional recipes, handed down from mother to daughter to modern Chef. The House boasts that they are regional Tuscan. “So what?” you may well say. But it means a lot, for there are 20 different regional cuisines in Italy. Tuscany is one of them and it borders Umbria, Liguria, and Emilia Romagna, each of which has its own distinctive cuisine. Tuscany has chosen as its signature beef in its finest quality, together with white truffles. OK, I accept that I am never going to enjoy real truffles in this gastronomic desert, but the House real-

Michael Barclay mab.media@dnt.ro

LAURENTIU OBAE

Genoa good Italian? Ven-Turin to Il Magnifico and you need Rome the streets of Bucharest no more

ly has made an effort to adhere to Tuscan foodie values. Their steaks are superb. They serve them in a variety of ways, correctly based upon a helping hand from balsamic and olive oil. It sound simple, but I have to say that I had one of the best steaks I have enjoyed here in years. I missed the traditional Tuscan dish of ‘Steak Cacciucco,’ which is combined with fish (hopefully not Romanian river fish) because every faithfully prepared Tuscan dish had to be ordered in advance! Yes, that is seriously dumb. But you have their phone number, so if you want to escape from tourist crap, this is your best choice. Forget the usual starters and pastas, their mains are fabulously tempting. I will leave you with this thought and tease you accordingly by not listing the main course menu. The food is good, the chefs are good, the waiters are good – but the management are morons. I asked for a factura fiscala, so that I could charge my inexpensive meal to my company. NO WAY. Contrary to Romanian law, the house had no invoices and no stamp on the premises. Draw your own conclusions!

Meat-ing place: you’ll have no beef with this eatery, so steak a claim for your table now – chop chop! BUSINESS REVIEW / May 18 - 24, 2009

GREEK BUSINESS FORUM 1

Greek Investors in Romania long term

15 ALL PHOTOS BY LAURENBTIU OBAE

■ 1. A panel of representatives of the Greek business community discussed the main challenges faced nowadays by Greek investors active in Romania ■ 2./ 7. An audience of top business people attended the event organized at the Intercontinental hotel ■ 3. Marian Lucu of Lucu, Tsignopolou & Associates ■ 4. Gerasimos Vergotis from Prior Capital Consulting ■ 5. Joannis Paschalis of the Embassy of Greece ■ 6. Sofronis Strinopoulos from the Hellenic Romanian Chamber of Commerce and Industry ■ 8. Ilas Papageorgidadis from More International Invest ■ 9-15. Members of the Greek busi-

“We, the Greek investors, are here for the long term.” This is how Gerasimos Vergotis, investment director at Plori Capital & Consulting, ended his speech at the Greek Business Forum organized by Business Review last week. Among the speakers were Ilias Papageorgiadis, More International Invest CEO; Ioannis Pachalis, Minister Counsellor of Economic & Commercial Affairs with the Embassy of Greece; Sofronis Strinopoulos, representative of the Hellenic Romanian Chamber of Commerce and Industry; and Marian Lucu, managing partner of Lucu, Tsignopolou & Associates. The speakers stated their interest in continuing to be solid investors on the local market and said that they expected the crisis to ease off towards the end of the year. “Romania should be among the countries in the region to exit this crisis, due to EU funding. Also, we have to state that the Greek government supported the Greek-owned banks with operations in Romania at the beginning of this year,” said Sofronis Strinopoulos. The Greek Business Forum is the first in a Country Focus series that will be organized this year by Business Review. The events are aimed at bringing together top-level executives, business people, investors and representatives of embassies and chambers of commerce to discuss the challenges that foreign business communities face in this difficult period. The Greek Business Forum was sponsored by Lucu, Tsignopolou & Associates and enjoyed the support of Intercontinental Bucharest. ■

ness community take advantage of networking opportunities BUSINESS REVIEW / May 18 - 24, 2009

EVENTS

IONUT STAICU

The environmental non-governmental association MaiMulteVerde (founded by Dragos Bucurenci, left) celebrated a year since it was founded last week with a reception at the Residence Cerisiers Hotel in Bucharest, attended by public figures such as journalists Andreea Esca, Liviu Mihaiu and Virgil Iantu, politicians Mircea Geoana, Victor Ponta and Daciana Sarbu, Princess Marina Sturdza and many others. The association also presented its activities over the course of its first year of activity: it planted 107,000 trees in deforested areas, collected 94,000 kilograms of waste and launched the Ciclotheque bike rental center. The association worked with 8,000 volunteers and developed environmental education campaigns in schools.

Eleven museums in Bucharest kept their gates open to the public until late as part of the Night of the Museums event on Saturday. The venues offered free access but also a series of special programs until the early hours. Visitors could see exhibitions, music shows, dance, theater and film, open air projections and special interactive events. This year, two important museums did not take part, namely the Romanian Peasant’s Museum and the Grigore Antipa Natural History Museum, the latter being closed for renovation. The fifth edition of the event included over 2,200 museums from 41 European countries. Night of the Museums started in France in 1999 and then expanded Europe-wide from 2005. This edition intends to encourage interaction between museums and the act of creativity in all its diversity, according to the Ministry of Culture in France.

Blood donation campaign attracts over 50,000 people in a year

Over 50,000 volunteers gave their blood

The national blood donation campaign A Chance for Life attracted over 50,000 donors in its first year and has increased the number of donors in transfusion centers all over the country by 30 percent. The campaign was initiated by Vodafone Romania and REACT Association in collaboration with the Ministry of Health, the National Institution of Hematology and the Na-

tional Union of Students in Romania. During the campaign, 22,500 liters of blood were donated to help save over 70,000 human lives. The positive effects of the media campaign could be noticed as early as the first month since the launch. In December 2008, blood reserves in the Bucharest Transfusion Center were up by 40 percent compared to December 2007, with 3,181 people donating blood compared to 2,265 a year earlier. The first session of blood collection during the 2009-2010 edition of A Chance for Life has already taken place in 15 cities around the country: Arad, Bacau, Bucharest, Brasov, Cluj-Napoca, Constanta, Craiova, Iasi, Petrosani, Ploiesti, Resita, Sibiu, Targu Mures, Targu Jiu and Timisoara. During this year’s campaign, there will be four national donation sessions in 15 university centers and five donation sessions in the Vodafone headquarters. Otilia Haraga

The Athenee Palace Hilton Hotel has officially re-opened the La Strada terrace. Hotel guests and other customers can relax at the terrace and also take advantage of several special promotions, In June, the terrace will run a promotion called Mojito All Night when for each Mojito they buy, customers get another one for free, while in July there will be Pina Colada and carpaccio promotions. Singer Horia Brenciu (above, left) was among the guests at the official re-opening.

More than 4,000 pupils sign up for Petrom and Ogilvy project

Last year a fit young Romanian rugby star, Georgei Balga, broke his back whilst playing for his club. The accident left him paralyzed, confining him to a dingy basement apartment where he is totally dependent on his ageing parents. Hearing of his plight, a group of individuals have decided to hold a 26

charity dinner and auction to raise funds to support him. The event will take place next Friday 22 May at the Howard Johnson. Tickets cost EUR 100 and include food and beverages. All funds go to the charity Asociatia Prieteni Rugbyului Romanesc.

MEDIAFAX

Dinner raises funds to support paralyzed rugby star Oil firm Petrom is backing the initiative

Three weeks since the launch of the national eco-civic project Andrew’s School, initiated by Petrom, there are 4,000 pupils, 300 coordinating teachers and 450 projects in the competition. The competition is the first stage of the program of social responsibility Andrew’s Country, the most recent pro-

gram implemented by the group Ogilvy Romania and Petrom. Teams that enter the competition can have between 15 and 35 members aged between 6 and 14 years old, and each team should be coordinated by a teacher. Since its launch, Andrew’s School has over 46,000 unique users registered and had a peak of 91,500 visits on the site in just one day. The program is part of the campaign Resources for the Future launched by Petrom in 2007 to change current mentalities regarding the problem of nonrenewable resources. “We are talking here about an extremely complex project with an innovative approach dedicated to people who care about the environment and wish to learn how every gesture counts and can bring about a change in the future,” said Loredana Caradimu, business unit director at OgilvyOne. Otilia Haraga BUSINESS REVIEW / May 18 - 24, 2009