6 PhotosThe Diplomat ? Bucharest talked to top representatives of the main Dutch investors to find out their expectations and strategies for this year.
Air France-KLM, LeasePlan, Remco and Eureko are just a few of the names heading the list of Dutch companies with significant presence on the local market. Like all firms, they have been working on business strategies and solutions to get by in these troubled times.
Damen Galati steers investments through choppy waters
Damen Galati, one of the main shipyards of the Damen group, today has 1,700 employees and is one of the local Dutch success stories, according to officials at the Netherlands Embassy in Bucharest. According to Florin Marian Spataru, HR corporate affairs director at Damen Shipyards Galati, since 2009 the Galati-based company has managed to cover its production capacity planned for 2011 and 2012 and even part of 2013, despite the contraction of the shipyard construction market.
?The increasing costs of operations and raw materials have driven the adjustment of the company?s activities to prototype ships produced in limited series and to the development of additional services,? Spataru told The Diplomat ? Bucharest.
This year, the shipbuilder is continuing investments, including the development of a new production site, and keeping up the investment pace that has seen it spend around EUR 3 million yearly on new equipment and modernizing its operational site.
The firm mainly produces for export and plans to deliver 14 ships this year, representing a 10 percent increase in production. The company?s managers support an intermodal transport strategy, even though Romanian shipyards operate independently.
?Investment plans for the intermodal strategy have to be adopted and supported through fiscal measures, in order to gain more commercial operations in harbor areas,? said Spataru. He added that Romanian shipbuilding activities rank third within the European industry, but local horizontal development is not that solid, with most of the equipment being imported.
Meet and Seat program lifts passenger numbers for Air France-KLM
Joint French-Dutch airline Air France-KLM is basing its current strategy for this year on consolidating its corporate client portfolio, including SMEs, according to country manager Alexandru Dobrescu. For this, the airline has the fidelity program BlueBiz, following which it plans to consolidate its share of a more and more competitive market. In addition, KLM has enhanced its online offers with social media campaigns.
According to the manager, the recently launched Meet and Seat service allows passengers to research their fellow travelers via Facebook and LinkedIn. ?Through this program, passengers can view the online profiles of other travelers long before booking a seat so they can chose to sit next to somebody they consider interesting or with whom they share interests,? said Dobrescu. He adds that the program is already a success story and has been expanded from three destinations available at the launch to ten now.
Last July, the group posted a six percent increase in passenger traffic into and out of Romania, mainly attributable to multiple group programs for passengers. In 2011, it announced it had a market share of 17 percent. With its two hubs in Paris and Amsterdam, the airline has not seen major changes in traffic in 2011 for its two top tourist destinations. However, demand for European destinations is up to the detriment of long haul, due to smaller budgets. ?This is the main change brought about by the recession. Our passengers have preferred to take shorter holidays, mostly long weekends in the big European cities,? Dobrescu said in 2011.
Quadra Invest bets on on-demand production
Furniture designer and importer Quadra Invest is focusing this year on two clear aspects, in order to boost the efficiency of the production process: finishing works, with a focus on ecological materials, and increasing the production line for the tapestry section, according to Daniela Banica, administrator of the company.
The main challenges it is facing are cost controls and adjustment to customer demand. ?This involves an increased flexibility in the production operations and the possibility of offering alternatives for finishings and tapestry. The more you are willing to exit serial production, the more interesting you become to the customers,? Banica told The Diplomat ? Bucharest.
Currently, the company?s production capacity is 3,500 wooden items of furniture and tapestry products. Last year, Quadra managed to increase its client portfolio by 7 percent on the previous year and it plans further growth in 2012.
The company?s managers attended a specialized trade exhibition organized in Moscow, from which the firm expects an increase in demand, and this year the focus is switching to the Middle East, as representatives will participate in a national exhibition in Sharjah in the UAE, near Dubai. According to the manager, 70 percent of foreign customers buy individual pieces. On the local market, the company serves both individuals and companies.
?We sense an increasing trust from customers in specialized interior design advice, provided by designers and architects, as well as the need to provide tailor-made products,? said Banica.
With an initial investment of almost EUR 500,000, the company?s flagship store European Heritage, located in the historic center of Bucharest, hosts 500 sqm of interior design products on three levels. In 2011, Quadra Invest attained a turnover of EUR 3.6 million and expects an increase this year. It employs around 120 people, a number likely to remain unchanged in 2012.
Crisis gives Rembrandt hotel officials lesson in efficiency
Toni Tatar, manager of the Rembrandt hotel in the old center of Bucharest, a Dutch investment, said, ?With only a few boutique hotels in Bucharest or, more widely, in Romania, one cannot build a market.? This means that there is enough space to grow on this market, and even though the last few years have brought several strategy changes and switches of business optics for every company, the manager thinks that 2012 will bring a five percent growth in revenues. The hotel posted a turnover of EUR 450,000 in 2011.
?The last few years have taught us a valuable lesson across the hospitality industry. We learned to be efficient and innovative during times when demand was decreasing every day. I would say that the current trend in the hospitality field is finding a niche in services,? added Tatar.
The Rembrandt hotel, which required a EUR 1.1 million investment, is a sister business to the adjacent Van Gogh coffee shop. With 16 rooms on 7 levels, it opened in 2005 after the building, which dates back to 1925, was refurbished.
For 2012, the hotel has budgeted investments of EUR 20 million in modernizing some technical facilities in the rooms and changing other hospitality services.
?This year we will target more the corporate segment,? hotel representatives told The Diplomat ? Bucharest.
The occupancy rate in January 2012 was up 15 percent on the same month of the previous year, but the sales rate decreased by 10 percent. The owners of the hotel have expanded their business portfolio in the old center of Bucharest with a wine shop, opened with an investment of EUR 100,000.
LeasePlan ups number of contracts in 2011
?Operational leasing in Romania has kept on growing in recent years, a trend that should be maintained in 2012 too,? said Bogdan Apahidean, managing director at LeasePlan and president of ASLO, the Romanian Association of Operational Leasing Companies. The manager told The Diplomat ? Bucharest that opportunities come from companies? need for cost efficiency when managing their fleet.
?The challenges, though, come from the fact that we have to convince partners who offer different services in this field to align their offers to customer demand and convince clients that have operational leasing contracts in their mother countries that they can benefit from outsourcing their fleet management services locally.?
Having signed up 40 new clients in 2011, one of the company?s most important contracts this year was with E.ON.
The company sealed a three-year operational leasing contract with power distribution company E.ON Moldova for 445 cars, in a deal estimated at EUR 9.5 million. The contract was awarded to LeasePlan Romania after it beat off rival bids from two companies in an auction held by E.ON.
LeasePlan Romania posted a turnover of EUR 30.9 million in 2011, 21 percent up on the previous year. The company had a market share of 17 percent in 2011 and a fleet of 6,267 vehicles. The largest fleet in its portfolio is held by OMV Petrom, with over 2,200 cars.
The local operational leasing market grew 17 percent in 2011 year-on-year to reach 37,397 vehicles under operational leasing contracts, up from 31,923 in 2010.
In its business services, LeasePlan partners Euro Insurances, which is part of LeasePlan group, as well as insurance companies Omniasig VIG, Allianz, Generali, BCR Asigurari and Uniqa.
According to ASLO, the top member company by market share and fleets is ALD Automotive, with an 18 percent market share and 6,705 vehicles.
LeasePlan Romania has a 17 percent market share and 6,267 vehicles; Porsche Mobility, 16 percent and 5,888; Arval Service Lease Romania, 12 percent and 4,362; and FMS has a market share of 6 percent and 2,412 vehicles. ASLO president Bogdan Apahidean last year predicted a 15 percent growth in the field in 2012, which would take it to 43,000 vehicles.
This year, Apahidean estimates that the company could net a turnover of EUR 40 million, compared with the almost EUR 31 million achieved in 2011.
With plans for expansion, 57 employees and 6,400 managed cars in the company?s fleet portfolio, LeasePlan expects to have a market share of 17.5 percent this year, a slight increase on 2011.
Vos Logistics and Fencs start hiring in Cluj
The two Dutch companies that announced investments at Cluj have started recruiting. Vos Logistics is expected to hire 150 workers, and Fencs Industries 100, according to officials from the Consulate of the Kingdom of the Netherlands. VOS Logistics will open its first work station in Romania close to the Transylvania highway, while Fencs Industries, which produces equipment for the food industry, will open a plant at Apahida. Fencs Industries is expected to invest EUR 2 million in the factory, which should be operational within the next three years. The company will establish two production lines for processing vegetables.
Spring is coming for Eureko
?The total insurance market, combined non-life and life, fell about 4.5 percent in terms of revenue. Eureko Asigurari posted a combined increase of 1.6-1.7 percent last year. We have a market share of 23-24 percent in health insurance and if we were to draw a line I would say spring is coming, we can see a positive trend,? Frans van der Ent, CEO and board member of Eureko Asigurari and chairman of the board at Eureko Pensii, told The Diplomat ? Bucharest.
According to him, the company?s life insurance business on the local market last year declined 0.9 percent, while the market rose about 4 percent, but this was mainly due to the hike in the health component of life insurance and growth in distribution via banks. ?Personally, I am glad when I see this number for Eureko as in 2010 business declined 8 percent. We continued to advance on the health market, rising 5 percent in 2011, while the market?s growth was double digit. The market keeps on growing as major clients have entered,? said Van der Ent.
The Eureko official says that pension contributions are growing and will very likely continue to do so. ?I am glad that pension contributions are so far increasing to 3.5 percent in 2012, and I think they will reach the 6 percent which was set as a target by law. This is good as it inspires trust. I hope the voluntary pension market (third pillar) will resume, as currently it is treading water as employers are being very prudent in adding benefits and, in the end, health is closer than retirement,? said Van der Ent.
On the topic of health, the Eureko official expects a double-digit growth for this EUR 10 million market.
?What is most important here is gradual health reform. The first step must be to change the tax regime to make it look more like the pension tax regime. The real issues of the health system are primary care, prevention, hospital efficiency, remuneration, the availability of the right drugs in Romania and funding,? said Van der Ent.
?In Romania we spend some 4 percent of GDP on health, while in the Netherlands it?s about 12 percent of GDP, with a significant difference in the value of the GDP. In terms of the European market, Romania is in a reasonably good position, as it has the possibility to grow, but it will be a decades-long process.? Eureko reduced last year?s losses by more than 50 percent compared to the previous year?s results.
?I expect economic trust, transparency and the need for protection to increase in Romania on the long run. The penetration of e-commerce and payment methods will also increase. And I expect bank insurance to grow. With 40 insurance companies in the market, further consolidation might be on the horizon as well,? predicted the Eureko official.
Spar resumes retailing in Romania
Retail D I 2011, which opened Dutch franchise Spar on the local market in March, has two new stores in Brasov, taking it to a total of 10 units under the brand on the local market ? eight in Brasov and two in Sfantu Gheorghe.
This is the Dutch retailer?s second attempt to conquer the Romanian market after the first ended in insolvency. However, the company?s projects will continue with rebranding its other stores ? 11 units are now functioning as Aprozar and Gostat in Brasov ? as Spar. Spar stores on the local market have surfaces of between 100 and 1,400 square feet and are named differently depending on their size.
Supermarkets are called Spar, while convenience stores are branded Spar Express. Soon another name for shops larger than 1,000 square feet will be added to the existing network.
Dutch delivery company TNT bought by American giant UPS
Dutch delivery group TNT Express has been acquired by and merged with the American express parcel giant UPS (United Parcel Service), in a transaction estimated at EUR 5.2 billion, representing EUR 9.50 a share, representatives of the two companies announced.
According to data on the market, UPS offered EUR 9 a share for the Dutch firm over a month ago, an offer which was rejected for being too low. Nevertheless, the two firms remained in talks and have now agreed to create a merged group with annual turnover of EUR 45 billion.
The offer is supported by TNT Express?s management and supervisory boards. PostNL, which owns 29.8 percent of the company, has said it will tender its shares, according to Dutch national news media.
UPS now plans to consolidate its expansion in Europe, especially on markets such as the UK, France, Germany and the Netherlands. In Romania, UPS recently announced a 15 percent increase in exports compared with the same period of 2010 at the end of the third quarter.
Constructor Remco Romania goes into Africa
Representatives of the Romanian branch of the Dutch group of companies Remco told The Diplomat ? Bucharest that the company?s general manager is currently in Africa.
The business trip comes following the recently announced contract the company won on the continent, where Remco is consolidating its businesses with ongoing construction projects to be developed in countries such as Gabon, Nigeria and Cameroon, totaling EUR 6 million and an estimated area of 30,000 sqm so far.
In 2011, the firm was awaiting construction permits for its sixth project in Africa, to build a 9,500-sqm warehouse in Nigeria. Remco Romania won its first contract in the continent in 2010, involving two projects in Gabon, while this year another three schemes have been delivered in the same country.
Currently, the company is about to sign deals to build a warehouse in Nigeria and a food processing plant in Cameroon.
?We are not targeting local controversial auctions in Romania; instead we are looking for interesting projects abroad. Besides Africa, we are in advanced negotiations for a 46,000-sqm project in Russia,? said Jan FJ van Vulpen, Remco Ruimtebouw Holland and Remco Romania GM.
Remco Romania, a subsidiary of Dutch company Remco Ruimtebouw, has amassed 100 projects involving over 500,000 sqm, building for companies active in the transportation, warehousing, distribution, trade, services and sport sectors, according to the firm. In 2010, the Dutch group had a turnover of EUR 30 million from its businesses in Romania, Poland, Ukraine, Russia and Bulgaria.
New shareholder for battery business
Rombat, the largest Romanian manufacturer of car batteries, has a new major shareholder: Dutch company Metair International Holdings Cooperatief, part of South African group Metair Investment Limited. Negotiations lasted over a year and reached completion in March, when the contracts were signed. At present, Metair controls 99.16 percent of Rombat. Under the agreement between the parties, the transaction details are being kept confidential.
?We are pleased that our new owner is Metair. This group is a strategic investor for us and is present in the same industrial sector ? car parts. We believe that the new shareholder will support the further development of Rombat. We are pleased that Metair representatives appreciated our company?s performance, as they also negotiated with other companies in this area. In recent years we have had good results,? said Ioan Repede, general manager of Rombat. Annually, the firm can recycle 43,000 tons of batteries from both home and abroad.
?I think the battery recycling segment has primarily been influenced by competition on the waste battery market, which contributed to higher commodity prices,? said the manager of the company, which in 2010 registered a turnover of over RON 280 million, up from the previous period, while shipments exceeded 2.1 million car batteries. According to Repede, the number of batteries recycled has grown steadily in recent years.
?From our data we can say that over 90 percent of the batteries in Romania are recycled, similar to other countries in this region,? commented the Rombat boss, adding that in recent years the company has invested significant sums in Rebat?s recycling facility in Copsa Mica, Sibiu County, putting into operation a modern oven plant and a new crushing and sorting installation of waste batteries.
The investment in Rombat started in 2003 and has now reached close to RON 48 million, of which almost two thirds went into advanced equipment for recycling. Rombat has 665 employees and its market share at the end of the last year was 53.8 percent. Metair?s main customers are Daimler Chrysler, General Motors, Nissan, Toyota, Volkswagen, BMW and MAN. Last year the group recorded revenues of EUR 429.4 million, up 14.4 percent on 2010. By acquiring the majority package of Rombat, Metair is entering on the European producers market.
HR market undergoes revolution
?The only problem we have encountered lately has been the growing number of candidates. Their profile has not changed, but the way they relate to the market has. In 2008 I placed an ad to fill a sales manager vacancy and I had 10-20 candidates; it was a salary war. Now, for a similar post we have between 200 and 1,000 candidates,? Cristina Savuica, managing partner for Romania and Czech Republic at Lugera Makler, told The Diplomat ? Bucharest, adding that currently the most sought after jobs are in sales, manufacturing and IT.
According to Savuica, while in 2008 she couldn?t find candidates and had many projects, 2009 was the opposite. In 2010 many companies stopped recruiting, but in 2011 they got back on track again. To successfully get through the tough times of 2009-2010 Lugera Makler diversified its services. It moved into brokerage (Citibank), inventory ? as company officials believe there are many retailers who need inventory ? and the travel business, having opened a department a few months ago. In 2011 the company invested about EUR 100,000 in the travel segment (for employees) and software for inventories.
Recruitment represents 10 percent of turnover, brokerage 5 percent and personnel leasing the rest.
?This segment has evolved a lot lately because customers can no longer afford to hire for an indefinite period. The recruitment market is currently on an upward trend, and more companies are looking for talented people. The beginning of the year brought many auctions, as companies use recruitment,? added Savuica.
Lugera Makler has over 8,000 employees at other companies and 152 of its own. The company had a turnover of EUR 34.8 million and a profit of EUR 800,000 in 2010. ?I think the market will settle. We must find a formula for balance. In 2012 both wages and the need for job security changed. In 2008 if a person was dismissed, the next day they could find 10 new solutions. In 2012 there is a need for job security,? said Savuica.
New investment flowers at Golden Tulip
?The latest news at Golden Tulip is that this month we will finish building a conference room with a capacity of up to 50 seats in which we have invested EUR 50,000-60,000,? Larisa Budaca, general manager at Golden Tulip, told The Diplomat ? Bucharest in December. According to the manager, the hotel had always suffered because it didn?t have a conference room, despite being a business hotel. Before the opening of the new room, the property had a room with only 14 seats, but that did not meet requirements. The GM added that companies prefer to sign contracts with hotels offering all the facilities they need.
?Efforts are being made and we all know of new projects to increase the number of tourists in Bucharest, but these projects have not yet contributed consistently enough to change the balance, and the business segment clearly remains the predominant one in our hotel,? added the GM of the hotel, whose leisure-business split is 30-70.
Big increases brewing at Philips?s automatic coffee machine plant
Dutch company Philips has had an automatic coffee machine plant in Hunedoara city in Orastie for three years. The factory was bought from Italian company Saeco, which came to Romania in 2003, and invested EUR 7 million in the plant. Initially the site had 200 employees and an annual production capacity of 300,000 devices. Currently the number of employees is around 500 people, but Philips representatives did not provide data on the new production capacity. Since taking over the factory in 2009, Philips has made no announcement about the Orastie unit, or the acquisition or the coffee machine factory?s work.
However, information on the Ministry of Finance website indicates that plant turnover reached RON 194.5 million in 2010, over double the figure in 2009, the last year the company was controlled by Saeco.
Sogeco Romania, the company through which Philips reports to the Ministry of Finance, said that the factory in Orastie reported a profit of RON 20 million in 2010, compared to a loss of RON 18.6 million the previous year. The Orastie factory is counted as a separate entity from Philips Romania, which includes the Dutch giant?s activities in Romania in the sale of lighting products, health products and services (cardiac care products for acute care) lifestyle and consumer products (electronics and appliances).
KLG Europe Logistics Romania to invest in 10,000-sqm storage space this
Logistics will continue to enjoy growth potential this year, due to companies? tendency to outsource these services, according to the manager of one of the leading firms in the logistics segment.
?Companies will transform fixed costs into variable costs, in order to optimize the logistics process by reducing stocks and increasing the volume of direct deliveries,? said Dragos Geletu, GM of KLG Europe Logistics Romania. According to the manager, the main challenges will be for services suppliers operating in transport and logistics, especially regarding cash flow, notably collecting debts within the context of increasing fuel and utilities costs. ?The financial stability of a company will be a major advantage and it will make the difference in many situations,? said Geletu.
Regarding the company?s strategy for this year, KLG Romania plans to build a new deposit in Bucharest, of more than 10,000 sqm, but overall investments are similar to previous years. Still, in 2011, when it expected a turnover of EUR 18 million, KLG managed to exceed its initial plans to reach a EUR 20 million turnover, compared with EUR 15.5 million attained in 2010.
?Back in 2007 when we entered the local market, we planned a turnover of EUR 2 million, but we ended the year with EUR 7.5 million,? noted Geletu.
In 2008 and 2009, years when the market in Romania had started to slow, the company almost doubled its turnover. In 2010, KLG invested over EUR 20 million in the ProLogis Park. In 2012, the firm plans to post turnover growth of 20 percent.
Heineken Romania: positive performance in turnover test in 2011
Part of the Dutch Heineken Group, Heineken Romania posted positive results in 2011.
According to the company?s statement, net turnover went up 11.5 percent in 2011, compared with 2010, amounting to RON 1.042 million, while the brewer?s sold volume went up 7.5 percent year-on-year.
Andrew Quayle, CFO of Heineken in Romania, said, ?Heineken has a globally consistent, long-term business strategy that is also embraced by Romania and which enabled us to achieve increased results in 2011, compared to 2010. Our performance in 2011 comes as a result of a healthy mix of effective marketing programs, strong brand activation, continuous investment in innovation, working closely with our customers and, in particular, our distribution partners.?
Of the brewer?s brand portfolio, Bucegi posted the strongest performance, exceeding 2 million hl in sales volume in 2011. Ciuc Premium also surpassed its 2010 figures, with a two-digit growth in volume sold.
The local branch of the beer producer has diversified its portfolio by starting to directly import and sell seven beer brands: Desperados, Amstel, Birra Moretti, Krusovice, Foster?s, Strongbow and Sol.
Heineken. In 2011, an ingredient in reaching this goal was the successful introduction of a new non-alcoholic beer for the mainstream segment, namely Golden Brau Non-Alcoholic.
Amsterdam-based Heineken would have market shares of 44 percent in Romania, 46 percent in Hungary and 51 percent in Bulgaria in a StarBev linkup, while Denmark?s Carlsberg would have 46 percent in Bulgaria, 76 percent in Serbia and 47 percent in Croatia, analysts have calculated. #9632;