ERNST & YOUNG SRL

 | 

VIORICA LUNGU

  |  10.12.2014

Small but steady increases in the Romanian Machinery Manufacture Industry

Despite the large investments mandatory for the development and for performing the activity of machinery manufacturing itself, Romanian machinery manufacturers seem to have managed well during 2013 – H1 2014 to align the increase of investments with the growth in turnover and return in profitability

ERNST & YOUNG SRL

VIORICA LUNGU

VIORICA LUNGU

CONSULTANT – TRANSACTION ADVISORY at ERNST & YOUNG SRL

During 2013 in comparison with 2012, the turnover value index manufacture of other transport equipment increased by 32.8%, for the manufacture of motor vehicles, trailers and semi-trailers by 22.6% and by 15.5% for other manufacturing (based on provisory data provided by INSSE).


Also, during 2013 vs. 2012, the value of new orders index in manufacturing branches working based on orders for total (domestic and non-domestic market) increased by 44.5% for manufacturers of other transport equipment, by 21.3% for manufacturers of motor vehicles, trailers and semi-trailers, and by 19.2% for manufacturers of machinery and equipment (based on provisory data provided by INSSE).


The exports of machinery and transport equipment reached a value of EUR 20.8 billion in 2013 (based on provisory data provided by INSSE), meaning an increase by 14.6% compared to previous year.


According to a selection of the companies with a turnover higher than EUR 2.4 million in 2013, 144 machinery manufacturers and traders were identified active on Romanian market, together totalling approximately EUR 3.6 billion of net turnover and around EUR 65.8 million of net profit, based on data provided by the Ministry of Finance reported by these companies in 2013.

 

  

 

Increasing demand on the European market launching exports recovery

Exports tend to be the main source of revenue for the equipment manufacturers active in Romania. That is the case of General Electric (GE), one of the strongest suppliers of equipment for the local energy industry, which has budgeted for 2014 to export equipment from Romania totalling USD 110 million, 60% higher than last year, the main driver of growth being presented by the taking over in 2013 of the oil equipment plant in Lufkin, including the plant of USD 140 million in Romania - a transaction valued at USD 3.3 billion. Also, the Romanian equipment manufacturer Comelf exports over 97% of its production, the company ranking among the 23 largest Romanian private capital exporters, according to a classification made by a local business publication.


In the Romanian agricultural machinery industry, there are only 8 players currently active compared to 30, 24 years ago. Moreover, if the local market was producing at that time all necessary equipment from drills to tractors, today the locally industry targets only small machines.


The market of rolling stock manufacturers estimated at EUR 250 million has experienced a decline in the recent years because of the dwindling budgets allocated by the state for the modernization of road infrastructure. State owned companies showed a substantial business decrease and smaller players such as Remarul February 16 and CFR Grivita recorded two or three times downtrend of sales in 2013.


In terms of innovation, the manufacturer Softronic Craiova produced the first electric train in Romania worth EUR 5 million. Softronic produced 7 electric locomotives in 2013, some of which were sold in Hungary. For 2014, the company plans to produce 8-10 locomotives, looking forward for prospective marketplaces.

 

Renewable Energy and Oil & Gas exploitation in Romania will drive shipyards manufacturing

Offshore construction vessels with applications in both renewable energy and the exploitation of oil and gas are one of the main segments targeted by the site of Galati. After the economic crisis, all shipyards were oriented towards the production of more than special ships with greater added value to diversify beyond traditional segment of tugs.


Galati Shipyard, owned by Dutch group Damen, reached a turnover of RON 130 million (EUR 29 million) in H1 2014, 30% higher than the same period last year, launching 8 ships in H1 2014, including the offshore construction vessel which will enable to produce enough renewable energy to supply 785ths homes. Damen ended 2013 with a turnover of EUR 142 million and a net profit of EUR 13.6 million. Also, the company is about to build for the Danish Maersk Supply Service a vessel of offshore services that will be used for the installation of submarine power cables, expected to be ready by the end of 2015.


Daewoo Mangalia Heavy Industries Shipyard placed in Constanta County has delivered in H1 2014 the largest navy transport road vehicles built in Europe. The value of contracts in progress at Daewoo-Mangalia Heavy Industries amount to USD 1.34 billion, which ranks the company 3rd in Europe in terms of volume of work and the first in the largest commercial shipbuilding segment.


Orsova Shipyard, specialized in the construction of vessels, started to recover after four years of decline, being already fully covered with orders until 2014, expecting a profit of RON 3.3 million, regardless the two consecutive years of losses. The shipbuilding industry was one of the most affected by the crisis, vessel prices being still maintained about 40% lower than in the peak year of 2008.


Alike in any industry, the demand drives the market. As the numbers above can confirm, the Romanian machinery manufacturers and traders have taken suitable measures and initiatives to satisfy the European market expectations by providing diversified, innovative and higher added value production, thus recording a positive trend in exports, revenue and profit.

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