RSM Romania_Business Brief_08-12.08.2016

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THE BUSINESS WEEK IN ROMANIA
8 – 12 August 2016

MACRO
• Absorption of European funds at a standstill
In July the current rate of absorption of European
funds remained at the same level as in the previous
month: 76.69%. The expenses declarations sent to
the European commission on 31 July were 14.6 billion
Euros. The rate of effective absorption, respectively
reimbursements from the European Commission,
increased by 3.69% to 71.76% (13.6 billion Euros).
For the Growth of Economic Competiveness
Sector Operational Programme the rate of current
absorption was 90.02%, for the Technical Assistance
Operation Programme 97.71%, the Environment
Sector Operational Programme 77.45%, the Regional
Operational Programme 83.91%, the Human Resources
Development Sector Operational Programme 65.14%,
the Transport Sector Operational Programme 68.8%,
and the Development of Administrative Capacity
Operational Programme 98.66%.
• Significant decrease in inflation forecast
The National Bank of Romania has significantly
decreased its inflation forecast for the end of this year
from +0.6% to -0.4% and its forecast for the end of 2017
from +2.7% to +2%. According to the bank’s governor,
Mugur Isărescu: “The evolution of the price of oil at
the international level and oversupply of alimentary
products at the European level have contributed to
the maintenance of inflation at a low level.” Oil prices,
along with the reduction in the general rate of V.A.T.
from 1 January 2016, have had the biggest impact very
low inflation. Furthermore, there is a large gap between
labour productivity and wages, and a strong increase in
consumption has led to higher imports, in the opinion
of Isărescu.
• Fall in industrial prices
Industrial production prices increased by 0.7% in June
compared with May, and the rate of the decrease over
the last year has slowed from -2.8% to -2.3%. In May
industrial production prices climbed by 0.3% on April,
but were 2.8% lower than in May 2015. Between June
2015 and June 2016 the biggest price decreases were
in coke and oil refinery products, a fall of 23.6%, and
in chemicals, a drop of 11.4%. The biggest increases
were in mining auxiliary services, a surge of 6.4%,
and computer and motorcar production, a leap of 4%.
Industrial prices have been tumbling for more than
two years, due to lower oil and raw materials prices
internationally. In Romania, more than ten industrial
sectors have been hit by falling prices, alarming experts
and leading them to talk of deflation.
Sources: Adevărul, Agerpres
BUSINESS
Kärcher opens 20-million-Euro factory in
Curtea de Argeș
The German Kärcher Group, with an annual turnover of
two billion Euros, is set to start production of industrial
and domestic vacuum cleaners at its new factory in
Curtea de Argeș, an investment of twenty million Euros.
The factory has already hired one hundred people, and
over the next decade the number of employees will rise
to eight hundred. Kärcher received eight million Euros in
State aid to open the factory. In Romania, the Kärcher
factory will also have a research and development
department and sales division. Kärcher products are
sold via Dedeman and Bricostore in Romania. In 2017,
the factory will produce around 800,000 industrial and
domestic cleaning devices.
• Practic București to sell the Racovița Hôtel in
Slănic Moldova
Real-estate company Practic Bucharest intends to
sell the Racovița Hôtel in the Slănic Moldova resort, 73
kilometres from Bacău. The hôtel has 52 double rooms
and twelve suites, as well as a restaurant with seating
for 120 people. The company also intends to sell two
plots of land, measuring 4,698 square metres and 2,210
square metres, which are part of the resort. Practic
Bucharest made a profit of 14.31 million lei last year, a
decrease of 17.20% on 2014. On the stock exchange,
the company is worth 178.7 million lei (40 million Euros).
Its shares have decreased in value by 26.94% since the
beginning of this year.
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BUSINESS
• 600,000 Euro investment in bio corn puffs
MRomania’s biggest producer of corn puffs, Phoenixy,
is to launch a bio line of corn puffs, having made
an investment of 600,000 Euros. The product was
launched in Austria and Germany over a year ago. The
corn for the new bio puffs is grown on pesticide- and
chemical fertiliser free land. Phoenixy has a seventy
per cent share of the local market and produces fifteen
different products. Its Baicoi factory produces more
than a million bags of puffs daily. The company also
exports to Sweden, Germany, Holland, Spain, Italy,
Greece, Czech Republic, Slovakia, Bulgaria, the U.K.,
Hungary, Belgium, Hungary, Croatia, Albania, and the
United States.
• OTP Bank launches double pre-financing credit for
A.P.I.A. subsidies
OTP Bank Romania has launched a credit line for double
pre-financing of A.P.I.A. (Payments and Intervention
Agency for Agriculture) subsidies, a product intended
for legal entities, authorised natural persons, family
business, and individual enterprises in the agricultural
sector. OTP will provide clients with the opportunity to
access a sum up to double the amount of the subsidies
they are to receive, based on a certificate from the
A.P.I.A. According to the bank’s representatives, this
financing product is unique in that it pre-finances
subsidies for two years.
• Danish retailer JYSK comes to Craiova and plans to
invest in Iași, Vaslui and Constanța
Danish furniture and accessories retailer JYSK
continues to expand in Romania, and is about to open
its 38th store in Craiova. With a total surface area of
1,100 square metres, the store will be located in the
Electroputere shopping centre. Since the beginning of
the year, JYSK has opened nine stores around Romania,
with the Craiova store to be the tenth. Last year JYSK
had a turnover of 160 million lei (36 million Euros), 56%
up on 2014. Profit rose significantly, from 1.7 million lei in
2014 to more than 14 million lei last year. Last year the
company employed 314 people, almost 100 more than
in 2014. The company plan is to have 100 stores around
Romania within the next five years. JYSK entered the
Romanian market in 2007, when it opened a store
in Oradea.
• Werk Property Group to invest 30 million Euros
in Timișoara offices
Werk Property Group, Timișoara, is to invest 30 million
Euros in developing Vox Technology Park, a class-A office
project with 26,000 square metres of space to rent. Due
to be delivered next year, the park will have a series of
facilities and represent the latest generation of office
space. There will be spaces for bicycles, a gym, a shopping
area, conference rooms, a restaurant, a food court, and a
rooftop café. The architecture is by Studio Arca.
• Jaeggi recruits 190 workers for Sibiu factory
Jaeggi Industries has completed 89% of its 15-million-
Euro factory in Cristian, Sibiu County. Jaeggi received 7.7
million Euros in State aid in 2013, in return for a promise
to hire 269 people to work in the factory. By the end of
June, the company had already recruited 186 people and
spent 4.5 million Euros of the State. Aid. Jaeggi Industries
produces hybrid dry coolers for air conditioning systems.
Last year, the company reported a turnover of 4.6 million
lei and a net loss of 11.6 million lei.
• Orange opens third smart telephone store in Bucharest
Orange, Romania’s largest mobile telephone operator,
has a new store in Bucharest’s Plaza Mall, its third in the
capital and ninth in the country as a whole. The telecom
operator’s other smart stores are located in Arad, Bacău,
Cluj, Iași, Oradea, and Timișoara. In Bucharest, Orange
smart stores can also be found in the Afi Cotroceni and
Băneasa shopping malls.
Sources: Ziarul Financiar, Bursa, Wall-Street
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