Florin Urite, Teraplast: Real estate crisis is here, a price reassessment is inevitable

“Real estate crisis is here, a reassessment of prices is inevitable. I am forced to proceed with a regional expansion. Since 2007 we had a serious approach on external market, but for now, we are analyzing all options to enter other fields that might be suitable for us,” said Florin Urite, managing director at Teraplast. At present, the company exports 7% of its production in other countries like Moldova.

The financial crisis affected the residential construction market in Romania, which geared a skyrocketing growth of Teraplast’s turnover in first part this year, together the visible presence of the group in the sewage projects.

The group reported a consolidated turnover of 202.76 million lei in first nine months this year, up 27% from last year, while after-tax earning increased by 36.6% in the aforementioned period, up to 20.69 million lei.

Teraplast’s sales of pipe, PVC profile, windows and granules, surged 13.54% in first nine months this year, to 153.7 million lei, below last year’s growth margin of 38.15%. After –tax earning upped by 10.06% up to 15.6 million lei.

PVC pipes sales had a 24.29% share in the consolidated turnover, registering a 37.5% growth from a year ago, above the growth rate of construction industry.

“Next year, I will rely on infrastructure and non-residential projects. I see a sharp decline of the real estate market,” said Urite, pointing out that the number of newly built housing units in Romania is far from the level of the countries in the region.

According to the company’s research, the precarious state of infrastructure in Romania and the need of upgrading the sewage and water supply networks is a vital argument in the growth of group’s business and investments. In Romania, 47% of the sewage infrastructure meets the requirements of high standards, due to the light penetration in the rural areas, compared to 94% in most European countries.

In first nine months in 2008, volume of the group’s investments climbed 65.6% from last period, amounting to 164.4 million lei. The investments were directed towards relocation of the existent production capacities and their development.

For this year the company allocated 37.3 million lei, fivefold higher amount than last year, when the company pumped 7.4 million lei. The group completed this year relocation of PVC pipe manufacturing facility in Saratel Park, also doubling the production capacity following a 26 million lei investment.

The enhancement of production capacity was necessary, as the price per tone for PVC slumped to below 1,000 US dollars since mid 2008.

The industrial park covers 22 hectares and will include the units that will be relocated in the coming period, including Politub factory, excepting the PVC extrusion and terra-cotta tiles manufacturing units.

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