A budget built on pessimistic hypothesis, improving work capital especially by cutting outstanding debts or by the decline of exposure in foreign currency by dropping debt in foreign currency are only few of the measures adopted by players in Romanian FMCG market, in the context of leu’s meltdown.
If national currency reaches 4lei/euro, Monica Tatoiu, managing director at Cosmetics Oriflame Romania said the company’s budget was framed for this fall’s shock even since November 2007. The forecasted currency exchange rate was 3.65lei/euro.
“We framed the budget blueprint for 2007 starting from pessimistic premises. Banks’ reports from early this year provided pessimistic forecasts for foreign currency exchange rate. I am a prudent person, and I have always chosen solutions with the minimum risk. Keeping savings in a bank is a minimum risk, nowadays,” Monica Tatoiu stated for Wall-Street.
Tatoiu added that the strategies implemented in early stages confer to company the “comfortable role of bystander at the show”.
“Now we are setting up strategies for spring, when we forecast a normal path for Romanian economy, yet with only one condition. Romanian Budget for 2008 must subject to vote no later than November 30, for the election donations to be assumed by those who proposed them,” Monica Tatoiu said in the interview.
As for national currency’s trend, Oriflame Romania’s representative sees a 3.7lei/euro average exchange rate for next year.
On a cosmetic market estimated at 800 million euros, Oriflame Romania, local subsidiary of the Swedish cosmetic player Oriflame registered, according to 2007 annual earning report 3.5 million euros net revenue and 31.9 million euros turnover.
The company’s portfolio includes 650 makeup, body care, men care products and fragrances.
Henkel Romania: Consumption and investments will decline will inflation will rise
FMCG producer Henkel Romania said the actual evolution of national currency will seriously dent Romania’s economy, while inflation will bolster.
A 4lei/euro threshold and a possible decrease in demand is likely to downturn Henkel’s business in Romania, according to Niculae Olteanu, Chief Financial Officer of the company.
“The turnover is likely to drop due to demand decrease. Moreover, the profit margins is likely to plunge as long as raw materials, fuel and energy prices climb,” Olteanu added.
Henkel Romania representative said the board has taken a set of measures to cushion from currency exchange rate’s sputters.
“We consider improving net working capital especially by cutting outstanding debts in the market. Furthermore, we are attempting to reduce the exposure to foreign currency by cutting debts in foreign currency,” Nicolae Olteanu pointed out.
The company forecasted in its budget blueprints for this year a foreign currency exchange rate at 3.7lei/euro.
Henkel Romania, the local subsidiary of Henkel Central Europe has 400 employees and its range of products includes 30 brands.
The company, active in Romania since 1994, posted in 2007 a turnover that amounted to 142 million euros, and 15.2 million euros revenue.
Translated and adapted by Camelia Oancea.
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