Dairy industry in 2008: investments, newcomers and rising volume

Traian Simion, managing director of Albalact, one of the most important players in the local dairy market, said the year 2008 had been very productive for the company he runs, recording rising turnover and completion of major phases within the consolidation process.

Albalact reported 20% growth in turnover in first nine months this year, to 134.08 million lei, from 111.75 million lei a year ago. Moreover, overall earnings of the company increased by 22%, to 146.19 million this year, from 119.18 million in 2007.

“These are very good results, given the fact that we have completed important phases of the consolidation process, that required two major investments: opening new production facility at Oiejdea and sealing the acquisition of 77% shares of local Raraul Campulung Moldovenesc to enter the cheese segment. Company’s management managed to proactively follow the objectives drawn in our development plan approved earlier this year, given the high expenses earmarked for opening the new facility,” Traian Simion told Wall-Street.

Although the local dairy industry is not yet consolidated, all segments followed upward trends, especially milk, butter and natural yoghurt categories, according to Traian Simion.

Local dairy industry has continued its natural trend in 2008, without being affected by the crisis, situation which would likely change starting next year.

“In 2009, the market evolution will follow a slower upward path due to the economic crisis. The growth margin will lower, and the consumption will focus around basic dairy products. Let’s not forget that milk is the second product in the “daily shopping cart” of Romanians. We believe that Romanians will choose cheaper products which will lead to a slower growth pace of the industry in general and to a lower profit margin”, said Simion.

As for the effects of the crisis on Albalact, managing director said the company’s strategy was adjusted to market’s conditions. “We hope we won’t be affected by the current financial context”, Simion added.

Albalact chose Raraul Campulung Moldovenesc producer, because it is a company with 40-years tradition in dairy industry, who invested in accreditation and modernization. Albalact plans to invest over 2 million euros in enhancing cheese production at Raraul facility.

Raraul S.A was privatized in 1994 in one of the first MEBO acquisitions in Romanian dairy industry.

Albalact was privatized in 1999 and it is listed at BSE’s second category. Albalact is the country’s fourth biggest dairy producer in Romania and produces over 60 types of milk, yoghurt, cream, butter and cheese.

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