The company is currently developing several projects for modernizing its technological processes.
“The effect is devastating! The cost of financing is surging, including that of large projects,” Laurentiu Ciurel, the company’s General Manager, told Business Standard.
Ciurel also anticipates indirect effects, such as the cut in the local energy consumption and, implicitly, a drop in the price of electricity, which will strongly influence the company’s revenues.
According to Ciurel, the contractors of the projects that the company is presently developing are facing difficulties when seeking financing. “A project which used to cost €50 million now requires €60 million, due to financial costs of companies. This can also be seen in the pace of activities, which has slowed. All contractors complain that taking out loans is becoming increasingly more difficult,” added Ciurel.
The company’s General Manager said that the effect of Romania’s downgrading was almost immediate, explaining that lenders now believe they take bigger risks when granting loans, and they want to cover those risks by raising interest rates or requiring more collateral.
The CE Rovinari posted RON 68.7 million (€18.8 mln) in gross profit and RON 893 mln (€245.3 mln) in turnover in this year’s first nine months, up 2-3 percent compared to the same period in 2007.
The company has already contracted 55 percent of next year’s production, with the value of the contracts rising to some RON 750 mln (€206 mln). Estimates for 2008 indicate turnover in excess of RON 1 bln (€277 mln) and gross profit over RON 100 mln (€27 mln).
This year, CE Rovinari will probably invest some 90 percent of its RON 120 mln (€33 mln) investment budget, said the company’s official.
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