Agricover company, a producer of genetic material for seeds and a provider of agricultural distribution services, registered a 25% drop in delivered volumes in a particularly droughty year.
However, the company's representatives say targets set for this year, namely turnover worth 95m euros, will be reached, particularly because of rising prices for grain.
"In 2007, we cannot speak of a normal market in Romania. International markets have been caught in a panic about grain, with wider effects on our market. We are talking about 70% higher wheat prices against last year, with an obvious impact over deal dynamics and the balance between demand and supply," stated Robert Arsene, Agricover general manager.
The volume decrease by around 25% came in a period of radical change in terms of market dynamics. "(...) We paid prices 30-40% higher than initially expected or contracted and a bigger working capital was needed," Arsene also said.
Turnover budgeted for 2007 is similar to last year's, but one must take into account the fact that starting this year Agricover has integrated Suntory Agrochemical national pesticide distribution firm into the group, but sold the oil unit in July to Bunge US group, leader of the domestic market of vegetable oil.
Until last year, Robert Arsene filled the position of general manager at Bunge Romania, having run the domestic operations of the US giant since 2001, when he took over the company's management.
This May, Arsene was appointed general manager of Agricover group, right after the company sold the oil unit.
In terms of income estimates, Agricover management says the firm will reach the budgeted value, of 2.5-3m euros.
Agricover's activity is divided into several units, including pesticide distribution, seed production, the silo unit, the grain unit and logistics. The company is set to invest around 8m RON (2.3m euros) in silo modernisation and capacity expansion by yearend.
Agricover, set up in 2000 through a merger between Comcereal Buzau and Ulvex Buzau, is part of ICB group held by 2 Iranian investors, which also includes Prodal '94 alcoholic drinks producer.
Agricover
Expects 95m euros in turnover
Operations are divided into several units: pesticide distribution, seed production, silos, grain and logistics
Expects to reach the 2.5-3m euro profit figure as budgeted
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