Raul Ciurtin, Albalact chairman, says he has also taken into consideration acquiring another player in the domestic dairy industry, but has not made such a move "because we didn't find any company fitting our strategy". However, he did not reveal any names related to the possible target.
After giving up the idea of an acquisition, Ciurtin has come up with a proposal to relocate the old production facility in Alba-Iulia to the new plant that started operating in late 2007, in the wake of 11m-euro investments. Production expansion will take investments of some 1m euros and installed capacities will go up to 300,000 hectolitres from 200,000 hectolitres now.
"We've decided to expand production in the new plant and we'll relocate the entire activity in this centre. In 4 months, we'll finalise the transfer and turn the old plant into a real estate project," says Ciurtin. The sale of the plot of land may bring Albalact 6m euros.
"We haven't devised a plan, yet, we have two alternatives, either selling the whole plot of land or develop it into a real estate project in which Albalact should be a passive investor," Ciurtin also says.
He states the problems linked to raw material price increases made the producer change its strategy.
"We're considering the construction of a new farm or even acquiring farms and we're only looking at farmers we've worked with. We plan to acquire 2 farms this year, targeting to reach 100,000 litres of milk per day, from 12,000 at present, on the medium term," states Albalact chairman.
The high raw material prices have made Ciurtin consider further growth possibilities, and this is how he decided to enter the baby-food segment.
During the General Meeting of shareholders, Albalact will also discuss on the company's floatation on the second tier of the Bucharest Stock Exchange. "This is not necessarily a good timing, but we have liquidity and shareholders have asked us to take this step for some time," said Ciurtin.
Albalact (ALBZ) is listed on RASDAQ and has a capitalisation of 86.2m euros, from 127m euros in late 2007. The company is 50% held by Petru Ciurtin and Raul Ciurtin.
"We've tried to keep our strategy as close to what's happening on the market as possible, and all market conditions have changed compared with the first half of last year, mainly due to raw materials. We've had to make changes along the way. Should the ideas we're starting from today be valid, then we'll reach 100m-euro turnover in 2009," says Ciurtin.
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