Bodgan Stanca, one of the 3 shareholders in Aaylex group of firms that owns Avicola Buzau, says the group is set to invest more than 26m euros to develop chicken production, despite the 2.8m-euro turnover decline Avicola Buzau witnessed last year compared with 2005.
Stanca stated investments would be largely aimed at the construction of a new chicken farm and the development of distribution. "We are currently operating a 4.2m-euro investment in Avicola Buzau in a greenfield project related to the building of a new chicken farm in Buzau county, 5 kilometres away from the company's central headquarters," stated Bogdan Stanca.
Though bird flu turned 2006 into a difficult year for chicken producers, Stanca believes it had a bigger impact over prices rather than over chicken consumption. Chicken producers had to cut down prices by 1.5 and 2 RON/kg, according to industry players. This price decrease, doubled by the shrinking domestic consumption and rising imports at that moment generated losses of 35m euros, which translated into domestic producers' 2006 financial results.
The new farm of Avicola Buzau will have 18 halls and will be the company's 12th unit, beside the 10 farms it holds in Buzau and one in Galati. According to Stanca, part of investments will be operated through a Sapard programme worth 2m euros. Works for the new farm started in February 2007 and Stanca estimates the first production will come out by yearend. "We want to triple production capacities by mid-2009 to successfully cope with domestic competition in the wake of Romania's EU integration," said Stanca.
Aaylex official added Avicola Buzau's total production capacities stood at 10,000 tonnes of slaughtered meat in 2006, meaning the producer will hit total annual production capacity of 30,000 tonnes.
"We are a little behind schedule with our investments. Though we already have the necessary land and projects for them, given that there is no methodology on how to access post-accession funds, we do not know exactly how to proceed. It would be a mistake for us to start investing now and then not get part of the funds," explained Stanca. The company wants to develop, starting the end of 2008, a collaboration project with small investors to bring together some family chicken farms.
Aaylex sells part of production through a chain of 18 owned stores under Cocorico brand, 15 of these being located in Bucharest and the rest in Buzau. Though meat producers' overall investments in media promotion doubled to 60 million euros in the last two years, Aaylex is not interested in investing in promotion for the time being. According to company data, Aaylex posted turnover worth 214m RON (60.7m euros) in 2006, up 12% year-on-year and expects 2007 turnover to rise by 10%, to 235m RON.
Aaylex in figures
3-the number of shareholders in Aaylex
5-firms making up the group: Aaylex Trading, Aaylex Distribution, Avicola Buzau, Lipia and Simex
10%-turnover growth projection for 2007
18-the number of stores Aaylex owns under Cocorico brand
26m euros-the sum to be invested by the group in the next three years
60.7m euros-the group's turnover in 2006
10,000 tonnes of slaughtered meat, the current production capacity
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