Compa Sibiu, one of the main manufacturers of automotive parts in Romania concluded the first quarter of this year with 0.33 million euros (1.18 million RON) in net profit, down 40% from the same time last year. Compa''s net income in the first quarter was 53.6% lower than anticipated in this year''s budget. Turnover in the January-March period stood at 16.8 million euros (59.88 million RON), up 15.4%, with exports accounting for 63% of the sales.
The company had budgeted net income worth 5.4 million RON (1.56 million euros against an average exchange rate of 3.45 RON/EUR) for this year, up 6.8% from income registered last year. Income growth is similar with this year''s inflation rate, which is put at 6.5%.
The slight advance in profit is expected amid a turnover increase by 15%, to a level of 259 million RON (75 million euros). Compa''s conservative projections related to income for year 2006 are due to the fact that the company was seriously hurt by foreign exchange market fluctuations last year, in the wake of which the profit Compa derived was below the budgeted level. The growth of the domestic currency against the euro is, after all, the main factor negatively impacting Compa''s profitability this year, according to the company''s management.
"We are forecasting this slight income increase in the context where Compa''s production largely goes to the export, and the euro''s depreciation against the RON is hurting our revenues. When building the budget for this year, we took into account an exchange rate of 3.45 RON/EUR, but during discussions with various banks, even lower exchange rate estimations were mentioned. Yet, there was also a higher exchange rate projection," specified Ioan Miclea, Compa''s financial manager. Miclea also added Compa''s exports were going to increase this year by 42%.
"Exports will go up 42% from last year''s value and are going to weigh 68.6% in total turnover. The higher exports are due to the increasing production volume for the projects we are already carrying out with our traditional partners. We are primarily talking about a substantial increase in deliveries to Bosch and Koyo," stated Miclea.
The company has sealed several partnerships for the production of car subassemblies with international companies operating in this domain over recent years, such as Honeywell Garrett US group or Japan''s Koyo. Compa also has a partnership contract with Germany''s Bosch group.
The company''s management added this year''s results would be negatively influenced by the rising utilities costs. However, Miclea considers budget targets as being realistic and says they will be attained this year despite negative market conditions. catalin.ciocan@zf.ro
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