Dairy producer Covalact forecasts turnover for this year worth 16 million euros, 15% higher in comparison with 2005.
The Sfantu-Gheorghe-based company, which is in partnership with the Dutch food industry giant Campina Arla, is likely to accept a takeover bid by another European producer, since talks with the Dutch group have had no concrete outcome so far.
"We had an in-principle agreement that expired in late October, but we decided to extend our collaboration until the middle of this year. I gave them no guarantee, though, that I would not seek another partner," stated Ioan Balan, Covalact general manager. Balan specified there are also other bids for Covalact at the moment. "We are just considering options. The sale of the company is an issue we must deal with at the right time," he says. The Covalact general manager did not offer any details on the other companies that are interested in acquiring a stake in Covalact. On the other hand, the representatives of the Dutch group say they do not have any investment plan targeting Romania in 2006. "We have no investment plan for Romania. Campina owns a production line together with Covalact. That is all. We are in talks, but there''s nothing more to it than that," stated Ria Feldman, communication manager with Campina.
Covalact last year posted turnover worth 50 million RON (13.6 million euros), 12% higher than in 2004. "Our profit was lower than in 2004 from two reasons: the rising utilities prices and the 10% increase in costs for raw materials," said Balan. He explained that other material costs increased by 5%, including salaries.
The Sfantu-Gheorghe-based producer for this year predicts turnover will advance by 15%, to almost 16 million euros. In 2006 the company will invest about 1.5 million euros in production equipment and to improve the milk collecting system. "We must get better yields," says Balan.
Investment carried in 2005 exceeded 2m euros and addressed the expansion of production capacities. Investments were partly carried out using SAPARD funds.
In line with its own estimations, Covalact, whose portfolio includes over 16 types of products, holds a 2% market share. In certain geographical areas, the company''s sales are more solid. For instance, in Covasna county, the company''s market share tops 50%. In other counties, such as Constanta or Bacau, the company owns just 3-4% of the market. Covalact was privatised in 1994 through MEBO, and at this moment 10 shareholders own 80% of its stock, with the rest belonging to another 200 shareholders (former and current employees, milk producers, partners of the company).
The milk producer has been working for some time with Campina, which owns a production line within Covalact, exclusively focusing on the domestic market.
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