Businessman Ovidiu Buluc, in charge of drug distributor Farmexim, which derived turnover worth almost 150m euros last year decided in the third quarter of 2008 to restructure the company and recoup the 6m RON (1.6m euros) losses reported in the first six months. The process involved layoffs and the shutdown of a warehouse.
"In the first six months we registered a 42% sales increase and a 6m RON loss. I've never experienced both operating and financial losses," explained Buluc concerning the decision to revise the strategy for the third quarter. Thus, the management set a lower sales rate and decided to focus on portfolio products that do not have negative margins. In the wake of these new moves, Buluc expects Farmexim to have broken even after the first nine months, as a result of 13% higher sales compared with a year ago. Nevertheless, outlook for the last year decade is "bleak because if we don't deliver, sales will not rise, either".
Distributors are going through a difficult period right now, having halted deliveries to drugstores, after the Health Ministry did not adjust the price of imported drugs. "We closed a warehouse and let go almost 60 employees, whereas we used to hire new people each year," says Buluc. Thus, restructuring affected around 10% of the company's employees.
Farmexim ended 2007 with turnover worth 496m RON (148.6m euros), amid income worth 5.8m RON (1.7m euros), which places the company among the top players domestically. The turnover target was initially set at 180m euros for this year. "We reshuffled the budget for 2008, in the sense that we downwardly revised our initial estimates by 5%," specified Buluc. "Thus, we're drafting a budget for 2009 that stipulates a 20% increase," added Buluc.
The main issue related to the 2009 budget is the exchange rate. "We don't know the exchange rate we'll count on, yet. We'll probably have two budget drafts. I personally do not believe the euro rate will stand at 3.9 RON and I see it at 3.7 RON," said Buluc.
Part of the investments budgeted for the following period have been put on hold. Still, the distributor has carried out some investments since the start of the year. It paid 3m euros for a 4,000 square metre hall in Pipera and will finish the warehouse in Timisoara.
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