Flamingo International IT&C group, which announced it would take over the Flanco chain of electronics and home appliance stores, has revised its profit target for this year, forecasting a 30% profit slump from 2004.
The company''s representatives blame the floods and NBR''s lending norms, which strongly eroded their hire purchase sales.
Nevertheless, the company''s turnover is projected to grow by at least 25% from last year, reaching 75-80 million euros. The company''s net income would thus come to about 2.6 million euros, from 3.7 million euros last year. Initial estimations for this year pointed to 3.8 million euros.
"Hire purchase sales account for a mere 25% of our initial estimation for this period of the year, amid tighter NBR norms linked to consumer loans. At the same time, this year''s recurring floods played a certain role in cutting Romanians'' appetite for consumption," stated Dragos Cinca, chairman and the majority shareholder in Flamingo. The company''s representatives say they have also been hit this year by the strong fluctuations seen on the foreign exchange market.
The company''s retail business is set to rise by 15% at most, while the distribution arm is likely to see growth of more than 30%. Flamingo derives most of its profit and a significant proportion of its sales during the last part of year, when IT&C sales are higher in comparison with previous months. After the first nine months, the company logged sales worth 47 million euros, while its income stood at only 20,000 euros.
The Flanco store chain, which is set to become a unit of Flamingo group in line with a preliminary agreement signed on Friday, has lost ground to other competitors, falling from leading position on the home appliances market, to third place. Flanco has not reported any financial results, but according to statements by the company''s representatives, they are not expecting solid sales growth this year.
The trading in Flamingo shares began again yesterday, after they were suspended as of Thursday. Flamingo stock took a nosedive yesterday, dropping 11 percent.
vlad.nicolaescu@zf.ro
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