The net profits of villa building company Impact Bucharest fell in euros last year by 16% to 4 million euros (162.8 billion ROL), at a time when the company's turnover climbed by 43% to 25.6 million euros (1,039 billion ROL).
Company officials say the main reason for the lower profits was the unexpected decrease of the ROL/EUR exchange rate. This eroded the value of the sums collected from customers in ROL, since the contracts signed by the company were euro-denominated.
From this month on, Impact will no longer work with prices for its villas in euros, preferring instead prices in ROL, indexed to inflation.
"Profits are below estimates made at the start of the year due to the unexpected decrease of the exchange rate. It is for this reason that we decided to sell villas in ROL starting February," says Carmen Sandulescu, the company's financial manager. Apart from last year's lower than expected revenues, the company also suffered from 30% higher labour costs and 20% higher prices for construction materials.
Last year the company derived 233% more value from its signed contracts by comparison with 2003. However, this was on a market with lower profit margins, namely the row house market. The company is currently working on housing projects in residential complexes in Bucharest, Oradea, Constanta and Ploiesti.
Impact this week finalised the sale of a bond issue worth 8.6 million euros that will mature in four years. "Bonds have been sold through the private placement method and have been acquired by a single buyer: the London branch of Dutch ING bank," Sandulescu says.
Interest on the issue will be the six-month EURIBOR plus 6.5%. The attracted sums will be used for the company's 2005 and 2006 real estate projects. The first bond issue by the company, worth 50 billion ROL (about 1.6 million euros) and launched in 2002, is due in the second half of this month.
Since the beginning of the year, Impact shares have climbed 33% on the stock exchange, with shareholders also gaining from rights to buy stock at a price of 2,000 ROL.
Impact shares closed on Tuesday's session at 7,950 ROL, 3% down on the previous session. Cluj-based company Broker sold a stake on the market on Tuesday worth 0.42 million euros. Impact has a stock market capitalisation of 106 million euros.
vlad.nicolaescu@zf.ro
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