Paint and varnish producer Policolor Bucharest has reported 65% higher net profits in euros for last year, from 30% higher sales. According to preliminary financial results for 2004, the company made net profits of 42.2 billion ROL (1.04 million euros) and sales of 903.9 billion ROL (22.3 million euros).
The improved financial results of the company have convinced Policolor's main shareholders to postpone by one or two years their exit from the business in order to take the company further, according to sources close to shareholders. Policolor's share price on the Bucharest Stock Exchange has risen by more than 100% over the last six months alone.
Policolor's main shareholders are in fact several investment funds: Romanian Investment Fund Cyprus (34.1%), The Romanian American Enterprise Fund (32.94%), Romanian Reconstruction (Cyprus) Limited (9.96%) and Societe Generale (Romania) Fund Ltd (7.73%). The remaining 14.19% belong to other shareholders.
As part of its restructuring programme, Policolor has reduced its number of employees by 13% to 389.
Policolor's better results come amid an overall increase on the construction materials market witnessed last year, which pushed sales and profits for most construction supplies producers higher.
Policolor leads the car paint market and is among the top three on the other market segment it operates on: the decorative paint segment. The company began to focus more on this area last year, launching a number of new products.
Many paint producers, however, complained last year about the market fall relative to 2003, when it was put at 140 million euros. The average rate of paint consumption in Romania is currently less than 3 kg per person, still much lower than averages for other European markets, such as Hungary (9 kg), Czech Republic and Germany (12 kg), and the Scandinavian states (20 kg).
The paint and varnish business can create quite high levels of profit, and consequently several domestic producers have appeared over recent years. They currently account for over 25% of total sales.
The market is dominated by three major producers, each with different business structures: Kober, a business launched from scratch after 1990 by Aurel Kober; Dufa Romania, which is controlled by the German group Meffert AG (50%) and some Romanian investors; and Policolor.
Policolor owns the majority stake in synthetic resins producer Orgachim in Bulgaria, which it bought from the Bulgarian state.
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