Dan Sucu, the chairman and majority shareholder of the Mobexpert group says the market of furniture manufacturers in Romania is going through a rough time, which will have a negative impact on the group he runs, as well.
"The sales growth pace is slower than forecast and we expect total growth of the group to reach 5 or 6 percent by the end of the year," Sucu stated.
Early this year, the group management had estimated a 10-12% growth in turnover from last year.
At this moment, however, Mobexpert forecasts sales of 152.5 million euros for 2006, whereas last year's turnover stood at 150 million euros.
"We based our initial estimates on a projected growth of 10-12% of the home furniture retail market, but considering the developments on the market over the last six months, we don't believe it amounted to the values forecast, which affects us, as well," Sucu added.
He said that the market of furniture manufacturers in Romania was going through a rough time after the losses posted for exports in 2005, with 2006 conditions not favourable for recovering these losses thus far. Out of the total production of furniture in Romania, 80% is exported, which means most manufacturers are experiencing these problems.
"We anticipated the unfavourable trend of the Western markets last year and redirected part of our output to the regional market, which turned out to be more profitable. However, exports continue to account for approximately 30% of the total production volume of our factories and we are still making losses from export operations," says Dan Sucu.
At the same time, he added that Romanian companies operating in the field of furniture manufacturing and retail needed to rethink their strategy and products to adapt them to the new conditions on the Western markets, the main markets for Romanian furniture exports. Without this effort to adjust, it will be very hard to offset 2005's deficit. All in all, the furniture industry in Romania ended 2005 with a drop in production of approximately 3% if calculated in RON, following a 4% decline in exports. Driven by imports, the domestic market rose by 20% in 2005, while estimates point to only 10% increase for this year.
The Mobexpert Group posted 61 million-euro turnover in the first six months of this year, with revenues generated by sales in the same time of last year standing at 60 million euros. The 61 million euros account for 40% of the total turnover estimated for 2006. As for Mobexpert's retail business on the regional home furniture market, sales in the first half of 2006 maintained at comparable levels to the same time in 2005. The office furniture retail market, despite being more mature than that of the home furniture, witnessed a 10% growth in the same period of time compared with the first six months of 2005.
The development strategy of Mobexpert entails expansion and consolidation of the store chain. A large surface area furniture store is to be opened in the Baneasa shopping centre at the end of the month, following a 15 million-euro investment.
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