Oriflame Romania, the domestic branch of Swedish cosmetics producer Oriflame, has grown fond of its deals on the real estate market after making almost 1.4m euros in profits from the sale of a 2,000-square-metre plot in the north of Bucharest, on land where the company also has its headquarters.
Oriflame received 1.5m euros (750 euros per square metre) from the sale, compared with the 112,000 euros (56 euros per square metre) it paid when buying the land. According to data from the Finance Ministry website, Oriflame made losses of 0.7m euros in 2002 and 2003.
"In 1996 we bought more land than needed to build our offices. At the time we expected to recoup the investment in constructing the building from selling the extra land," explained general manager Monica Tatoiu.
Oriflame''s real estate plans do not only include the sale of the 2,000 square metres of land. The company also intends to build a P(7- or P(8-type (ground floor plus seven or eight floors) office building in the same area on the site of its 350-square-metre warehouse.
The company will use part of the building, while the remaining space will be rented out. "At the moment the warehouse looks like an industrial building surrounded by luxurious hotels and company headquarters. This decision was also made out of respect for our partners," said Tatoiu, who added that they had procured urban planning approval for a P(6 building.
The sum generated from the sale of the land will be used to strengthen Oriflame''s position on the market outside of Bucharest, she said. "For this year we''ve earmarked half a million euros to equip and establish centres outside of Bucharest."
The company has also opened a new sales centre in Timisoara and a regional orders centre in Constanta.
It has also invested in an enlarged centre in Iasi.
"Cluj is our next priority as the higher buying power in the area is generating pressure for investment," she added.
In May, the Swedish parent group to Oriflame Romania performed a share capital increase of 2.5m euros at the domestic company, whose capital has now reached 4.5m euros. "All the investments made by Oriflame Romania so far have come from the company''s own resources and the decision to increase the share capital was born of the wish to offset all these investments. Moreover, the increasing strength of the domestic currency has pushed costs higher, and this justified the capital increase," explained the Oriflame Romania general manager.
Last year, the company turned over 28m euros, an 8.8% increase year-on-year. Oriflame''s biggest rivals on the cosmetics market are Avon, Romsar, L''Oreal and Coty.
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