After having lost nearly 2 million euros from the decline of the euro against the RON, businessman Viorel Catarama, the owner of the furniture manufacturer Elvila is dropping some of his clients in France and Germany and says he will focus on exporting to Russia and Ukraine, instead.
"We are going through a time of foreign client portfolio restructuring. We are dropping some of our export contracts to France and Germany, which are markets experiencing difficulties," Catarama said.
He says Elvila concluded partnerships with Russian companies to supply furniture for chain stores on this market. "We will begin to export to the Russian and Ukrainian markets in 2006. We will start with deliveries of 100,000 euros per month and then progressively increase exports," he explained.
The sharp decline in the euro exchange rate over the last year, as well as the economic stagnation of the main Western European markets, has caused a lot of trouble to most furniture exporters in Romania. Some had to drop foreign contracts and even make people redundant.
This year, Elvila reduced the proportion of exports in relation to total turnover to 50%, down from 65% last year. "We want to keep reducing the share of exports to 45% in 2006," Catarama specified.
The company last year announced the conclusion of a 10 million-euro partnership with the Conforama company, the leading French furniture retailer, a deal which was, in the end, never completed.
"We did not develop the Conforama contract because the profitability of the French market was not sufficient," Catarama says.
Following the depreciation of the euro against the RON, the company''s net profit will be 1.8 million euros lower this year, compared with the budget forecasts made early this year. "I estimate the full-year profit in 2005 will stand at 1.5-2 million euros. Profit is below expectations because of the foreign exchange rate," the businessman stated.
Catarama also mentioned that Elvila''s total revenues will amount to 120 million dollars (some 100 million euros) this year.
Elvila is one of the main manufacturers and retailers of furniture in Romania, along with Mobexpert. The company''s products are targeted towards average and below average income consumers, while Mobexpert targets customers with above average incomes.
Besides Russia and Ukraine, Elvila also tapped onto the English market this year and is eyeing Dubai for 2006. "We are trying new outlets. We will attend the furniture fair in the United States next year," he stated.
Another tactic to offset the negative effect of the exchange rate evolution is the development of its retail chain in Romania.
The company completed a 2.5 million-euro investment in a 5,000 square metre store in Iasi last week, and has similar plans for Ploiesti in 2006.
"I do not agree with those who say that Moldova is not a developing area," the businessman stated.
Elvila has a 50-strong chain of stores throughout the country, 5 of which are large outlets (over 5,000 square metres). georgiana.stavarache@zf.ro
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