Wienerberger group, the largest manufacturer of bricks domestically, plans to build its fourth plant in Romania by the end of the year, after the demand for such construction materials increased significantly.
Wienerberger Sisteme de Caramizi, the domestic arm of Wienerberger group, has so far invested around 75-80m euros on the Romanian market in the wake of the acquisition of CEMA Sibiu and the construction of three plants, in Sibiu, Gura Ocnitei and Triteni, according to the latest available data.
The company is considering building a new plant from scratch rather than an acquisition, because other brick manufacturers are unwilling to sell. The new plant could be built on one of the company's current sites, if land in other areas is not found. These investments are part of a larger programme worth 100m euros, which was announced in 2004, when the Austrian group began its rapid expansion campaign in Romania.
"We're interested both in acquiring rivals and in investing in new plants. We may start building a new plant this year, because right at the moment we entered Romania, Wienerberger's intention was to outpace the market," stated Daniel Catanas, the company's general manager.
The Austrians have recently announced a new medium-term investment plan worth 100m euros, with the funds to be directed to production facilities and potential acquisitions of some domestic players, according to Karin Hofmann, head of PR with the group.
An acquisition has several advantages, but domestic players are enjoying the positive market conditions and are not considering selling their plants, choosing instead to invest in order to boost production in a bid to profit from the rapid increase in consumption.
Finding a large plot of land at an affordable price is the main problem Wienerberger has to cope with. One of the hurdles producers face in their efforts to expand more rapidly is the lengthy and difficult process of building a plant.
Wienerberger wants to advance further into rural areas, after several years of focusing on urban areas. The Austrians will employ market research to uncover trends in the brick sector.
At present, brick producers are unable to meet demand and are working at full capacity. This is why most players have announced massive investments in production.
"The brick market will increase by 20% this year as a result of residential construction, whilst on medium term we don't believe the market will stagnate or decline," says Catanas. In fact, the 20% growth rate registered in the first quarter of this year is expected to continue.
Over the past two years, brick consumption has increased due to a levelling of prices against ACC-based construction materials. However, increases in oil prices to over 130 dollars and in energy prices by at least 30% will bring a new wave of around 10-15% price hikes.
Wienerberger
Will build its fourth plant on the domestic market by yearend, in the wake of increased demand
Invested around 75-80m euros on the Romanian market, in the acquisition of CEMA Sibiu and the 3 plants it built
Recently announced a new medium-term investment plan worth 100m euros, with the funds to be directed to production facilities and the potential acquisitions of some domestic players
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