Chairman of Romanian Cement Association and general manager of Carpatcement Holding, part of German-based HeidelbergCement, Mihai Rohan sees a negative influence of the national currency’s steep decline on profit margins of companies in construction materials field.
“I believe the national currency will exceed even 4 lei/euro, and will probably stabilize at this level. This downside path of leu dents our activity, due to costs boost. The fuel used in technologic process and a part of the equipment is imported and the meltdown of national currency will be mirrored in production costs and in decline of profit margin,” stated for Wall-Street, Mihai Rohan.
Fuel price growth will trigger a raise in power tariffs, which is a core element in cost of cement, concrete and aggregates production. “Apart from the direct impact, there is also an indirect impact. Drop of national currency will gear a general growth of prices and of course, inflation,” Rohan explained.
He added that a high exchange rate of the leu will have positive effects for exporters only if the own production is not relying on imports and importers will have to “shrink their activity”.
At the moment, Carpatcement imports an annual cargo of 100,000 tons of cement and 50,000 tons of clinker, following to double imports next year. “We will carry on imports for the following three years at least. The demand will always outrank offer,” general manager of the group had previously stated.
However they will not be the cornerstone in the group’s turnover evolution, as they represent 1% of the own production of 3.5 million tons generated by plants in Bicaz, Deva and Fieni, which will mount, after the 150 million euros investments, to 800,000 tons annual surplus.
Given the production designed to national segment, where cement demand is soaring, a skyrocketing climb of euro against l
