BUSINESS WEEK ROMANIA – No. 113 , November 25, 2008

The BUSINESS WEEK

The news you need to know , p. 04 Comments on Fitch downgrading Romania’s rating, and a few of the biggest local companies slowed down production; estimate of foreign currency flow to the country from workers employed abroad; slowing down of the production of important industrial sectors affects Romgaz; Equest Balkan Properties sells 7 of its 10 Romanian companies; new shopping mall opened in Moldova. Useful info, well presented.

PERSPECTIVES: Slalom through the Ratings, by Alice taudor, pg. 06Comments and quotes on Fitch lowering Romania’s credit rating, and also on the agency’s lack of transparency regarding the criteria used. The author also talks on the downgrading’s possible effects, and the government’s interest in the electoral campaign than in risk reducing policies. Good analytical comments, well written article.

NUMBERS: Hopes for eProsperity , by G. Barliga, pg. 07According to an ANC (National Communications Authority) study, the number of Romanian online shops will increase 50% per year. Charts with the (estimated) number of shops, number of online transactions; “online popularity” of shops (I would have liked some details on how this was calculated). Interesting info.

In Short by G. Barliga - p.11 Comments on big companies’ educational programs for students; Personal income taxes got lower around the world (According to KPGM international); new Bucharest – NY route operated by Delta Air; penetration of mobile telephony in Romania; private equity funds ‘ investments in Romanian companies; spam levels in the third trimester according to Panda Labs. Interesting info.

Interview, by Raluca Comanescu, pg 15Interview with Cristian Nacu, partner at Enterprise Investors, one of the biggest private equity companies in Eastern Europe. Discussion on the economic crisis, its effects on Romania, effects on equity funds, concrete company plans. Enjoyable discussion.

FOCUS

Healthy Signs, by M. Munteanu, pg. 18Article about the pharmaceutical company Zentiva, 8 months after the new management took over the running of the business. The author talks about the general strategy implemented, also reasons for the negative performance last year, first decisions and results. There are comments on the general evolution of the pharmaceutical market in Romania, and what influences it. Good case study, well commented and organized.

Real Estate Hunting by Magda Munteanu, pg 20Flavus Investitii starts the €1.5 billion real estate project on the previous industrial platform of Tractorul factory in Brasov. The author describes the project, gives info and quotes on financing options. There is also info on the Flavus' failed attempt of revive Tractorul, and plans to develop a part of the industrial park involving nonpolluting production activities. The project is well described, but I would have liked the author to also approach the threats posed by the slowdown in the real estate sector in Romania.

Harvesting Time for Financing, by Ionut Visan, pg. 22Article about EU’s decision to move away from directly supporting agriculture, towards indirect measures like infrastructure development and investment. The author shows how this decision will affect the Romanian agriculture, what are the Romanian state’s plans to support this sector. The article covers well many aspects of the issue, offers good comments and explanations.

Bitter Chocolate, by Raluca Comanescu, pg. 25Article about the closure of the Kraft chocolate factory in Brasov, and the relocation of a part of the production to Bulgaria. The author quotes the company reps regarding the reasons for the closing down – “regional consolidation of the production facilities”, and the additional production facilities needed while the Brasov-based factory couldn’t supply the extra necessary space. The news is well commented, quite clear, but in other news that I read regarding this issue, there was strongly emphasized that the closing down was no effect of the economic crisis. In the BWR article there are no such mentions, and that somehow leads the reader to suspect this possibility.

TOP 50 PERFORMERS

The top 50 peformers is an xRay of the evolution of the Romanian economy in 2007 carried out by BWR in cooperation with Coface Romania. The introductory article offers info on the leaders of the top and comparisons with last year’s companies. There are comments on the top reflecting the best performance in the car and construction industries, and also threats for these sectors in the year to come. The authors try to explain why some photos of the managers are missing and are replaced by grey silhouettes and say that this “demonstrates a trend of the local business environment, the grey economy”. While I think I got the metaphor, I still found this a bit unfortunate, since far-from-being-grey companies like Philips Romania, Colgate Palmolive, or L’Oreal have grey shadows instead of the managers’ photos.

Performant sector: Car IndustryWhere Is the Last Year’s Market? by Silvia Panturu, pg. 28The author comments on this sector’s evolution in 2007, which is considered at the peak of its development, and factors that influenced this evolution. There are also comments on state measures to stimulate progress, and also threats for the next year.

Performant sector: ConstructionShaken from the Ground, by Gabriel Barliga, pg. 29 General overview of the sector, with factors influencing development. There are comments about some of the companies that were involved in controversial state projects that brought them millions (the grey area the authors suggested in the introductory part), with examples. The author also refers to threats and effects of the financial crisis. Good short synopsis.

Top 50The authors shortly present the 50 top performers - business description, sector, turnover, profit rate, credit grade, development in 2007. Interesting facts, useful info.

Behind the top, by Andreea Crainic, (Risk manager at Coface Romania) There is info on the criteria and the methodology used to for the top, comparison to last year’s top, and comments on the performing sectors. Useful add to the top material.

NEXT

Zero Growth, by Silvia Panturu, pg. 54The growth of the IT&C market will be zero this year. The author talks about Flamingo's plans to avoid collapse. She also talks about the factors that generally influenced sales and affected small retails. There are comments on market evolution this year, the stagnation that is likely to follow, and general company strategy. Good article, useful info, supported by examples, concrete figures and an insert that summarizes Flamingo's strategy.

New Times, New Lions, by Raluca Comanescu, pg. 58Article about the “Lions’ Den” reality show produced by TRV2, which was one of the points of interest for a British BBC crew which made a documentary about the Japanese “Dragons’ Den” reality show format in other countries. The author says that the Romanian format is “given as example” by the British, for its remarkable production format, but in the text is just a line explaining how the Romanian show is different/better than other shows. There is info on production costs and selection process, and general info about the Japanese show. I found the article thin, and I thought that the author was not focusing enough on the issue that would have made the story worth writing an article about (how the show was different/better than others)

LIFESTYLE

AUTO: The Champ Enters the Stage, by G. Barliga, pg. 60 Article about the Ferrari F430 Scuderia Spider 16M with technical and design details.

PERSONAL BUSINESS

PLUS: edited by O. Neagoe, pg. 57New film, a London hotel, a film festival, a new mouse from Logitech.

OPINIONS

STOCK EXCHANGE: A Consolidation Week, by Mihnea AnastasiuComments on the latest developments at the Bucharest Stock Exchange (BVB), in view of the negative Fitch rating to BB+ for forex long term loans. The author comments on the market's reactions. There is also a short article on the BVB emitents' economic performance. Useful info, concisely presented.

TECH FOR YOU: The Most Intelligent Smartphones by D. Serbanescu, pg. 63Article about iPhone and Blackberry, and their competitor from Sony Ericsson, Xperia X1, with technical details.

IDEAS: Overcoming Obstacles from Innovation's Way, by Stephen Welch, associate director at hay Group, and one of the speakers at the "Innovation day" event.Essay about the importance of innovation, with comments on innovation structuring, the leaders' mission. Interesting comments.