Alexandru Stânean, CEO TeraPlast: "Ukraine's reconstruction plans are worth hundreds of billions of euros"

The international development of the company and obtaining the status of a candidate country for joining the European Union were among the reasons for TeraPlast's acquisition of the majority stake in the company Palplast from the Republic of Moldova, Alexandru Stânean, the general director of the construction materials manufacturer from Bistriţa, said yesterday , on the occasion of a press conference.

Also, the market in the Republic of Moldova is close to the one in Ukraine, for which investments in reconstruction of hundreds of billions of euros are expected once the conflict ends, the director of TeraPlast also pointed out. Alexandru Stânean stated: "We made the purchase from the Republic of Moldova because, on the one hand, one of our goals is international development, and on the other hand, Moldova obtained the status of a candidate country for joining the European Union. This means that we expect the course of the Republic of Moldova to be similar to that of Romania in the pre-accession phase. Respectively to have EU funds available for environmental infrastructure, part of which is in water and sewer networks. We have to think that Romania is in the last place in Europe in terms of connection to water and sewage. However, Romania has a connection rate to the sewage networks somewhere around 60%, and the Republic of Moldova in the rural area has a connection rate of 2%. Therefore, we expect significant investments in the water and sewer infrastructure of the Republic of Moldova to follow".

The director of TeraPlast added: "Last but not least, the market in the Republic of Moldova is geographically or culturally close to Ukraine, where we believe that, once the conflict is over, there will be a need for investments of a different order compared to what we are us regulars. If in the area of water-gas-sewerage, in Romania the sum of two to three billion euros per European budget exercise is very large, in Ukraine the reconstruction plans are measured in hundreds of billions of euros".

• "We believe that this year we can double sales outside of Romania"

Teraplast recently announced an agreement to acquire the Wolfgang Freiler Group from Austria, for the sum of 16.5 million euros, which owns production facilities in Hungary and a distribution division in several markets in Central and Western Europe.

"All the markets on which the Freiler Group focuses are, to a good extent, larger than the Romanian market, because we are also discussing the German market where it distributes. Also, there are markets where the competition is less fierce than the one in Romania", said Alexandru Stânean, adding: "We have been waiting for this transaction for two years. I started the discussions at more than double the amount I paid. There were long negotiations, but the fact that we were patient and did not complete the transaction sooner materialized in the price at which we did the transaction, which I believe brings added value to our shareholders".

According to the director of TeraPlast, one of the problems the company encounters in terms of sales outside Romania is the logistics cost. "There are objective causes, namely transport distances that involve costs and the time spent in customs, because we are not in Schengen. Now we have these production capacities that are closer to the markets in the west, as well as those in the Republic of Moldova, which reduces our logistics costs so that we will become more competitive in those markets (...). We believe that this year we can double sales outside of Romania", said Alexandru Stânean.

Regarding a possible dividend distribution, TeraPlast's director pointed out: "Given our level of debt, I don't think anyone can realistically expect dividends this year. We have a growth strategy, so our focus area is here."

For last year, the TeraPlast Group reported a preliminary turnover of 672.3 million lei, 5% below that of 2022, and an EBITDA indicator level of 51.4 million lei, down 3%, for the same period of reporting. The gross margin was increasing, from 32% to 37%, but the gross performance was burdened by the increase in wages and utility prices. In this regard, good cost management has the potential to bring about significant improvements, according to the TeraPlast report. The net profit was 1.14 million lei, well below that of 2022, of 15.4 million lei. For this year, the manufacturer of construction materials has budgeted a net profit of 10.6 million lei.