"Arctic" to invest another EUR 5 million in 2009

Cornelia Angelescu

Monica Iavorschi: " exports to over 45 countries" Household appliance maker "Arctic" had a turnover of EUR 213 million last year, with sales rising to 1.5 million units. The products are sold under the brands "Arctic" and "Beko". Both brands have a combined market share of 31.5%, with "Arctic" holding the larger market share.

Monica Iavorschi, General Manager of the Găeşti-based company, said: "The household appliance market is tightly correlated with the consumer lending market. As banks have cut back on lending, this has had repercussions on the household appliances market. As a result, in the first two months of 2008, the market has contracted by about 20%. As for our company, we have two scenarios for 2009: an optimistic one, where we keep a growth rate of 5%, and a pessimistic one, where our turnover shrinks 10%, following the general drop of the market. We may be able to offset, to an extent, a potential drop in the market, by extending our market share. In 2008, our market share grew to 31.5%, thanks to the remarkable contribution of the Beko brand, which amounted to 25% of the company"s domestic sales".

Products sold under the Beko brand, which was launched in Romania in 2004, with premium level prices, are intended for consumers with an interest in the latest trends in technology. Unlike the other players on the market, "Arctic" has a nation-wide service network, and a full range of pre- and after-sale services.

The good results obtained by "Arctic" are due to the modernization and renewal of the production equipment and to its experienced workers. Since 2002, "Arctic" has become a part of Turkish group Arçelik, the third-largest European household appliances producer, part of the Koç holding, the largest Turkish corporation.

After 2002, the company"s annual output tripled, reaching 1.2 million units. Also, the company has diversified its product portfolio, as apart from the Arctic branded refrigerators, the company began producing washing machines, cookers, hoods, vacuum cleaners and TV sets.

The company is taking proactive steps to mitigate the effects of the crisis Monica Iavorschi said: "Our company is one of the largest Romanian exporters, and almost 70% of the output of the Găeşti-based factory is exported in over 45 countries all over the world. What"s more, the company is one of the largest investors and employers in Romania, with a total of 2200 employers".

Discussing the impact of the economic crisis on production and investments, Monica Iavorschi said: "Like any responsible company, we have taken several proactive steps to in order to mitigate, as much as possible, the effects of the economic crisis, and to go through this difficult period as smoothly as possible. On the investment side, we have decided to keep our investment budget at a similar level to that of 2008, namely EUR 5 million, by focusing, however, on those investments that would increase our productivity and efficiency of the Găeşti factory. Also, we have decided to postpone any investments that were not absolutely needed, for the second half of the year, when we will be able to have a better estimate of the evolution of the market for the current year.

We have decided to hold weekly output planning meetings, in order to keep the output in line with the evolution of orders. This way, we are going to avoid accumulating inventory of raw materials or finished products".

Mrs. Iavorschi also said: "As has always had a very good cash-flow structure and has constantly maintained good profitability, we don"t have any difficulties in raising funding. We just have to adapt the output, in order to remain profitable regardless of what the market is doing, while still keeping the ability to grow once the market begins to recover".

The General Manager of "Arctic" is looking to offset a possible drop in demand on the domestic market by increasing exports to markets which are still on a growing trend.

Products of the Turkish group Arçelik, which owns "Arctic", are present in over 100 countries across the world, under 10 brands. The company has 12 factories in four countries and employs 17,000 people.