"Bog`Art" expects over 140 million euros turnover for 2009

Viviani MiricĂ

The "Bog`Art" group estimates a EUR 140 million turnover for 2009, with EUR 110 million to come from its construction business, according to the statements of Mr. Raul Doicescu, the company"s chairman.

The group"s turnover in 2008 was EUR 115 million, of which 90 million from the construction business. In 2007, "Bog`Art" group"s turnover was 63 million Euros.

• "The crisis is a good opportunity to invest in construction"

People who invest in construction during the crisis will profit once it is over, Raul Doicescu says. The favourable aspects of the crisis are the low prices for construction materials and land, as well as the cheap labor.

At the same time, the "Bog`Art" official considers that this is an opportune period for the acquisition of small companies.

Some of the drawbacks of the crisis include developer"s troubles in paying their debts owed to construction companies. Therefore, developers are asking for payment rescheduling. According to the Mr. Doicescu, "Bog`Art" has requested some of its payments to be postponed by as much as a month.

The construction contracts that "Bog`Art" had concluded by the end of January - including one for the headquarters of the US embassy in Băneasa - confirm the company"s expectations for growth, as published in November last year. Another recent project of "Bog`Art" is the new headquarters of the SPP (Romanian State Security and Protection Service), worth EUR 35 million.

Right now, the company"s largest contract is "City Gate", a real estate project of offices, worth EUR 76 million.

One of the investments that "Bog"Art" has recently completed is a fully equipped plant for medium sized metallic structures and steel reinforcement bars, worth EUR 13 million.

On the conclusion of other contracts, Raul Doicescu says that their accomplishment depends largely on the willingness of banks to finance developers" projects.

The residential segment will be the most affected by the crisis, said the chairman of "Bog`Art", because of the dwindling funding and of the high end-user costs. Given the fact that the residential segment represents around 30% of the construction market, we may see the latter shrink by 20-25%, he said.

One solution to stimulate this segment of the construction market would be the reduction of VAT from 19% to 5%, for the construction of individual homes. Raul Doicescu explained: "The state isn"t earning any VAT anyway from the construction of apartments, given the current deadlock in the real estate transactions and apartment construction segments".