CURRENTLY IN INSOLVENCY, Hidromecanica has reduced its losses by one third

Hidromecanica SA, specializing in the production of engines and turbines, ended the first quarter of 2011 with losses of 1.647 million lei, down 33% YOY, from 2.445 million lei.

The turnover of the company fell 1%, from 1.913 million lei to 1.887 million lei.

Both the revenues and the expenses of the company fell during the reviewed period, according to the quarterly report remitted to the Bucharest Stock Exchange, by one third each. Thus, the total revenues decreased from 2.439 million lei to 1.622 million lei, whereas expenses fell from 4.882 million lei to 3.269 million lei.

The management of the company claims that the financial results of the first quarter were influenced by the opening of the insolvency procedure, "first of all due to the protection it provided against creditors and the stopping of interest and penalties calculations starting with November 10th, 2010, while on the other hand the company"s image was affected by the event, causing its commercial partners to lose confidence". However, overall the insolvency had an unfavorable impact on the earnings, the management of the company says. "Thanks to the behavior of the company"s commercial partners, this impact was significantly mitigated, with real odds of normalization of the company"s commercial relationships", the press release states.

"The financial earnings continue to be affected by the crisis, but the steps taken by the company to alleviate the impact, particularly on the cost cutting side by adapting wages to the volume of business, had a favorable influence on the earnings, and contributed to a certain extent to reducing the losses compared to Q1 2010", the aforementioned document says. More to the point, personnel expenses fell 15% in Q1, from 1.360 million lei to 1.149 million lei.

The company is controlled by the heirs of former asset owner Lucian Gârbacea, who hold 50.96% of the company"s shares, whereas SIF Transilvania controls 45.21% of the shares.