Drastic reduction in Prefab profit, in the first nine months of the year

The manufacturer of construction materials Prefab Bucharest (PREH) achieved a net profit of 0.8 million lei, for the first nine months of this year, well below the 7.5 million lei in the same period of 2022, even if the figure of business increased by 22%, up to 89.5 million lei, according to the report published yesterday by the company, on the website of the Bucharest Stock Exchange (BVB).

"The most worrying phenomenon is inflation, which causes a decrease in demand in the construction materials market, due to the decrease in purchasing power and the orientation of consumers towards existential products," the document states.

According to the report, on September 30, 2023, compared to the same period of 2022, the blockage in the market of construction materials, caused by the decrease in the purchasing power of consumers, is observed. "Regarding the market of prefabricated reinforced and prestressed concrete, electric poles, highway elements, prefabricated parts for hyper or supermarkets, beams for road bridges, the reason is the lack of large projects for national infrastructure and skilled labor, the market maintaining -is at a low level due to financial blockages in the national investment field. Although investments from European funds are vital for the Romanian economy, their absorption is below the optimal level. The implementation of PNRR and the absorption of European funds should be a major objective for Romania".

According to the report, the economic climate is still characterized by excessive and volatile taxation, there is the risk of an increase in taxes and fees to finance public expenditures, heavy legislation, excessive bureaucracy in obtaining the approvals and authorizations necessary for operation, currency risk with influence on the price of some raw materials and materials.

For the first nine months of the year, Prefab reported operating income of 94.1 million lei, 32% more than in the same period last year, a dynamic that the company explains by the increase in sales prices due to inflation. On the other hand, expenses with raw materials and consumables used rose by 58%, up to 37.3 million lei, expenses with energy and water were higher by 36% (18.3 million lei), and those with staff increased by 79%, up to 18.8 million lei.

The operating profit amounted to 2.6 million lei, well below the ten million lei for the period January-September 2022, a decrease caused by the current economic context, which led to the reduction of the company's activity. The result was eroded by a loss from financial activities of 1.5 million lei, due to the increase in the cost of financing, according to the issuer's report.

Prefab Bucharest is controlled by Marian Milut through Romerica International, which owns 69.6% of the company, while Celco Constanţa, owned by the Dusu brothers, has 26.4% of the construction materials manufacturer.