Moldoconstruct Profit Up 6.5 Times

Despite adversities on the construction market in the first half of the year, Moldoconstruct SA - Iasi (RASDAQ: MOLE) reported an H1 gross profit of 926,131 RON, up by a whooping 648.53% from the corresponding period of 2008. The gross profit was derived entirely from operations (977,542 RON) minus the 54,411 RON spent on bank interests and fees in the reporting period.

Notwithstanding the substantial increase in gross profit, Moldoconstruct"s turnover decreased from 8,608,877 RON in H1, 2008 to 5,185,240 RON in H1, 2009, while operating revenues decreased from 8,656,157 RON to 5,190,414 RON. As operations downsized, operational expenses also decreased from 8,466,719 RON in H1 last year to 4,212,872 RON in H1 this year. The management"s focus on optimization led to an increase in operating profit from 189,438 RON in June 2008 to 977,542 RON in H1, 2009.

According to the management report, the company"s operations in the first half of the year were influenced primarily by the lack of qualified workforce, a decrease in payroll, the impossibility to update the labour unit price for ongoing works, unfair competition in the form of illegal employment, an increase in the price of raw materials, fuel and electricity and unfair competition in the form of undervaluation of prices bid in tenders driven by the "lowest price" criterion.

At the end of the reporting period, Moldoconstruct held receivables in the amount of 5,693,924 RON, of which 99.46% on customers. The company also reported debts of 4,070,577 RON, of which 14.45% to suppliers.

Moldoconstructii SA - Iasi was established in 1991 as a construction and plumbing company. The company operates exclusively on the domestic market and is currently facing harsh competition from foreign-based companies that participate in tenders for very sizable projects, for which Iasi-based companies do not meet eligibility criteria.

As of end-June 2009, Gabriel Nechifor is the leading shareholder in Moldoconstruct SA with 32.97%, followed by Eugen Nechita with 11.24%, Constantinela and Vasile Lupascu with 16.80%, Florin Iftimescu with 17.67% and others with 21.32% collectively.