"Moldoconstruct" SA Iaşi profit increases 6.5 times

Despite the difficult market conditions in the construction sector, Iaşi company "Moldoconstruct" SA (symbol: MOLE, on the Rasdaq tier of the Bucharest Stock Exchange) posted a gross profit of 926,131 lei at the end of June, up 648.53% Y/Y. The company had an operating profit of 977,542 lei, diminished by interests, commissions and fees expenses of 51,411 lei.

In spite of these results, the company saw its turnover drop Y/Y from 8,608,877 lei in H1 2008, to 5,185,240 lei on June 30, 2009, and operating revenues dropped from 8,656,157 lei to 5,190,414 lei. As a result of lower business volume, operating expenses dropped as well, from 8,466,719 lei in H1 2008, to 4,212,872 lei in H1 2009, as the company"s efforts to improve profitability led to an increase in operating profits from 189,438 lei in June 2008, to 977,542 lei in H1 2009.

According to the report of the managers, the company"s operations in the first semester were influenced by the lack of skilled employees, a drop in wage expenses, the difficulty in raising labor costs for ongoing projects, the use of black market employment by many companies in the business, rising prices for fuel, electricity and materials, as well as the underbidding tactics used by many firms participating in auctions where price serves as the main factor in selecting a winner.

At the end of the first semester, "Moldoconstruct" SA Iaşi had receivables worth 5,693,924 lei, with customers receivables accounting for 99.46% of that amount. At the same time, the company had 4,070,577 lei in outstanding debt, of which supplier debt accounted for 14.45%.

"Moldoconstruct" SA Iaşi was incorporated in 1991, with the company"s main line of business being the construction of residential and non-residential buildings and installations. The company only operates on the domestic market and is facing strong competition, especially as a result of the foreign companies which entered this sector, which bid and win extremely expensive projects, for which the companies in Iaşi do not qualify.

At the end of June 2009, the company"s main shareholder was Gabriel Nechifor, who holds a 32.97% stake, while other shareholders include Eugen Nechita (11.24%), Constantinela and Vasile Lupaşcu (16.80%), Florin Iftimescu (17.67%), as well as other individual shareholders (21.32%).