Prefab's profitability was drastically reduced last year

The manufacturer of construction materials Prefab Bucharest (PREH) reported a net profit of 0.9 million lei for last year, well below the 7.7 million lei obtained in 2022, even though operating income rose by 22.1 %, up to 120.5 million lei, according to the company's report published yesterday on the website of the Bucharest Stock Exchange (BVB).

"In 2023, the blockage in the market of construction materials caused by the decrease in the purchasing power of consumers is observed, with the real estate market being significantly affected. The energy crisis triggered in 2021, strongly felt starting in 2022, caused economic upheavals both at the global and national level that led to the significant increase in production costs and implicitly the contraction of demand in the construction materials market. The cost increases were driven by rising international and domestic prices for natural gas, electricity and fuel, which in turn caused increases in the chain for all products," the Prebet report states.

According to the company, the market for precast reinforced and prestressed concrete, electric poles, highway elements, precast parts for hyper or supermarkets and beams for road bridges is affected by the lack of large projects for national infrastructure and the lack of sufficiently skilled labor. "Although investments from European funds are vital for the Romanian economy, their absorption is below the optimal level. The implementation of the PNRR and the absorption of European funds should be a major objective for Romania", the document also mentions.

According to the report, the most worrisome phenomenon is inflation, which has caused a decrease in demand in the construction materials market following the decrease in purchasing power and the orientation of consumers towards existential products.

For last year, Prefab reported total operating expenses of 117.2 million lei, 33.5% above those of 2022. Those with raw materials and materials were 46.8 million lei, up 47.5% , while energy and water expenses were 24.1 million lei, 26.3% more than in 2022. The operating profit amounted to 3.3 million lei, well below the 10.6 million lei in 2022, a result that was eroded by a loss from financial activities of about two million lei.

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.