Romania Has 454,000 Companies With EUR250B Revenue; Half Of It Comes From 1,200 Companies

07.06.2015 By Dana Ciriperu

• The revenue of the companies dropped by 25 billion lei (EUR5.6 billion) in 2013 compared with the previous year * Last year was the year with the highest net profit of the past three and with the lowest loss of the last six * 1,246 companies saw sales of at least RON100 million each and posted RON585 billion revenue together in 2013, or 53% of the total * More than 384,000 companies in Romania see less than RON1 million revenue and only 70,000 companies are above that level * Romanian entrepreneurial businesses dominate the RON1 million to RON100 million revenue bracket, while the heavyweights of the economy are 75% foreign-held.

Romania’s economy had only 236 companies with at least RON500 million (EUR113 million) revenue last year, but these companies generate 35% of the revenue of the business sector in the country. The 236 posted RON387 billion (EUR87.5  billion) revenue, or 35% of the total revenue of the companies in Romania. More than 75% of these companies are foreign held, according to a ZF analysis of the Trade Registry data.

The revenue of the companies in Romania dropped by RON25 billion in 2013 to RON1,104 billion (EUR250 billion) compared with 2012, the lowest level in three years, according to preliminary Trade Registry data.

In a year with an economic growth of 3.5%, the business of the companies continued to suffer, mainly affected by the 30,000 new insolvencies but the managers learnt the crisis lessons and paid more attention to costs and efficiency. This shows best in the profit and loss account of the local business, for which 2013 was the year with the highest net profit in the past three years and with the lowest loss in the last six. The revenue per company was lower, though. The year 2013 also saw the first change of leader, after Automobile Dacia overtook OMV Petrom for the first time, and the Renault-owned Mioveni carmaker became the largest company in Romania.

A number of 1,200 companies generate more than half of the revenue of all companies in Romania. The 1,200 are those companies that posted more than RON100 million revenue in 2013. The 1,246 companies with at least RON100 million sales posted RON585 billion (EUJR132 billion) revenue together in 2013, or 53% of the total.

“This gap (between the number of large companies and SMEs i.e.) is not Romania’s worst problem at the moment – we can roughly find the same thing in other countries with a much sounder economy. A key element, however, besides the revenue is profitability: in Romania, only about 55% of the total active companies post profit and out of those, small and medium-sized enterprises are much more vulnerable than the large ones (whereas 75% of the large companies are profitable, the percentage is much lower among small and medium-sized ones – only 50% of them are profitable). There is only one conclusion to this: sound governmental programs are needed to support the growth of the small and medium-sized enterprise segment in Romania, so as to enable it to become a growth driver for the local economy,” Codrut Pascu, managing partner of Roland Berger Strategy Consultants Romania, told ZF.

Taking 2008, the record year of the Romanian economy, as a reference, the share of large companies remained relatively constant. The only notable difference was recorded in 2011, when Nokia shook the market with the announcement of its departure and the loss of the EUR1.5 billion the phone manufacturer had contributed in a short time showed in the statistics in the coming years. The year 2011 was the best for large companies, whose revenue stood at RON457 billion, according to Trade Registry data. After all, 2011, the year when the economy returned to growth (2.2%), following two years of recession, was also the peak year for companies, which posted RON1,167 billion (EUR275 billion) revenue, the highest level ever. At the time, total losses were almost equal to total profits (RON54 billion losses vs RON56 billion profit). In 2013, the profit was RON16 billion higher than losses, the best result during the crisis. In comparison, this gap stood at more than RON38 billion in 2007.

The profit of the 454,000 companies in Romania (whose revenue is above zero) increased by RON5.5 billion (EUR1.25 billion) in 2013 compared with 2012, in a year that will be marked in the economic calendar as the year of the first billion euro profit, posted by oil company OMV Petrom SA.

The 454,000 companies whose financial statements reached the Trade Registry by mid July (the data are not final) posted RON62.5 billion (EUR14.1 billion) net profit together, the best result in three years. The net profit per company rose by 11% in lei on 2012 and came close to RON100,000 again, a mark overshot during the crisis only in 2010.

OMV Petrom’s RON4.8 billion net profit accounted for 7% of the total net profit of local companies last year.

The government collected RON11.5 billion (EUR2.6 billion) from the 16% profit tax last year, but statistics so far show it has not done anything to boost the number of companies in Romania, which has been fluctuating between 620,000 and 640,000 since 2007.

On the other hand, gross losses stood at RON46.4 billion (EUR10.5 billion) in 2013, the lowest level in six years, and were RON6 billion lower than in 2012.

(English version by Loredana Fratila-Cristescu)