SOFIA (Bulgaria), November 13 (SeeNews) – Bulgarian cast iron foundry Tchugunoleene will cut staff by a quarter due to decline in its exports caused by the global financial turmoil, the company said on Thursday.
“The management will lay off 25% of the staff alongside with other measures to cut spending,” Tchugunoleene’s CEO, Vladimir Popov, said in a statement.
The company hopes it will be able to continue production, albeit in reduced volumes, he added.
Local media reported earlier that other companies in Bulgaria’s metal sector are also suffering from lower global prices for their products and some have started cutting jobs. The country’s two chemical fertilizer plants, Agropolichim and Neochim, which are leaders in their sector in southeast Europe, have also said they will temporarily halt operations in view of the crisis.
Although the cabinet in Sofia says that the global crisis would only have an indirect effect on the country, which has no direct exposure to toxic U.S. securities, the global financial turmoil seems to have hit the Bulgaria’s emerging economy much harder than expected as metals and chemicals are the key export items for the European Union newcomer, which depends on foreign cash inflow to balance out its huge current account deficit, analysts say.
Tchugunoleene exports nearly 85% of its output and a drop in orders from its key markets like Italy, Germany and France has put it in “an extraordinary situation”, the company said.
It turned to a half-year net loss of 1.16 million levs ($742,700/598,600 euro) from a net profit of 484,000 levs a year earlier due to rising prices of raw materials and energy supplies.
Tchugunoleene produced 14,936 tonnes of iron castings in the first half of 2008, up 15% on the year. Earlier this year Tchugunoleene said it expects its pre-tax profit to reach 2.23 million levs this year on the back of a projected 52.5% rise in sales revenue.
The company stock lost 21.12% on Thursday to 5.9 levs in turnover of some 500 shares.
(1 euro = 1.95583 Bulgarian levs)