INTERVIEW – Bulgarian Paint Maker Orgachim Hopes To Stay Profitable in 2008 Despite Slowing Sales

Company sales rose by a robust 28% to nearly 125 million levs ($82.3 million/64 million euro) last year.

Stagnation on the anhydride market triggered by the global economic crisis has dented company sales and forced Orgachim to write off the value of prodiction in stock, Shoylekov told SeeNews in a recent interview.

Orgachim is the sole producer of anhydrides in Bulgaria and the biggest one on the Balkans. It is also the largest producer of plasticizers and alkyd resins in Bulgaria. More than 90% of the company's anhydride output is exported, generating 35 to 40 percent of its sales. The company reaps more than half of its revenue on international markets.

“We wrote off some 800,000 levs which had an impact on the pre-tax profit but I think we'll post a [full-year] profit,” Shoylekov said. He declined to disclose a profit forecast.

Orgachim, a blue chip on the Sofia bourse, posted a 57% drop in its nine-month net profit to 4.4 million levs. Its net profit fell 16% to 6.76 million levs last year.

In June former Orgachim CEO Ivan Sokolov told SeeNews in an interview that the company will maintain a sales growth pace of 24% throughout 2008 and will close the year with a higher profit than in 2007.

Sokolov resigned in late July and Achille Angelo Bardelli was appointed as CEO in October.

The company’s robust growth in recent years has been driven by Bulgaria's booming construction sector, now hurt by the global economic downturn.

“Much water has run under the bridge since the beginning of the summer. There were no indications what will happen on the market,” Shoylekov said.

“We witness quite a volatile situation and big fluctuations both in prices and demand, stagnation on the market, and I couldn’t be as upbeat as I was in the beginning of the year. At the moment our expectations are to maintain a 10% growth in net sales revenue, maybe 15%, compared to last year's, not more,” he said.

He added that indications of recovery of the anhydride market have been spotted lately, raising hopes that such sales growth rates are achievable.

The company has tentatively forecast sales growth for next year, said Shoylekov.

“Next year will be very difficult and if we succeed in achieving 15% growth it will be really good. I think this is rather optimistic considering the situation we observe at the moment not only in Bulgaria,” he added.

Orgachim has hoped to spin off its production of phthalic and maleic anhydride by the end of the year to facilitate prospective partnerships and raise efficiency.

Shoylekov said the spin-off procedure, which will create a new public company, will be concluded most likely in 2009.

Orgachim (www.orgachim.bg) closed 2.58% down at 71.11 levs on Thursday.

(1 euro = 1.95583 Bulgarian levs)