BELGRADE (Serbia), September 30 (SeeNews) – Serbian metals company Galeb Group expects its net profit to rise by around one-fifth to some 5.5 million euro ($8.0 million) this year even though the company's revenue is likely to remain unchanged, its Vice President Dejan Dzagic said.
“Our revenue for the first nine months of 2009 is slightly higher, some 5.0% on the year, while our net profit grew some 20% on the year during the same period," Dzagic told SeeNews in an interview, adding that revenue rose thanks to optimised production.
About 31% of Galeb Group’s revenue comes from production of metal containers, while corporate electronics manufacturing makes up some 20%. Sales of tools contribute about 15%, telecommunications make up roughly 13%, while manufacturing of safety equipment and steel products generate 12% of the company's revenue. Eight percent is made up of railway signalling systems.
The group, based in the town of Sabac in the Vojvodina autonomous province in northern Serbia, controls 40% of the corporate electronics market in the country and more than half of the market of railway signalling systems, Dzagic said.
The company had a consolidated net profit of 423 million dinars ($6.7 million/4.5 million euro) in 2008, down from 800 million in the previous year, data from Serbia’s business registry showed. Galeb Group posted a consolidated net profit of 243 million dinars in 2006.
The group halved investments this year due to the global financial crisis, Dzagic said without elaborating.
“Over the past five years we invested about 10 million euro in new metals production equipment, this also included a new coil-cutting unit. We don’t use the new equipment for our own production needs only but we use it to produce metal sheets that are then sold to our competitors, making us competitors to our suppliers as well,” Dzagic said. In January, Galeb Group completed a 1.5 million euro investment in a new printing and varnishing machine.
“It helped us save on a myriad of levels. We cut the number of people working and reduced production hours. Another big benefit is that we now produce less waste and use less energy to roll out the same volume of production,” Dzagic also said.
Galeb Group, which has also installed a new tin can production unit that mainly services the Serbian chemical industry, plans to invest between 2.0 million euro and 3.0 million euro next year in expanding production of cans, crown caps and containers for local food industry.
“In 2004, we processed 2,000 tonnes of sheet metal, while this year we will process about 10,000 tonnes. Our goal is to process between 18,000 and 20,0000 tonnes annually in three years from now," Dzagic said.
The company invests 1.0 million euro per year on average in the development of corporate electronics.
“The bulk of this one million goes to salaries for those that create the software,” he said, adding the company expects to maintain its production in this segment at the current level. Galeb Group employs about 700 people.
The only segment of the company's portfolio that posted losses is the sale of tools.
“Domestic [industrial] production fell this year, so there is less demand,” Dzagic said.
Serbia’s August industrial output dropped 10.0% on the year after falling by an annual 15.4% in July and 14.1% in June, the country’s statistics office said earlier.
Galeb Group, which exports mainly to former Yugoslav republics, Russia and Italy, plans to boost exports to about 9.0 million euro this year from last year’s 5.0 million euro. The group has raised its exports of telecommunications equipment to neighbouring Bosnia and Herzegovina by 30% to 800,000 euro so far this year, Dzagic said.
(1 euro=93. 0862 Serbian dinars)