Dairy Product Manufacturing (3115) - 2011

8/12/2019 Dairy Product Manufacturing (3115) - 2011

1/35

T r e n d s o f Y o u r B u s i n e s s

E x c l u s i v e l y d i s t r i b u t e d b y

Romania, 2011

Please address all comments and enquiries to: [email protected]

Dairy Product Manufacturing

ISIEmergingMarketsPDF ro kpmg6 from 62.217.241.204 on 2013 08 29 09:02:34 EDT. DownloadPDF.Downloaded by ro-kpmg6 from 62.217.241.204 at 2013-08-29 09:02:34 EDT. ISI Emerging Markets. Unauthorized Distribution Prohibited.


2/35-2-


Contents Page

1. Macroeconomic Scenario - 4

2. Analysis of Investment Attractiveness - 5

- Attractiveness Indicators - 5

- Driving Forces of Attractiveness - 5

- Risk-Profitability Maps - 7

3. Concentration in the Sector - 9

4. Analysis of Financial Ratios - 10

- Distributions of Financials - 10

- General Indicators - 11

- Profitability Ratios - 14

- Liquidity Ratios - 16

- Financial Cycles - 18

- Financial Leverage Ratios - 19

- Production Factors - 21

- Costs - 24

- Structure of Current Assets - 26

- DuPonts Pyramid - 28

5. Companies from the Sector - 29

- Top Players from the Sector - 29

- Listed Companies from the Sector - 30

- Mergers and Acquisitions - 31

6. Key Concepts - 32

- Definitions of Indices - 32

- Definitions of Selected Concepts - 34

! This report has been compiled to the best of the authors knowledge, using information originating from verified

sources. The authors of the report take no responsibility for the consequences of any decisions and actions taken as a

result of the use of this report. This report refers to the Romanian economy.



3/35-3-


EconTrends for Romania is the unique tool for analyzing various Romanian industries. It contains description of

macroeconomic environment, analysis of investment attractiveness, detailed analysis of revenue as well as in-depth

analysis of a wide scope of financial ratios. The report covers not the full sector but only its major part, since it is build

on the bottom-up aggregated financial data from Creditinfo Romania and CCIR (Chamber of Commerce and Industry).

Profitability of a given industry is evaluated on the basis of average forecasted dynamics of EBIT in two following

years. Every industry has a granted profitability mark that ranges from 1 up to 5, which reflects its profitability versus

other industries. Higher mark indicates higher profitability. Risk of an industry in turn is measured by the standard

deviation of forecasted Profitability Index. Every industry has also an assigned risk mark that ranges from 1 up to 5,

which reflects its risk versus other industries. Higher mark means here lower risk. Each industry is at the end

characterized by the following two parameters its profitability and risk. They are used for evaluation of the short term

investment attractiveness, that reflects preferences of investors seeking to maximize their rates of return and to

minimize the risk they face.

The final Short-Term Investment Attractiveness Ranking of an analyzed industry explains its relative attractiveness

comparing to other sectors. The lower a position within the ranking the higher is attractiveness of an industry. Changes

in this position replicate either changes in profitability or in risk. Additionally like in the case of profitability and risk

measurement the final attractiveness is graded from 1 to 5, where the highest grade means the highest attractiveness.

Lower grade means worseinvestment-weather conditions, so either lower profitability or higher risk. The Short-Term

Investment Attractiveness Ranking is presented according to the structure of the North American Industry

Classification System (NAICS). However the used system of industry classification is not fully compatible with the

Romanian Classification of Activities due to Romanian statistics - specific factors.

The Short-Term Investment Attractiveness Ranking developed for Romania under the EconTrends methodology is

based on the so called Profitability Index, that shows forecasted dynamics of EBIT. It serves as a proxy for dynamics

of dirty cash flows in enterprises from a given industry. Fundamental components of the Profitability Index like net

sales and EBIT margin, are forecasted using econometric models. The behavior over time of all these categories is

illustrated using appropriate pictograms in the Map of Forces.

Analysed sector:

Class Dairy Product Manufacturing

There are no subclasses in analysed

class.

Only the subclasses marked by an arrow are covered by EconTrends reports.



4/35-4-


Macroeconomic ScenarioPeriod 2009 2010 2011 2012 2013

Nominal GDP Growth 97.4 104.3 110.7 106.5 103.8

Real GDP Growth 93.4 98.3 102.5 100.9 101.8

Inflation (CPI) 105.6 106.1 105.8 103.3 103.3

Inflation (PPI) 101.9 106.3 108.9 106.2 104.5

USD/RON exchange rate 3.05 3.18 3.05 3.47 3.35

Datasource: ISI, EMIS, CEIC

-> expected fall of

GDP nominal growth

in 2013

-> expected slight

fall of GDP real

growth in 2013

-> expected slight

fall of CPI inflation

in 2013

-> expected slight

fall of PPI inflation in

2013

-> expected

weakening of

USD/RON exchange

rate in 2013

0

20

40

60

80

100

120

140

Growth

Period

Nominal GDP Growth

Forecast

98

100

102

104

106

108

110

112

114

Growth

Period

Inflation (CPI)

Fore

cast

90

95

100

105

110

115

120

125

Growth

Period

Inflation (PPI)

Forecast



5/35-5-


Analysis of Investment Attractiveness

Attractiveness Indicators

Driving Forces of Attractiveness

- Profitability Index - y/y dynamics

- Net Revenue per Company - y/y dynamics

- EBIT Margin - y/y dynamics

Current situation a a aForecasted situation e d d

Map of forces for the sector Net revenue - Y/Y dynamics EBIT margin - Y/Y dynamicsProfitability index - Y/Y

dynamics

"+"

"-"

"o"

Positive dynamics of "driving force"

Negative dynamics of "driving force"

Close to zero dynamics of "driving force"

Fall of dynamics comparing to previous year

Stabilisation of dynamics comparing to previous year

Symbols orientation Rise of dynamics comparing to previous year

Neutral impact on profits dynamics

Symbols sign

Symbol's colour Dynamics of profit

Positive impact on profits dynamics

Negative impact on profits dynamics

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

-10%

-5%

0%

5%

10%

15%

20%

25%

Profitabilityindex-Y/Ydynamics

Netrevenueper

company-Y/Ydynamics

Period

Net revenue per company - Y/Y dynamics

Net revenue per company - Y/Y dynamics Profitability index - Y/Y dynamics

D

Forecast

5 0

4 0

3 0

2 0

1 1

5 1

4 1

3 1

2 1

1 1

ForecastedAttractiven

ess

Pro

fitability

Risk

0

1

2

3

4

5

Forecasted Attractiveness5 0

4 0

3 1

2 1

1 1

5 1

4 1

3 1

2 1

1 1

CurrentAttractivene

ss

Pro

fitability

Risk

0

1

2

3

4

5

Current Attractivenessexpected fall of

attractiveness in the

sector

-> expected fall of

profitability

-> expectedstabilisation of risk

(expected

stabilisation in risk

mark shown on the

chart)

expected rise in

dynamics of net

revenue in 2012

expected rise in

dynamics of net

revenue in 2013



6/35-6-


-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

-20%

-15%

-10%

-5%

0%

5%

Profitabilityindex-Y/Ydy

namics

EBITMargin-Y/Y

dynamics

Period

EBIT Margin - Y/Y dynamics

EBIT Margin - Y/Y dynamics Profitability index - Y/Y dynamics

Forecast

expected rise in

dynamics of EBIT

margin in 2012

expected rise in

dynamics of EBIT

margin in 2013



7/35-7-


Risk-Profitability Maps

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0

Profitability

Risk

Risk - Profitability Map (current situation)

All sectors Most efficient sectors

subc lasses belong ing to selected class Selected s ector (Class): Dair y Product Manufacturing

Investors' utility function

0.0

0.0

0.0

0.0

0.0

0.1

0.1

0.1

0.1

0.1

0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1

Profitability

Risk

Risk - Profitability Map (current situation)

Zoom




risk - profitability

map (current

situation)in previous

year the sector was

efficient in sense of

risk minimation and

profitability

maximation



8/35-8-


-0.5

0.0

0.5

1.0

1.5

2.0

2.5

0.0 0.5 1.0 1.5 2.0 2.5

Profitability

Risk

Risk - Profitability Map (forecasted situation)


subc lasses belonging to selected class Selected s ector (Class): Dair y Product Manufacturing


-0.1

-0.1

-0.1

0.0

0.0

0.0

0.0

0.0

0.0 0.0 0.0 0.1 0.1 0.1 0.1

Profitability

Risk

Risk - Profitability Map (forecasted situation)

Zoom




risk - profitability

map (forecasted

situation)



9/35-9-


Concentration in the Sector

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

C

umulativemarketshare

Cumulative share of companies from lower market share

Distribution of net revenues in the sector (2011)

Gini Coefficient83.95%

Lorenz Curve

Perfect Inequality Line

Perfect Equality Line

Market power

concentration

measured by

Herfindahl-

Hirschman Index

was weak in 2011

Net sales of top fivecompanies in the

sector reached the

market share of

46.27% in 2011

Market share of top companies in the sector

Year 2011

Number of analysed companies 232

The Herfindahl-Hirschman Index 550

Top 1 company 14.15%

Top 2 companies 24.93%






10/35-10-


Analysis of Financial Ratios

Distributions of Financials

20% 40% 60% 80%

2010 2011 I II III IV

General Indicators

Number of companies 206 232

Y/Y dynamic s of net revenue per company [%] 1.30% -8.48% -17.67% -4.47% 7.39% 23.05%

Y/Y dynamics of total operating cost per company [%] 3.85% -6.86% -16.25% -0.21% 10.39% 23.29%

Y/Y dynamics of operating profit per company [%] -57.92% -100.94% -85.54% -33.31% 1.95% 73.28%

Y/Y dynamics of operating profit per profit-making company [%] 5.23% -25.14% -49.22% -22.85% 7.34% 72.72%

Y/Y dynamic s of gross profit per company [%] -73.72% -199.52% -93.91% -51.78% -0.92% 103.71%

Y/Y dynamics of gross profit per profit-making company [%] 3.32% -24.15% -75.35% -47.29% -4.34% 105.08%

Y/Y dynamics of net profit per company [%] -106.21% 872.46% -95.18% -37.23% 13.67% 114.75%

Y/Y dynamics of net profit per profit-making company [%] 0.31% -19.60% -73.68% -24.05% 14.34% 171.26%

Profitability Ratios

Ope rating Sales M argin [%] 1.72% 0.10% -13.56% 0.99% 3.41% 6.05%

Net Sales Margin [%] -0.11% -1.07% -13.80% 0.08% 0.76% 3.21%

Return on Equity [%] -0.44% -5.42% 0.00% 1.34% 8.06% 24.35%

Return on Ass ets [%] -0.13% -1.39% -9.06% 0.02% 0.47% 3.51%

Effective tax rate [%] 17.49% 13.15% 12.70% 15.96% 18.14% 31.93%

Share of profit-making companies [%] 69.90% 62.07%

Liquidity Ratios

Current ratio [%] 82.27% 68.01% 38.29% 75.17% 116.07% 198.62%

Quick ratio [%] 58.66% 48.09% 13.98% 33.49% 60.82% 125.42%

Super quick ratio [%] 9.32% 8.00% 0.21% 1.36% 4.75% 17.75%

Receivables to liabilities ratio [%] 46.73% 38.36% 10.95% 27.44% 50.05% 108.98%

Financial Cycles

Days of coverage for Cash & Equivalent [days] -42 -69 -147 -33 9 49

Days of coverage for rece ivables [days] 66 65 25 40 58 109

Days of coverage for inventories [days] 33 34 23 39 58 114

Days of coverage for short term liabilities [days] 142 167 56 105 173 358

Financial Leverage Ratios

Debt to Equity ratio [%] 53.69% 53.92% 0.00% 0.00% 35.08% 169.07%

Equity to total assets ratio [%] 30.55% 25.58% -8.78% 13.37% 28.11% 51.12%

Long-term liabilities to total liabilities ratio [%] 16.40% 13.79% 0.00% 5.09% 22.70% 54.20%

Debt ratio [%] 63.51% 68.67% 42.09% 60.06% 74.52% 96.74%

Ope rating profit coverage [years] 4.84 6.78 5.0 11.7 18.4 39.0

Production Factors

Av erage employment per company [person] 29 59 10 18 28 67

Labour productivity [thou. RO N/person] 191.99 289.99 75.79 114.10 147.40 206.52

Labour cost as the s hare in total operating cos ts [%] 9.74% 8.93% 4.90% 8.42% 11.71% 15.26%

Fixed ass ets per employee [thou. RO N/person] 129.24 152.48 39.41 72.36 115.76 184.15

Labour intensity of production [%] 9.57% 8.93% 6.41% 9.01% 12.29% 15.62%

Material & energy intensity of production [%] 47.99% 49.97% 40.44% 61.08% 73.83% 83.79%

Total assets turnover [%] 118.99% 116.48% 24.83% 57.46% 102.56% 161.29%

Fixed assets productivity [%] 196.91% 188.95% 47.07% 104.09% 177.60% 341.82%

Labour cost per employee [thou. RON/person] 17.54 25.99 9.63 11.56 13.61 19.10

Costs

Share of wages in total operating cos ts [%] 7.66% 7.02% 3.65% 6.64% 9.20% 11.91%

Share of soc ial contributions in total operating cos ts [%] 2.08% 1.91% 1.08% 1.83% 2.49% 3.23%

Share of external servic es in total operating cos t [%] 16.19% 15.44% 3.98% 5.97% 8.51% 13.05%

Share of material & energy used in total operating cos ts [%] 48.83% 49.96% 31.06% 55.52% 69.84% 82.32%

Share of taxes & fees in total operating cos ts [%] 0.60% 0.51% 0.19% 0.38% 0.58% 1.05%

D I S T R I B U T I O N O F P A R A M E T E R S

(The distribution of financial indicators in the sector)

Average value for the

sector in

Source: ISI, EMI S, Creditinfo Romania, CCIR



11/35-11-


General Indicators

Number of companies

Period 2008 2009 2010 2011

Value 200 194 206 232

Y/Y increase 0 -6 12 26

Net revenue per company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 16 605.50 16 522.25 16 736.25 15 316.90

Y/Y dynamics [%] 19.84% -0.50% 1.30% -8.48%

Total operating cost per company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 15 731.10 15 837.70 16 448.20 15 319.61

Y/Y dynamics [%] 21.09% 0.68% 3.85% -6.86%

rise of number of

companies covered

by database in 2011

comparing to the

value in 2010

fall of Y/Y dynamics

of net revenue per

company in 2011

comparing to the

value in 2010


of total operating

cost per company in

2011 comparing to

the value in 2010

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

[thouRON]

Net revenue & total operating costs per company

Net revenue per company [thou RON] Total operating cost per company [thou RON]

Operating profit per company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 874.40 684.55 288.04 -2.71

Y/Y dynamics [%] 1.09% -21.71% -57.92% -100.94%

-120%

-100%

-80%

-60%

-40%

-20%

0%

20%

-100

0

100

200

300

400

500

600

700

800

900

1 000

Y/Ydynamicsofoperatingprofitpercompany[%]

[thouRON]

Period

Operating profit per company [thou RON]

Operating profit per company [thou RON] Y/Y dynamics of operating profit per company [%]


of operating profit

per company in

2011 comparing to

the value in 2010




12/35-12-


Operating profit per profit-making company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 1 252.65 1 238.59 1 303.42 975.73

Y/Y dynamics [%] 13.83% -1.12% 5.23% -25.14%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

0

200

400

600

800

1 000

1 200

1 400

Y/Ydynamicsof

operatingprofitperprofit-making

company[%]

[thouRON]

Period

Operating profit per profit-making company [thou RON]

Operating profit per profit-making company [thou RON] Y/Y dynamics of operating profit per profit-making company [%]

-250%

-200%

-150%

-100%

-50%

0%

50%

100%

-200

0

200

400

600

800

1 000

1 200

1 400

Y/Ydynamicsofgrossprofitpercompany[%]

[t

houRON]

Period

Gross profit per company [thou RON]

Gross profit per company [thou RON] Y/Y dynamics of gross profit per company [%]

Gross profit per company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 655.74 439.33 115.45 -114.90

Y/Y dynamics [%] -42.79% -33.00% -73.72% -199.52%


of operating profit

per company in

2011 comparing to

the value in 2010


of operating profit

per profit-making

company in 2011

comparing to thevalue in 2010




13/35-13-


Gross profit per profit-making company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 1 059.02 1 040.09 1 074.59 815.04

Y/Y dynamics [%] -25.39% -1.79% 3.32% -24.15%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

0

200

400

600

800

1 000

1 200

1 400

1 600

Y/Ydynamicsofgrossprofitperprofit-making

company[%]

[thouRON]

Period

Gross profit per profit-making company [thou RON]

Gross profit per profit-making company [thou RON] Y/Y dynamics of gross profit per profit-making company [%]

-200%

0%

200%

400%

600%

800%

1000%

-400

-200

0

200

400

600

800

1 000

1 200

Y/Ydynamicsofnetprofitpercompany[%]

[th

ouRON]

Period

Net profit per company [thou RON]

Net profit per company [thou RON] Y/Y dynamics of net profit per company [%]

Net profit per company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 527.75 301.68 -18.75 -182.32

Y/Y dynamics [%] -47.98% -42.84% -106.21% 872.46%


of gross profit per

company in 2011

comparing to the

value in 2010


of gross profit per

profit-making

company in 2011

comparing to the

value in 2010




14/35-14-


Net profit per profit-making company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 900.57 883.84 886.59 712.80

Y/Y dynamics [%] -28.77% -1.86% 0.31% -19.60%

-40%

-20%

0%

20%

40%

60%

80%

0

200

400

600

800

1 000

1 200

1 400

Y/Ydynamicsofnetprofitperprofit-making

company[%]

[thouRON]

Period

Net profit per profit-making company [thou RON]

Net profit per profit-making company [thou RON] Y/Y dynamics of net profit per profit-making company [%]

Profitability Ratios

Share of profit-making companies [%]

Period 2008 2009 2010 2011

Value [%] 77.00% 67.53% 69.90% 62.07%Y/Y increase [%] -8.00% -9.47% 2.38% -7.83%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Period



rise of Y/Y dynamics

of net profit per

company in 2011

comparing to the

value in 2010

fall of share of profit-

making companies

in 2011 comparingto the value in 2010




15/35-15-


Operating Sales Margin [%]

Period 2008 2009 2010 2011

Value [%] 5.27% 4.18% 1.72% 0.10%

Y/Y increase [%] -0.90% -1.09% -2.46% -1.62%

0%

1%

2%

3%

4%

5%

6%

7%

Period

Operating Sales Margin [%]

Net Sales Margin [%]

Period 2008 2009 2010 2011

Value [%] 3.18% 1.99% -0.11% -1.07%

Y/Y increase [%] -4.06% -1.20% -2.10% -0.96%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Period

Net Sales Margin [%]

Return on Equity [%]

Period 2008 2009 2010 2011

Value [%] 11.62% 5.99% -0.44% -5.42%

Y/Y increase [%] -9.89% -5.63% -6.43% -4.98%

-10%

-5%

0%

5%

10%

15%

20%

25%

Period

Return on Equity [%]

fall of operating

sales margin in 2011

comparing to the

value in 2010

fall of net sales

margin in 2011

comparing to the

value in 2010

fall of return on

equity in 2011comparing to the

value in 2010




16/35-16-


Return on Assets [%]

Period 2008 2009 2010 2011

Value [%] 4.42% 2.42% -0.13% -1.39%

Y/Y increase [%] -4.95% -2.01% -2.55% -1.25%

-2%

0%

2%

4%

6%

8%

10%

Period

Return on Assets [%]

Effective tax rate [%]

Period 2008 2009 2010 2011

Value [%] 15.39% 16.30% 17.49% 13.15%

Y/Y increase [%] 4.47% 0.91% 1.20% -4.35%

Liquidity Ratios

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Period

Effective tax rate [%]

Current ratio [%]Period 2008 2009 2010 2011

Value [%] 109.14% 95.10% 82.27% 68.01%

Y/Y increase [%] -26.15% -14.04% -12.83% -14.26%

0%

20%

40%

60%

80%

100%

120%

140%

160%

Period

Current ratio [%]

fall of return on

assets in 2011

comparing to the

value in 2010

fall of effective tax

rate in 2011

comparing to the

value in 2010

fall of current ratio

in 2011 comparing

to the value in 2010




17/35-17-


Quick ratio [%]

Period 2008 2009 2010 2011

Value [%] 74.78% 62.29% 58.66% 48.09%

Y/Y increase [%] -23.54% -12.49% -3.63% -10.57%

Super quick ratio [%]Period 2008 2009 2010 2011

Value [%] 11.15% 10.21% 9.32% 8.00%

Y/Y increase [%] -5.94% -0.94% -0.89% -1.32%

Receivables to liabilities ratio [%]

Period 2008 2009 2010 2011

Value [%] 62.71% 50.33% 46.73% 38.36%Y/Y increase [%] -17.08% -12.38% -3.60% -8.37%

0%

20%

40%

60%

80%

100%

120%

Period

Quick ratio [%]

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Period

Super quick ratio [%]

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Period

Receivables to liabilities ratio [%]

fall of quick ratio in

2011 comparing to

the value in 2010

fall of super quick

ratio in 2011

comparing to the

value in 2010

fall of receivables to

liabilities ratio in

2011 comparing tothe value in 2010




18/35-18-


Financial Cycles

Days of coverage for Cash & Equivalent [days]

Period 2008 2009 2010 2011

Value [days] -3 -17 -42 -69

Y/Y increase [days] -18 -14 -25 -27

-80

-70

-60

-50

-40

-30

-20

-10

0

10

20

Period

Days of coverage for Cash & Equivalent [days]

Days of coverage for receivables [days]

Period 2008 2009 2010 2011

Value [days] 59 52 66 65

Y/Y increase [days] -13 -7 14 -2

0

10

20

30

40

50

60

70

80

Period

Days of coverage for receivables [days]

Days of coverage for inventories [days]

Period 2008 2009 2010 2011

Value [days] 32 34 33 34

Y/Y increase [days] -1 2 -1 0

32

32

33

33

34

34

35

Period

Days of coverage for inventories [days]

fall of days of

coverage for cash &

equivalent in 2011

comparing to the

value in 2010

fall of days of

coverage for

receivables in 2011

comparing to the

value in 2010

rise of days ofcoverage for

inventories in 2011

comparing to the

value in 2010




19/35-19-


Days of coverage for short term liabilities [days]

Period 2008 2009 2010 2011

Value [days] 94 104 142 167

Y/Y increase [days] 5 9 38 25

0

20

40

60

80

100

120

140

160

180

Period

Days of coverage for short term liabilities [days]

Financial Leverage Ratios

Debt to Equity ratio [%]

Period 2008 2009 2010 2011

Value [%] 47.85% 36.05% 53.69% 53.92%

Y/Y increase [%] 7.77% -11.80% 17.63% 0.23%

0%

10%

20%

30%

40%

50%

60%

Period

Debt to Equity ratio [%]

Equity to total assets ratio [%]Period 2008 2009 2010 2011

Value [%] 38.06% 40.31% 30.55% 25.58%

Y/Y increase [%] -5.49% 2.25% -9.76% -4.96%

0%

5%

10%

15%20%

25%

30%

35%

40%

45%

50%

Period

Equity to total assets ratio [%]

rise of days of

coverage for short

term liabilities in

2011 comparing to

the value in 2010

rise of debt to equity

ratio in 2011

comparing to the

value in 2010

fall of equity to total

assets ratio in 2011

comparing to the

value in 2010




20/35-20-


Long-term liabilities to total liabilities ratio [%]

Period 2008 2009 2010 2011

Value [%] 18.21% 14.53% 16.40% 13.79%

Y/Y increase [%] 0.76% -3.68% 1.87% -2.61%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Period

Long-term liabilities to total liabilities ratio [%]

Debt ratio [%]Period 2008 2009 2010 2011

Value [%] 54.71% 52.91% 63.51% 68.67%

Y/Y increase [%] 5.27% -1.81% 10.60% 5.16%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Period

Debt ratio [%]

Operating profit coverage [years]

Period 2008 2009 2010 2011

Value [year] 5.08 5.42 4.84 6.78Y/Y increase [year] 0.27 0.35 -0.58 1.94

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Period

Operating profit coverage [years]

fall of long-term

liabilities to total

liabilities ratio in

2011 comparing to

the value in 2010

rise of debt ratio in

2011 comparing to

the value in 2010

rise of operating

profit coverage in

2011 comparing tothe value in 2010




21/35-21-


Production Factors

Average employment per company [person]

Period 2008 2009 2010 2011

Value [person] 71 72 29 59

Y/Y dynamics [%] -0.03% 0.57% -58.91% 101.74%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

0

10

20

30

40

50

60

70

80

Y/Yd

ynamicsofaverageemployment

percompany[%]

[person]

Average employment per company [person]

Average employment per company [person] Y/Y dynamics of average employment per company [%]

Labour productivity [thou. RON/person]

Period 2008 2009 2010 2011

Value [thou RON/person] 239.12 244.17 191.99 289.99

Y/Y dynamics [%] 19.93% 2.11% -21.37% 51.04%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

0

50

100

150

200

250

300

350

Y/Ydynamicsoflabourproductivi

ty

[%]

[thouRON/person]

Labour productivity [thou. RON/person]

Labour productivi ty [thou. RON/person] Y/Y dynamics of labour product ivity [%]

Labour cost as the share in total operating costs [%]

Period 2008 2009 2010 2011

Value [%] 9.50% 10.11% 9.74% 8.93%

Y/Y increase [%] -0.05% 0.61% -0.36% -0.81%

8%

8%

9%

9%

9%

9%

9%

10%

10%

10%

10%

Labour cost as the share in total operating costs [%]

rise of average

employment per

company in 2011

comparing to the

value in 2010

rise of labour

productivity in 2011

comparing to the

value in 2010

fall of labour cost as

the share in total

operating costs in

2011 comparing to

the value in 2010




22/35-22-


Fixed assets per employee [thou. RON/person]

Period 2008 2009 2010 2011

Value [thou RON/person] 101.26 113.32 129.24 152.48

Y/Y dynamics [%] 16.45% 11.92% 14.04% 17.98%

0%

5%

10%

15%

20%

25%

30%

35%

0

20

40

60

80

100

120

140

160

180

Y/Ydynamicsoffixedassets

per

employee[%]

[thouRON/person]


Fixed assets per employee [thou. RON/person] Y/Y dynamics of fixed assets per employee [%]

Labour intensity of production [%]

Period 2008 2009 2010 2011

Value [%] 9.00% 9.69% 9.57% 8.93%

Y/Y increase [%] 0.05% 0.69% -0.11% -0.64%

8%

9%

9%

9%

9%

9%

10%

10%

Period

Labour intensity of production [%]

Material & energy intensity of production [%]

Period 2008 2009 2010 2011

Value [%] 58.27% 47.87% 47.99% 49.97%

Y/Y increase [%] -0.71% -10.39% 0.12% 1.98%

0%

10%

20%

30%

40%

50%

60%

70%

Period

Material & energy intensity of production [%]

rise of fixed assets

per employee in

2011 comparing to

the value in 2010

fall of labour

intensity of

production in 2011

comparing to the

value in 2010

rise of material &

energy intensity ofproduction in 2011

comparing to the

value in 2010




23/35-23-


Total assets turnover [%]

Period 2008 2009 2010 2011

Value [%] 139.20% 132.30% 118.99% 116.48%

Y/Y increase [%] 11.22% -6.89% -13.32% -2.51%

105%

110%

115%

120%

125%

130%

135%

140%

145%

Period

Total assets turnover [%]

Fixed assets productivity [%]Period 2008 2009 2010 2011

Value [%] 236.14% 212.34% 196.91% 188.95%

Y/Y increase [%] 6.72% -23.80% -15.43% -7.96%

0%

50%

100%

150%

200%

250%

Period

Fixed assets productivity [%]

Labour cost per employee [thou. RON/person]

Period 2008 2009 2010 2011

Value [thou RON/person] 21.53 23.67 17.54 25.99Y/Y dynamics [%] 20.53% 9.96% -25.91% 48.16%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

0

5

10

15

20

25

30

Y/Ydynami

csoflabourcostper

employee[%]

[thouRON/person]

Labour cost per employee [thou. RON/person]

Labour cost per employee [thou. RON/person] Y/Y dynamics of labour cost per employee [%]

fall of total assets

turnover in 2011

comparing to the

value in 2010

fall of fixed assets

productivity in 2011

comparing to the

value in 2010

rise of labour cost

per employee in

2011 comparing to

the value in 2010




24/35-24-


Costs

Share of wages in total operating costs [%]

Period 2008 2009 2010 2011

Value [%] 7.50% 7.96% 7.66% 7.02%

Y/Y increase [%] 0.05% 0.46% -0.29% -0.64%

6%

7%

7%

7%

7%

7%

8%

8%

8%

8%

Period

Share of wages in total operating costs [%]

Period 2008 2009 2010 2011

Value [%] 2.00% 2.15% 2.08% 1.91%

Y/Y increase [%] -0.10% 0.15% -0.07% -0.17%

Share of social contributions in total operating costs [%]

2%

2%

2%

2%

2%

2%

2%

2%

2%

2%

Period

Share of social contributions in total operating costs [%]

Period 2008 2009 2010 2011Value [%] 14.90% 16.10% 16.19% 15.44%

Y/Y increase [%] 0.86% 1.21% 0.09% -0.75%

Share of external services in total operating cost [%]

13%

13%

14%

14%

15%

15%

16%

16%

17%

Period

Share of external services in total operating cost [%]

fall of share of

wages in total

operating costs in

2011 comparing to

the value in 2010

fall of share of social

contributions in total

operating costs in

2011 comparing to

the value in 2010

fall of share of

external services in

total operating cost

in 2011 comparing

to the value in 2010




25/35-25-


Period 2008 2009 2010 2011

Value [%] 60.70% 49.94% 48.83% 49.96%

Y/Y increase [%] -1.63% -10.75% -1.11% 1.13%

Share of material & energy used in total operating costs [%]

0%

10%

20%

30%

40%

50%

60%

70%

Period

Share of material & energy used in total operating costs [%]

Period 2008 2009 2010 2011

Value [%] 0.56% 0.56% 0.60% 0.51%

Y/Y increase [%] -0.05% 0.01% 0.04% -0.09%

Share of taxes & fees in total operating costs [%]

0%

0%

1%

1%

1%

1%

1%

1%

1%

Period

Share of taxes & fees in total operating costs [%]

rise of share of

material & energy

used in total

operating costs in

2011 comparing to

the value in 2010

fall of share of taxes

& fees in total

operating costs in

2011 comparing to

the value in 2010

material and energy

costs dominate inthe cost structure


Costs structure [%]

Wages [%] 7.96% 7.66% 7.02%

Social contributions [%] 2.15% 2.08% 1.91%

Cost of external services [%] 16.10% 16.19% 15.44%

Material and energy costs [%] 49.94% 48.83% 49.96%

Taxes and fees [%] 0.56% 0.60% 0.51%

O ther costs [%] 23.28% 24.63% 25.16%

Period 2009 2010 2011



26/35-26-


0%

20%

40%

60%

80%

100%

2009 2010 2011

Period

Costs structure [%]

Wages [%] Social contributions [%] Cost of external services [%]

Material and energy costs [%] Taxes and fees [%] Other costs [%]

7.0%1.9%

15.4%

50.0%

0.5%

25.2%

Costs structure [%] (2011)

Wages [%] Social contributions [%] Cost of external services [%]

Material and energy costs [%] Taxes and fees [%] Other costs [%]

Structure of Current Assets


short-term

receivables

dominate in the

current assets

structure

Current assets structure [%]

Inventories [%] 34.50% 28.70% 29.29%

Short-term receivables [%] 52.92% 56.80% 56.40%

Cash and equivalent [%] 10.74% 11.33% 11.77%

O ther current assets [%] 1.84% 3.17% 2.54%

Period 2009 2010 2011



27/35-27-


0%

20%

40%

60%

80%

100%

2009 2010 2011

Period

Current assets structure [%]

Inventories [%] Short-term receivables [%] Cash and equivalent [%] Other current assets [%]

29.3%

56.4%

11.8%

2.5%

Current assets structure [%] (2011)

Inventories [%] Short-term receivables [%] Cash and equivalent [%] Other current assets [%]




28/35

-28-

DairyProductManufactu

ring

DuPontsPyra

mid

Equity

per

company

2011

3364

2010

4297

2009

5033

2008

4540

Leverage

2011

3.91

Assets

per

company

2011

13150

2010

3.2

7

2010

14066

2009

2.4

8

2009

12488

ROE

2011

-5.4%

2008

2.6

3

TAT

2011

1.16

2008

11930

2010

-0.4

%

2010

1.1

9

2009

6.0%

2009

1.3

2

2008

11.6

%

ROA

2011

-1.4%

2008

1.3

9

Net

revenue

per

company

2011

15317

2010

-0.1

%

2010

16736

2009

2.4

%

2009

16522

2008

4.4

%

ROS

20

11

-1.1%

2008

166

05

2010

-0.1

%

2009

2.0

%

2008

3.2

%Net

profit

per

company

2011

-182

2010

-19

2009

302

2008

528

Returnon

equity

ROE=ROA*leverage

Assetsturnover

TAT=Netrev

enueper

company/Assetsper

company

Returnonassets

ROA=ROS*TAT

Netrevenuepercompany(*)

[thouRON]

(*)Netprofitpercompanyornetrevenuepercompanyfrom

agivenyear

(**)Valueofassetspercompanyorequitypercompanyfrom

theendof

year

Equity

percompany(**)

[thouRON]

leverage=Assetsper

company/Equityper

company

Assetspercompany(**)

[thouRON]

Returnonnetsales

ROS=Netprofitpercompany

/Netrevenuepercompany

Netprofitpercompany(*)

[thouRON]

*

*

/

/

/



29/35

-29-


ring

CompaniesfromtheSector

TopPlayersfrom

theSector

improveof

taxshield

++ + o +

+ + o +

leverage

increase

+ o o + + ++ o +

+++ + +

cost

cutting

+ + + o + o ++

++

++ o +

increas

e

ofrevenue

o + + + o o + ++ ++ ++ + +++o

18.15%

15.30%

12.31%

19.82%

14.09%

3.13%

13.80%

ROS

3.26%

1.78%

1.71%

4.15%

4.08%

10.44%

0.07%

-1.15%

-3.09%

5.30%

2.65%

TAT

2.88

2.01

1.56

2.05

2.28

2.18

1.70

0.28

0.98

1.18

1.71

ROA

9.39%

3.57%

2.65%

8.50%

9.28%

22.80%

0.11%

-0.32%

-3.04%

6.24%

5.92%

leverage

2.16

2.93

2.42

2.11

1.87

1.24

4.67

1.47

1.43

1.79

2.21

ROE

20.27%

10.44%

6.41%

17.89%

17.33%

28.30%

0.52%

-0.47%

-4.34%

11.15%

10.75%

Employm

ent

608

617

631

348

365

158

316

120

371

545

408

Asse

ts

[mnR

ON]

174.61

190.59

217.38

108.57

87.00

58.49

73.14

350.79

92.00

69.24

142.18

Equity

[mnRON]

80.88

65.13

89.98

51.56

46.59

47.11

15.64

239.27

64.44

38.74

73.93

Y/Y

dynamics

ofnetprofit

-45.81%

186.37%

894.03%

-74.04%

-26.15%

45.15%

104.19%

-255.29%

1.80%

-11.75%

81.85%

NetProfit

[mnRON]

16.40

6.80

5.77

9.23

8.08

13.33

0.08

-1.12

-2.80

4.32

6.01

Y/Y

dynam

ics

ofn

et

revenues

5.62

%

50.04%

29.47%

4.33

%

2.72

%

87.00%

3.20

%

31.05%

15.85%

9.56

%

23.89%

Net

Revenue

[mnRON]

503.00

382.72

338.25

222.37

197.95

127.75

124.34

97.11

90.43

81.53

216.55

Market

share

14.15%

10.77%

9.52%

6.26%

5.57%

3.60%

3.50%

2.73%

2.54%

2.29%

6.09%

Datafrom2011

Shareofnetrevenue

sof

top10companiesinthe

sector

60.94%

DANONE

FrieslandCampinaRomania

AlbalactSA

Na

polact

HochlandRo

mania

Simult

anSRL

IndustrializareaLaptelui

Mures

OLYMPUSDAIRYIND

USTRY

Co

valact

BettyIce

Average

Highpotential

Mediumpotential

Lowpotential

Mainindicators

Thedatafor2010and

2011arefromCreditinfoRomaniaandC

CIR.Hence,thequalityofpresented

dataisstrictlylimited

bythequalityofdatainCreditinfoRomania&CCIR.

*)PubliccompaniesrepresentsonlythesePLCthatarelistedon1stand2ndtierofBVBorRasdaq

Public

com-

pany

*)

Strategicconclusions

Potentialfor:

Effective

taxrate

DuPontpyramid

InduPontPyramidstockv

ariablesarenot

averagedovertimeforcalculationpurposes

duetolackofthesedata



30/35

-30-


ring

Listedcompaniesfrom

thesector(BVB/Rasdaq;1stand2ndtier)

U

L

U

L

P/BV

P/E

%P

(y/y)

P

++++++

15.30%

67.28%

14.94%

29.99%

52.70%

12.83%

32.17%

ROS

1.71%

-7.89%

0.36%

2.25%

-37.82%

0.40%

0.13%

3.44%

-48.94%

-54.89%

-14.13%

TAT

1.556

1.784

1.181

2.367

0.375

1.619

1.078

1.535

0.459

0.098

1.205

ROA

2.65%

-14.08%

0.43%

5.33%

-14.20%

0.64%

0.14%

5.28%

-22.46%

-5.36%

-4.16%

leverage

2.416

1.583

2.927

1.513

5.666

1.961

9.812

1.496

-0.385

1.329

2.832

ROE

6.41%

-22.29%

1.25%

8.06%

-80.44%

1.26%

1.34%

7.89%

8.64%

-7.12%

-7.50%

Boo

k

Va

lue

[mn

RON]

89.98

11.52

8.02

5.40

8.55

4.98

1.49

4.49

-37.46

25.36

12.23

Ne

tPro

fit

[mn

RO

N]

5.77

-2.57

0.10

0.44

-6.88

0.06

0.02

0.35

-3.24

-1.81

-0.78

Ne

t

Revenue

[mn

RON]

338.25

32.55

27.71

19.33

18.19

15.83

15.71

10.30

6.62

3.29

48.78

Marke

t

share

9.81%

0.94%

0.80%

0.56%

0.53%

0.46%

0.46%

0.30%

0.19%

0.10%

1.41%

RASDAQ

RASDAQ

RASDAQ

RASDAQ

RASDAQ

RASDAQ

RASDAQ

RASDAQ

RASDAQ

RASDAQ

Datafrom2011

AlbalactSA

LactateNaturaS.A.

Targoviste

Ilvas

BUC

OVINA

Pro

dlacta

LactaSA

Lactag

Vr

anlact

IndustrializareaLaptelui

Ha

rghita

L

actido

Av

erage

Liqu

idity

Mainindicators

-highliquidity

-averageliquidity

-lowliquidity

Market

FinancialIndicators(2011)

Effec

tive

taxra

te

DuPont'spyram

id

MarketIndicators(31/12/

2012)

Required

returnrate

Market

multipliers

Beta

()

Company

'

smarke

t

va

lue

[mn

RON]

Price

Averag

e

daily

vo

lume-

las

tye

ar

[thou

RON]



31/35

-31-


ring

MergersandAcquisitions

Takingover

company

AlboraSRL

Debrocons,

Portavon,

RevanCom

Sole-Mizo

LactalisGroup*

TopBrands

Distribution

MeggleRomania

Unilever

AlbalactAlbaIulia

SigmaBleyzer

LactalisGroup

Takenover

company

TRD-TnuvaRoma

nia

Dairies

LactateNatura

Prodlacta

AlbalactAlbaIulia

*

MasterHouseGrup

StarsCoOOD

"Napoca"ice-cream

brandinRomania

Raraul

PRIMULACTSA,

LACTATEHARGHIT

A

SA

DORNASA,

DORNA

LACTATESA,

Dorn

a

Hellas

Tran

sactiondate

D

ec-19,2

012

O

ct-15,2

010

F

eb-25,2

010

J

an-05,2

010

S

ep-11,2

009

S

ep-09,2

009

F

eb-24,2

009

O

ct-16,2

008

A

pr-23,2

008

A

pr-21,2

008

Buyer'sName

LactalisGroup

SigmaBleyzer

SigmaBleyzer

Debrocons,

Portavon,

R

AlbalactAlbaIulia

TopBrandsDistribution

Parmalat

AlboraSRL

Seller'sName

JeanValvis

privateinvestor-Ioan

Balan

SIFOlteniaSA

EuropeanBankfor

Reconstructionand

Development(EBRD)

N/A

Target

Company

DORNASA

,DORNA

LACTATESA,

Dorna

Hellas

PRIMULAC

TSA,

LACTATEHARGHITA

SA

Covalact

LactateNa

tura

Raraul

MasterHouseGrup

ParmalatRomania

TRD-Tnu

vaRomania

Dairies

Transactiondate

Apr-21,2

008

Apr-23,2

008

Aug-07,2

007

Oct-15,2

010

Oct-16,2

008

Sep-11,2

009

Apr-05,2

007

Dec-19,2

012

Valueofadeal

[mnUSD]

Statusofadeal

124.7

1

15.9

4

9.0

5

(completed)

4.9

8

4.7

9

2.9

2

2.9

1

(completed)

1.7

3

Last

mergers

Thela

stmergersrefertothetransactions

affectinganalysedsector.

ThedatasourceisISIDealwatch

Thelargestbuy/

selloffers

Thelargestbuy/sell

offersrefertothetransactionsaffectinganalysedsector.ThedatasourceisISIDealwatch



32/35-32-


Key ConceptsDefinitions of Indices

Number of companies Number of reporting companies V

Net revenue per company [mn RON]Net revenue

-----------------------------------------

Number of companies

V

---

V

Total operating cost per company [mn RON]

(including depreciation and amortization)

Total operating costs---------------------------------------

Number of companies

V---

V

Operating profit (EBIT) per company [mn RON]Operating profit - Operating loss

---------------------------------------

Number of companies

V

---

V

Operating profit (EBIT) per profit-making company [mn RON]Operating profit

---------------------------------------------

Number of profit-making companies

V

---

V

Gross profit per company [mn RON]Gross profit - Gross loss

---------------------------------------

Number of companies

V

---

V

Gross profit per profit-making company [mn RON]Gross profit

---------------------------------------------


V

---

V

Net profit per company [mn RON]Net profit - Net loss

---------------------------------------

Number of companies

V

---

V

Net profit per profit-making company [mn RON]Net profit

---------------------------------------------


V

---

V

Operating Sales Margin [%]Operating profit - Operating loss

-------------------------------------

Net revenue

V

---

V

Net Sales Margin [%]Net profit - Net loss

------------------------------------

Net revenue

V

---

V

Return on Equity [%]Net profit - Net loss

------------------------------------

Equity

V

---

V

Return on Assets [%]Net profit - Net loss

------------------------------------

Total assets

V

---

V

Effective tax rate [%]Gross profit - (Net profit - Net loss)

-------------------------------------------

Gross profit

V

---

V

Share of profit-making companies [%]Number of profit making companies

---------------------------------------------

Number of companies

V

-----

V

Current ratio [%]Current assets

------------------------

Short-term liabilities

V

---

V

Quick ratio [%]Current assets - Inventory

-------------------------------


V

---

V

Super quick ratio [%]Cash & Equivalent

------------------------------------


V

---

V

Receivables to liabilities ratio [%]Receivables

------------------------


V

---

V

Days of coverage for Cash & Equivalent [days](Receivables + Inventories - Short term liabilities) * 360

------------------------------------------------------------------

Net revenue of goods and services

V

---

V

Days of coverage for receivables [days]Receivables * 360

------------------------------------


V

---

V

Days of coverage for inventories [days]Inventories * 360

--------------------------------------


V

---

V

Days of c overage for short term liabilities [days]Short term liabilities * 360

--------------------------------------


V

---

V

Debt to Equity ratio [%]Long-term liabilities

-----------------------

Equity

V

---

V

Equity to total assets ratio [%]

Equity

--------------Total assets

V

---V

Long-term liabilities to total liabilities ratio [%]Long-term liabilities

-----------------------

Total assets

V

---

V

Debt ratio [%]Total liabilities

-----------------

Total assets

V

---

V

Operating profit coverage [years]Total liabilities

----------------------------------------

Operating profit - Operating loss

V

-----

V

V - Value for a given year

Financialcycles

Definition of index

Generalindices

P

rofitabilityratios

Liquidityratios

Financialleverage

ratios



33/35-33-


Average employment per company [person]Number of employees

--------------------------

Number of companies

V

---

V

Labour productivity [thou. RON/person]Net revenue

---------------

Employment

V

---

V

Labour cost as the share in total operating costs [%]Wages + Social insurance & other contributions to employees

----------------------------------------------------------------------

Total operating costs

V

---

V


Fixed assets

------------------Employment

V

---V

Labour intensity of production [%]Wages + Social insurance & other contributions to employees

----------------------------------------------------------------------

Net revenue

V

---

V

Material & energy intensity of production [%]Material & energy costs

----------------------------

Net revenue

V

---

V

Total assets turnover [%]Net revenue

------------------

Total assets

V

---

V

Fixed assets productivity [%]Net revenue

------------------

Fixed assets

V

---

V

Labour cost per employee [thou. RON/person]Wages + Social insurance & other contributions to employees

----------------------------------------------------------------------

Employment

V

-----

V

Share of wages in total operating costs [%]Wages

-------------------------


V---

V

Share of soc ial contributions in total operating costs [%]Social insurance and other contributions to employees

--------------------------------------------------------------


V

---

V

Share of external services in total operating cost [%]External services

-------------------------


V

---

V

Share of material & energy used in total operating costs [%]Material & energy costs

-----------------------------


V

---

V

Share of taxes & fees in total operating costs [%]Taxes & fees

-------------------------


V

---

V

Costs

V - Value for a given year

Definition of index

Productionfactors



34/35-34-


Definitions of Selected Concepts

EconTrends for Romania are based to large extent on the structure of the North American Industry

Classification System (NAICS). Analyses made for respective industry divisions and groups are

consistent with this classification. However the used system of industry classification is not fully

compatible with the Romanian Classification of Activities due to Romanian statistics - specific factors.

Moreover the reports are based on the bottom-up aggregation of individual companies financial data

from the Creditinfo Romania and CCIR (Chamber of Commerce and Industry), which provides the

financials not for all, but for all major companies from the sector. Hence the report covers not the full

sector but only its major part.

Forecasting models used in EconTrends have a hierarchical structure. The first layer consists of

models that transmit behavior of macroeconomic variables like nominal GDP growth, increases in prices

to the behaviors of financial parameters like net sales per company and EBIT margin in all analyzed

economic divisions. EBIT margin should be understood as earnings before interest and taxes. The next

layer of models translates the behavior of the above parameters in economic divisions into the groups

within them, than into classess within groups and subclassess within classess. The econometric

models that are used in respective layers have a linear structure and belong to a well known group of

regression models.

Risk-profitability maps show the location of sectors depending on the value of profitability and risk

they achieve. Sectors singled out by being encircled by a red ring are most useful efficientfor

investors, due to the relatively highest return at the lowest variability of profit (relatively high value of

the Sharps index). On the basis of the coordinate values ofefficient sectors, the preferences of

investors on the market are shown by a grey dotted line visible on the graphs this is a level line of

the linear function of utility for investors (Investors Utility Function). The level line shows preferences

of the majority of investors with regard to achieved profitability at a given risk. Sectors, which are

placed above the linear function of usefulness are preferred by investors due to the possibility of

achieving a high profitability, at a particular level of risk. Sectors lying below the level line are not as

attractive for investors, due to the relatively high variability in profit as against their profitability.

The forces map shows decompositions of the profitability index into particular driving forces. The idea

of the strengths map is to show the effect of particular variables on the dynamics of profit both in

current and forecasted situation.

Several concentration measures are used to examine the degree of the market power concentration

within the analyzed sectors. The Herfindahl-Hirschman Index (known as HHI), is a measure of the size

of firms in relationship to the industry and an indicator of the amount of competition among them. It is

defined as the sum of the squares of the market shares of each individual firm: ie the average market

share, weighted by market share. As such, it can range from 0 to 10,000 moving from a very large

amount of very small firms to a single monopolistic producer. Decreases in the Herfindahl index

generally indicate a loss of market power and an increase in competition, whereas increases imply the

opposite. The Lorenz curve in turn, is a graph showing the proportion of the distribution assumed by

the bottom % market share values. It is used to represent market shares distribution, where it shows

for the bottom x% of companies in the sector, what percentage y% of the market share they have.

The percentage of companies is plotted on the x-axis, the percentage of market share on the y-axis.

It is considered it to be a measure of inequality of the market shares within the given sector. The Gini

coefficient is a measure of statistical dispersion in the market shares defined as the field between the

diagonal and the Lorentz curve. It is defined as a rat io with values between 0 and 1. A low Gini

coefficient indicates more equal market shares, while a high Gini coefficient indicates more unequaldistribution. 0 corresponds to perfect equality (all companies having exactly the same market share)

and 1 corresponds to perfect inequality (where one monopolist has all the market share, while

everyone else has zero share in the market).

Forecasting models

Risk-profitability maps

The forces map

Several concentration measures are used to examine the degree of the market power concentration

within the analyzed sectors.

The Herfindahl-Hirschman Index (known as HHI), is a measure of the size of firms in relationship to the

industry and an indicator of the amount of competition among them. It is defined as the sum of the

squares of the market shares of each individual firm: ie the average market share, weighted by market

share. As such, it can range from 0 to 10,000 moving from a very large amount of very small firms to a

single monopolistic producer. Decreases in the Herfindahl index generally indicate a loss of market

power and an increase in competition, whereas increases imply the opposite.

The Lorenz curve in turn, is a graph showing the proportion of the distribution assumed by the bottom

% market share values. It is used to represent market shares distribution, where it shows for the

bottom x% of companies in the sector, what percentage y% of the market share they have. The

percentage of companies is plotted on the x-axis, the percentage of market share on the y-axis. It is

considered it to be a measure of inequality of the market shares within the given sector.

Concentration measures

Herfindahl-Hirschman Index

Lorenz Curve



35/35


The Gini coeffic ient is a measure of statistical dispersion in the market shares defined as the field

between the diagonal and the Lorentz curve. It is defined as a ratio with values between 0 and 1. A

low Gini coefficient indicates more equal market shares, while a high Gini coefficient indicates more

unequal distribution. 0 corresponds to perfect equality (all companies having exactly the same market

share) and 1 corresponds to perfect inequality (where one monopolist has all the market share, while

everyone else has zero share in the market).

Gini coefficient

Forecasts presented in EconTrends for Romania relate to a period of two years ahead in relation to

the end of the time period for which statistical data are available.

Liquidity (of public company) - ranked accordingly to the averaged daily shares' turnover from the last

Betas and Required Rates of Return - are calculated for listed companies under CAPM model.

- rate of return from investments in shares of an analysed company,

- Leveraged Beta,

- Unleveraged Beta,

- Required Rate of Return, where:

DuPont Pyramid is a very useful tool to decompose Return on Equity (ROA) into various ratios like:

Return on Assets (ROA), Return on Sales (ROS) and Total Assets Turnover (TAT). It enables easy

drawing of c onclusions about the efficiency of an analyzed company in various areas of its act ivity.

- effective tax rate.

- required (by investors) rate of return from investments in the shares of an analysed company; i.e.

the expected rate of return when the market stays in equilibrium under CAPM assumptions,

- 5Y rate of return of a stock market index (BET),

- 5Y expected rate of return of the stock market index (BET),

- risk-free rate of return (of 12-month average Bucharest Interbank Bid Rate),

- debt to equity ratio,

Distributions of Financials present crit ical values of the distributions of various financials in the

analyzed sector. The presented critical values represent quartiles of the empirical distribution i.e. they

are calculated for 20%, 40%, 60% and 80% of the total populat ion of companies from the given

sector. These distribut ions make possible easy comparison of an analyzed company to othercompanies in the sector, looking at it from various financial angles.

Market multiples (P/E, P/BV) - are widely used for the valuation purposes. Price to Earnings (P/E) is

calculated by dividing closury company's capitalisation in the year after analysed year by the earnings

(net profits) from the last year. For the calculation of Price to Book Value (P/BV) the ending year book

value is taken.

Y/Y Increase, Y/Y Dynamics. Increases are calculated as absolute differences with respect to the

preceding year (Y/Y). Dynamics are calculated as relat ive [%] differences with respect to the

preceding year (Y/Y).

M

MiL

RVar

RRCov ,

E

DL

U

11

iR

iR

MR

MR

fR

E

D

fMfi RRRR

Y/Y Increase, Y/Y Dynamics

Forecasts

Distributions of Financials

DuPont Pyramid

Market multiples (P/E, P/BV)

Betas and Required Rates of Return

Liquidity

Documents

Dairy Product Manufacturing (3115) - 2011