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Romania's TeraSteel Factory in Serbia to Double Output in Nov, Dec

TeraSteel sandwich panels factory in Serbia recently opened by Romanian plastic products manufacturer Teraplast Group [BSE:TRP] will double its output in November and December, the group said on Wednesday.

Teraplast's plans of doubling production in the last two months of the year are backed by the addition of specialized production personnel and auxiliary staff, the company said in a press release.

The factory in Serbia had a full month of production in October, during which it worked in two shifts. From November, the production process will run in three shifts after the company hired Serbian staff to cover production needs. Teraplast inaugurated the factory on October 11.

"Considering that Serbia is a net importer of sandwich panels, we believe we are on the right track in balancing imports with exports. At the same time, we believe that the next two months will mark doubling of production in TeraSteel Serbia over October, an estimate supported by the expansion of the team," Dorel Goia, chairman of Teraplast board of directors, said.

Teraplast bought the factory, formerly known as Interlemind, for 4.3 million euro ($5.07 million) in June. The production facility, located in the southern Serbian city of Leskovac, has a production capacity of 2.2 million sq m of sandwich panels per year. It is the first factory opened outside Romania by Teraplast after 1990 and fully owned by the Romanian company.

The group plans to invest 2.7 million euro in the factory's development and to provide 4 million euro of working capital by the end of the year. TeraSteel targets sales of 28 million euro in 2018.

Sandwich panels are used in the construction of industrial buildings, such as halls, warehouses, shopping centres and cold stores.

Most of the panels produced at the plant will sell on the Serbian market, while some will be exported to other countries in the Balkan region, Goia added. TeraSteel Serbia will mainly serve countries such as Serbia, Bulgaria, Macedonia, Bosnia, Croatia and Montenegro, as well as secondary markets such as Hungary, southern Romania and northern Greece.

Earlier in October, Romania's anti-trust regulator approved the takeover of plastic products manufacturer Politub by Teraplast. The agreement for the takeover was signed for an undisclosed sum in August.

In September, the group increased its planned 2017 investment by 14% to 96 million lei ($25 million/21 million euro). Teraplast sought the hike due to the multiple acquisitions made by the company in the first half of the year.

In June, Teraplast acquired a further 10% of Romanian roof tiles maker Depaco, boosting its stake in the company to 60%.

Teraplast's net profit more than halved to 15.9 million lei in the first nine months of 2017, compared to 30.3 million lei in the year-ago period. The consolidated operating result for the first three quarters of 2017 was 19 million lei, down from 36.3 million lei in the like period of 2016.

The bulk of the negative financial result is a consequence of rising interest expenses, taking into account credits allocated to investments, whose results are not yet visible, it said in its third quarter financial statement.

Teraplast shares traded 0.49% lower at 0.4080 lei on the Bucharest Stock Exchange by 1623 CET on Wednesday.


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