Megapress Holdings to invest 121 million euros in production consolidation

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Megapress Holdings, comprising the Megapress and Aramis printing houses and the Minerva and Tribuna Invatamantului publishing houses, will be investing this year 11 million euros in consolidating production and its market stand among the three best printing houses of Romania.
 
Megapress Holdings closed 2007 second in the rankings of private printing houses in terms of business turnovers, with the member companies having reported an aggregate turnover of 26 million euros. First in the rankings was Infopress of Oderheiul Secuiesc, with a turnover of 80 million euros.
 
Megapress Holdings Director General and main shareholder Sorin Penes says that competition got tougher in Romania particularly after the entry of Germany’s EDS Euro Druck Service, which carried out a Greenfield project in Brasov. EDS is currently building a printing house there that is expected to be completed this autumn, according to the latest available data.
 
The company’s investment budget has been earmarked for the acquisition of rotary presses that can print 48 pages a minute, as well as equipment for finishing and binding works.
Megapress’ 2007 investments stood at 4.8 million euros and they were channeled mainly into purchasing a rotary press that prints 32 pages a minute for magazine printing, and the related equipment.
Following the conduct of an 11-million-euro development project, the company is now estimating a 22% increase in the business turnover of the printing house.
 
Penes says that the company has projected a 22% increase in its printing business and a 35% rise in its publishing business, which include the publishing by the Minerva and Aramis houses of 108 titles. The title portfolio of Minerva has advanced this year to 400 following the purchase of copyrights for more than 200 books.
The Megapress official says that the company may increase its investment budget to 20 million euros in 2010, depending on the developments in its growth.
 
Penes says he has received buy offers from many over the past two years but he  ecided to keep the company, pending the identification of a potential client that will keep up the current growth pace.
„For the time being, I do not feel like pulling out of the company, and were I to give away up to 80% of the shares I would prefer to select a strong client that possess the required knowhow,” he says.
The company has been valued by its majority shareholder at 15-18 million euros, by dividing the operational profit to 7. In the printing business, the computational coefficient is 8.5, at the most.
 
„Back in 2007, we would be bombarded by a volley of offers, but this year they are fewer because of limited crediting sources. Bank are much more attentive now, money is getting expensive and potential buyers are hard pressed to win access to credit lines. Irrespective of the prevailing conditions, concentration in this market will continue,” says Penes.
 
Market concentration will be determined by developments in the market shares of the large printers with consolidated business, such as Infopress and Megapress, but also by companies such as EDS and G. Canale, which this year alone has earmarked 8 million euros for business expansion in Bucharest City.
 
The company has also contemplated potential investments abroad. „Consolidation is a priority, but we would also like to move to Serbia, as our competitors have opted for Bulgaria and Hungary,” says Penes. He is also considering takeovers in Ukraine or Bosnia, countries where it has sold or is considering selling equipment that have been replaced by new equipment used in the work processes.
 
For research and development projects, Megapress receives the necessary funding from Banca Romana de Dezvoltare (BRD), under a partnership, but it is also acquiring equipment under operational leasing, because at the end of the use cycle it doe not have to buy the equipment.
Megapress’ customer portfolio comprised retail traders – Real, Metro Bulgaria and Moldova, for which it prints ad pamphlets, as well as the Publimedia, RINgier and Intact media holdings.
 
The local market for offset printing, where high-capacity rotary presses are used, and where Infopress, Megapress and Coprint are together controlling 80% of it, is said to have been assessed according to the business turnovers recorded by each company in 2007; their annual growth is put at 20% year on year, to more than 130 million euros.
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