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The American dream in Romania: US investors


American companies are among the most influential in Romania, although the US is only the eleventh foreign investor in Romania, according to official data. For July 4th, American’s birthday, Romania-Insider.com has made an overview of the main American investors in Romania. Happy 4th of July, America!

By Romania-Insider.com

Coca Cola, Pepsi, Bunge and Procter&Gamble are among the leaders on the food&drinks and the consumer goods markets, while Oracle, Microsoft, HP and IBM are the leaders of the IT&C sector in Romania. The McDonalds, KFC and Pizza Hut franchises dominate the restaurants business. Although the franchise owners are not American themselves, the brands are. Ford and Delphi are powerful investors in the auto industry.

The American participation in Romanian companies is currently of about USD 1 billion (EUR 800 million), which is 2.75 percent of total foreign direct investments, according to data from the Romanian Trade Registry Office (ONRC) at the end of February. However, many American companies choose to invest through their European divisions, which makes the total investments much higher.

Here’s a list of the most important American companies which operate in Romania:

Industry:

Automaker Ford Motor Company bought the car factory in Craiova in 2007, when it was privatized by the Romanian Government. Although Ford’s production in Craiova is still low, this could become one of the largest American businesses in Romania in the following years. Ford representatives say the company invested EUR 350 million in Craiova since they took over.

Some of the largest American investments are in the auto components industry, where Delphi, TRW Automotive and Johnson Controls run some of the largest operations in Romania. Delphi, who is one of the largest auto components producer in the world, has four factories in Romania and over 10,000 employees. The group recently announced that it will add another 800 employees in the new factory at Moldova Noua (Caras Severin county) where it produces electrical cables. The other three factories are located in Iasi, Sannicolau Mare and Ineu.

American group Cameron, which produces oil equipment for oil giants such as ExxonMobil, has a production facility in Campina (Prahova county) and its business amounted to EUR 92 million in 2009. The company announced in 2009 that it will invest about 80 million dollars in a new factory in Ploiesti.

Timken also has a factory in Ploiesti where it produces bearings. The company had revenues of almost EUR 70 million in 2009.

Prysmian Slatina, one of the largest producers of electrical cables in Romania is part of a group which is controlled by American investment bank Goldman Sachs. Another Wall Street bank, Morgan Stanley, holds a 23 percent minority stake in Romcab Targu Mures, which also produces cables.

Agriculture and food industry:

Cargill is one of the largest players in grains trading and in the sun flower oil industry, and made a total of EUR 270 million in revenues in Romania, in 2009. Cargill started its operations in Romania in 1996 and currently owns multiple grain silos and storage facilities as well as a sun flower oil factory.

Bunge is the largest sun flower oil producer in Romania. The company had four production capacities in Buzau, Iasi, Oradea and Bucharest, but now only the Buzau factory is operational and the others are shut down. Bunge had a turnover of EUR 260 million in 2009.

Smithfield, the largest pork producer and processor in the world, runs the largest pig farms in Romania, in Banat area. The company says it invested about USD 500 million in Romania since 2004 which makes it one of the largest investors in Romanian agriculture. Smithfield also has a food distributor, Agroalim Distribution.

Food&drinks:

Coca Cola and PepsiCo brands, the largest non alcoholic beverages producers in the world, are both produced in Romania. Coca Cola operations are run by Coca Cola Hellenic Bottling Company, which is not an American company. The company has sales of over EUR 400 million on the Romanian market.

Pepsico is present here directly. Pepsi is one of the few American brands that managed to enter the Romanian market in the communist era, in 1965 when it started production in Constanta. In 1991, Pepsi re-entered the Romanian market through Quadrant Amroq Beverages (QAB) which held the franchise until 2006 when QAB was bought by bottling company Pepsi Americas. In 2010, PepsiCo bought Pepsi Americas and made its direct entry on the local market. Pepsi has three production facilities in Romania for soft drinks and a snack factory. The latest Pepsi factory was opened in 2009, in Dragomiresti, following a USD 150 million greenfield investment.

Kraft Foods is one of the leaders of the coffee and sweets market in Romania with sales of EUR 139 million in 2009. The Jacobs coffee brand is among the strongest on the Romanian market. Kraft used to produce Poiana and Milka chocolate in Brasov, but the factory was closed in 2008. In 2010, Kraft sold the Kandia factory in Bucharest.

Chewing gum Wrigley and Mars chocolate, both controlled by American group Mars are also among the top players on the market with sales that amounted to EUR 100 million in 2009.

McDonald’s is the largest restaurant franchise in Romania, with sales of almost EUR 100 million in 2009. McDonald’s entered the Romanian market in 1995 and now runs 63 restaurants with 3,500 employees.

KFC and Pizza Hut are also among the biggest restaurant businesses in Romania. Both franchises are held by the Romanian businessman Gabriel Popoviciu, who also owns the Baneasa Shopping City mall in Bucharest. KFC had 39 restaurants in Romania last year and about 1,100 employees and announced it wanted to open 10 more restaurants, according to Ziarul Financiar. Pizza Hut runs 13 restaurants.

Burger King has eight restaurants in Romania. The franchise was brought on the Romanian market by Eli Davidai, who also brought Pepsi, through QAB.

Ruby Tuesday also has two restaurants in Bucharest.

Other American food franchises showed their interest for the Romanian market lately. Domino’s Pizza already entered the market in 2010 and Subway plans to open its first restaurants this year, most likely through a franchise.

Starbucks coffee shops are also present on the Romanian market since 2007 when it opened its first cafe in Plaza Romania mall. Starbucks has eight cafes now, most of them situated in shopping malls. The franchise is owned by Greek group Marinopoulos.

Consumer goods, pharmaceuticals:

Tobacco producer Philip Morris holds almost a quarter of the Romanian cigarette market and had sales of more than EUR 500 million in 2009. The company has a factory in Otopeni, which it opened in 2001 after a USD 100 million investment.

Procter&Gamble (P&G) is the largest distributor of cosmetics and household cleaning products on the Romanian market, with EUR 280 million in sales during 2009. P&G also opened a factory in Urlati, near Ploiesti, in which it invested USD 100 million since 2009. The factory produces shampoo and haircare products and a large part of the production is exported.

Avon Cosmetics is also one of the main cosmetics distributors in Romania. The company had revenues of over EUR 110 million in 2009 and one of the largest distribution networks. Amway, which is controlled by American group Alticor, is also present on the market for many years.

Colgate-Palmolive is one of the top sellers of toothpaste and soap on the Romanian market, with EUR 65 million in revenues in 2009, and Gillette ranks among the top shaving products distributors.

In the pharmaceuticals sector, Pfizer , Merck and Abbott are among the largest ten producers/importers of drugs on the local market.

IT&C

American companies also run some of the largest businesses in the Romanian IT&C sector. Oracle is the leader of the software market with EUR 71 million in sales in 2009 for Oracle Romania. The company has more than 1,300 employees locally.

Microsoft Romania generated sales of EUR 30 million in 2009 with 260 employees. Adobe also has a local division and so does Google.

The hardware market is dominated by HP and IBM. Both had sales of about EUR 50 million in 2009. Xerox is also an important player.

UPC, which is held by the American group Liberty Global, is the second largest cable TV provider on the Romanian market. It had sales of EUR 116 million and over 1,500 employees in 2009. Digital Cable Systems, another TV and internet provider, is controlled by AIG.

Financial sector

Citibank is currently the only American bank present on the Romanian market. Citibank Romania is a medium-sized bank with assets which amounted to EUR 1.1 billion in 2010.

In the life insurance sector, Alico ranks third. Alico is also one of the top private pension funds administrators on the Romanian market.

American private equity fund Advent is one of the main private equity investors in Romania. The fund holds controlling stakes in the Regina Maria (ex CMU) medical clinics, in paint producer Deutek and pharmaceuticals producer Labormed. The fund also controls Ceramica Iasi, one of the largest brick producers in Romania.

Franklin Templeton, one of the largest asset managers in the world, took over as manager of Fondul Proprietatea (FP) in 2010. The Franklin Templeton team in Bucharest manages over EUR 4 billion in assets at Fondul Proprietatea, including minority stakes in some of the most important Romanian companies in the energy sector (Petrom, Hidroelectrica, Romgaz).

Franklin Templeton is also one of the most active investors on the Bucharest Stock Exchange, through the rest of the funds it manages. The largest foreign investor on the Romanian capital market is Artio Global, which holds more than USD 100 million in Romanian stocks.

In the real estate sector, brands like CB Richard Ellis and Re/Max are also present in Romania.

editor@romania-insider.com