Milos Jovicic
Managing Director
Procema

05 July 2021

Procema is a market leader in reinforced steel processing, cut-and-bent rebar, and pre-assembled elements. It was founded in 1949 as a research institute in Romania and now conducts business in several countries across CEE.

Procema has transformed multiple times across the decades, what is the company’s current footprint in Romania and beyond it?

Our strong position on the market is maintained through our rebar fabrication shop where we straighten, bend and cut the steel for specific projects. Prefabricated products are also an important part of our business, welded mesh and pre-assembled steel cages being two popular elements in our portfolio. Our products are fit both for distribution and processing companies, but the main focus is to directly serve the construction industry. Procema is the sole supplier of FORTEC coupling systems in Romania - a cold forging process that offers a quick and safe bar-to-bar connection.

Is there a specific sector of the real estate industry that generates more demand at present?

The residential sector has been the star of the industry in the past three-four years across multiple regions of Romania: Bucharest & Ilfov, Cluj, Timisoara, Iasi and Constanta. Office and commercial were hit by the pandemic quite badly, but thanks to past momentum, there was a project pool still being developed during the past year and a half. Infrastructure projects were expected to have an increased demand for materials, but as works have slowed down, our expectations were not exactly met on this front.

You finished 2020 on a positive note and with a growing turnover - what was the context that led to this successful result?

The favorable context to achieve an increased turnover was generated by merging our subsidiary Procema Metal, through which we were selling products (including raw materials) to companies in Romania and CEE, with our main company. Moreover, this growth was also sustained by commercializing new products on newly penetrated markets. Fortunately, the pandemic didn't slow down the construction industry in Europe and in Romania it really thrived, as we all know.

We talked to other players who mentioned this fortunate context, but also how raw materials are more expensive than ever before - what would be the reason behind this price increase?

Generally speaking, there is a global inflation caused by macroeconomic policies, meant to keep the economy going and people happy during the pandemic, policies taken both by the EU and the United States. These measures overlapped with a sudden halt in the industrial sector during the lockdown period  since companies couldn't predict how hard they would be hit, but as the recovery was swift, the offer couldn't meet the newly generated demand. This specific context led to price increases not only for construction materials but also for energy related products.

You mentioned international markets - in which of them is Procema present, besides Romania, and what is your in terms of expansion?

We are present in the majority of markets around Romania: Hungary, Serbia, Slovakia, Bulgaria and sporadically in Moldova. The plan is to expand towards more markets by diversifying our portfolio through new product categories and continually pushing our limits. At the moment we don't deal in absolutes, but rather point our attention towards any fresh opportunity that might help us achieve these goals.

Three years ago, our export was almost non-existent (under 1% from the final turnover), but this year it's probably going to reach 15%-20%, depending on market conjecture. Probably, in two-three years’ time, exports will represent one third of our total revenue.

It's interesting how, originally, Procema was a research institute - how did you integrate this direction in your present business?

It's true, Procema has a long tradition in construction materials research, but also in seismology, our competence for reinforcing steel stemming precisely from this. The initial know-how input wasn't lost, but we transformed it into valuable insight for the processing phase. We continue to offer research services through Procema Research, such as product approval tests and so on.

There are ongoing discussions about integrating novel technologies into your industry - how did you respond to this modernization trend?

We are not followers in this respect, but rather leaders. An edifying example is the fact that we are the first company in Eastern Europe to work with the latest technology for production of custom-made welded mesh. The product we developed offers both speed and a great level of customization in comparison to traditional production. With its help, we developed a special product: welded mesh produced according to specific dimensions, this customization increasing speed on building sites. For example, the Ana Tower project in Bucharest used this product for all their 25 floors and they managed to cut at least two thirds of the total time needed to reinforce every slab.

Taking a look into the future - what are the main objectives you're pursuing in the next two-three years?

One of the main objectives we're concentrating on is increasing our sales by innovating our portfolio in such a way that clients receive a preassembled custom-made product. Continuing our turnover growth both in Romania and CEE is yet another target we want to reach in the next two-three years.

Do you have a final message about the Romanian real estate market?

In my opinion, Romania evolved a lot in the construction materials sector and there is enough room for new players who want to invest in this transparent and competitive market that is full of opportunities.

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