Octagon will end 2014 with a 16 million euro turnover, a decline on the turnover reported last year, according to the estimates of Alexandros Ignatiadis, co- founder and shareholder of the company. The anchor of Octagon during the crisis was the Iraqi market, he told us during an interview, stressing that the company wants to consolidate its position in this country, where it already has two ongoing projects. Alexandros Ignatiadis believes that the Romanian construction market needs restructuring, as it operates on 900 million euro annual losses and as in the past 20 years it has been negatively affected by political instability. Mr. Ignatiadis told us that the beginning of the year was characterized by effervescence in the private real estate sector, but, after the end of the first semester, many projects have slowed down.
|Hermes Business Campus- building B|
Reporter: How did the company’s activity evolve in the first year half and what is your forecast for the second half of the year?
Alexandros Ignatiadis: The first half of the year evolved positively for Octagon. We finished the construction of the first building within the office complex Hermes Business Campus, where we were general contractor and we contracted new civil, geotechnical and infrastructure works. The turnover for H1 of 2014- 6.6 million euro, is similar to the one of H 1 2013, so the financial perspectives for 2014 are optimistic.
|Green Court Bucharest- building B 1|
Reporter: Will 2014 be a better year than 2013 for Octagon?
Alexandros Ignatiadis: Even if it included number 13- that allegedly brings bad luck, 2013 was one of the best years OCTAGON has had so far. Two of our remarkable successes were the fact that we became general contractor for Hermes Business Campus and also having delivered the first building of the complex Green Court Bucharest, developed by Swedish real estate giant Skanska. We ended the year with a 19.6 million euro turnover, and we estimate a 16 million euro turnover for 2014.
Reporter: How do you see the short and medium term evolution of the construction market?
|Green Court Bucharest- building B 2|
Alexandros Ignatiadis: The construction market needs restructuring, because something is fundamentally wrong in this industry. A 4 billion euro market is operating on 900 million euro annual losses. It is an overcrowded market, which has been negatively influenced by political instability in the past 20 years. The short and medium term evolution will only be positive if this regulation occurs and if the state grants fiscal incentives for the sector consolidation. There is also a law draft initiated by the Romanian Association of Construction Entrepreneurs (ARACO), to eliminate from the competition, the companies set up overnight, that have access to public projects worth hundreds of millions of euro. Another solution would be to merge several Romanian companies in order to create companies with a superior financial power, able to access tenders for very high value projects. The construction sector is still a brake for economic growth, due to the fact that the political stabilization process has not ended yet
Reporter: How have the orders generated by public and private investments, evolved this year?
Alexandros Ignatiadis: Due to the fact that 2014 is an electoral year, most of the public funds have been directed towards areas able to attract voters. The construction sector is not a priority for the state this year, but we have been slightly affected, as we are not involved in major public projects. The private sector is dynamic this year. We participate in tenders for projects within all the segments of the construction market.
|PC Business Center- superstructure 1|
Reporter: Consultants say that the new real estate developments market, including the residential sector, has started to perform better this year. What is your perspective?
Alexandros Ignatiadis: The year started dynamically in the private sector and this gave new hopes, but after the first semester many announced projects have slowed down.
Reporter: What will be the engine of the construction market in the next period?
Alexandros Ignatiadis: Inevitably, after 4 years of stagnation, infrastructure will be the engine of the construction market.
Reporter: What are the short and medium term development plans of Octagon?
Alexandros Ignatiadis: In a stagnating market, our priority is the consolidation of the economic position and keeping the existing clients.
|PC Business Center- superstructure 2|
Reporter: How would you evaluate the tax level in our country?
Alexandros Ignatiadis: The tax level is acceptable against other EU member states, but the number of taxes must be reduced and wage inflexibility must also relax.
Reporter: What are your most important ongoing projects?
Alexandros Ignatiadis: We have ongoing projects in Romania and in Iraq. In Romania we are working on two office buildings and five infrastructure projects. We are working on building B of the Green Court Bucharest office complex, located on Herastrau St.- Bucharest, after having delivered building A, at the beginning of the year. The complex will have three office buildings in total.
A project started last autumn, on which we are currently working, is the office building PC Business Center, located on 7-9 A Bucharest- Ploiesti Road. We initially performed the special foundation and infrastructure works and we are now building the superstructure.
In terms of infrastructure projects, last summer we started the geotechnical works to “ Presei Libere Square Underground Passage” (Bucharest). We are also building bored piles and metal sheet pile retention systems in Craiova on a passage over the railway. Another project is the functional rehabilitation of Revolutiei Square in Slobozia, where we are building sheet pile retention systems and we are performing drilling for dewatering systems. We are also building bored piles for sections A, D and E, sector 2- Lugoj- Deva Highway, for Salini Impregilo.
At the same time we are continuing the retention works with columns and sheet piles at the project “Rehabilitation of Brasov- Simeria railway, Coslariu- Sighisoara section”, where FCC Construccion is the general contractor.
In Iraq we have two projects: Electric Power Plant 1250 MW Shatt Al Basra in Basra (Iraq) and the residential project Iraq Gate Residential, for Iraqi developer Almco. In both projects we have been contracted for the execution of geotechnical works.
|Shatt Al Basra Power Plant- Iraq|
Reporter: Many construction companies, among which Octagon, have expended abroad as well. Octagon is developing in Iraq. Is this a good solution for survival during the crisis?
Alexandros Ignatiadis: Our anchor during the crisis has been the Iraqi market. We have decided to try another market with long term growth perspectives and that has liquidities for infrastructure projects. The security issues have been an addition advantage for us, as they keep competition away. Right now we are building awareness and we are waiting for the political system to stabilize. The fact that we have two ongoing projects is a positive sign and comes as a confirmation of the fact that we had good intuition when we decided to expand there.
Reporter: Do you plan to expand in other countries as well? If yes, where exactly?
Alexandros Ignatiadis: Right now we are focusing on consolidating our activity in Iraq, but should the opportunity of entering a market with high growth potential arise, we will certainly take it.
OCTAGON has performed two thirds of the contracted works for the rehabilitation of Brasov- Simeria railway, Coslariu- Sighisoara section
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OCTAGON CONTRACTING & ENGINEERING