EY - A Vision For Growth - September 2014

A vision for growth
Business outlook survey Mid-year edition

Romania 2014
What is A vision for growth?

A vision for growth is a survey that explores the perceptions of top executives from major companies
operating in Romania regarding the business outlook for 2014. This is the mid-year edition.
This EY report is based on a survey of 305 C-suite level executives from companies in various sectors, who
provided a perspective on how the domestic business environment is perceived at the middle of 2014. The
questionnaire was open during the period 28 July 8 August 2014. This slide deck shows comparative data
between February and August 2014 findings.
In general terms, the perspective of turnover growth has declined during the last 6-7 months, with a larger
number of companies envisaging negative growth values (12% in Aug vs 2% in Feb). However, the percentage
of companies anticipating a turnover growth rate of 10-31% has increased from 28% in Feb to 37% in Aug
2014.
Companies expectations regarding profit growth largely stayed the same in August compared to
February 2014. If at the beginning of the year 84% of respondent companies were expecting an
increase in profits, in August the percentage reached only 81%. However, 8% of respondents still say
2
that they expect their profit to grow by more than 31% in 2014.
5 main
findings
4
Page 2
Companies expectations with regards to the evolution of their employees number are quite different
in August compared to February 2014. While in Aug 2014, 18% of companies expect a 5-10%
increase in personnel numbers, only 5% said so at the beginning of the year. Also, 22% say now that
they will have no new staff this year compared to 37% in Feb 2014.
More than half of the respondent companies (51% in August) predict a growth in salary level of 5-10%,
while 30% of them (a 9% increase) continue to anticipate higher growth rates of 10-21% in salaries
during this year.
When it comes to financing investments, companies continue to use mostly bank loans (54% in February vs.
49% in August), followed by share capital increase (10% in February vs. 22% in August). There was a steep
reduction in the own resources, intercompany loans and reinvested profit segment, down to 16% in August
from 34% in February 2014.
Business outlook survey 2014 Mid-year edition
A vision for growth

Business outlook survey
Mid-year edition Romania 2014
Our survey findings show the increased
focus companies have on coping with the
challenging business environment in a way
that secures their potential for growth.
Bogdan Ion, Managing Partner, EY Romania
Page 3
Please indicate the main three elements that

you use to define success. (multiple answers)
Question 1
88%
Financial results
96%
82%
78%
Customer satisfaction
50%
Market share
63%
42%
39%
Brand awareness
Number of years on the market
Feb-14
7%
5%
7%
Number of employees
3%
Going public (IPO)
2%
Other
Total Respondents: 305

(Skipped this question: 0)
Aug-14
18%
9%
0%
20%
40%
60%
80%
100%
120%
Usually, companies measure their success by a combination of financial results, market share, and brand awareness. In
the second half of 2014, the financial results and market share elements a mild decrease while, criteria such as number of
years in the market, customer satisfaction, and brand awareness go up significantly.
Page 4
How much do you expect your turnover

to grow in 2014? (one answer)
Question 2(a) All answers
Exceeding 31%
6%
2%
20% to 30%
7%
10%
10% to 20%
19%
22%
27%
5% to 10%
30%
18%
1% to 5%
37%
5%
0%
Aug-14
3%
3%
2%
5%
-1% to -5%
-5% to -10%
Feb-14
2%
-10% to -20%
-20% to -30%
1%
Exceeding -31%
1%
0%
5%
10%
15%
20%
25%
30%
35%
40%

In general terms, the perspective of turnover growth has declined during the last 6-7 months, with a larger number of
companies envisaging negative growth values (12% in Aug vs 2% in Feb). The percentage of companies that expect
a 1-5% turnover growth decreased also by 19%. However, the percentage of companies anticipating a turnover growth
rate of 10-31% has increased from 28% in Feb to 37% in Aug 2014.
Page 5
How much do you expect your turnover

Question 2(b) Split by industry sectors
Transportation
8%
Tourism
15%
8%
Telecommunication / Media
22%
8%
9%
Retail & Wholesale trade
8%
5%
4% 4%
38%
14%
4%
12%
46%
14%
Services
35%
58%
14%
31%
15%
Exceeding 31%
14%
14%
9%
50%
9%
2%
12%
7%
7%
4%
+20 to +30%
+10 to +20%
+5 to +10%
R&D / New technology
33%
Publishing & Printing

Power / Energy / Mining
25%
6%
Pharmaceuticals / Healthcare

0%
17%
10%
12%
10%
30%
50%
15%
22%
5%
26%
40%
60%
6%
5%
6%
70%
80%
6%
10%
9%
-1% to -5%
-5% to -10%
7%
-10% to -20%
3% 4%
-20% to -30%
14%
19%
29%
20%
15%
16%
23%
0%
17%
37%
30%
14%
6%
15%
21%
13%
14%
6%
10%
25%
47%
21%
Food & Beverages / Agriculture

Construction / Real Estate
28%
6%
1% to +5%
50%
8%
Information Technology (IT)

Industry / Manufacturing
67%
5%
5%
Exceeding -31%
6% 3% 3%
90%
100%
14% of responding companies in Food & Beverages / Agriculture industry sector, 9% in Services, and 8% in Retail &
Wholesale, Pharmaceuticals, and Transportation sectors expect a turnover growth rate of more than 31%.
Page 6
How much do you expect your profit

8%
7%
Exceeding 31%
6%
20% to 30%
7%
17%
10% to 20%
19%
22%
21%
5% to 10%
28%
1% to 5%
30%
9%
10%
0%
6%
4%
-5% to -10%
2%
-10% to -20%
1%
-20% to -30%
1%
Exceeding -31%
Feb-14
2%
-1% to -5%
Aug-14
0%
5%
10%
15%
20%
25%
30%
35%
Companies expectations regarding profit growth largely stayed the same in August compared to February 2014. If at the
beginning of the year 84% of respondent companies were expecting an increase in profits, in August the percentage
reached only 81%. However, 8% of respondents still say that they expect their profit to grow by more than 31% in 2014.
Page 7
How much do you expect your profit

Transportation
6%
18%
Tourism
18%
25%
9%
Services
6%
9%
8%
5%
23%
35%
25%
26%
27%
13%
6%
6%
46%
8%
42%
6%
Exceeding 31%
9%
5% 3%
8%
5% 3%
+20 to +30%
+10 to +20%
4% 4%
20%
33%
25%
25%
6%
13%
10%
5%
14%
6%
0%
9%
30%
16%
5%
6%
20%
18%
11%
18%
24%
40%
6%
23%
-10% to -20%
2%2% 7% 2%
19%
10%
31%
9%
60%
80%
6%
-1% to -5%
-5% to -10%
19%
33%
24%
0%
6%
19%
23%
+5 to +10%
1% to +5%
25%
31%
13%
8%
33%
18%
38%
6%
8%
25%
35%
8%
28%
34%

28%
5%
5%
-20% to -30%
Exceeding -31%
6% 3%
100%

It is noteworthy that 25% of respondent companies in Tourism sector see a potential profit growth of +31%, followed by
companies in Food & Beverages / Agriculture (14%), and companies in Industry / Manufacturing (10%).
Page 8
How much do you expect your number of

employees to grow in 2014? (one answer)
2%
Exceeding 31%
2%
20% to 30%
5%
9%
9%
10% to 20%
5% to 10%
18%
5%
1% to 5%
30%
35%
Aug-14
22%
0%
6%
-1% to -5%
37%
Feb-14
9%
4%
5%
-5% to -10%
1%
-10% to -20%
1%
-20% to -30%
0%
5%
10%
15%
20%
25%
30%
35%
40%

Companies expectations with regards to the evolution of their employees number are quite different in August compared
to February 2014. While in Aug 2014, 18% of companies expect a 5-10% increase in personnel numbers, only 5% said so
at the beginning of the year. Also, 22% say now that they will have no new staff this year compared to 37% in Feb 2014.
Page 9
How much do you expect your number of

employees to grow in 2014? (one answer)
Transportation
4% 4%
8%
17%
Tourism
22%
60%
Services
33%
14%
5%
8%
7%
29%
42%
4%
14%
17%
27%
12%
38%
34%
67%
17%
38%
15%
4%
+20 to +30%
+10 to +20%
33%
+5 to +10%
33%
+1% to +5%
28%
24%
Exceeding 31%
5% 2%
19%
33%
8%
40%
43%
10%
4%
11%
38%
15%
6%
8%
0%
-1% to -5%
-5% to -10%

8%
2%3%
5%

15%
15%
14%
5%
5%
19%
14%
18%
0%
15%
30%
8%
47%
37%
40%
8%
19%
14%
24%
20%
39%
60%
3%2%
-10% to -20%
-20% to -30%
10%
6%
80%
12%
3%
100%
The industry sectors that expect the highest growth in personnel numbers (exceeding 31%) are the following:
Retail & Wholesale trade (8%), Services (5%), and Transportation (4%).
Page 10
How much do you expect the salary level

in your company to grow in 2014? (one answer)
1%
Exceeding 21%
10% to 20%
2%
6%
5% to 10%
19%
23%
51%
1% to 5%
Aug-14
60%
Feb-14
17%
19%
0%
-1% to -5%
1%
-5% to -10%
1%
0%
10%
20%
30%
40%
50%
60%
70%

More than half of the respondent companies (51% in August) predict a growth in salary level of 5-10%, while
30% of them (a 9% increase) continue to anticipate higher growth rates of 10-21% in salaries during this year.
Page 11
How much do you expect the salary level

in your company to grow in 2013? (one answer)
Transportation
4%
17%
Tourism
66%
30%
60%
Services
13%
10%
57%
29%
14%
Exceeding 21%
2%
7%
14%
39%
32%
2% 4%
+10 to +20%
4% 4%
27%
34%
33%

8%
8%
0%
6%
32%
0%
28%
6%
62%
-10% to -20%
51%
29%
8%
47%
12%
40%
Exceeding -21%
19%
61%
20%
-1% to -5%
-5% to -10%
77%
38%
+5 to +10%
1% to +5%
67%
15%
5%
4%
33%
31%
3%
3%
15%
33%
28%
46%
24%
60%
80%
100%

The industry sectors in which companies expect a salary increase exceeding 20% are: Power / Energy / Mining (28%),
followed at a great distance by Services (9%), and by Retail & Wholesale trade, Pharmaceuticals / Healthcare, and
Information Technology with 8% each.
Page 12
How confident do you feel regarding the growth of

your industry for the next 6 months? (one answer)
Question 6
12%
Very confident
7%
39%
Somewhat confident
30%
Aug-14
Feb-14
34%
Slightly confident
49%
15%
Not at all confident
14%
0%
10%
20%
30%
40%
50%
60%

The level of trust in the industry sector in which the respondent companies operate has improved between February and
August 2014. The proportion of the companies slightly confident has gone down by 15%, while the percentage of
somewhat confident and very confident companies increased by 9% and 5% respectively.
Page 13
How confident do you feel regarding the growth

of your company for the next 6 months? (one answer)
Question 7
32%
Very confident
40%
40%
Somewhat confident
37%
Aug-14
Feb-14
20%
Slightly confident
23%
8%
Not at all confident
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%

If in February 2014 zero percent of respondents were not at all confident about the growth of their company, in August
2014 this percentage has gone up to 8%, while the proportion of very confident companies has gone down to 32% in
August from 40% in February 2014.
Page 14
Please select the main strength of your competitors

in the local market, Romania. (one answer)
Question 8
40%
38%
37%
35%
30%
26%
27%
25%
20%
Aug-14
14% 14%
15%
Feb-14
14%
9%
10%
6%
7%
7%
5%
1%
0%
Low cost
Strong brand
Distribution channels
awareness (trust)
Partnerships
R&D
Other

Low cost as the main strength of the respondents competition in the local market increased from 26% in February to 38%
in August 2014. Competitors brand is not anymore the most important one (27% in Aug vs. 37% in Feb). A notable
increase is seen in the Partnerships segment, up to 14% in August from 9% at the beginning of 2014.
Page 15
To what extent do you expect your customers'

demand to change in the next 6 months? (one answer)
Question 9
August 2014
Increase dramatically
February vs. August 2014
2%
62%
Somewhat change
60%
Somewhat increase
53%
Stay the same
Somewhat decrease
36%
Stay the same
36%
Aug-14
37%
Feb-14
8%
2%
Change dramatically
Decrease dramatically
3%
1%
0%
10%
20%
30%
40%
50%
60%
0%
20%
40%
60%
80%

In August 2014, 53% of companies expect the demand from their customers to somewhat increase and 36% believe
that it will stay the same. However, overall there are no major variations in trends in August compared to February 2014.
Page 16
What impact will the change in customers' demand

have on your company in the next 6 months?
(one answer for each option)
Question 10(a) Operations, Marketing, and Brand Positioning

Operations
Feb-14
12% 7%
Aug-14 10%
0%
33%
20%
20%
Lowest impact (1)
Marketing
27%
34%
40%
(2)
23%
60%
(3)
(4)
Feb-14
21%
Aug-14
13%
80%
19%
14%
0%
100%
14%
20%
20%
Lowest impact (1)
Highest impact (5)
26%
36%
32%
40%
(2)
60%
(3)
(4)
5%
28%
6%
80%
100%
Highest impact (5)
Brand Positioning
Feb-14
16%
Aug-14
17%
0%
19%
33%
21%
20%
Lowest impact (1)
25%
27%
40%
(2)
27%
60%
(3)
(4)
80%
7%
8%
100%
Highest impact (5)
Total number of responses: 587
Although in decrease, a potential change in customers demand seems to impact the most on operations of the
respondent companies (13% in August, in decrease from 21% in February) and not so much marketing and brand
positioning.
Page 17
What impact will the change in customers' demand

have on your company in the next 6 months?
(one answer for each option)
Question 10(b) CSR, Organizational Structure, and Innovation

CSR (Corporate Social Responsibility)
Feb-14
40%
Aug-14
28%
31%
0%
20%
Lowest impact (1)
23%
31%
27%
40%
(2)
60%
(3)
(4)
Organizational Structure
7% 2%
Feb-14
9% 2%
Aug-14
80%
100%
21%
17%
0%
Highest impact (5)
28%
28%
20%
38%
20%
Lowest impact (1)
40%
(2)
60%
(3)
(4)
21%
20%
80%
2%
5%
100%
Highest impact (5)
Innovation
Feb-14 5%
Aug-14
12%
0%
16%
23%
35%
16%
25%
20%
40%
Lowest impact (1)
(2)
21%
33%
60%
(3)
(4)
14%
80%
100%
Highest impact (5)
Also in decrease, innovation comes second in the ranking of the areas perceived as having the highest impact as a result
of a change in customers demand (14% in August vs 21% in February 2014).
Page 18
To what extent does the legal, tax and regulatory

environment play a role in the growth of your
company? (one answer for each option)
Question 11(a)
Legal environment
Feb-14
18%
Aug-14
8%
0%
35%
15%
10%
26%
28%
20%
30%
27%
40%
Least important role (1)
21%
50%
(2)
(3)
60%
(4)
22%
70%
80%
90%
100%
Highest important role (5)
The impact of the legal environment on the growth of the company is perceived as relatively stable at the high-end ratings
(21% in February vs 22% in August 2014).
Page 19

Question 11(b)
Tax environment
Feb-14 2%
Aug-14
14%
7%
0%
28%
8%
10%
19%
23%
20%
30%
37%
31%
40%
(2)
50%
(3)
31%
60%
(4)
70%
80%
90%
100%
In August 62% of respondents consider that tax environment plays a high and very high role in the growth of their
company, on increase from 56% in February.
Page 20

Question 11(c)
Regulatory environment
Feb-14
2%
7%
Aug-14
0%
9%
33%
11%
10%
33%
22%
20%
30%
23%
33%
40%
50%
(2)
(3)
27%
60%
(4)
70%
80%
90%
100%
The regulatory framework seems to be perceived as of a highest impact in August 27% compared to 23% in February.
Both in August and February, 33% of the respondents agreed that regulatory environment plays a high role in their
companys growth in 2014.
Page 21
Which of the following best describes your

companys primary strategy for financing its
investments in the past year? (one answer)
Question 12
49%
Our company used bank loans to

finance its investments
54%
Our company used share capital

increase to finance its
investments
August 2014
23%
10%
13%
Aug-14
Our company used venture
capital to finance its investments
Own resources
Feb-14
12%
27%
2%
60%
Intercompany
loans
Reinvested profit
Own resources, intercompany

loans, reinvested profit
16%
34%
0% 10% 20% 30% 40% 50% 60%

When it comes to financing investments, companies continue to use mostly bank loans (54% in February vs. 49% in
August), followed by share capital increase (10% in February vs. 23% in August). There was a steep reduction in the own
resources, intercompany loans and reinvested profit segment, down to 16% in August from 34% in February 2014.
Page 22
Which of the following best describes your

company's preferred strategy for financing its
investments in the following 6 months? (one answer)
Question 13
48%
49%
Bank loans
26%
21%
Share capital increase
August 2014
Aug-14
Feb-14
Venture capital
Own resources, intercompany
loans, reinvested profit
Other
12%
11%
3%
Own resources
35%
12%
12%
62%
Intercompany
loans
Reinvested profit
2%
7%
0% 10% 20% 30% 40% 50% 60%

In August as well, companies main strategy for financing future investments appears to be through bank loans 48% vs.
49% in February 2014. The share capital increase segment is expected to be up to 26% compared to 12% in February.
Page 23
Which of the following best describe the reaction

of your company to the business environment
in the past 6 months? (one answer)
Question 14
Produtivity increase
32%
34%
23%
22%
Cost reduction
16%
17%
New products
11%
Restructure of the organization
15%
6%
Talent acquisition
Aug-14
4%
2%
3%
5%
1%
Attraction of EU funds
Mergers & Acquisition
Reduced market coverage
Reduced capital investment
2%
2%
Other, please specify

0%
Feb-14
5%
5%
10%
15%
20%
25%
30%
35%
40%

In the past 6 months, businesses reacted to the pressures coming from the business environment by increasing
productivity (34% in August vs. 32% in February), by reducing costs (23% in August vs. 22% in February), or by new
products launching (16% in August vs. 17% in February).
Page 24
Which of the following actions will your company

take to increase sales? (multiple answers)
Question 15
Introducing new products and/or services for existing clients and
to attract new clients
60%
80%
33%
Increasing investment in marketing and sales
24%
32%
32%
Entering new geographic markets for existing products/services

Opening new distribution channels/ reorganizing distribution to
use multiple channels
31%
29%
Feb-14
14%
10%
Cutting prices
5%
5%
Increasing prices
Merging with and/or acquring competitors to increase market
share
Aug-14
18%
22%
Adapting existing product/ service for new geographic markets
3%
7%
0%
20%
40%
60%
80%
100%
In August, 60% of respondents say their companys strategy to increase sales will consist in introducing new
products/services for existing clients (compared to 80% in February), 33% say they will be increasing investment in
marketing and sales (compared with 24% in February), while 18% will be adapting existing products/service for new
geographic markets (compared to 22% in February).
Page 25
In case of stagnation/decline in the market what

will be the steps your company will pursue in the
next 12 months? (all that apply)
Question 16
61%
56%
Stay on the market until is stable again in order to secure it and

increase the trust level
42%
Transform the market through innovative approaches
56%
13%
10%
Grow on the market through M&A (Mergers & Acquisition)
Aug-14
Feb-14
5%
Seek external funding to secure our position on the market
10%
4%
5%
Leave the market and seek new ones
0%
10%
20%
30%
40%
50%
60%
70%

Unlike in February, when only 56% of companies said that they would continue to stay on the market if it declined, in
August the percentage increased up to 61%. However, a lower percentage of companies (42% in August vs. 56% in
February) seem to be willing to transform the market through innovative approaches in case such a decline occurs.
Page 26
Demographics
The results of this survey reflect the
responses received to our
questionnaire in the period between
28 Jul. and 8 Aug. 2014, from 305
top executives of major companies
operating in Romania.
Page 27
Demographics
Industry sector
Romanian company (Yes/No)
22%
26%
14%
9%
11%
10%
Services
46%
2%
No
9%
4%
7%
Transportation
43%
6%

Aug-14
Feb-14
Chemicals
Tourism
Yes
57%
10%
20%
30%
40%
50%
1%
1%
12%
Other
1%
Aug-14
Feb-14
60%
0%
Page 28
17%
4%
4%
5%
4%
4%
2%
4%
2%
2%
8%
54%
0%
9%
10%
20%
30%
Demographics
Business type
Company revenue level
29%
100 M EUR +
5%
37%
Business to Government
6%
12%
50-100 M EUR
15%
22%
Aug-14
Business to Consumers
29%
33%
10-50 M EUR
29%
Feb-14
Feb-14
21%
1-10 M EUR
15%
73%
Business to Business
65%
0%
Page 29
20%
40%
60%
5%
Less than 1 M EUR
80%
4%
0%
10%
20%
30%
Aug-14
40%
Demographics
Job title of respondent
Entity type
CEO/President/Managing
director
77%
54%
38%
Privately owned
17%
CFO/Treasurer/Controller
56%
28%
Manager
8%
7%
Board member
6%
8%
14%
Pubicly listed
36%
Aug-14
SVP/VP/Director
5%
13%
Feb-14
Feb-14
Public Equity / Portfolio
company
Government/State-owned
enterprise
7%
Head of department
4%
Head of business unit
3%
3%
Other C-level executive
2%
3%
5%
2%
3%
CIO/Technology director
0% 20% 40% 60% 80% 100%
Page 30
Aug-14
1%
0% 10% 20% 30% 40% 50% 60%
Project team members
Constantin Mgdlina
Elena Badea
Senior Associate, Knowledge Management

Branding, Marketing and Communication
EY Romania
Associate Director
Branding, Marketing and Communication
EY Romania
constantin.magdalina@ro.ey.com
elena.badea@ro.ey.com
We would like to thank all the respondents for their contribution

to this survey. A special tank you goes to Diana Dumitracu
from doingbusiness.ro for her significant support.
Page 31
EY | Assurance | Tax | Transactions | Advisory

About EY
EY is a global leader in assurance, tax, transaction and
advisory services. The insights and quality services we
deliver help build trust and confidence in the capital
markets and in economies the world over. We develop
outstanding leaders who team to deliver on our promises
to all of our stakeholders. In so doing, we play a critical
role in building a better working world for our people, for
our clients and for our communities.
2014 EYGM Limited.
All Rights Reserved.
ey.com
Page 32

EY - A Vision For Growth - September 2014

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EY - A Vision For Growth - September 2014

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A vision for growth

Business outlook survey Mid-year edition

What is A vision for growth?

A vision for growth

Please indicate the main three elements that

Going public (IPO)

Total Respondents: 305

Business outlook survey 2014 Mid-year edition

How much do you expect your turnover

Total Respondents: 305

Business outlook survey 2014 Mid-year edition

How much do you expect your turnover

Retail & Wholesale trade

R&D / New technology

Publishing & Printing

Total Respondents: 305

Food & Beverages / Agriculture

Information Technology (IT)

Business outlook survey 2014 Mid-year edition

How much do you expect your profit

Business outlook survey 2014 Mid-year edition

How much do you expect your profit

R&D / New technology

Food & Beverages / Agriculture

Information Technology (IT)

Construction / Real Estate

Publishing & Printing

Total Respondents: 292

Business outlook survey 2014 Mid-year edition

How much do you expect your number of

Total Respondents: 292

Business outlook survey 2014 Mid-year edition

How much do you expect your number of

Retail & Wholesale trade

R&D / New technology

Power / Energy / Mining

Publishing & Printing

Information Technology (IT)

Construction / Real Estate

Business outlook survey 2014 Mid-year edition

How much do you expect the salary level

Total Respondents: 292

Business outlook survey 2014 Mid-year edition

How much do you expect the salary level

R&D / New technology

Publishing & Printing

Power / Energy / Mining

Information Technology (IT)

Total Respondents: 292

Business outlook survey 2014 Mid-year edition

How confident do you feel regarding the growth of

Not at all confident

Total Respondents: 280

Business outlook survey 2014 Mid-year edition

How confident do you feel regarding the growth

Not at all confident

Total Respondents: 280

Business outlook survey 2014 Mid-year edition

Please select the main strength of your competitors

Total Respondents: 274

Business outlook survey 2014 Mid-year edition

To what extent do you expect your customers'

February vs. August 2014