BUCHAREST ACADEMY OF ECONOMIC STUDIES

MASTER IN BUSINESS ADMINISTRATION

S.C. AUTOMOBILE DACIA S.A.
Financial Analysis 2008 - 2012








Coordinating professor:
Prof.univ.dr. Pascu-Nedelcu Maria Students:
Brutaru Tudor
Oglavie Daniel
Pasecinic Artur
Postovan Alexandru
Radu Ionut







09.01.2014


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Table of Contents
1. Company profile .............................................................................................................................. 3
1.1. Mission and policy of the Company ........................................................................................ 3
1.2. Ownership Structure ............................................................................................................... 4
2. Product and service the package .................................................................................................. 4
3. Market and competition ................................................................................................................. 5
3.1. SWOT Analysis of the company ............................................................................................... 5
3.2. Analysis of external environment............................................................................................ 7
4. Marketing and sales ........................................................................................................................ 8
4.1. Customers ................................................................................................................................ 8
4.2. Evolution of predicted sales .................................................................................................... 8
5. Business system and organization ................................................................................................. 10
5.1. Economy overview ................................................................................................................ 10
5.2. The business environment. ........................................................................................................ 10
5.3. The fiscal environment ............................................................................................................... 11
6. Business schedule .......................................................................................................................... 11
7. Opportunities and risks ................................................................................................................. 14
8. Financial planning and financing ................................................................................................... 15
Conclusions ............................................................................................................................................ 16
References ............................................................................................................................................. 17


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1. Company profile
Dacia is the brand around which the Romanian auto industry was created and
developed, it came into existence in 1966, at Colibasi (now called Mioveni), Arges county. A
close cooperation evolved between Dacia and Renault from the very beginning - 1968.
Dacia has been an integral part of the Renault Group since 1999 and it is currently becoming
more and more visible as an international brand.
1.1. Mission and policy of the Company
The declared primary mission of the company is to support the French group in
entering new markets by taking over production and sales of its products in many countries
around the world. In addition, Dacia is a company that puts great emphasis on innovation,
efficiency and price. Dacia has a dynamic thinking, trusting the future and the organizations
opportunities to continuously develop.
Dacia defines and implements a profitable growth strategy based on four major objectives:
maintain and strengthen its leading position on the Romanian auto market and to
strengthen ( where case ) and expands its presence on international markets
establish it in emerging auto markets, which will be the main source of growth over
the next ten years. From this perspective, Logan , as expected, has started to generate a
significant rise in its export sales, thus contributing to achieving Renault`s objectives.
constantly improve the quality of its products, to make sure that customers` needs are
satisfied, and at the same time maintaining low costs to create viable solution for
affordable price
ensure the profitability of its investments.

The main values that govern the companys activities are work, discipline, respect,
responsibility and care towards the environment. Value like the effort submitted by Dacia
employees, the professionalism they proof and their discipline at work, give the company a
distinctive image. The concern for the environment has become a necessity; therefore Dacia
has implemented the program called Rabla. Company's long-term efforts to reduce global
warming and pollution encourage the initiatives for producing with minimum waste,
extending the use of products and recycling products at end of use. These initiatives are part
of a program of long-term commitment to society ( the program started in 2010 and rumours
has it that it will end in 2014 ).
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1.2. Ownership Structure
Dacia Group is owned in majority by Renault, having 99.43% of the shares, the other
0.57% is owned by natural persons and small companies.
Dacia announces itself as a company very attentive to environment.
The actual objectives of the project in this respect , are the following:
Guaranteeing the compliance with the labelling instructions and the retaining chemical
products ;
Controlling and then the reducing of electrical energy with 3% in the future
Reducing the attached materials and the chemical consumption of oxygen by
complying with the regulation 35mg/l MES, 70mg/l DCO
Guaranteeing the compliance with waste triage and disposal
Reducing the industrial liquids consumption with 23%v in the future
Modernizing the boilers from the steam power plant which lead to the reduction of
CO2 emissions;
Modernizing the compressors by replacing the cooling towers with open-circuit with
the towers with closed-circuit;
Modernizing the purification station from Davidesti.
Replacing the melting furnaces from the Aluminum Foundry Department
Modernizing the facilities for car body painting and for the plastic parts etc.
The total value of the project is 17,647,000 . In order to continue these projects, they need
financial resources.
2. Product and service the package
After signing a license agreement between Renault and the Romanian state in 1968,
Automobile Dacia SA has began the manufacturing of Dacia 1100 and Dacia 1300. Since
1978, it continued the production independently. Year 1995 marked the launch of its first
concept: Dacia Nova. In 1998, the anniversary year of three decades since producing the first
ever Dacia car, the vehicle number 2,000,000 came out of the plant. That same year, the
company obtained the ISO 9001 Quality Management System Certification.
The privatization agreement was signed on July the 2
nd
1999 and Dacia became officially a
brand of the Renault Group.
5

The year 2000 brought the launching of the Dacia SuperNova model, the first tangible
result of the French-Romanian cooperation, a vehicle fitted with a Renault engine and
gearbox.
In 2005, Dacia surpassed all previous production (172,000 units) and sales records
(164,000 units) with its Logan model.
The most successful model was considered Dacia Sandero, launched on the Romanian market
in June 2008.
The company was extremely active on producing new models and
improving/,,facelifting old models .In 2010 Dacia lauched Duster and Lodgy in 2012
In 2013 Dacia brought on the market some new models : Dokker but most important , new
and improved versions on Logan, Sandero, Duster and MCV.
3. Market and competition
3.1. SWOT Analysis of the company
Strengths
Dacia is a major player for the Romanian National Economy. Following the
privatization process, the company has undergone a groundbreaking modernization program:
upgrading the industrial installations
reconstruction of the commercial network
reorganization of the suppliers network
radical improvements in product quality
staff training
range renewal
The equipment used to manufacture cars, the constantly improvement, despite the
cheap labour force and cheap spare parts. Also the existing distribution, with its channels, the
information and processing systems can give the company a competitive advantage.
A major component of the companys strengths is the communication mix composed of TV
ads, games, competitions; out-door advertising and participation in national and international
fairs, exhibitions and direct communication with show rooms advisers.
Weaknesses
Taking into consideration that Dacia cars are also available for export, a weakness can
be represented by the high distribution costs. These expenses, besides the physical transport
also include taxes, custom duties and insurance.
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The infrastructure of community space can also represent a weakness as it slows down
the distribution process.
Even though the small prices of Dacia vehicles and small production costs imply poor
design and blunt aspect, but most importantly cheap parts can represent poor quality or less
security for drivers and passengers (in car accident Dacia vehicles are more easily destroyed
than other more expensive cars).

Opportunities
Dacia is developing at a very rapid rhythm. Their market quotas are increasing in all
Western Europe, starting from May 2009 also in Germany with a percentage of 3.5%.
Unquestionably, Dacia is currently the most dynamic car brand in Europe. This performance
is explained through the pertinence of their offer of different models, which benefit of a good
interior space/performances/good price ratio.
In Romania, Dacia has consolidated the leader position even in the current difficult
environment being the only company from the car market which succeeded to fully use the
allocated quota in the first phase of the Rabla program.
Dacia innovates and is heading towards the future, developing new models which are
more economical and ecological.
All assembly of evolutions will help Dacia to progressively conquer new market
segments, gain over younger customers and answer new needs of the Romanian and European
customers through product diversification.
There also exist vertical integration opportunities. This involves the acquisition of
companies which accounted as Dacia suppliers of raw materials or which represented
strategic points on the market.
Through concluding new alliances or advantageous and profitable agreements with
various companies such as Dacia-Renault-Nissan alliance, Dacia Group seeks to reduce the
economies of scale.

Threats
One of the main threats is represented by the adoption of legislative or restrictive
regulations may have a negative impact over the companys sales. Also the sales may be
affected by a change in needs, taste and preferences of the clients which may prefer the
competitors products.
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Dacia faces the threat of increased competition and the entry of new competitors on
the market which may have better quality in relation to the price or better marketing strategy.
Other threats can be represented by the following:
The decrease of the purchasing power and of the prices due to the economic crisis and
the customers preference for used cars at half of the price for a new one
The withdrawal of customs tax for EU cars
The campaigns of discrediting of the brand through the making of some objective
tests with the purpose of protecting some international producers or the second-hand
market.
Dacia brand is associated in Romanians minds with low-quality products.
Vulnerability to the business environment fluctuations
The emergence of unforeseen events such as strikes which brought upon Dacia
negative consequences. For instance, in 2007 during the strike the production
stagnated, causing losses of $ 30 million.
3.2. Analysis of external environment
Competitors
Dacia Group played the pioneer role in creating a new concept of low-cost cars by
launching the Logan model in 2004 and in only a couple of year started competing with a
series of low-cost cars produced by competitors. Some of these competitors are: Toyota,
Volkswagen, Nissan, Fiat or Skoda, producers which offer models from low class to big mono
volumes. A few years ago, premium cars were really sought after, but nowadays car producers
from all over the world compete in building cars under 10,000 and some ever try to obtain a
price below 3,000.
To this competition, Renault replied by launching Logan MCV in October 2006 is one
of these models, with its 7 seats and roomy design it had such a high demand that buyers had
to wait up to 6 months to receive their cars. The price for the basic version was of only
8,200, 40% less than similar models produced by Skoda, Volkswagen or Opel. The superior
version, with air conditioning and power steering had a starting price of 11,600.
The huge success Dacia cars had on external emergent markets determined the
opening of production centres in Columbia, Morocco, Iran, Russia, India and Brazil and also
determined competitors like Fiat, Volkswagen and Toyota to initiate similar projects.
Dacia is considered the European champion in the low-cost category from a while
now, its products crossing the Romanian boarder, Dacia-Renault Group having such a great
8

success with their latest model that Dacia Duster, the most accessible SUV on the market, was
included in the finalists of the Europes Car of the year 2011 competition.
4. Marketing and sales
4.1. Customers
In the current financial and economic climate, customers who are on the lookout for
smart buys are turning increasingly to Dacia which gives them the ability to acquire only what
they really need at the right price.
Dacia is attracting two types of customers:
they are mainly customers who previously purchased used cars, generally of five years
of age or more,
pragmatic new car buyers who see Dacia as a logical choice that delivers purely what
they are looking for. For these customers, price continues to stand out as the
predominant factor in their purchase decision
Dacia remains faithful to the low-cost segment. Francois Fourmount, a previous CEO
of the Romanian company, stated that Dacia does not have the resources to build an
approximately 30.000 Euros car series. Their philosophy it is to remain focused on the
production of reliable, roomy car at an incomparable price on the market, and compared to
these expectations, Dacia has the ability in time to overcome the Skoda image.
4.2. Evolution of predicted sales
In the tables below is presented Automobile Dacias evolution between 2008 and
2012. Also, for the future years 2014, 2015, 2016, taking into consideration the evolution
from the previous years, Dacias turnover it is expected to increase with almost the same
values, since Dacia faced a constant evolution regarding its turnover.


Year 2008 2009 2010 2011 2012 2014 2015 2016
Turnover
(Mil RON)
7642 9004 11403 13178 12742 15914 17508 20480

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From the chart above, we can see some interesting evolution in 2010 and 2011.
On the Romanian market, in 2011 the sales volume dropped with 20,4%, Dacia
selling only 36,730 vehicles. Over two thirds from the sales were delivered through the
renewal of the Romanian Auto park program. Another important contribution to the 2011
sales had the fleet sales (almost 4000 units) to important Romanian and international
corporations on the Romanian market.
For Dacia, the year 2010 was marked by the launching of Duster model. Duster made
its mark on the market with 4,826 units sold. What is more remarkable is that the buyers
chose the most expensive available option, Laureate. This model had also a remarkable
success on the international market, with 100 000 orders until 31
st
of December 2010.
Dacia Duster obtains a series of prizes in Romania: Autobest 2011, Car of the year
2011 in Romania, 2011s SUV.
On the international market, Dacia sales were over 311 000 units, with 15% more
than 2010. The Romania brand consolidated its success in Western Europe where in 2011
where registered 228,865 Dacia cars.
France became last year, the first export market with more than 110,000 sold units.
Dacia being on the 6
th
place of the most sold cars in France.
The second export destination for Dacia is Germany, with 40,500 sold units. The 3
rd

one is Italy with 21,903 sold units, followed closely by Spain. Other important market for
Dacia are: Turkey, Algeria, Morocco, Belgium, Austria, Poland and Netherlands.
2008 2009 2010 2011 2012 2014 2015 2016
7642
9004
11403
13178
12742
15914
17508
20480
1 2 3 4 5 6 7 8
Turnover evolution ( million RON )
Year Turnover
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5. Business system and organization
5.1. Economy overview
In order to underline the characteristics of the economic environment where Dacia Group
activates, here is the presentation of the main macroeconomic factors:
Inflation evolution (%) is characterized by the index of consumption prices in
Romania (ICPR) established by The National Statistics Commission:



ROL/USD and RON/EURO parity

Year ROL/USD
exchange rate
evolution
ROL/EUR
exchange rate
evolution
RON/USD
exchange rate
evolution
RON/EUR
exchange rate
evolution
2007 32,595 41,117 - -
2008 29,067 39,663 - -
2009 - - 3.4093 4.2373
2010 - - 3.1779 4.2099
2011 - - 3.0486 4.2379
2012 - - 3.4682 4.4560
2013 - - 3.3279 4.4190
2014 - - 3.37 4.5

5.2. The business environment. Mostly determined by the economic financial
crisis accentuated, this affecting firstly the constructions domain and the automobile industry.
In the context of an unfavourable years, when the majority of the automobile producers
Year ICPR
2008 14.1
2009 9.3
2010 8.6
2011 4.9
2012 4.95
2013 3.5
2014 3
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reduced the production level, Automobile Dacia managed to maintain an even increase the
production volumes. This was possible, in the condition of some programs of automobile
parks renewal in many countries of the EU and also because of the quality and
competitiveness of the series of vehicles produced by Dacia.

5.3. The fiscal environment. As a member state of the EU, Romania adapted and
is continuing to adapt the national legislation to the EU Directives, but in the same time, is
amplifying the number of fiscal reports.
In this way, the company had to implement internal procedures of surveillance of the
deliveries and acquisitions, to receive and centralize the transport documents and revise all
deliveries contracts in order to secure the fulfilment of the VAT obligations. Also, the
accounting and IT systems are subjected to specific adaptations to register and extract all
these compulsory information to issue new fiscal reports.
6. Business schedule
Main financial ratios
In the tables below, is presented the evolution of the financial results of Automobile
Dacia over a 5-year period.
Balance Sheet 2008 2009 2010 2011 2012
Total fixed
assets 2,803,218,907 3,071,866,131 2,930,047,197 3,222,180,936 3,807,911,767
Total current
assets 1,445,294,622 1,840,944,098 2,614,241,294 2,866,492,095 2,777,315,777
Inventory 554,116,674 367,570,310 443,376,904 421,606,303 344,860,759
Cash and
deposits 540,948,124 621,361,454 900,413,092 1,532,591,860 1,346,823,186
Total
receivables 350,229,824 852,012,334 1,270,451,298 912,293,932 1,085,631,832
Total capital 2,961,131,296 3,184,276,086 3,314,805,657 3,534,107,612 2,497,167,857
Paid-in capital 2,541,719,939 2,541,719,939 2,541,719,939 2,541,719,939 2,541,719,939
Loss
provisions 127,877,572 130,057,595 124,389,214 105,504,419 114,066,073
Total debts 1,125,693,065 1,508,335,244 2,038,475,925 2,400,670,328 2,888,361,782





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Profit and
Loss
2008 2009 2010 2011 2012
Annual
turnover 7,642,296,976 9,004,409,833 11,403,296,221 13,177,841,584 12,742,145,319
Total
revenues 8,402,861,521 9,081,004,000 11,606,030,655 13,433,362,621 12,946,397,843
Total
expenses 8,143,469,504 8,790,115,384 11,271,963,072 13,065,263,846 12,602,606,812
Profit before
tax 259,392,017 290,888,616 334,067,583 368,098,775 343,791,031
Net profit 222,018,211 230,276,035 300,015,819 275,111,397 277,239,794
No of
employees 13,274 12,698 13,823 13,652 13,640

The cash flow situation for the year 2012 is the following:

Amount at 1 January
2012 (RON)
Amount at 31 December 2012
(RON)
Operating cash flows 532.177.867 753.073.172
Investment cash flows -390.593.025 -687.504.695
Financial cash flows 540.948.123 621.361.454

From the info below , we can calculate some important indicators, present in the following
tables :

Profitability
Ratios
2008 2009 2010 2011 2012
Profit before
tax margin
(%) 3.3942 3.2305 2.9296 2.7933 2.6981
Net profit
margin (%) 2.9051 2.5574 2.631 2.0877 2.1758
Before tax
ROE (Return
On Equity) 8.3063 8.5443 9.529 9.981 9.2995

Operating
Ratios
2008 2009 2010 2011 2012
Inventory
turnover
(days) 26.4649 14.8997 14.1917 11.6777 9.8786
Receivables
turnover 14.0564 29.0226 34.1722 21.2342 26.1328
Total assets
turnover
(times) 0.4016 0.491 0.6957 0.745 0.7585
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But the ratios considered to be the most relevant to this analysis are:
Ratio 2008 2009 2010 2011 2012
Current ratio 1.28 1.22 1.28
1.22 1.20
Liquidity ratio 2.49 2.04 1.44
1.22 1.22
operating profit
margin 3.09 3.20 2.88
2.28 2.34
equity ratio 69.70% 64.82% 59.79%
67.41% 67.41%
ROE 8.30 8.54 9.53
7.64 7.43
ROA 5.23 4.69 5.41
5.15 5.01

the current ratio: which indicates that Dacias ability to meet short-term debt
obligations is dropping. As the figures below show, the company was in a good short-
term financial standing over the years but it has decreased in the last 2 years.
the liquidity ratio: indicates by how much the total assets of the business exceed the
total liabilities. The figures tell us that the company potential for easy covering the
debts has decrease dramatically.
the operating profit margin: measures what proportion of a company's revenue is left
over after paying for variable costs of production such as wages, raw materials, etc.
Dacia is still a strong company
the equity ratio: measures the proportion of the total assets that are financed by
stockholders and not creditors. Dacia has started borrowing again money from the
capital market.
the return on equity (ROE): measures a corporation's profitability by revealing how
much profit a company generates with the money shareholders have invested Dacia
is less profitable for the shareholders.
the return on assets (ROA): is an indicator of how profitable a company is before
leverage. In the last years, Dacia has faced a good level of profitability in 2011 due to
new launches and goods sales, but in 2012, the sales dropped, the investments were
bigger and this lead to less profit.

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7. Opportunities and risks
Future Strategies
As stated previously in this paper, Dacias growth strategy is based on four major
objectives:
Maintain and strengthen its leading position on the Romanian auto market and to
strengthen and broaden its presence on international markets
Establish it in emerging auto markets, which will be the main source of growth over
the next ten years. From this perspective, Logan is expected to generate a significant
rise in its export sales, thus contributing to Renault`s objectives
Constantly improve the quality of its products, to make sure that customers` needs are
satisfied, and at the same time maintaining low costs
Ensure the profitability of its investments.
In order to accomplish these objectives, the strategies of the Romanian producer to get
though the financial crisis effects were based on two major axis, the first is the direct
responsibility of the Group and the second the Romanian Public Authorities responsibility.
Francois Fourmont, the CEO of Automobile Dacia SA declared that the companys
responsibilities are divided between three levels:
the products: the company has a young range of products which fosters its presence on
the national and international market
the extension on new markets: with the aid of new products / lines , Dacia models will
be sold on over 60 international markets
the increase in products quality keeping a very competitive level of price
Dacia Renault Group launched 9 Dacia models: Dacia Logan, Dacia Logan MCV,
Dacia VAN, Dacia Logan Pick-up, Dacia Sandero, Dacia Sandero Stepway , Dacia Lodgy ,
Dokker and Dacia Duster - a 4x4 model. They all maintain the same low-cost strategy.

As mentioned Dacia renewed design and improved fiability for almost all of this
models. The first ones were New Dacia Logan (a Sedan with huge success ) and one a MPV
(multi purpose vehicle) with 7 seats. The difference between the new model and Logan MCV
is that the back doors are sliding and the design is more ergonomic. The MPV is specially
designed for people transportation plus the associated luggage. Dacia brand has registered a
rapid increase on the international market. Continuing this trend, Dacia was launched on the
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British market at the end of 2012. The first model to have been sold in the UK will be Dacia
Duster 4x4.
8. Financial planning and financing
Forecasted sales for Dacia Group
Balance sheet 2011 2012 2013 2014
Intangible fixed assets 2.817.192 3.098.911 3.315.835 3.160.889
Tangible assets 3.122.007.217 3.434.207.939 3.674.602.495 3.502.892.098
Financial assets 315.665.657 347.232.223 371.538.479 354.176.868
Total fixed assets 3.440.490.067 3.784.539.073 4.049.456.809 3.860.229.855
Inventory 411.678.747 452.846.622 484.545.885 461.903.554
Accounts receivable 954.253.814 1.049.679.195 1.123.156.739 1.070.672.779
Cash

699.920.168 769.912.184 823.806.037 785.310.428
Total current assets 2.065.852.729 2.272.438.002 2.431.508.662 2.317.886.762



Total assets 5.506.342.796 6.056.977.075 6.480.965.470 6.178.116.617



Short term debts 1.689.335.473 1.858.269.021 1.988.347.852 1.895.434.401
Long term debts 0 0 0 0
Deferred revenues 104.953.600 115.448.959 123.530.387 117.757.939



Total liabilities 1.794.289.073 1.973.717.980 2.111.878.239 2.013.192.340



Provisions 145.664.506 160.230.957 171.447.124 163.435.576
Capital

2.846.726.332 3.131.398.965 3.350.596.892 3.194.026.944
Share Premium 1.979.524 2.177.476 2.329.900 2.221.026
Re-evaluation reserves 281.116.734 309.228.407 330.874.396 315.412.976
Retained earnings 80.988.828 89.087.711 95.323.851 90.869.466
Reported Profit 97.668.639 107.435.503 114.955.988 109.584.213
Profit 257.909.159 283.700.075 303.559.080 289.374.077



Total Owners' Equity 3.712.053.723 4.083.259.095 4.369.087.232 4.164.924.277
16



Income statement 2011 2012 2013 2014
Sales

10.273.797.713 11.301.177.484 12.092.259.908 12.334.105.106
Cost of goods sold 9.948.002.463 10.942.802.709 11.708.798.899 11.942.974.877
Taxable income 325.795.250 358.374.775 383.461.009 391.130.229
Taxes 67.886.091 74.674.700 79.901.929 81.499.967
Net income 257.909.159 283.700.075 303.559.080 309.630.262

Conclusions
After the privatization of Dacia, the companys primary mission was to support the
French group in entering new markets by taking over production and sales of its products in
many countries around the world. Renault helped Dacia evolve and follow new and profitable
growth strategies.

Dacia in not only preoccupied with profitability and economic growth, but also with
protecting the environment and thats why they started implementing a new project for which
they need outside financial resources.

During 2009 and 2010, in the national and international business environment, the
economic financial crisis accentuated this affecting firstly the constructions domain and the
automobile industry. In the context of an unfavourable year, when the majority of the
automobile producers reduced the production level, Automobile Dacia managed to maintain
an even increase the production volumes.

According to the positive results obtained by computing financial ratios and after
calculating the forecasted sales and profits, it can be concluded that Dacia will have a
progressive increase until 2014, explained by the fact that Dacia will penetrate all the
important markets. The net income will have an upward tendency so the investment can be
made in safe conditions and the loaned financial resources can be repaid in time.


17



References:

http://www.money.ro/dacia-duster-versus-concurenta-vezi-cine-se-bate-cu-suv-ul-
romanesc_531526.html
http://www.dacia-sandero.org/dacia-sandero-cabrio/
http://www.zercustoms.com/news/Dacia-Sandero-Stepway-Concept.html
http://www.promotor.ro/noutati-auto-dosar-analize/articol-dacia-sandero-analiza-
preturi-si-dotari-2696763/p2
www.daciacars.co.uk
http://www.money.ro/cine-face-piesele-pentru-dacia-duster-si-unde_819466.html
www.daciagroup.com
www.wall-street.ro
www.money.ro
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Dacia environment declaration
www.bloombiz.ro
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www.doingbusiness.ro