Slovenia Business Week no. 13, March 27th 2006
Table of Contents:
HEADLINES ................................................................................................................. 3
CCIS: Positive 2005 Economic Trends, Downbeat 2006 Forecasts .......................... 3
German, Slovenian Bus Makers Join Forces on New Coach ..................................... 3
Development Minister Damijan Resigns .................................................................... 4
INTERNATIONAL COOPERATION .......................................................................... 5
Expert Says Slovenian Companies in China Not Linked Enough .............................. 5
Latvian and South African Ambassadors Present Credentials ................................... 5
EUROPEAN UNION .................................................................................................... 6
Agriculture Minister Welcomes EU's Poultry Sector Aid Plans ................................ 6
Minister Damijan Presents FDI Experience in EU Newcomers................................. 6
Friuli-Venezia Giulia Might Get Exemption for Slovenian Workers ........................ 7
Committee in Favour of Slovenia-Austria Employment Agreement ......................... 7
EU to Earmark EUR 19m for Slovenian Fisheries ..................................................... 8
Slovenia Faces New Challenges after EU Summit, PM Says .................................... 8
PM Wants LB Debt Resolved in Succession Talks .................................................... 9
Macedonia Favourite Potential EU Member for Slovenians ...................................... 9
Committee to Reconsider Slovenia's Objection to Oil Pipeline Memorandum ......... 9
PM Jansa Says Energy Is a Key Strategic Issue for the EU ..................................... 10
STATISTICS/FORECASTS........................................................................................ 12
Projections Show Single VAT Rate Would Boost Inflation .................................... 12
Official: Reforms to Create Dynamic Economy, Keep Social Rights ..................... 12
More than 7,000 Workers to be Made Redundant in 2006 ...................................... 13
FINANCE .................................................................................................................... 15
Ljubljana Bourse Launches New Blue Chip Index .................................................. 15
Ljuljana Stock Exchange .......................................................................................... 15
Foreign Exchange ..................................................................................................... 16
REGIONAL INFORMATION .................................................................................... 17
Pomurje Among Ten European Regions of the Future ............................................ 17
Third Development Axis Important for Slovenia, Symposium Says ....................... 17
Maribor City Vinedresser Prunes World's Oldest Vine............................................ 18
BRANCH INFORMATION ........................................................................................ 19
Transport Ministry Presents Rail Upgrade Plans ..................................................... 19
Small Hydro Plants Fear Energy Liberalisation ....................................................... 19
COMPANIES .............................................................................................................. 21
Reader's Digest Now in Slovenian ........................................................................... 21
Managers Succeed With Iskra Buyout ..................................................................... 21
Telekom Buys Macedonian ISP ............................................................................... 22
Kolektor Gains Control of Postojna-based Plastics Maker ...................................... 22
Simobil Makes Maiden Profit in 2005 ..................................................................... 22
Steel Group Makes Successful Start into 2006 and Keeps CEO .............................. 23
Niko Trost New CEO of Casino Company Hit ........................................................ 24
Troubled Iskraemeco Looking for Fresh Capital ..................................................... 24
German Publisher Involved in Talks for Dnevnik Stake .......................................... 25
Marche Launches Its First Diner in Slovenia ........................................................... 25
Co-Founder of Tech Firm Ultra Becomes Entrepreneur of the Year ....................... 26
Krka Boss Predicts Double-Digit Profit Growth ...................................................... 26
Helios Boosts Sales .................................................................................................. 27
Furniture Company Lesnina Ups Profit.................................................................... 27
Merkur Group Increases Profit by 31% in 2005 ....................................................... 28
Viator&Vektor will Seek Deal with Croatian TLM ................................................. 28
SLOVENIA IN BRIEF ................................................................................................ 30
ITF Receives Check for SIT 12m for Demining in Bosnia ...................................... 30
Prevent to Lay Off 189 Workers .............................................................................. 30
Sugar Factory Records SIT 413m Losses in 2005 ................................................... 30
Labour Ministry Wants to Upgrade the Employment Service ................................. 30
EU Foreign Ministers Discuss EU Future without Enlargement ............................. 30
Minister Claims Slovenia, Macedonia Close to Environment Deal ......................... 30
Slovenian Archbishop Rode Elevated to Cardinal ................................................... 30
HEADLINES
CCIS: Positive 2005 Economic Trends, Downbeat 2006 Forecasts
Slovenian companies entered 2006 with mixed feelings, as they are rather cautious in
their plans and uncertain about the government-sponsored reforms in the field of tax
and labour legislation
Slovenian companies entered 2006 with mixed feelings, as they are rather cautious in
their plans and uncertain about the government-sponsored reforms in the field of tax
and labour legislation, according to the Chamber of Commerce and Industry (CCIS).
Business sentiment will be especially unfavourable in the first half of this year,
suggest the results of a survey conducted by the CCIS. The worst results are expected
in trade, while there is more optimism in industry.
The 2006-2009 social agreement talks are already underway, however, they are
moving ahead very slowly, with the issue of wage policy still unresolved, analysts of
the CCIS Economic Outlook and Policy Services have said.
This year's main focus will be on the euro changeover. Although Slovenia, with a
2.5% average inflation and stable prices, meets macroeconomic criteria for the euro
adoption, analysts feel it will be of key importance to maintain the achieved
macroeconomic balance.
In their view, 2005 economic growth forecasts for Slovenia are good, but not
excellent. Annual economic growth of 3.7% in the third quarter of 2005 points to a
possible 4% growth for the entire year, with international trade still the main motor of
the Slovenian economy.
Meanwhile, last year's investment activity did not meet expectations, especially in
equipment, which could enable faster increase of added value and enhance
competition on global markets. However, the financing is not the only problem - there
is also a lack of good projects, the analysts said.
The CCIS moreover said that wages in 2005 mainly increased due to changes in tax
legislation, as net wages rose faster than labour expenses. In real terms, gross wages
went up 2.2% last year.
The situation on the labour market is worsening, as the unemployment rate at the end
of 2005 already topped the rate in 2004. According to the analysts, the share of
unemployed persons with higher education has also been on the increase.
German, Slovenian Bus Makers Join Forces on New Coach
Maribor-based bus maker Tovarna vozil Maribor (TVM) has signed a deal with
German bus giant Neoplan Bus on cooperation in the making of a new high-tech
luxury coach
Maribor-based bus maker Tovarna vozil Maribor (TVM) has signed a deal with
German bus giant Neoplan Bus on cooperation in the making of a new high-tech
luxury coach.
With the deal, signed by the directors of the two companies in Maribor on Tuesday,
21 March, TVM and Neoplan are to join forces in the design and development of the
prototype and the production of the coach.
TVM general manager Dusan Meznar told the press ahead of the signing that this was
not the first time the two companies joined forces.
"Years ago we successfully developed an [airport] bus...and launched mass
production," Meznar said, adding that the two companies now control half of the
global airport bus market.
Neoplan chairman Joachim Reinmuth said that the good cooperation from the airport
bus project has convinced his company that TVM is the right choice for the new
coach.
"TVM is now the exclusive maker of our airport buses...and we expect the same will
happen with the new product, for which we expect to have the prototype ready by the
autumn," Reinmuth said.
He said the two companies would likely join forces on other projects in the future.
The signing was attended by Transport Minister Janez Bozic, who said Slovenia had
made important inroads in the transport infrastructure market in recent years.
According to Bozic, up to EUR 30bn will have to be invested in transport
infrastructure in the coming years, which will demand EU and private funds.
Bozic also pointed to the strong economic cooperation between Slovenia and
Germany (Germany is Slovenia's largest trade partner with total trade worth EUR
5.2bn).
TVM, Slovenia's lone maker of buses and trucks, is owned by Ljubljana-based
logistics group Viator&Vektor and specialises in the production of coaches and
specialty trucks.
The company expects to generate revenues of SIT 6bn (EUR 25m) this year, which is
three times what it made when Viator&Vektor acquired the company in 2004.
Development Minister Damijan Resigns
PM claimed reforms would continue despite Damijan's resignation
Development Minister Joze P. Damijan tendered his unconditional resignation on
Tuesday 21 March after heading the government's newly-established Development
Office for less than three months.
Damijan of the Ljubljana Faculty of Economics, who officially assumed the new post
on 1 January, stepped down for personal reasons, his Office said in a press release.
PM Janez Jansa "regrets, but respects" the decision by Development Minister Joze P.
Damijan to step down for personal reasons. Jansa told the press on Tuesday, 21 March
that "due to its nature, it is difficult to comment on the resignation".
Jansa added that the comprehensive structural reforms would proceed as planned, also
thanks to Damijan, without whom the reforms proposals would have been drafted
much more slowly.
Jansa also said that he is not planning to put forward a new minister without portfolio,
with Damijan's deputy, State Secretary Andrej Horvat, slated to head the
Development Office for the moment.
The PM moreover stressed that a lot of work on reforms has been done so far, such as
the continuation of social dialogue, and informing the public on the necessity and
effects of the reforms.
He also denied that Damijan had stepped down because of his disagreements with
Finance Minister Andrej Bajuk over the continued privatisation of Slovenia's leading
bank NLB.
According to Jansa, talks between Belgian banking and insurance group KBC and the
state on the increase of KBC's stake in NLB from its current 34% are still going on.
The cabinet's position on the issue has been harmonised with Damijan, Jansa
revealed, adding that no decision has yet been taken.
INTERNATIONAL COOPERATION
Expert Says Slovenian Companies in China Not Linked Enough
A total of 19 Slovenian companies have branch offices in China
Slovenian companies doing business in China are not connected enough and should
promote each other more, Jordan Berginc of the Gea College private business school
said at a meeting on doing business in China on Tuesday, 21 March.
"Connected technologies are the ace in the sleeve when negotiating with Chinese
companies", Jordan told the meeting entitled "Doing Business in China - Preparation
of Slovenian Companies for Taking Part in the CeBit Asia 2006 Fair."
Slovenian companies will always be "niche players" on the Chinese market and it is
important that they promote each other, he pointed out. A total of 19 Slovenian
companies have branch offices in China.
Gea College and the Chamber of Commerce and Industry (CCISS), which coorganised the event, would like to establish a consortium of Slovenian companies in
China.
In China you need to do business long-term and be patient, said Vladimir Murko, the
CEO of Iskra Zascite, a maker of surge voltage protection systems. He added that to
maintain its competitive edge, the company had to move its production to China.
The CCIS is preparing a joint stand for Slovenian companies at the 2006 Asian IT fair
CeBit, which will take place in Shanghai between 17 and 20 April.
According to CCIS's Miha Cebulj, no Slovenian company has registered so far to take
part in the fair this year, while five took part last year.
Slovenia's exports to the world's most populous country reached US$ 40m in the first
eleven months of 2005, a 23% increase year-on-year. The country imported US$
220m worth of goods from China, a 30% increase in comparison with 2004.
Latvian and South African Ambassadors Present Credentials
The newly-appointed non-resident Latvian and South African ambassadors to
Slovenia, Aivars Groza and Leslie Mbangambi Gumbi, presented their credentials to
President Janez Drnovsek in separate ceremonies in Ljubljana
The newly-appointed non-resident Latvian and South African ambassadors to
Slovenia, Aivars Groza and Leslie Mbangambi Gumbi, presented their credentials to
President Janez Drnovsek in separate ceremonies in Ljubljana on Wednesday, 22
March.
In talks with Groza, who is based in Vienna, Drnovsek labelled the relations between
Slovenia and Latvia as traditionally good, adding that the countries have many
common interests as EU and NATO members.
Drnovsek moreover wanted to know how Latvia solves its open issues with
neighbouring Russia. The pair also called for stronger economic cooperation between
the two countries, a press release from Drnovsek's office said.
Meanwhile, Drnovsek and Mbangambi Gumbi discussed bilateral relations and called
for better cooperation, especially in trade.
According to the president's office, Drnovsek said that opening a Slovenian embassy
in South Africa would greatly improve relations between the countries as well as
repeated his invitation to South African President Thabi Mbeki to visit Slovenia.
Mbangambi Gumbi on the other hand welcomed Slovenian offers of humanitarian aid
to individual crisis areas in Africa, the press release added.
EUROPEAN UNION
Agriculture Minister Welcomes EU's Poultry Sector Aid Plans
Slovenian Agriculture Minister Marija Lukacic welcomed the European Commission's
plans to co-finance national aid programmes to the poultry sector
Slovenian Agriculture Minister Marija Lukacic welcomed the European
Commission's plans to co-finance national aid programmes to the poultry sector,
which were agreed in Brussels on Monday, 20 March.
"I backed the EU's plans to contribute half of the aid, as this is the biggest guarantee
for success. State aid alone, financed from the national budget, is not such an effective
form of aid," Lukacic added.
Lukacic, speaking at the sidelines of a meeting by the bloc's agriculture ministers,
pointed out that the ministers discussed EU subsidies for exports to markets outside
the bloc.
She also stressed that the "Commission must try and get the Balkan countries to lift
the ban on poultry imports" from the EU.
"Some Balkan countries have closed their markets for EU poultry, while Slovenian
poultry producers export 50% of their production to those markets," Lukacic
explained.
According to her, EU Agriculture Commissioner Mariann Fischer Boel said that the
EU is in talks with those states to lift the ban.
Lukacic also stressed the need to subsidise private stockpiling and restructuring for
breeders, abattoirs and the food-processing industry.
Slovenia's agriculture minister moreover called for adjustments to state aid guidelines
and priority treatment of requests for state aid by the poultry sector.
"We are proposing to increase the amount of de minimus state aid which does not
have to be declared in Brussels, to EUR 3,000 for three years," she added.
She is moreover worried about a 20% drop in domestic poultry demand, as well as
falling prices. However, the total damage has not been assessed yet.
On the other hand, the migratory paths of birds from Africa do not cross Slovenia, so
the country might not see another bird flu outbreak, the minister added.
Minister Damijan Presents FDI Experience in EU Newcomers
According to the Development Ministry, Damijan presented the results of the latest
empirical studies, which show the positive influence of FDI on technological
restructuring of the economies of the new EU members and on productivity growth at
foreign-owned companies
Development Minister Joze P. Damijan presented the trends and experiences of the
EU newcomers in attracting direct foreign investments at an EIB-sponsored meeting
of the Facility for Euro-Mediterranean Investment and Partnership (FEMIP) in
Vienna.
According to the Development Ministry, Damijan presented on Monday, 20 March
the results of the latest empirical studies, which show the positive influence of FDI on
technological restructuring of the economies of the new EU members and on
productivity growth at foreign-owned companies.
The participants, coming from EU states, Mediterranean countries, banks, industry,
economy, academia and the European Commission, were also told that two recent
studies have shown that the state-owned banks in the newcomers are much less
efficient than their counterparts with a majority private ownership.
Under the auspices of the European Investment Bank (EIB), FEMIP enables and
directs financial cooperation between the EU and its Mediterranean neighbours.
Friuli-Venezia Giulia Might Get Exemption for Slovenian Workers
Italian Minister of Labour and Welfare Roberto Maroni has told a Trieste daily that
Italy was willing to enact an exemption to the ban from workers from EU newcomers,
to allow Slovenians to work in Friuli-Venezia Giulia
Italian Minister of Labour and Welfare Roberto Maroni has told a Trieste daily that
Italy was willing to enact an exemption to the ban from workers from EU newcomers,
to allow Slovenians to work in Friuli-Venezia Giulia. Slovenia has welcomed the
news.
By 30 April the two countries would sign an agreement allowing Slovenians to get
jobs in this region on the border, while Italians could work in the Slovenian coastal
regions, Il Piccolo quoted Maroni as saying on Thursday, 23 March.
According to Maroni, Friuli-Venezia Giulia is a special case, as workers from the
Slovenian regions along the border are not potential illegal workers, but they still face
the same restrictions as workers from other EU newcomers.
The Slovenian Ministry of Labour, Family and Social Affairs told STA that
negotiations on the content of such an agreement should start as soon as possible. The
ministry said the idea was vented by Maroni at a recent meeting of labour ministers
from Italy, Slovenia, Hungary and Croatia.
Most old EU members, including Italy, introduced bans on the free flow of labour
from eight Central and Eastern European countries that joined the EU in 2004. This is
in accordance with the accession treaties that the newcomers have signed.
The first phase of the ban (the total length of which may not exceed seven years) runs
out this year and the member states must notify the European Commission by 30
April whether they will extend the ban by another three years.
Committee in Favour of Slovenia-Austria Employment Agreement
The parliamentary foreign policy committee has voiced its support for an agreement
between Slovenia and Austria on employing workers and key personnel in border
regions
The parliamentary foreign policy committee has voiced its support for an agreement
between Slovenia and Austria on employing workers and key personnel in border
regions.
The agreement will become necessary if Austria does not lift its restrictions on free
labour flow from the EU's eight central European newcomers on 1 May, State
Secretary at the Labour Ministry Marjeta Cotman said on Thursday, 23 March.
It would be valid for the border regions in both countries, including Slovenia's
northern and northeastern regions of Pomursko, Podravsko, Korosko, Savinjsko and
Gorenjsko as well as the Austrian Carinthia and Styria provinces.
In line with the agreement 225 individuals and 225 key personnel will be able to get
employment in both countries.
Austria, alongside 11 other EU15 members, opted for a two-year transition period on
restricting labour movement in 2004. The country is now expected to extend the
period for three more years.
Slovenia reacted likewise, meaning that Slovenians who want to get employed in
Austria and Austrians who are seeking jobs in Slovenia, need work permits.
Under the bilateral agreement the countries would still issue such permits but under a
simplified procedure.
The initiative moreover calls for an exchange of information and facilitating joint
projects in labour market policies.
EU to Earmark EUR 19m for Slovenian Fisheries
The EU will contribute three quarters of the funds, while the rest will have to be
provided by the state or municipalities
Slovenia looks set to get EU funding to the tune of EUR 19m for sea fisheries in the
2007-2013 EU budget period, an Agriculture Ministry official told mayors of three
coastal municipalities on Thursday, 23 March.
The EU will contribute three quarters of the funds, while the rest will have to be
provided by the state or municipalities, said Dejan Rehar of the directorate for
hunting, forestry and fisheries at the Agriculture Ministry.
Speaking after a meeting with mayors of Piran, Koper and Izola, Rehar pointed out
that in order to get the EU funding, the state will have to draft a long-term national
strategy for sea fisheries.
Since the next EU spending plan will be more flexible regarding the phasing of funds,
Rehar said the state and municipalities should start designing joint projects with
partners soon.
Slovenia Faces New Challenges after EU Summit, PM Says
The resolutions of the EU summit regarding economic growth, employment and
energy policy pose several new challenges to Slovenia
The resolutions of the EU summit regarding economic growth, employment and
energy policy pose several new challenges to Slovenia, Prime Minister Janez Jansa
told journalists after the talks, but indicated that only energy policy would require
adaptations.
"We will not have to change anything at the national level regarding growth and
employment, as some of the national goals are already more ambitious...However
certain adaptations will be required in energy policy, and this is a challenge," Jansa
said on Friday, 24 March.
According to him, Slovenia will have to make significant efforts to achieve two of the
energy goals: raising the share of renewable sources to 15% by 2015 and aiming for
energy savings of 20% by 2020.
However, in countries that are serious about it, compliance with these goals should
not be a problem, Jansa said.
According to Jansa, the EU has set itself "quite ambitious goals" at the summit,
including the increase of the share of GDP allocated for R&D to 3% by 2010 in
promoting economic activities.
The summit moreover called for setting up "one-stop-shop" procedures that would
allow the establishment of companies in one week by 2007.
The countries also agreed with an initiative for creating 10 million new jobs for the
young by 2010 and setting up mechanisms to secure young people with a job or
additional training within a six months period after they finish schooling by 2007.
This period should drop to 4 months in 2010.
The 25 leaders also agreed to establish a common gas and electricity market by 2007
and set concrete measures in renewable energy sources, all ambitious goals, according
to Jansa.
The recent surge of economic protectionism in several EU members is "damaging the
creation of a common market", according to Jansa.
Jansa moreover believes that Slovenia has become more open than several old EU
members since entering the bloc, but added that the country would take steps towards
greater openness in the future only if it would benefit it.
PM Wants LB Debt Resolved in Succession Talks
"It would be good if negotiations in the framework of the succession to the former
Yugoslavia make headway and the part of the problem that can be solved this way is
resolved as soon as possible," Jansa said after the EU summit in Brussels
PM Janez Jansa has said that Slovenia and Croatia should resolve their disagreements
regarding the debt of Ljubljanska banka (LB) to Croatian customers in negotiations on
the succession to the former Yugoslavia, whereby LB should be allowed to operate in
Croatia.
"It would be good if negotiations in the framework of the succession to the former
Yugoslavia make headway and the part of the problem that can be solved this way is
resolved as soon as possible," Jansa said after the EU summit in Brussels on Friday,
24 March.
The prime minister also said it would be good if "Croatia allows LB to operate
normally, as that way a part of the problem would resolve itself."
This was Jansa's response to the move of his Croatian counterpart Ivo Sanader, who
presented this issue to European Commissioner for Enlargement Olli Rehn on
Thursday, 23 March and gave him a document detailing the issue.
Jansa was certain that the document was the position of the Croatian central bank
which Slovenia is familiar with. "This will not change facts about a problem that has
been unresolved since independence."
Slovenia has recently said it would make the resolution of this issue a precondition for
Croatia's EU entry.
Macedonia Favourite Potential EU Member for Slovenians
When it comes to potential new fellow EU members Slovenians favour Macedonia,
which is followed by Bosnia-Herzegovina, Montenegro, Bulgaria, Croatia, Romania,
Serbia and Albania, according to the Politbarometer survey
When it comes to potential new fellow EU members Slovenians favour Macedonia,
which is followed by Bosnia-Herzegovina, Montenegro, Bulgaria, Croatia, Romania,
Serbia and Albania, according to the Politbarometer survey.
While Macedonian accession to the EU was backed by 69% of the respondents,
Bosnia-Herzegovina's membership is endorsed by 65% and Croatia's, Montenegro's
and Bulgaria's by 63%.
The survey, which encompassed 862 respondents and was conducted from 20 to 22
March, also showed that 54% of Slovenians expect the euro changeover to bring a
change for the worse. Meanwhile, 28% think the new currency would have more
benefits than drawbacks.
While 76% provided the correct answer as to the current euro/SIT exchange rate, 50%
expect the euro to add to inflation.
Committee to Reconsider Slovenia's Objection to Oil Pipeline Memorandum
Slovenia presented its position on the construction of an oil pipeline between the
Romanian port of Constanta and Italy's port of Trieste at a meeting of the committee
monitoring the project in Rome
Slovenia presented its position on the construction of an oil pipeline between the
Romanian port of Constanta and Italy's port of Trieste at a meeting of the committee
monitoring the project in Rome on Friday, 24 March.
After Slovenia refused to sign the memorandum of understanding on the constructing
of the pipeline, the committee proposed the document be amended as to become
acceptable for Slovenia, the Slovenian representative Franc Zlahtic told STA after the
meeting.
The acting head of the directorate for energy at the Slovenian Economics Ministry
added that despite the lively debate the wording of the memorandum for now
remained unchanged and the investor unknown.
According to Zlahtic, Slovenia's position remains firm. "This means that the other
four states involved [Romania, Serbia-Montenegro, Croatia and Italy] will have to
change their attitude to Slovenia in the sense that this project should be handled like
all other energy projects in Europe. We can not accept the status of a country with
high political risks," he explained.
Slovenia rejected the memorandum, as it would bind it to acquire the necessary land
and building permits by the end of 2007. As Economics Minister Andrej Vizjak
explained in a letter to his Italian counterpart Claudio Scajola, such an approach was
unusual when dealing with countries with lower risks.
Slovenia does not reject the project itself, rather the way it was approached, Vizjak
explained. We believe that environmental and other risks outweigh the benefits, so we
would first like to be briefed on all the details of the project, Vizjak said.
Zlahtic said that, while it seems that the remaining four states are willing to back the
memorandum, its signing has for now been postponed.
PM Jansa Says Energy Is a Key Strategic Issue for the EU
The final conclusions of the summit regarding energy policy should therefore be in
line with the proposed conclusions: the EU will probably decide to let member states
decide on the selection of energy sources and their structure, yet the members would
join forces in negotiations with suppliers, Jansa told the press
PM Janez Jansa has said that the first day of the EU summit in Brussels on Thursday,
23 March, saw lively debates about the EU energy policy, which he labelled a "key
strategic issue". However, the positions of individual members differ due to
differences in the structure of energy consumption.
The final conclusions of the summit regarding energy policy should therefore be in
line with the proposed conclusions: the EU will probably decide to let member states
decide on the selection of energy sources and their structure, yet the members would
join forces in negotiations with suppliers, Jansa told the press.
"A united EU is a stronger partner," Jansa said in reference to energy supply
negotiations with Russia. Indeed, a stronger negotiating position is one of the main
motives for the creation of a common energy policy.
On the other hand, Jansa is convinced that the liberalisation of electricity and gas
markets does not in itself guarantee safe supply. Indeed, in many cases it leads to
mergers and the creation of oligopolies, something which the European Commission
should start dealing with.
Other issues debated by the heads of state and government included the creation of a
favourably regulatory environment for small and medium-sized enterprises (SME), an
issue that Jansa discussed in his address to EU counterparts.
The prime minister said he pointed out that SMEs are being neglected although they
are the main motor of growth and employment in the EU. He said their main problem
was taxes, as the SMEs waste a lot of energy on tax administration, which hampers
growth.
It is expected that the heads of state and government will set the goal that by 2010 it
should not take more than one week to set up a company anywhere in the EU. Jansa
said the goal was feasible.
Employment and investments in R&D were also on the agenda, with Jansa
emphasising that all the issues are inter-connected: only safe energy supply can
support sustainable growth, which in turn creates jobs that also depend on R&D
investments.
STATISTICS/FORECASTS
Projections Show Single VAT Rate Would Boost Inflation
If a single VAT rate is introduced in line with the government's reform proposal,
consumer prices would see a one-off increase of up to 1.8%, provided that the payroll
tax is abolished and the income tax rates are tweaked, according to government
projections
If a single VAT rate is introduced in line with the government's reform proposal,
consumer prices would see a one-off increase of up to 1.8%, provided that the payroll
tax is abolished and the income tax rates are tweaked, according to government
projections.
The figure was released on Monday, 20 March, when the government presented the
effects the proposed tax changes to social partners in negotiations on a social
agreement for the 2006-2009 period.
Janez Sustersic, the director of the government Institute for Macroeconomic Analysis
and Development (IMAD), pointed out that this was the maximum projected price
increase, which would hold true only if the entire spillover effect translated into
consumer prices.
However, the government estimates that the VAT hike (designed to offset the budget
shortfall due to the elimination of the payroll tax and lower income tax revenues)
would not spill over into consumer prices in its entirety, Sustersic said.
The government analysis considered the impact on individuals in four income tax
brackets. It was established that the lowest income groups would see their status
deteriorate the most, but Sustersic said this could be ameliorated with appropriately
high general tax relief.
According to the calculations, the abolition of the payroll tax would reduce budget
revenues by 1.2% of GDP. A flat income tax would mean a further decrease of 0.6%
of GDP, while the income tax proposal of economist Marko Kranjec (fewer tax
brackets with lower rates) would have the smallest negative impact of all income tax
reform proposals, 0.35% of GDP.
To plug the gap, the single VAT rate would have to be set at 18% in case the flat
income tax rate is introduced. If Slovenia wants to keep two VAT rates, they would
be at 10.5% and 22% respectively, up from 8.5% and 20% at the present.
According to Sustersic, the abolition of the payroll tax creates a much larger gap than
any of the income tax schemes: if the flat income tax was introduced without the
accompanying abolition of the payroll tax, VAT would have to increase by only 0.2
percentage points.
Official: Reforms to Create Dynamic Economy, Keep Social Rights
The all-encompassing government-sponsored structural reforms are aimed at
"creating a dynamic economy as well retain social rights"
The all-encompassing government-sponsored structural reforms are aimed at
"creating a dynamic economy as well retain social rights", State Secretary at the
Development Office Andrej Horvat said in Bled on Thursday, 23 March.
Horvat, who was speaking at a meeting on reforms in the non-commercial sector,
believes that the reforms aim to achieve an ideal state by reducing the expenses and
creating a more efficient public sector.
Public sector expenditures must therefore be brought down, which in turn demands an
improved administrative qualifications and measures to ensure a more efficient use of
EU funds, he added.
"The health sector is definitely one of the areas that we want to bring closer to an
economic way of thinking," he added, explaining that the reforms blueprint calls for
80 acts and 120 regulations to be passed in 2006.
"The health sector has been in a perpetual reform, but the results were slow and
hardly noticeable," Health Minister Andrej Brucan said.
Brucan moreover believes that the reforms will form the basis of an integral and
quality health system, with the final goal to increase the accessibility of health
services to all Slovenians.
"The main future challenges come from demographic pressures of an ageing
population, rapid development of health technologies and expectations of health
workers for a suitable valuation of their work," Brucan listed the main issues in the
sector.
To overcome these problems, the minister called for improving the management of
existing resources and increasing the sector's efficiency, while retaining accessibility,
solidarity and social justice as core values.
The ministry is therefore weighing up adjustments to the obligatory health insurance
system, establishing more effective oversight in hospitals and private institutions as
well as linking a part of the salary of health services to their efficiency.
Head of the Court of Audits Igor Soltes meanwhile said that management of public
funds must be efficient, transparent and regulated.
"We want to create a shift in control over public spending by replacing formal audits
with a content-based approach, which call for interdisciplinary audits of auditors,
economists, legal experts and other branches," Soltes pointed out.
The two-day event was organised by the Agency for Management.
More than 7,000 Workers to be Made Redundant in 2006
Slovenian companies expect that a total of 7,328 workers would lose their jobs either
because of sacking or because companies would go bankrupt in 2006, 60.1% of which
will be made redundant in manufacturing, shows a survey of the Slovenian
Employment Service
Slovenian companies expect that a total of 7,328 workers would lose their jobs either
because of sacking or because companies would go bankrupt in 2006, 60.1% of which
will be made redundant in manufacturing, shows a survey of the Slovenian
Employment Service.
As many as 996 workers are expected to be laid off by electrical and optical
manufacturers, 897 in the textile and leather industry, 611 in the paper industry and
publishing, and 537 in the food-, drink- and tobacco-processing industries.
These are followed by trade (759) and construction (636), while 287 redundant
workers are expected in transport, warehouses and communications.
The sector of services expects to lose 1,864 jobs (25.4% of all lost jobs this year),
with 279 workers to be laid off in agriculture, hunting and forestry, 265 in education,
and 256 in the real estate sector and business services.
Most of the workers to be made redundant, 36.8%, are those with third or fourth level
of education. Moreover, pink slips are to be handed to 34% workers with first or
second, 21.2% of those with fifth, and 8% of those with sixth level of education.
The survey, which is carried out every year by the Employment Service, included
6,866 companies that employ a total of 552,000 persons or 90% of all workers
employed in such facilities.
FINANCE
Ljubljana Bourse Launches New Blue Chip Index
The SBI TOP, which will be launched on 1 April, will include Slovenian market
heavyweights Krka, Petrol, Mercator, Gorenje and Pivovarna Lasko
The Ljubljana Stock Exchange (LJSE) has come up with a new index of blue chips
that will feature five of the biggest names on the official market.
The SBI TOP, which will be launched on 1 April, will include Slovenian market
heavyweights Krka, Petrol, Mercator, Gorenje and Pivovarna Lasko.
According to the LJSE, only the biggest and most active shares are being included in
the new index.
Meanwhile, the current benchmark index, SBI 20, will be transformed into a general
market index that will include 15 of the biggest shares from the official and free
markets.
As of 1 April, shares of Delo, Droga Kolinska and Zito (all official market) will be
replaced by Helios, Juteks and Cinkarna Celje (all free market) in the make up of the
SBI 20.
Ljuljana Stock Exchange
The main market index thus closed at this year's low of 4,447.83
The Ljubljana Stock Exchange was stuck in the red last week, as the blue chip SBI 20
index closed in negative territory for five consecutive days. The main market index
thus closed at this year's low of 4,447.83 on Friday, 24 March, down 50.96 points on
the week, despite a surge by drug maker Krka, which soared to a new all-time high.
Market analysts registered poor demand throughout the week, which was reflected in
the great daily price fluctuations of individual shares. Friday, 24 March was a bit
more upbeat, but the optimism rubbed off onto only a handful of securities.
Krka was by far the biggest name of the week, soaring 2.52% past the SIT 123,000
(EUR 513.40) mark on deals worth SIT 1.74bn (EUR 7.26m), of which nearly one
third was done in block deals.
Krka has enjoyed a boost after the disclosure last week of excellent preliminary Q1
results and double-digit growth projections, as well as the assessment of CEO Joze
Colaric that the share is worth about 20% more.
The growth is underpinned by the growth projections as well as strong demand from
foreign investors, according to Matjaz Bernik of the brokerage Ilirika.
Oil company Petrol came close to Krka in volume terms, but it remained stagnant at
SIT 70,002 (EUR 292.19). Meanwhile, retailer Mercator shed 1.08% to SIT 35,695
(EUR 148.99) in more moderate trading.
Other blue chips were on the sidelines last week and posted marginal losses. The
same goes for investment funds on the free market, which have been steadily losing
ground on selling pressure.
The PIX investment fund index thus shed 1.5% (56.83 points) to 3,745.92 last week,
while the bond BIO index edged 0.98 points lower to 119.79.
The total volume of deals topped SIT 6.78bn (EUR 28.3m) last week, with block
deals accounting for well over a third of the turnover.
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR)- SIT 239.58 (-0.01)
U.S. dollar (USD) - SIT 200.25 (+3.51)
Swiss franc (CHF) - SIT 151.88 (-0.58)
British pound (GBP) - SIT 346.91 (+1.58)
REGIONAL INFORMATION
Pomurje Among Ten European Regions of the Future
FDI Magazine, a part of the London-based Financial Times group, has selected
Slovenia's northeastern region of Pomurje as one of the ten European regions which
are the most attractive for foreign investments
FDI Magazine, a part of the London-based Financial Times group, has selected
Slovenia's northeastern region of Pomurje as one of the ten European regions which
are the most attractive for foreign investments.
Regional Development Agency Mura, which runs the project Attracting Foreign
Investments in Pomurje, received the award "Pomurje - the 2006-2007 European
Region of the Future" on 16 March in France's Cannes, the agency told the press on
Monday, 20 March.
The Pomurje project scored top points for human resources, information technology
and telecommunications, quality of life, strategy of FDI promotion and cost
efficiency.
According to the agency's director Danilo Krapec, the prestigious award is an
acknowledgment of the efforts made in promoting the region and attracting foreign
investors, and a confirmation of the region's quality.
It does however not mean automatic foreign investments, as these still depend on
investor's individual needs and on competing regions, he added.
The agency has been carrying out the Pomurje project, for which is has received a
total of SIT 15m (EUR 62,600), for the past two years in a bid to enhance economic
development, improve added value, and decrease the unemployment rate in the
region.
According to Feri Goenc of the agency, more than 120 foreign companies and
companies with foreign and domestic owners have already been established in
Pomurje, with 1,700 employers and a total turnover of SIT 47bn (EUR 196.16m).
FDI Magazine, which focuses on foreign investments, is published in Europe, the US
and Asia, and is mainly read by representatives of multinational companies and
advisers for foreign investment locations.
Third Development Axis Important for Slovenia, Symposium Says
Local Government and Regional Policy Minister Ivan Zagar said that he saw the axis
as one of the central projects of Slovenia's 2007-2013 development programme
"The third development axis is one of the most ambitious development projects of the
government in the 2004-2008 period," Transport Minister Janez Bozic has told an
international symposium on this crucial north-south transport link from Austria via
Slovenia to Croatia.
The third development axis is a long-term process requiring that economic, transport,
tourism and environmental sectors jointly find the optimal solution, Bozic said at the
symposium in Maribor on Tuesday, 21 March.
Local Government and Regional Policy Minister Ivan Zagar said that he saw the axis
as one of the central projects of Slovenia's 2007-2013 development programme.
He believes that new development concepts are needed in order to reverse the trend of
ever increasing regional differences. Slovenia should consider this if it wants to use
the potential of its regions along the axis.
Addressing some 200 participants of the symposium, Environment and Spatial
Planning Minister Janez Podobnik labelled the third development axis "an agreement
on a joint long-term development vision involving economy, transport and tourism".
A successful implementation of the axis requires individual sectors to cooperate in a
bid to attract investors, especially in transport infrastructure, stressed Podobnik, who
also heads a working group for the third development axis project.
At the symposium organised by the Maribor Faculty of Civil Engineering and the
Slovenian Association for Research in Transport, Slovenian experts were joined by
their colleagues from Austria and Croatia.
They shared a view that the third development axis will contribute to the economic,
social and territorial cohesion, better competitiveness, and a more balanced
development of economy, transport and tourism in this part of Europe.
The event dubbed "The Third Development Axis - Slovenian Project of the Third
Millennium" will be followed by a number of meetings on the realisation of the
project, the organisers said.
They believes that planning is of key importance, as the axis will connect five
statistical development regions in Slovenia as well as two border regions of
neighbouring countries.
Maribor City Vinedresser Prunes World's Oldest Vine
The world's oldest vine was pruned as part of a traditional tourist event in Maribor as
the city vinedresser Tone Zafosnik dealt the expert cut which will ensure the over 400year-old Guinness World Record-holding vine yields a good harvest
The world's oldest vine was pruned as part of a traditional tourist event in Maribor on
Wednesday, 22 March as the city vinedresser Tone Zafosnik dealt the expert cut
which will ensure the over 400-year-old Guinness World Record-holding vine yields
a good harvest.
The Old Vine is a protected item of natural heritage and the symbol of Maribor, as
well as all the wine-growing regions of Slovenia. Pruning controls its growth,
fruitfulness, quality and stability.
This year's 27th pruning session was attended by numerous locals and tourists, and
accompanied by a rich cultural programme.
Mayor of Maribor Boris Sovic symbolically handed over grafts to representatives of
various municipalities. One graft will be winging its way to Slovenians in Argentina
where it should put down roots in the city of Mendoza, one of the most important
wine-growing centres in South America.
Maribor has hitherto officially given away 50 grafts of the Old Vine, 18 of these are
now growing outside Slovenia in Europe, Asia and even Australia. The venerable age
of the vine was scientifically proven in 1972.
The grapes of the Old Vine usually produce about 25 litres of wine every year. It is
specially bottled and the Maribor City Council uses it for special occasions.
BRANCH INFORMATION
Transport Ministry Presents Rail Upgrade Plans
Construction works on the rail section Koper-Ljubljana, including a second rail
between Koper and Divaca and upgrades to the existing line on the section, and the
electrification of the Pragersko-Hodos line will be the country's top priorities in rail
infrastructure
Construction works on the rail section Koper-Ljubljana, including a second rail
between Koper and Divaca and upgrades to the existing line on the section, and the
electrification of the Pragersko-Hodos line will be the country's top priorities in rail
infrastructure, Transport Minister Janez Bozic told the press on Friday, 24 March.
According to Bozic, the cost of construction works on the Koper-Ljubljana section is
estimated at SIT 168bn (EUR 701.2m), whereby SIT 3bn (EUR 12.5m) needs to be
secured this year for the necessary documentation.
The Koper-Ljubljana section is also on the EU's quick-start list of priority
infrastructure projects, as it lies on the 5th pan-European transport route.
Bozic said that the ministry is already drawing up the appropriate documentation so
that Slovenia can vie for EU grants in the 2007-2013 budget period. He said the
project should be completed by 2015.
Whereas a second rail should be constructed between Koper and Divaca in the west of
the country, the existing rail will be upgraded as well in order to meet the rising
demands of the Port of poper, which ships the bulk of its cargo via railway. This
project is to wrap up in 2008.
Indeed, Robert Casar, the chief executive of port operator Luka Koper, said that the
upgrade alone would increase throughput by 30%, which should allow the port to
cope with the increasing cargo volumes for another six years.
However, only the second rail can bring the final solution, as it will nearly double the
throughput capacities, explained Casar, who joined Bozic at the press conference.
Meanwhile, the electrification of the route from Pragersko in the northeast to Hodos
on the border with Hungary is valued at SIT 36bn (EUR 150.3m) and is scheduled for
completion in 2013, Bozic explained. This section is also on the EU's quick-start list.
According to Bozic, in order to co-fund all these projects and several others,
parliament will have to pass an act on state guarantees in the amount of about SIT
131bn (EUR 546.8m).
Small Hydro Plants Fear Energy Liberalisation
Energy liberalisation has started to affect small hydro-electric plants; it may even
happen that the operators lose the current subsidies and guaranteed purchase of
electricity
Energy liberalisation has started to affect small hydro-electric plants; it may even
happen that the operators lose the current subsidies and guaranteed purchase of
electricity, the owners of small hydro plants were told at a conference on Saturday, 25
March.
Marko Gospodinjacki, the chair of the association of small hydro plants, which
organised the conference, also said that the opening of the market to foreigners in
2007 would put pressure on producers and reduce profitability.
The operators therefore hope that the state will continue to protect them, as they are
no match for large energy companies. However, there is fear that the state might
determine which renewable sources would be prioritised, which could significantly
affect the construction and maintenance of small hydro plants.
Overall, the operators fear they might have to revert back to the activities they carried
out in the 90s and start seeking support among the electricity users. Moreover, they
project they could lose 20% of the output due to the EU water directive.
COMPANIES
Reader's Digest Now in Slovenian
Mladinska knjiga has received 18,900 advance subscriptions for Reader's Digest
Slovenija
The Mladinska knjiga publishing house has joined forces with Reader's Digest to
make the magazine available in the Slovenian language. The first edition of the
magazine, which will normally go on sale at the beginning of each month, was
presented on Monday, 20 March in Ljubljana.
General manager of Mladinska knjiga Milan Matos, speaking at the presentation, said
he believes that both the Slovenian and Croatian editions will attract readers with their
contents.
Managing editor of the international editions of Reader's Digest Raimo Moysa said
Slovenian was the 21st language in which the magazine is published. Reader's Digest,
founded in 1922, is read by over 100 million people and appears in 61 countries in the
world.
The magazine deals with serious issues but is also known for humour, with one
edition per year being devoted to it, as will be the first edition of Reader's Digest
Slovenija which includes the actor and writer Desa Muck's ruminations on Slovenian
humour.
Editor-in-chief of Reader's Digest Slovenija Meta Tavcar explained that in choosing
topics for publication they would look in the rich Reader's Digest archives as well as
publishing entirely new items including home stories.
Mladinska knjiga has received 18,900 advance subscriptions for Reader's Digest
Slovenija. The first edition will be published in 26,000 issues.
Managers Succeed With Iskra Buyout
Maos, the company set up by around 50 Iskra managers, managed to acquire 88.6%
of Iskra with its bid, and another 4.9% outside the bid to hold a total of around 93.5%
Managers of the Iskra conglomerate have succeeded in their bid to gain a majority
stake in the company.
Maos, the company set up by around 50 Iskra managers, managed to acquire 88.6% of
Iskra with its bid, and another 4.9% outside the bid to hold a total of around 93.5%.
The managers managed to surpass the 51% threshold set by them for the bid after the
state-run Restitution Fund (SOD) and Pension Management Fund (KAD) decided to
sell at the offered price.
The final bid by Maos of SIT 1,400 (EUR 5.84) per share had now been extended for
another 14 days to allow other shareholders to sell their shares.
Iskra chairman Dusan Sesok was delighted with the outcome of the bid, adding that
the large stake acquired by the managers came as no surprise.
Sesok believes that additional shareholders will decide to accept the bid now that the
two state-run funds, which together held 42% in Iskra, sold their stakes.
"I believe that the final number will exceed 95%," he said.
Maos was formed by Iskra managers who had opposed a hostile bid for Iskra by Iskra
Avtoelektrika, a maker of car electronics equipment, which offered SIT 1,044 (EUR
4.36) per share in mid-December.
Maos and Iskra Avtoelektrika then waged a bidding war until Iskra Avtoelektrika
announced in early February that it was pulling out.
Still bent on Iskra takeover, Maos published its last bid of EUR 5.84 a share on 6
March after the two state-run funds said prior bids did not meet their expectations.
Telekom Buys Macedonian ISP
Slovenian telco Telekom Slovenije has acquired a majority stake in Macedonia's
second-biggest Internet service provider, On.net
Slovenian telco Telekom Slovenije has acquired a majority stake in Macedonia's
second-biggest Internet service provider, On.net.
Telekom signed on Monday, 20 March in Skopje a deal with US investment fund
SEAF on the purchase of a 76% stake in On.net for EUR 4.7m.
Telekom has also injected EUR 1m in fresh capital into its new acquisition to aid its
growth, Telekom Slovenije chairman Bojan Dremelj told the press after the signing in
the Macedonian capital.
"The future of Telekom Slovenije lies in expanding outside of Slovenia given that
competition on the domestic market is extremely fierce and it is all but impossible to
win new users," Dremelj said.
According to him, the telco has decided to focus on SE Europe markets, with
Macedonia being the first stop.
Vladimir Pesevski, who signed the contract on behalf of SEAF, said that Telekom's
investment was important for the Macedonian telecoms market, with On.net director
Predrag Cemerikic saying that there would not be any layoffs.
The Telekom delegation also held talks with Macedonian PM Vlado Buckovski and
his deputy Radmila Sekerinska, the latter stressing that the investment shows the
rising confidence of foreign investors in the Macedonian market.
On.net is the second largest ISP in Macedonia. It is best known for plans to blanket
95% of the country with Wi-Fi coverage, the biggest such project in the world.
Kolektor Gains Control of Postojna-based Plastics Maker
Kolektor, one of the world's largest makers of commutators, has acquired a majority
stake in maker of plastics and mechanised machinery, Liv
Kolektor, one of the world's largest makers of commutators, has acquired a majority
stake in maker of plastics and mechanised machinery, Liv.
The Idrija-based Kolektor acquired 96% of Liv through Monday, 20 March in a
takeover bid that was published on 22 February.
Kolektor has already announced that given the success of its bid, it would now extend
it until 5 April so as to allow remaining shareholders to sell their shares.
Kolektor was looking to secure at least 76% of Liv with its friendly bid of SIT 35,700
(EUR 149) per share.
Liv general manager Bojan Dolar believes the new owner would help the Postojnabased company implement its development strategy.
Dolar told the daily Delo that he believes the new owner will support the long-term
development of Liv.
The two companies could offer a wide palette of plastic products for the automotive
sector, he said for Delo.
Simobil Makes Maiden Profit in 2005
Simobil, Slovenia's second-largest mobile phone operator, has made its first annual
profit, ending 2005 with net earnings of EUR 10m
Simobil, Slovenia's second-largest mobile phone operator, has made its first annual
profit, ending 2005 with net earnings of EUR 10m, its chairman told the press on
Tuesday, 21 March.
According to Zoran Thaler, the company posted excellent results last year. "We
performed well on the market...and our results reflect this," Thaler said.
Simobil, which is owned by Austria's Mobilkom (in turn owned by Telekom Austria),
made its profit on net revenues of EUR 100.8m, which is 14.8% more than a year
earlier.
Meanwhile, the Slovenian partner of the world's leading mobile phone operator,
Vodafone, saw earnings before interest, tax, depreciation and amortisation rise by
20.4% to EUR 24.5m.
"The key factor in all of this is that we achieved this on our own," Thaler said. He
added that 2005 saw no major interventions by the telecommunications regulator or
competition watchdog on the market.
"Last year we made a point of saying that things were changing for the
better...However, it has now become clear that we will have to wait a while for the
results of these interventions to show, which is why we expect even more from 2006,"
he added.
Simobil ended 2005 with 359,600 users, for a market share of 22.7%. The figure
represents a drop of 1% on the year before, mostly because of changes in the method
for keeping user figures.
Meanwhile, Thaler also touched on speculation that Simobil is thinking of buying part
of the infrastructure of the third-largest Slovenian mobile operator, Vega, which has
had a difficult time on the Slovenian market.
"It is obvious that [Vega] is not overly active, something that cannot go on for ever,"
Thaler said in a reference to the operations of the Western Wireless Internationalowned operator.
"If they were to make an offer for parts of the infrastructure, such as base stations, or
even its users, at a suitable price, Simobil would seriously consider its options. But
there is no offer on the table for now," Thaler said.
Steel Group Makes Successful Start into 2006 and Keeps CEO
The supervisory board of the Slovenian Steel Group extended CEO Tibor Simonka's
term in office for another five years
The supervisory board of the Slovenian Steel Group on Tuesday, 21 March extended
CEO Tibor Simonka's term in office for another five years. Simonka has led the
Group since September 2002.
The supervisors also discussed the Group's results for the first two months of 2006,
when it made a net profit of SIT 1.2bn (EUR 5m), a 72% increase over the same
period 2005.
According to a press release from the Group, sales revenues of its companies
amounted to SIT 21.5bn (EUR 89.7m) in the January-to-February period, 17% above
the target.
As much as 71% of this sum, or EUR 68.8m, came from exports. While its main
markets remain within the EU and US, the Group is also expanding to Eastern Europe
and Asia.
Metal Ravne continues to be its flagship company, posting a net profit of SIT 682.5m
(EUR 2.8m).
The supervisors also touched on the environmental issues concerning the company
Acroni, expressing support to its efforts to secure sustainable compliance with the
European directive aimed at minimising pollution (IPPC).
Niko Trost New CEO of Casino Company Hit
Janja Grbec was appointed a second member of the board
The supervisory board of casino company Hit appointed Niko Trost the company's
new CEO, Hit's chief supervisor Viktor Baraga said after the session on Tuesday, 21
March.
Janja Grbec was appointed a second member of the board. Grbec of the ruling
Slovenian Democrats (SDS) comes from the management board of the state-run SOD
fund.
The third member of the management board will be appointed in the next three
months, Baraga explained.
One of the first talks of the new CEO will be to find an "expert, ambitious and
unburdened" third management board member.
Trost also revealed that the new management's top priority will drafting a new longterm development strategy, so further personnel replacements are not excluded.
The new management will also have to draft a business plan for 2006, he said, adding
that he and Grbec have not yet divided their responsibilities.
Baraga explained that while four supervisors voted to dismiss CEO Branko Tomazic,
two abstained. The remaining two management board members, Borut Jamnik and
Silvan Krizman, tendered their resignations.
Jamnik and Krizman would get "senior positions" in the company, Baraga revealed,
adding that no detailed discussion has yet been held on their new posts.
The Tomazic-led management team was appointed in 1999, when the state-run funds
KAD and SOD - which hold two-thirds of the share voting rights in the company were controlled by officials appointed by the former centre-left government.
Baraga explained the owners decided to replace the old management because it did
not enjoy the support of the Finance Ministry, which represents Slovenia in talks with
US entertainment giant Harrah's Entertainment on a massive casino project.
The US$ 700m investment rests on the government's willingness to tweak legislation:
currently, foreigners can hold no more than 20% in a gaming venture, whereas the
gaming tax is set at 30%.
Harrah's Entertainment would be willing to enter this joint venture if the tax is
lowered and if it is allowed to hold a 50% stake in the new company. Tomazic
revealed that the cabinet might made its decision known before the end of March.
Troubled Iskraemeco Looking for Fresh Capital
Iskraemeco, the maker of electric meters which has been in administration since
February, has decided to seek investors willing to inject at least SIT 2.5bn (EUR
10.4m) in fresh capital for current operations in exchange for an ownership stake
Iskraemeco, the maker of electric meters which has been in administration since
February, has decided to seek investors willing to inject at least SIT 2.5bn (EUR
10.4m) in fresh capital for current operations in exchange for an ownership stake.
In line with a public call for applications issued on Wednesday, 22 March,
Iskraemeco would issue 100,000 new shares, which would give the investor control of
just under one third of the company.
The move comes after Iskraemeco, one of Europe's leading producers of equipment
and systems for energy measurement, sought bankruptcy protection in mid-February
following a prolonged soft patch due to falling prices of meters.
The company had tried unsuccessfully to convince banks to provide it with fresh
capital. With its debts to suppliers growing, Iskraemeco had no choice but to seek
bankruptcy protection.
In line with a decision of the Kranj District Court, Iskraemeco, which owes SIT 14bn
(EUR 58.43m) to its creditors, including SIT 8bn (EUR 33.4m) to banks, will have to
draft a restructuring plan by early June, while creditors have until 3 April to register
their claims.
German Publisher Involved in Talks for Dnevnik Stake
Talks on the possibility that German publisher WAZ might buy a stake in the
Slovenian newspaper publisher Dnevnik could be wrapped up "sometime this spring",
the CEO of publisher DZS, which owns 51% of Dnevnik, said
Talks on the possibility that German publisher WAZ might buy a stake in the
Slovenian newspaper publisher Dnevnik could be wrapped up "sometime this spring",
the CEO of publisher DZS, which owns 51% of Dnevnik, said on Wednesday, 22
March.
"DZS as well as Dnevnik are looking for growth opportunities in the markets of the
nearby SE region, and a strategic partner would enable a speedy breakthrough to
both," Bojan Petan added, but refused to disclose any details of the talks.
According to media reports, DZS and WAZ have already signed a letter of intent to
establish a joint company that would in turn own Dnevnik.
The CEO of the Ljubljana-based newspaper publisher Dnevnik, Branko Pavlin,
meanwhile told STA that a possible entry of a new owner is "viewed as positive"
based on experiences of other companies that are partners with WAZ.
"[Our] goal is to become Slovenia's leading newspaper publisher," Pavlin added,
explaining that WAZ "is a large publisher with more than 500 publications".
Apart from DZS, Austrian publisher Styria Medien AG owns a 26% stake in Dnevnik,
the state-run KAD fund owns 10% and the Maribor-based daily Vecer holds 6.5%.
Marche Launches Its First Diner in Slovenia
The company run by Swiss firm Marche has opened its first diner in Slovenia since
Marche acquired catering company Petrol Gostinstvo from fuel trader Petrol in June
of last year
The company run by Swiss firm Marche has opened its first diner in Slovenia since
Marche acquired catering company Petrol Gostinstvo from fuel trader Petrol in June
of last year.
The 340 sq. metre diner, worth EUR 1.94m, was opened adjacent to Petrol's petrol
station at Lukovica on the motorway route Ljubljana-Celje.
For Marche gostinstvo, in which Marche owns 75% and Petrol 25%, this is the first in
a series of new diners in Slovenia, said the company's general manager Hermann
Ircher.
According to Ircher, Marche gostinstvo intends to renovate another 13 former Petrol
diners and bars around the country, spending EUR 1.5m this year and EUR 500,000
the next.
Ircher said he expected the company to generate revenues of SIT 2.7bn (EUR 11.3m)
this year, which is almost 50% more than that made by Petrol's catering arm in 2004,
before the transaction.
Marche International is a part of the Moevenpick group, managing highway, airport
and train station catering facilities in Germany, Austria and Switzerland.
Co-Founder of Tech Firm Ultra Becomes Entrepreneur of the Year
Milos Urbanija, the co-founder and majority owner of technology firm Ultra, has
been chosen entrepreneur of the year by the business magazine Podjetnik
Milos Urbanija, the co-founder and majority owner of technology firm Ultra, has been
chosen entrepreneur of the year by the business magazine Podjetnik. Urbanija was
honoured on Thursday, 23 March for his "bold business combinations that can serve
as an example for the optimal establishment of Slovenian know-how on global
markets".
Urbanija set up the company with two partners in 1989. The first product, launched in
1990, was an ultrasonic level meter. In 1995 the company started developing the
UltraStar measuring system for underground reservoirs and launched the UltraSpar
device for the energy optimisation of public lighting.
The company has since diversified into three core programmes: Ultra Energy
solutions for the optimisation of processes in the oil and gas industry; the Telargo
mobile asset management service; and a range of M-Pay solutions for payments with
mobile phones.
The award jury said that the company's record makes Urbanija a great example of
how much Slovenian entrepreneurs can achieve. According to the jury, his message is
his faith in know-how, as the company earmarks 50% of the sales for R&D and
almost three quarters of the employees work in R&D.
Urbanija had told the magazine that Ultra's story is a "typical garage story", as he
launched the company out of necessity in his home town of Zagorje. He attributes his
success to the fact that he has always been aware of his weaknesses, but he has learnt
to control them.
Ultra currently has a 180-strong workforce, with 70% working in R&D. According to
Urbanija, sales last year topped SIT 3.5bn (EUR 14.6m), with profits at SIT 120m
(EUR 0.5m).
The entrepreneur of the year award is the oldest and most prestigious award for
entrepreneurs in Slovenia, with Urbanija its 16th recipient.
Last year's honours went to Ales Stancar of biotech company BIA Separations, while
a year earlier the award was conferred on Igor Akrapovic of the namesake company
which specialises in advanced exhaust systems for motorbikes.
Krka Boss Predicts Double-Digit Profit Growth
The chairman of pharma company Krka has said he expects the company to register
double-digit profit and revenue growth this year
The chairman of pharma company Krka has said he expects the company to register
double-digit profit and revenue growth this year.
Joze Colaric told the press in Novo mesto on Thursday, 23 March that the group
expects to finish the year with SIT 150bn (EUR 626m) in revenues, a 13% rise on the
year.
Colaric said that double-digit growth would extend to the group's profit, although he
would not give a profit target.
The planned results are attainable, as is demonstrated by the first quarter results, he
added. According to him, Krka's sales revenues through the first half of March
amounted to SIT 33bn (EUR 137.7m).
Meanwhile, Colaric confirmed that Krka finished 2005 with SIT 133bn (EUR 555m)
in total sales revenues, a 17% jump over the year before.
The group's profit surged 49% to SIT 23.3bn (EUR 97.2m) in 2005. According to
Colaric, the strong rise in earnings is a result of a transition to international
accounting standards and the clearance of inventories by Krka's foreign subsidiaries.
Colaric said that the group generated 82% of all its sales on foreign markets last year.
Meanwhile, Slovenia remains the single largest market for the group, accounting for
18% of all sales.
As for the first quarter of this year, Krka saw its sales on overseas markets rise by
50%. Sales in Slovenia were flat, while SE European sales rose 10%, central
European sales grew 20% and western European sales surged 30%.
As for the group's takeover ambitions, Colaric said that Krka was eyeing possible
targets but it does not intend to rush into an acquisition. Moreover, Colaric ruled out
that Krka would agree to be acquired by another company since the strategy through
2010 envisages independent operations.
Colaric also said that he believes the company's share is undervalued. Krka is on track
to see its share rise to SIT 150,000 (EUR 625.94) (it is currently trading at SIT
120,000/EUR 500), he said.
He also said that Krka would continue to attract foreign investors into its ownership
structure. In recent months, the stake held by foreigners in the company rose from
below 5% to 7.8%, he said.
As part of efforts to attract foreign investors, Colaric announced the company would
go on a roadshow between 3 and 6 April in Western Europe.
He said Krka was still mulling listing on the London Stock Exchange, although he
could not say when this would happen.
Helios Boosts Sales
Helios, the Domzale-based chemical group, increased net sales by 36% in 2005 to
SIT 55bn (EUR 229.6m)
Helios, the Domzale-based chemical group, increased net sales by 36% in 2005 to SIT
55bn (EUR 229.6m), but still fell marginally short of plans. Net profits totalled SIT
3.2bn (EUR 13.4m), down 7% over the year before, according to unaudited,
unconsolidated results.
The group's operating profit was at SIT 3.5bn (EUR 14.6m), an increase of 9% over
2004, the company said in a press release on Friday, 24 March.
The management board has labelled the results as good considering the increasing
prices of raw materials, fierce competition and an economic downturn on several
global markets.
In volume terms, Helios increased sales by 37% to 127,000 tonnes. Decorative
coatings, powder coatings and artificial resins were the group's best-selling products
last year.
The Helios group comprises 16 entities in seven countries, which had a total
workforce of 1,888 at the end of last year. Exports accounted for 80% of the sales
revenues.
Furniture Company Lesnina Ups Profit
Furniture retailer Lesnina made a net profit of SIT 2.15bn (EUR 8.9m) in 2005
Furniture retailer Lesnina made a net profit of SIT 2.15bn (EUR 8.9m) in 2005, an
increase of 12% over the previous year, according to unaudited data published by the
company on Friday, 24 March. Its sales revenues also increased by 12%, totalling SIT
18.8bn (EUR 78.5m).
While Slovenia continues the be the main market for the company, export sales mostly to markets in the ex-Yugoslav region - went up by 7% and amounted to SIT
1.3bn (EUR 5.4m).
In 2005 Lesnina invested SIT 1.6bn (EUR 6.7m) into its Croatian subsidiary Lesnina
H that is expected to complete the construction of a new shop in Reka by August this
year.
This year the company hopes to increase sales by 7% on the domestic market, develop
the Italstyle trademark as part of Lesnina's distribution network and start expanding to
new markets.
Merkur Group Increases Profit by 31% in 2005
The group moreover increased its net sales revenues by 5% year-on-year, to SIT
187.8bn (EUR 783.45m)
Hardware retailer Merkur posted net profit of SIT 3.6bn (EUR 15.02m) in 2005, a
31% increase over 2004, the group said on Friday, 24 March.
The group moreover increased its net sales revenues by 5% year-on-year, to SIT
187.8bn (EUR 783.45m).
The results were examined by the supervisory board, which also confirmed changes to
the company's articles of association, dictated by the issue of 98,000 fresh Merkur
shares.
The issue was paid for by the Sava holding company, which spent SIT 3.55bn (EUR
14.61m) for the stake at SIT 36,200 (EUR 151.09) a share.
The supervisors unanimously confirmed the changes, therefore increasing Merkur's
nominal capital by SIT 980m (EUR 4.09m) to SIT 13.125bn (EUR 54.78m).
The Merkur group includes companies in Serbia-Montenegro, the Czech Republic,
Italy, Croatia, Germany, Macedonia and Bosnia-Herzegovina.
The group managed to increase its market share on almost all of its markets, with its
retail sales up 21% in 2005.
Merkur also opened its first Serbian retail centre in Belgrade, as well as two new
centres in Croatia's Pula and Samobor in 2005.
Viator&Vektor will Seek Deal with Croatian TLM
The Slovenian logistics firm Viator&Vektor confirmed it has received a resolution by
the Croatian company Tvornica lakih metala (TLM) on the breaking up of a contract
on the sale of its haulage arm Promal to the Slovenian company
The Slovenian logistics firm Viator&Vektor confirmed on Friday, 24 March it has
received a resolution by the Croatian company Tvornica lakih metala (TLM) on the
breaking up of a contract on the sale of its haulage arm Promal to the Slovenian
company. Viator&Vektor announced for STA it would try to reach an agreement with
TLM on a settlement to the issue.
TLM informed Viator&Vektor that TLM's units TLM, TLM-TVP Tvornica valjanih
proizvoda and TLM-TPP Tvornica presanih proizvoda have been tasked with
refunding the investment already made by Viator&Vektor in line with the provisions
of the terminated contract.
Furthermore, TLM noted that - for the case that Viator&Vektor filed a compensation
claim - TLM's management has been authorised to settle half of the expenses
Viator&Vektor has incurred due to the one-sided termination of the contract. The
expenses would be determined by two independent legal experts, chosen by TLM,
according to TLM's, resolution.
Viator&Vektor could not yet provide an estimate as to the scope of the investment
made so far by its Croatian subsidiary Viator&Vektor Zagreb under the provisions of
the contract in question nor could it comment on the possibility of filing a
compensation claim.
TLM's decision marks the end of months of disputes that started almost immediately
after Viator&Vektor bought Promal in August 2005.
The deal between Viator&Vektor and TLM ran into trouble after Croatian hauliers
threatened to hold mass strikes as they feared their existence was being threatened by
the provision that would make Viator&Vektor the exclusive haulage company for
TLM.
The Croatian government froze the deal in September and launched talks with
Viator&Vektor on its annulment. The two sides reached a compromise in December
when it was agreed that the original contract should be adapted so as to exclude the
provision making Viator&Vektor the official haulage company for TLM.
SLOVENIA IN BRIEF
ITF Receives Check for SIT 12m for Demining in Bosnia
Two donors that have donated SIT 6m (EUR 25,000) each to the Slovenian-run
International Trust Fund for Demining and Mine Victims Assistance (ITF) were
received at the US Embassy in Ljubljana on Tuesday, 21 March. The US has kept
their promise and doubled the sum to SIT 12m (EUR 50,000). The EUR 50,000 check
was handed to the ITF director Goran Gacnik by US Ambassador to Slovenia Thomas
Robertson, and the head of the American Chamber of Commerce in Slovenia Barbara
Kosler, the embassy's press release reads.
Prevent to Lay Off 189 Workers
Prevent, a maker of car-seat covers, plans to lay off 189 workers in its core division in
Slovenj Gradec, about one-fifth of the workforce there, in a bid to adapt to the
increasingly fierce competition on the global market. "This is one of the measures
Prevent will take as a global company to adapt to the market circumstances," Prevent
chief executive Joze Kozmus told the press in Slovenj Gradec on Wednesday, 22
March.
Sugar Factory Records SIT 413m Losses in 2005
Slovenia's sole sugar factory in Ormoz last year lost almost SIT 413m (EUR 1.72m),
according to unaudited results published in the daily Vecer on Wednesday, 22 March.
This is 42% more than in the same period of 2004, when losses stood at SIT 241m
(EUR 1.01m). Net sales revenues last year reached SIT 10.07bn (EUR 42m), which is
a little less than the previous year when they amounted to SIT 10.5bn (EUR 43.8m).
Labour Ministry Wants to Upgrade the Employment Service
The Ministry of Labour, Family and Social Affairs has set the upgrading of the
National Employment Service as one of its top priorities over the next two years. In
particular, the number of job counsellors will be raised to improve the quality of
counseling, Minister Drobnic told the press on Thursday, 23 March.
EU Foreign Ministers Discuss EU Future without Enlargement
The future of the EU topped the agenda of a meeting of EU foreign ministers,
however, enlargement was not one of the topics, Slovenian FM Dimitrij Rupel said as
he came out of the meeting in Brussels on Thursday, 23 March.
Minister Claims Slovenia, Macedonia Close to Environment Deal
Environment and Spatial Planning Minister Janez Podobnik said that Slovenia and
Macedonia would in the future sign an agreement on cooperation between the
country's environment ministries, after meeting his Macedonian counterpart Zoran
Sapuric in Skopje on Friday, 24 March.
Slovenian Archbishop Rode Elevated to Cardinal
Slovenian Archbishop Franc Rode was elevated to cardinal at a ceremony in St.
Peter's Square on Friday, 24 March in which Pope Benedict XVI formally installed 15
new "princes of the church."