Slovenia Business Week no. 20, May 27, 2007
Table of Contents:
HEADLINES ............................................................................................................................. 3
Petrol Biggest by Revenue, Lek by Profit .............................................................................. 3
Slovenia Welcomes EU Directive on Cutting Roaming Prices ............................................. 3
Pharma Company Krka Receives Excellence Award ............................................................ 4
INTERNATIONAL COOPERATION ...................................................................................... 5
Official: Slovenia Supports Regional Integration in the Balkans .......................................... 5
Drnovsek Receives Incoming Yemeni Ambassador .............................................................. 5
Slovenia Opens Consulate in Samara, Russia ........................................................................ 5
EU Issues Discussed During Molterer's Visit ........................................................................ 6
EUROPEAN UNION ................................................................................................................. 6
British Minister Praises Slovenian EU Presidency Preparations ........................................... 6
Podobnik, Bursik Discuss Cooperation in Environmental Issues .......................................... 7
EU Ministers Debate Future of European Rural Areas .......................................................... 8
Proposed Farm Aid Cuts Not to Affect Slovenia ................................................................... 8
Report Finds EU Presidency Preparations on Track .............................................................. 8
EU Adopts Leipzig Charter .................................................................................................... 9
Slovenia Happy with Agreement on TV Without Frontiers .................................................. 9
LEGISLATION ........................................................................................................................ 11
Government Adopts Three Laws on Provinces .................................................................... 11
STATISTICS/FORECASTS .................................................................................................... 12
Business Confidence at Its Strongest So Far ........................................................................ 12
FINANCE................................................................................................................................. 13
Financiers Debate Loans to SMEs ....................................................................................... 13
NLB Acquires Kosovo Bank BRK ...................................................................................... 13
Vizjak: Clearing Debt Repayment Through Economic Cooperation ................................... 13
Debt Increase Threatens Financial Stability, Central Bank Says ......................................... 14
Ljubljana Stock Exchange .................................................................................................... 14
REGIONAL INFORMATION ................................................................................................ 16
Motorway Company Signs Contracts for Maribor Ring Roads ........................................... 16
Government Fulfilled its Promises to Region, PM Says ...................................................... 16
Second Tube Ready, Tender Only Hurdle to Full Tunnel ................................................... 17
BRANCH INFORMATION .................................................................................................... 18
Vizjak Announces Legislative Changes over Green Power ................................................. 18
Economist, Exec Disagree about Future of Slovenian Retail .............................................. 18
UN Tourism Official Says Innovation, Cooperation Necessary .......................................... 19
COMPANIES ........................................................................................................................... 20
Sava Reports 50% Increase in Q1 Profit .............................................................................. 20
Mercator Acquires Croatian Grocer Presoflex ..................................................................... 20
Droga Kolinska Decides to Squeeze Out Small Shareholders ............................................. 20
Railways Still in the Red ...................................................................................................... 21
Jansa Says State Will Keep Minor Stake in Gorenje ........................................................... 21
Publisher Vecer Posts EUR 717,000 in Profit in 2006 ........................................................ 22
Business School Founds Sustainable Development Association ......................................... 22
Mercator Sees Sales Soar, Profits Marginally Higher .......................................................... 22
Luka Koper's Sales, Net Profit Up ....................................................................................... 23
Economy Minister States Support for Inventive Companies ............................................... 23
Logistics Group Sees 10.9% Rise in Sales ........................................................................... 24
Cabinet Appoints Paulin Acting Director of STA ............................................................... 24
Gorenje Ups Revenues, Profit in Q1 .................................................................................... 25
Experts Agree Slovenian Companies Not Innovative Enough ............................................ 25
Skimar Saw Revenues Rise, Profit Fall in 2006 .................................................................. 26
Reporters Flocking to Slovenia for Mass Test Drive ........................................................... 26
Austrian Companies to Invest in Spa Complex in NE Slovenia .......................................... 27
SLOVENIA IN BRIEF ............................................................................................................ 28
Ministers Adopt Zupan's Proposal on Bologna Process Evaluation .................................... 28
EU Interior Ministers Wrap Home Policy Strategy Meeting ............................................... 28
Government Adopts Decree on Classified Data Protection ................................................. 28
Mramor Not to Stand for Central Bank Governor ............................................................... 28
Ministers Agree Preparations for Schengen Accession Going Well .................................... 28
Exhibition on Koper Port's 50th Anniversary Opened ......................................................... 28
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HEADLINES
Petrol Biggest by Revenue, Lek by Profit
Energy group Petrol topped the list of biggest Slovenian companies in terms of revenues in
2006, while pharmaceuticals company Lek, part of the Novartis group, topped the list in terms
of profit, shows a survey of the 300 biggest Slovenian companies published by daily Delo
Energy group Petrol topped the list of biggest Slovenian companies in terms of revenues in
2006, while pharmaceuticals company Lek, part of the Novartis group, topped the list in terms
of profit, shows a survey of the 300 biggest Slovenian companies published by daily Delo.
Delo's business supplement, Delo FT, points out on Monday, 21 May that Petrol took the title
of revenue king in Slovenia for the ninth time since 1990. In 2006, the company generated
revenues of EUR 1.89bn, to lead retailer Mercator, which finished the year with revenues of
EUR 1.69bn.
Mercator managed to close the gap, as the difference between the two in revenues fell from
33% in 2005 to 11% in 2006. Mercator increased its revenues by 36%, while Petrol's were up
14%.
The two are followed on the list by carmaker Revoz (EUR 1.01bn), technical goods retailer
Merkur (EUR 814m), energy group HSE (EUR 787m), home appliance group Gorenje (EUR
752m) and Lek (EUR 744m).
While Lek's net profit fell by 18% last year, the company managed to hold on to its lead on
the list, with a profit of EUR 114.76m. It was followed by Slovenian rival Krka, which
finished the year with a profit of EUR 113.1m. Telco Telekom Slovenije was third with a
profit of EUR 96.4m.
Behind the top three were Mercator (EUR 75.9m), mobile operator Mobitel (EUR 44.23m),
Petrol (EUR 39.6m), cigarette distribution company Tobacna Ljubljana (EUR 39.2m), HSE
(EUR 36.3m), grid operator Eles (EUR 30m) and Revoz (EUR 26.7m).
Delo FT also breaks down the leaders according to their geographic position: Petrol and
Mercator are the biggest companies in central Slovenia, Revoz tops the list in SE Slovenia,
chemical company Impol is the biggest in northeastern-most Slovenia and Gorenje in the mid
NE of Slovenia.
Merkur heads the pack in the north of Slovenia, while in the west, construction company
Primorje and gaming chain Hit lead the pack.
Slovenia's top employer in 2006 out of the listed companies was Mercator, which had 12,462
employees. Postal company Posta Slovenije was second (6,317 employees), followed by
Gorenje (5,761), Krka (4,006), clothes company Mura (3,371), retail chain Engrotus (2,827),
Lek (2,772) and Merkur (2,602).
To be listed among the Delo FT's Top 300, a company had to generate revenues of a little
under EUR 29.2m or make a profit of over EUR 1.25m last year. A total of 12 companies
exceeded revenues of EUR 417m, while 99 companies generated a profit in excess of EUR
4.17m.
Slovenia Welcomes EU Directive on Cutting Roaming Prices
Slovenian MEPs have welcomed the new EU directive aimed at bringing down mobile phone
roaming charges, which was adopted by the European Parliament in Strasbourg
Slovenian MEPs have welcomed the new EU directive aimed at bringing down mobile phone
roaming charges, which was adopted by the European Parliament in Strasbourg on
Wednesday, 23 May. Major Slovenian mobile operators meanwhile say the directive is strict,
but they intend to respect it as it agrees with their business policy.
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Slovenian MEP Romana Jordan Cizelj (EPP/SDS) pointed out that Slovenians were still
making the majority of their roaming calls from the countries of the Balkans, where the
directive will not be in force.
Alojz Peterle (EPP/NSi) supported the directive, saying that it opened up space for innovation
based on new technologies, and solutions that bring lower prices to the market and added
value to the final customer.
Borut Pahor (PES/SD) meanwhile said that certain telecommunication companies would not
be satisfied with the legislative solution. It is a decision which favours the customer, said
Pahor.
The Agency for Post and Electronic Communications (APEK) welcomed the directive, saying
that it would undoubtedly benefit Slovenian and all European users of mobile phone services.
According to the APEK, the directive is a direct regulation of electronic communication
services on the EU level, which means domestic mobile operators will now have to respect it
completely and directly.
The biggest Slovenian mobile operator Mobitel assessed the directive as strict, but said it
would respect it. Lower prices are also in line with the company's guideline to provide its
users with the best service possible, the company told STA.
As Slovenia is a bordering EU country, it means that Slovenians make the majority of their
roaming calls outside of the EU. Mobitel will advocate lower prices in those countries as they
are frequently visited by Slovenian citizens, the company said.
Simobil, Slovenia's second-largest mobile operator, meanwhile told STA that its prices for
roaming service were to come close to the prices of calls within the national network, which it
says are the lowest prices on the Slovenian market.
According to the company, the majority of revenues from roaming service are generated from
calls made by foreign citizens visiting Slovenia. The directive will considerably cut revenues
in that segment, Simobil said.
Pharma Company Krka Receives Excellence Award
Pharma company Krka was awarded as the company that employed the highest number of
experts in 2006
Pharma company Krka was awarded as the company that employed the highest number of
experts in 2006 at a two-day international forum of excellence in Otocec on Friday, 25 May.
"Krka is a successful, attractive and development-oriented company that has the expertise to
enhance, improve and include a growing number of employees in solving necessary
globalisation issues," Economy Ministry State Secretary Andrijana Starina Kosem said in her
address to the meeting.
"Krka's success presents guidelines for Slovenia and a beacon for everybody else," Starina
Kosem added.
Krka chairman Joze Colaric said that 40% of the company's workforce was employed abroad,
mainly between Vladivostok and Dublin. He believes that people are of key importance for
positive indicators.
Krka employs quality professionals because it has to, Colaric said and added that it opened
500 new jobs last year, while it planned to hire 600 workers this year, including 200 in
Slovenia.
Starina Kosem said that the conference confirmed in practice the measures taken by the
government and the ministry to promote entrepreneurship and increase the competitive ability
of the Slovenian economy.
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INTERNATIONAL COOPERATION
Official: Slovenia Supports Regional Integration in the Balkans
Economy Ministry State Secretary Andrijana Starina Kosem has told a business conference in
Sarajevo that Slovenia supports regional integration in the Balkans, especially economic
integration, where there are still many opportunities
Economy Ministry State Secretary Andrijana Starina Kosem has told a business conference in
Sarajevo that Slovenia supports regional integration in the Balkans, especially economic
integration, where there are still many opportunities.
"The implementation of the Central European Free Trade Agreement (CEFTA) in countries in
the region will be a significant contribution to the further stabilisation and the strengthening
of economic and political ties," she said on Tuesday, 22 May.
Starina Kosem was quoted by the Economy Ministry as saying that the agreement not only
eliminates barriers to trade, it also determines procedures for the resolution of disputes.
It will have a positive impact on trade between the countries in the region, boost foreign direct
investment and strengthen connections between companies from different countries, she said.
Starina Kosem also talked about Slovenia's EU presidency in the first half of 2008, saying that
this would be an opportunity for the country to affirm its standing as a bridge to the Western
Balkans.
That way Slovenia will strengthen its political and economic ties with the region, she said at a
conference that was organised by the Slovenian logistics group Intereuropa.
Drnovsek Receives Incoming Yemeni Ambassador
In the meeting, Drnovsek expressed interest in strengthening Slovenian-Yemeni relations
President Janez Drnovsek received on Thursday, 24 May the credentials of the incoming nonresident Yemeni Ambassador to Slovenia Ahmed Alwan Mulhi Al-Alwani. In the meeting,
Drnovsek expressed interest in strengthening Slovenian-Yemeni relations, the president's
office said in a press release.
Al-Alwani, who is headquartered in Vienna, acquainted Drnovsek with the efforts of the
Yemeni government for the democratisation and modernisation of Yemen and said his
country saw the EU as a role model.
Yemen is trying to balance traditional values of its people with requirements and standards of
modern democratic societies, the ambassador added.
Drnovsek meanwhile said that Yemen enjoyed Slovenia's full support in efforts to boost its
ties with the EU, the president's office added.
Al-Alwani also handed a copy of his credentials to the head of the Foreign Ministry's
Directorate for European Affairs and Bilateral Relations, Bogdan Benko.
Slovenia does not have diplomatic representation in Yemen, the Foreign Ministry told STA.
Slovenia Opens Consulate in Samara, Russia
This is the second Slovenian consulate in Russia after the one in St. Petersburg, which opened
in 2004
Slovenian Ambassador to Russia Andrej Benedejcic inaugurated a Slovenian consulate in the
Russian city of Samara on Wednesday, 23 May in what the Foreign Ministry said coincided
with the 15th anniversary of diplomatic relations between the two countries, to be celebrated
on Friday, 25 May.
This is the second Slovenian consulate in Russia after the one in St. Petersburg, which opened
in 2004. The consulate in Samara is headed by Nikolai Yurievich Ulyanov.
5
On the sidelines of the inauguration, representatives of ten Slovenian companies met for a
conference with their Russian business partners.
Samara is situated in the Volga Federal District, which plays an important role in Russia's
economic and social development, the Foreign Ministry said in a press release.
EU Issues Discussed During Molterer's Visit
Austrian Vice Chancellor Wilhelm Molterer and Slovenian officials discussed cooperation in
the EU and bilateral ties
Austrian Vice Chancellor Wilhelm Molterer and Slovenian officials discussed cooperation in
the EU and bilateral ties during Molterer's visit here on Friday, 25 May. Slovenian
preparations for the EU presidency in the first half of 2008 and top issues facing EU finance
ministers was the focus of Molterer's meeting with Slovenian counterpart Andrej Bajuk.
According to Bajuk, many open issues in the area of public finances face the EU, which may
have to be resolved during Slovenia's stint at the helm of the bloc. Bajuk made a special
mention of the pilot project Austria intends to carry out in the area of value added tax.
Speaking about the project, which would see the tax carrousel trimmed by levying VAT only
on the end consumer, Bajuk said that Slovenia supports efforts to simply the tax systems in
the EU. He added, however, that there were many other issues that also needed tackling.
Meanwhile, Molterer spoke of the excellent relations between Slovenia and Austria at the
press conference. "As the vice chancellor and finance minister I intend to do everything in my
power to ensure that these excellent relations are fostered," he said.
He echoed Bajuk's view that a number of issues relating to finances needed to be resolved in
the EU. According to him, key issues include VAT, tax evasion, cooperation in financial
services, financial transparency and the operations of venture capital funds.
"There is also the politico-economic debate in the eurozone, in which our countries can, in my
opinion, make a great contribution due to the structure of our economies. But most important
is ensuring a greater contribution of small- and medium-sized companies for economic
growth and job creation," he said.
Bajuk also said that the EU must give equal treatment to businesses of all sizes in shaping
legislation so "as not to ensure the competitiveness of only the biggest organisations".
"Specifically I'm talking about the drafting of an insurance directive, where it is the interest of
countries like Slovenia that smaller organisations are included," Bajuk said.
The Austrian and Slovenian ministers welcomed the idea to allow EU citizens to borrow
money from any EU bank and the idea of European bank cards. Bajuk added that this was not
only for the countries to decide on, but for the "private sector to get involved".
Apart from Bajuk, Molterer met Slovenian Prime Minister Janez Jansa during his visit here.
In a press release following the meeting, Jansa's office said that the pair spoke about areas
where the countries could strengthen ties in the framework of the EU.
Molterer and Jansa also agreed that efforts to find a constructive solution to the issue of
Slovenian-German city limits in the Austrian province of Carinthia must continue. Molterer
said at a press conference that efforts were underway to achieve a wide consensus on the
issue.
EUROPEAN UNION
British Minister Praises Slovenian EU Presidency Preparations
Interview
British Minister of State for Europe Geoff Hoon praised on Wednesday, 23 May Slovenia's
preparations for its upcoming stint as EU president. He said that the country's spell would
result in shifts in important EU issues as he met EU Affairs State Secretary Janez Lenarcic.
6
According to Hoon, the EU presidency is a "relay race and not a sprint to the finish", meaning
that states have to be competent and clear as to their ambitions during their spells as EU
president.
"This is a process of moving important issues, important questions from one presidency to the
next. This is a team effort and that is why Slovenia is doing so well in looking at the
experience of other countries, looking at the issues that are likely to arise and ensuring that it
can move them through the presidency," Hoon told STA in and interview.
Moreover, Great Britain and Slovenia are very good friends and the British have offered some
practical and technical advice as to how the presidency is organised, the minister said.
While previous EU presidents wanted to have a great set of achievements at the end of their
six-month stints and resolve these matters, modern politics are more complex, Hoon said.
This means that Slovenia should mainly try to be a team player and make sure that problems
get solved during its spell, he added.
According to Hoon, Great Britain wants an amended EU treaty, something similar to the
amendments to the Treaty of Rome. He said that the French were also increasingly calling for
an ordinary treaty that would not require a referendum, however, the final result depended on
the outcome of talks in Brussels.
Asked to comment on a call by Italian Prime Minister Romano Prodi for a Europe of two
tiers, Hoon replied that the eurozone and the Schengen agreement already allowed some states
to integrate in different ways than others.
"But, the most important characteristic of the EU is that it has a single legal space and that we
all signed up to essentially the same legal changes. That has allowed the single market to
function and to flourish," Hoon said.
Asked how Great Britain supports Turkish endeavours to join the EU, Hoon replied that talks
on Turkey's EU membership were taking place between Turkey and the EU.
"We want Turkey to make the necessary reforms in order to allow it to become a member of
the European Union. We accept that there is still a long way to go in those negotiations. We
need to continue the process and hope that Slovenia in the course of its presidency will see the
opening of a number of new negotiating chapters", Hoon further told STA.
Podobnik, Bursik Discuss Cooperation in Environmental Issues
Environment and Spatial Planning Minister Janez Podobnik and his Czech counterpart
Martin Bursik agreed on close ties between experts
Environment and Spatial Planning Minister Janez Podobnik and his Czech counterpart Martin
Bursik agreed on close ties between experts, especially as part of the preparations for the two
countries' EU presidencies, as they met in Prague on Monday, 21 May.
Podobnik told STA Bursik wanted to know how Slovenia was preparing for its stint at the
helm of the EU in the first half of 2008, as the Czech Republic will preside the bloc a year
later.
It was agreed that a number of Czech experts would visit Slovenian teams, explained
Podobnik, who met Bursik as part of a working visit dedicated to climate change.
The ministers also agreed on cooperation in the field of forestry and wood industry. The
Czech Republic has rich experience in this field, while in Slovenia forests are an important
carbon sink and wood biomass is an important source of energy, Podobnik said.
He added that wood would be one of Slovenia's priorities at the informal meeting of
environment ministers next year.
Podobnik presented the distribution of emission coupons in Slovenia, as the Czech Republic
is facing problems in this area because its main energy source is coal. The ministers also
discussed CO2 emissions of cars.
7
EU Ministers Debate Future of European Rural Areas
Slovenia's Iztok Jarc underlined the importance of the promotion of innovation and quality,
and alternative sources of income
EU agriculture ministers debated the development of rural areas and the role that the Common
Agriculture Policy plays in these regions as they held an informal meeting in Mainz,
Germany, on Tuesday, 22 May. Slovenia's Iztok Jarc underlined the importance of the
promotion of innovation and quality, and alternative sources of income.
Farmers must react quickly to new development trends, technologies and climate change, Jarc
told his counterparts according to the Agriculture Ministry.
Agriculture, which needs to play a multi-purpose role, must be adaptable and focused on
competitiveness, he said, adding that the specific potentials of individual regions needed to be
developed.
A development approach that includes the promotion and cooperation of all stakeholders at
the local level is the right response to the future challenges in rural development, he added.
The debate also stressed the importance of dialogue with young people and the creation of
appropriate living and working conditions in the countryside.
Proposed Farm Aid Cuts Not to Affect Slovenia
European Agriculture and Rural Development Commissioner Mariann Fischer Boel said that
the Commission wanted to make rapid cuts to direct aid to EU farmers in a bid to funnel more
money into rural development
European Agriculture and Rural Development Commissioner Mariann Fischer Boel said on
Tuesday, 22 May that the Commission wanted to make rapid cuts to direct aid to EU farmers
in a bid to funnel more money into rural development. Slovenia will not be affected by the
cuts, Agriculture Ministry said.
According to the ministry, EU newcomers currently do not get the full amount of direct aid,
which they are expected to get with the next EU budget period. This means that Slovenian
farmers would not be affected until they reach the level of payments from old EU members.
Fischer Boel said at the close of a three-day informal meeting of EU agriculture ministers in
Germany's Mainz that she wanted to increase the money that goes for rural development and
organic farming.
She proposed that the share of money for these areas be increased from the current 5% to
10%, what she termed a "moderate increase". Direct payments for farmers amount to EUR
35bn per year.
Report Finds EU Presidency Preparations on Track
The report says the preparations between November and April were carried out in
accordance with the time-line and would intensify in June, when the final phase begins
The government confirmed on Thursday, 24 May a report on preparations for the Slovenian
EU presidency in the first half of 2008. The report says the preparations between November
and April were carried out in accordance with the time-line and would intensify in June, when
the final phase begins.
In the analysed period an 18-month programme for successive presidencies of Germany,
Portugal and Slovenia was adopted and the programme for Slovenia's six-month stint was
being drafted, the Government Office for European Affairs (SVEZ) said in a press release.
In the second half of 2007 the preparations would intensify at all levels, especially
programming. The inherited EU agenda will be updated when Portugal takes over from
Germany on 1 July; on the basis of the updated agenda the preparations for Slovenian
presidency will continue.
8
By 1 June Slovenia has to deliver to the EU Council the official draft of the calendar of main
events during its presidency, so intensive harmonisation with competent bodies was being
carried out in the previous months.
EU Adopts Leipzig Charter
EU member states adopted the Leipzig Charter on sustainable European cities, which has
been hailed by Slovenian Environment and Spatial Planning Minister Janez Podobnik as an
"additional motivation for an integral approach to urban development."
EU member states on Thursday, 24 May adopted the Leipzig Charter on sustainable European
cities, which has been hailed by Slovenian Environment and Spatial Planning Minister Janez
Podobnik as an "additional motivation for an integral approach to urban development."
The charter is a major step forward, as the EU is paying increasing attention to the urban
dimension, said Podobnik, who signed the charter along with his counterparts responsible for
urban development.
Podobnik told STA that the EU did not have a specific urban development policy, but there
were appropriate instruments in cohesion policy.
Slovenia will allocate funds for urban development in the programming documents for the
2007-2013 budget period, he said.
The charter says that all dimensions of sustainable development should be taken into account
at the same time and with the same weight. These include economic prosperity, social balance
and a healthy environment.
The proposed policies include making greater use of integral urban development policy
approaches, creating high-quality public spaces, modernising infrastructure, and proactive
innovation.
Slovenia Happy with Agreement on TV Without Frontiers
EU culture and audiovisual ministers reached a compromise on a new directive on
audiovisual services which sets minimum common regulations in protecting children when
watching regular TV as well as on-demand content
EU culture and audiovisual ministers on Thursday, 24 May reached a compromise on a new
directive on audiovisual services which sets minimum common regulations in protecting
children when watching regular TV as well as on-demand content. Commenting on the
agreement, Culture Minister Vasko Simoniti said Slovenia was happy with the solution
although its legislation was more restrictive.
The new piece of legislation, which upgrades the TV without Frontiers Directive, also
liberalises advertising, whereby it boosts competition in the media space.
According to Simoniti, the hardest part of lengthy negotiations on the new directive was the
definition of advertising, in particular product placement.
This is fully banned in children's programmes, while advertising is allowed only in shows that
are longer than 30 minutes, Simoniti explained. Product placement is permitted in other
programmes, which is contrary to the practice so far.
The reformed directive gives but the minimum standards in audiovisual services, while the
hardest thing was to reach a compromise as to what extent member states can insist on
implementing stricter rules in their national laws.
The solution that the ministers backed is that member states can take measures against those
content providers who move their seat to another country so as to avoid tougher regulations at
home.
According to Simoniti, Slovenia is satisfied with the compromise as it acknowledges its effort
to protect the most vulnerable groups of consumers, in particular the youth.
9
The new solution allows advertising for 12 minutes an hour, while product placement in
programmes other than children's or news programmes will be allowed only provided the
viewers are notified of this at the outset, at the end and during every break in the programme.
An additional restriction on product placement prohibits the use of products that incite racial
or other hatred, and other products such as tobacco or prescription drugs.
The Audiovisual Media Services without Frontiers Directive, which is based on a 1989 law, is
expected to take effect this year, whereupon member states will have two years to transpose it
to their national legislation.
10
LEGISLATION
Government Adopts Three Laws on Provinces
The cabinet also discussed the bill on setting the borders, seats and names of future provinces
The government adopted on Thursday, 24 May three laws dealing with the powers, structure
and financing of provinces, Local Government and Regional Development Minister Ivan
Zagar told the press.
The cabinet also discussed the bill on setting the borders, seats and names of future provinces
and referred it to public debate. This will give stakeholders 60 days to voice their views on the
bill, Zagar said.
According to Zagar, the three bills present the basic package establishing the provinces.
Furthermore, the setting up of provinces will require changes to the legislation to define their
jurisdiction. That is why the cabinet drafted a special interdepartmental group to take part in
changing legislation, Zagar said.
According to expectations, Slovenia is to be divided into a maximum of 14 provinces.
11
STATISTICS/FORECASTS
Business Confidence at Its Strongest So Far
Buoyed by consumer confidence, business confidence in Slovenia reached its high watermark
in May, 14 percentage points above the long-term average
Buoyed by consumer confidence, business confidence in Slovenia reached its high watermark
in May, 14 percentage points above the long-term average, the Statistics Office said on
Friday, 25 May.
The seasonally adjusted business sentiment indicator for May was 1 percentage point above
April's figure and 8 points above that recorded in May 2006.
Consumer confidence index was 5 percentage points higher than the month before, mainly
owning to consumers' optimism about the financial state of their households in the following
12 months. The index is 9 percentage points above last year's average.
Outlook in manufacturing was driven by the rise in overall orders. The indicator reached the
highest level so far, 19 points above the long-term average and 1 point up on April.
In retail, the confidence indicator was also up one percentage point on April, mainly on the
back of expectations regarding sales.
The construction sector was more confident as well, the indicator gaining 2 points, while the
indicator in the services was down 4 points, according to the report from the Statistics Office.
The business sentiment indicator is a weighted average of the confidence indicators in
manufacturing, retail and the consumer confidence indicator, which are in turn calculated with
the aid of surveys on business trends in the fields.
12
FINANCE
Financiers Debate Loans to SMEs
Approaches in loans to small and mid-sized enterprises, and opportunities in the sector, were
in the focus of a four-day ICPE conference
Approaches in loans to small and mid-sized enterprises, and opportunities in the sector, were
in the focus of a four-day ICPE conference that began in Ljubljana on Tuesday, 22 May. "The
private sector is the motor of development. SMEs provide employment and growth," Finance
Minister Andrej Bajuk said in his keynote address.
Banks play a crucial role in this field, as they can provide better access to sources of finance,
Bajuk told the conference, which is organised by the Ljubljana-based International Centre for
Promotion of Enterprises (ICPE).
Former finance minister Dusan Mramor said that the business environment in Slovenia was
much more favourable for enterprises than several years ago, when it was very unstable.
Banks are much more competitive than they used to be, but now they have to focus on
information capital, improve efficiency and provide support to enterprises, he said.
According to Mramor, there are many SMEs in Slovenia that do not get as much money for
their operations as they could.
Development Minister Ziga Turk meanwhile stressed that companies need to accept the
growing clout of economies such as India's as an opportunity, not a threat.
"They are always an opportunity for good business," he said, adding that alongside global
players, there was always room for small, hi-tech companies.
NLB Acquires Kosovo Bank BRK
Slovenia's largest bank, NLB, signed a contract on the acquisition of a 77.75% stake in what
is the fourth largest commercial bank in Kosovo
Slovenia's largest bank, NLB, on Wednesday, 23 May signed a contract on the acquisition of
a 77.75% stake in what is the fourth largest commercial bank in Kosovo. According to a press
release from NLB, BRK holds a 6% market share in the province.
The bank says the latest acquisition rounds off the group's penetration of the Kosovo market
after it bought the third largest bank there, Kasabank Pristina, in April. NLB plans a merger
between the two banks, which would give them a combined market stake in excess of 18%.
According to the press release, the take over of BRK paves the way for even closer
cooperation and is seen as a further boost to the excellent business ties between Slovenia and
Kosovo, where several Slovenian companies operate.
A bank operating since 2001, BRK had total assets of EUR 63.7m in December 2006.
Vizjak: Clearing Debt Repayment Through Economic Cooperation
Economy Minister Andrej Vizjak came out of Slovenian-Russian trade commission meeting
saying that economic cooperation is increasing through considerable trade growth and
mutual investments
Economy Minister Andrej Vizjak came out of Slovenian-Russian trade commission meeting
on Friday, 25 May saying that economic cooperation is increasing through considerable trade
growth and mutual investments. The coming years seem even brighter due to Russian
investments as part of its clearing debt repayment, he told the press.
Slovenia and Russia are discussing concrete ways of how Russia can repay its US$ 129m debt
to Slovenia, Vizjak and head of Russia's Federal Agency for Construction, Housing and
Communal Infrastructure Sergey Kruglik told the press after the meeting.
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The pair agreed that the goal of the commission was not to repay the debt as quickly as
possible, but as effectively as possible.
"We all want the repayment of the clearing debt to take the economic cooperation between the
countries even further," said Vizjak.
"We wish to find concrete and mutual benefits from cooperation," he explained, adding that
he believed projects and specific deals would soon be on the table.
Meanwhile, Kruglik said the task was to remove the remaining obstacles that might hinder
future cooperation between the countries.
Economic cooperation between the countries is seeing substantial growth, said Vizjak, adding
that trade between had increased by 20% compared to 2005 and already exceeded US$ 1bn.
Russia and Slovenia are to detail the process of debt repayment in an agreement, which is
expected to be drafted and approved by the end of the year.
Russia's clearing debt to Slovenia, which Russia is to settle in goods and services over three
years, has been a topic of discussions since Slovenia's independence in 1991.
Although the countries reached an agreement in principle in December 2003, Russia later
shied away from the deal.
Talks on the issue hit a standstill in 2004 and were opened again in May this year, during a
visit by Prime Minister Janez Jansa to Moscow, as Russia unveiled a new proposal.
Debt Increase Threatens Financial Stability, Central Bank Says
The Slovenian finance system remains relatively stable and its direct exposure to risks has
decreased after the changeover to the euro
The Slovenian finance system remains relatively stable and its direct exposure to risks has
decreased after the changeover to the euro. However, indirect exposure to risks is growing
quickly and is fuelled by the increase in debts of households, companies and banks, a central
bank official said as he presented the bank's report on Friday, 25 May.
Bozo Jasovic, a member of the Banka Slovenije Board of Governors, added that the
introduction of new financial instruments was also contributing to the rise of debt.
Households increase their debts at the rate of 24% a year, and banks lower their credit
standards and offer new forms of long-term loans in a bid to maintain high growth in the
segment, Jasovic said as he presented the bank's report on financial stability in Slovenia.
He pointed to household loans linked to investment products and those which are pegged to
the Swiss frank's exchange rate to the euro. These loans currently represent 20% of all
household loans and are a liability in case of the appreciation of the frank, he warned.
Financial institutions are moreover finding it increasingly more difficult to assess the
exposure of companies to risks as the country's economy becomes increasingly globally
integrated.
The upbeat state of the Slovenian financial market is the consequence of favourable
conditions on the global market, Jasovic said.
Ljubljana Stock Exchange
The SBI 20 benchmark index ended the week at 9,369.17
Last week amounted to a cold shower for investors on the Ljubljana Stock Exchange (LJSE),
as a long expected correction set in the middle of the week, sending share prices into the
doldrums. Yet Thursday, 24 May brought an end to the slide and the SBI 20 benchmark index
ended the week only 26.8 points (0.28%) lower at 9,369.17.
Technical goods retailer Merkur was the busiest issue of the week and recorded EUR 24.90m
in turnover while losing 4.54% to EUR 312.24 as supply outpaced demand.
Pharma company Krka traded in the black, adding 0.12% to EUR 902,74 on volumes
amounting to EUR 12.58m. Another EUR 2.15m with the share was done in block deals.
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Telco Telekom Slovenije accounted for a good share of trading as well, adding 2.5% to EUR
452.13 despite lower-than-expected net profit for the first quarter.
On the free market, most trading was done in shares of investment companies, which
nevertheless lost on average to take the PIX investment fund index down 43.6 points (0.68%)
to 6,282.55.
In a week of two halves, brokers closed deals worth EUR 79.28m, nearly 40% of which came
in block deals.
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REGIONAL INFORMATION
Motorway Company Signs Contracts for Maribor Ring Roads
The EUR 28.1m contracts should eliminate traffic jams in Slovenia's second largest city,
Maribor Mayor Franc Kangler said after the signing
Motorway company (DARS) signed on Tuesday, 22 May contracts for carrying out final
works on the eastern Maribor ring road and the commencement of works on the western ring
road. The EUR 28.1m contracts should eliminate traffic jams in Slovenia's second largest city,
Maribor Mayor Franc Kangler said after the signing.
The contracts include the construction of a 250-metre tunnel, worth EUR 22.7m, which
should be completed in 20 months, and the EUR 5.4m construction of the western ring road.
The tunnel will be built by the SCT Ljubljana and CPM Maribor road construction
companies, while the western ring road will be built by the CPM Maribor and GIZ Gradis
Ljubljana in 14 months.
Government Fulfilled its Promises to Region, PM Says
Prime Minister Janez Jansa said on Wednesday, 23 May that the government had fulfilled its
promises given to the mid north-east region of Savinjsko-salesko when it first visited it two
years ago
Prime Minister Janez Jansa said on Wednesday, 23 May that the government had fulfilled its
promises given to the mid north-east region of Savinjsko-salesko when it first visited it two
years ago. "We have discovered that all the promises, bar the ones that require a longer
completion date, have been met," Jansa told the press in Mozirje.
The key issue when the cabinet first toured the region was whether Savinjsko-salesko would
become one of the provinces and it is clear today that it will, the prime minister said.
The second major issue was lack of funds for municipalities in the region and the amended
municipalities funding act gave all of them more money, Jansa added. According to him, the
amended legislation gives the municipalities 12% more funds, meaning some EUR 4m.
The third important issue was the listing of large regional projects in the resolution on
national development projects, such as the sixth reactor of the Sostanj coal-fired plant and the
third development axis, a road link between Savinjsko-salesko and SE Slovenia. The
resolution allocates over EUR 2bn for the project, Jansa said.
Transport Minister Janez Bozic meanwhile said that the final course of the motorway should
be known in September, meaning the construction could begin in late 2009.
Jansa also said that the EUR 10m waste water treatment plant in the Saleska Valley was being
built, new premises of the social care centre were opened in Mozirje and an entrepreneurial
education centre launched in Velenje.
The economy in the region is also doing relatively well and unemployment in the region was
down by 20% in the past two years, Jansa said as the two-day government tour of the region
was drawing to a close.
The region also contains several large companies, such as home appliances maker Gorenje,
while another reason for satisfaction is the successful development of small- and mediumsized companies, Jansa said and called on companies to apply for EU funds in the 2007-2013
period.
Jansa also positively assessed the development potential of the region. Given the current
trends and the cooperation of all involved as well as the creation of provinces, this region will
become "one of the most successful in the country", Jansa said.
16
The prime minister and his cabinet also held a meeting with the mayors, executives, deputies
and upper chamber councillors later in the evening.
He told the assembled representatives that 60 various visits took place during the
government's trip in the region and that many burning issues had been resolved in the past two
years.
Velenje Mayor Srecko Meh presented the successful business operations of the companies in
the region, however, pointed to lengthy denationalisation procedures and to the need for more
calls for bids for development projects.
Justice Minister Lovro Sturm replied that the cabinet is gearing up to increase the pace of
such procedures and is drafting an act on speeding up denationalisation issues.
Economy Minister Andrej Vizjak told the participants that the ministry was drafting a EUR
50m call for bids for tourism infrastructure.
Bozic meanwhile added that the reconstruction of the road towards the Logarska Valley
would require between four and five additional years and that the state allocated EUR 3m for
the project.
Second Tube Ready, Tender Only Hurdle to Full Tunnel
Workers managed to complete the dig of the second tube of a key tunnel on a section that will
round off the ring road around Ljubljana
Workers on Thursday, 24 May managed to complete the dig of the second tube of a key
tunnel on a section that will round off the ring road around Ljubljana. While works near
completion, the same cannot be said for a tender process for tunnel equipment, which
threatens to push back the opening date, set for the end of this year.
Having dug out the first of the two tubes of the Sentvid tunnel in December of last year, the
contractor staged a breakthrough ceremony for the second tube of the 1,033-metre tunnel on
the only remaining incomplete section of the Ljubljana ring road.
The event is considered a major achievement, as the digging required complex excavations
due to the nature of the rock in the area and the structure of the tunnel, the Slovenian
Motorway Company DARS wrote in a press release. According to DARS, this is the most
demanding tunnel on the Slovenian motorway network.
DARS chairman Rajko Sirocic told a press conference on Thursday, 24 May that while work
was proceeding in line with the schedule, the timely opening of the tunnel was threatened by
the complications surrounding the tender for the tunnel equipment.
The public tender for electronic and other equipment was published as early as 2005, however
the contractor has not been selected yet. The main reason for the delay is appeals lodged by
companies seeking the EUR 9.4m contract, Sirocic explained.
DARS will enter into talks with the bidders next week to try and reach a solution so works
could get underway in June, allowing the completion of the tunnel by the end of the year, as
scheduled, he added.
17
BRANCH INFORMATION
Vizjak Announces Legislative Changes over Green Power
Slovenia will have to change its energy legislation after Brussels recently approved its system
of feed-in tariffs for renewable electricity
Slovenia will have to change its energy legislation after Brussels recently approved its system
of feed-in tariffs for renewable electricity. Economy Minister Andrej Vizjak has said that in
this way the country will meet Brussels' requirements over certain changes in the system.
Support measures in the Slovenian electricity act which set fixed prices for green electricity
purchase came under scrutiny by the European Commission after Competition Commissioner
Neelie Kroes voiced concern that the system of tariffs could run against state aid rules.
However, following months of analysis, the Commission in April approved Slovenia's system
of feed-in tariffs, which guarantee the purchase of electricity at fixed prices.
"This guarantees purchase at preference prices from qualified electricity producers. These are
producers of electricity from renewable sources, congregations and power plants using
domestic fossil fuels," Vizjak said in Brussels late on Monday, 21 May.
While the Commission does not believe the state aid in this case will distort competition on
the common market and has retroactively approved the measures from the energy act, the
legislation will have to be changed due to the Commission's demand for changes in financing.
Measures in the feed-in system have so far partly been financed through a parafiscal levy paid
by end users on their electricity consumption.
"This financing mechanism could have led to the discrimination of imported green electricity,
which would have had to contribute to financing the national support scheme without being
eligible to benefit from it," the Commission said in April.
Vizjak told STA that the country would have to look for new effective funding methods, one
of the options being to base them on the rated power rather than consumption as so far. Vizjak
expects legislative changes to be passed as early as this year.
Economist, Exec Disagree about Future of Slovenian Retail
The Slovenian retail sector will need to change many things in its mode of operation and
employ new strategies, Tajnikar said at the first strategic conference on development of retail
in Slovenia. He added that consolidation was still possible
The Economics Faculty dean and chairman of Slovenia's largest retailer presented on
Wednesday, 23 May opposing views on the state of the retail sector in Slovenia. While
economist Maks Tajnikar said there was still room for consolidation, Ziga Debeljak of
Mercator was convinced that the sector in Slovenia was saturated.
The Slovenian retail sector will need to change many things in its mode of operation and
employ new strategies, Tajnikar said at the first strategic conference on development of retail
in Slovenia. He added that consolidation was still possible.
Debeljak countered by saying that the process was completed. "The hands have more or less
been dealt," he said and added that the three largest Slovenian retailers hold 80% of the
market.
"The market is becoming saturated" and retailers would need to seek their opportunities for
growth in the largely unconsolidated markets of the former Yugoslavia, Debeljak said.
Bine Kordez, chairman of Merkur, Slovenia's largest retail hardware chain, agreed and said
that sales of home electronics would increase and that grocers would offer more and more of
such goods in their stores.
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Debeljak meanwhile said three major shifts were happening in Slovenian retail: a greater
emphasis on health, and healthy food, greater stress on partnership between suppliers and
retailers and an increase in awareness of consumers regarding socially responsible practices.
Debeljak also believes that the trend of construction of large shopping malls on the outskirts
of cities is in decline as consumers want conveniently located shopping centres.
Bojan Papic meanwhile called for legislation that would support retailers, especially through
the new trade act which would deregulate the sector.
Andrijana Starina Kosem, state secretary at the Economy Ministry, confirmed Papic's claims
and said that the existing legislation had been hindering the development of retail.
UN Tourism Official Says Innovation, Cooperation Necessary
Speaking at a regional UNWTO conference in the lakeside resort of Bled, Frangialli added
that tourists were no longer limited to a small number of destinations and that Europe's share
of all tourists was in decline
Francesco Frangialli, secretary general of the UN World Tourism Organisation (UNWTO),
said on Thursday, 24 May that maintaining the competitive ability of tourist destinations
required innovation and cooperation on the global and regional levels.
Speaking at a regional UNWTO conference in the lakeside resort of Bled, Frangialli added
that tourists were no longer limited to a small number of destinations and that Europe's share
of all tourists was in decline.
While 58% of all tourists world-wide visited Europe in 2000, the share now stands at 54.4%
and is expected to drop below 50% a decade from now, he said on day one of the two-day
conference of the UNWTO Commission for Europe.
Frangialli also said that Slovenia alone would find it increasingly difficult to attract visitors,
however, a joint promotion of neighbouring countries such as Croatia, Italy and Austria would
make it easier for tourists to decide to visit the country.
Zdenko Micic, state secretary at the Croatian Sea, Tourism, Transport and Development
Ministry, said there was room for cooperation between the countries, but wondered whether
the will existed to implement it.
Marjan Hribar, director general for tourism at the Economy Ministry, said that cooperation
was already taking place, mainly among companies.
Micic, also the chairman of the Commission for Europe, said that tourists were becoming
increasingly demanding and wanted more for less money.
Tourism should also adapt to climate change and the increasingly unpredictable weather
patterns that are causing people to decide at the last moment on where to travel, Micic said.
He sees Europe's potential in catering to high-end guests, which in turn requires investment in
facilities and personnel.
Economy Minister Andrej Vizjak said that Slovenia was aware of the importance of tourism.
The sector in the country is developing at two times the pace of the rest of the economy.
Results from the first three months of 2007 show an 8% rise in overnight stays and a 10% rise
in the number of visitors, which raises hopes for a record year. However, Vizjak agreed that
new products and innovation were necessary to attract guests.
Tourism contributes 5.5% to the EU's gross domestic product on average and provides jobs
for eight million people
19
COMPANIES
Sava Reports 50% Increase in Q1 Profit
Chemicals-through-tourism conglomerate Sava reported EUR 40.8m in net sales revenues for
the first quarter of this year
Chemicals-through-tourism conglomerate Sava reported EUR 40.8m in net sales revenues for
the first quarter of this year, which is up 16% on the same period last year, while its net profit
increased by 50% to EUR 6m.
The bulk of sales revenues (65%) was generated by its rubber division. Over a quarter of the
revenues (28%) came from tourism, while other divisions together contributed 7%. While
revenues in the rubber unit went up by 16% in Q1, those generated from tourism rose by 19%,
the company says in a press release on Monday, 21 May.
The group allocated a total of EUR 8.7m for investment, the most in the construction of a new
four-star hotel in Ptuj, which is due to open in September.
Financial investment topped EUR 37m, which went for the acquisition of Abanka Vipa
shares. When the transaction is completed in the second half of the year, Sava will control a
stake in excess of 23% of what is Slovenia's third-largest bank in terms of assets.
The conglomerate of some 30 companies plans to post EUR 185m in consolidated sales
revenues and EUR 30.6m in net profit for the whole of 2007, the press release adds.
Mercator Acquires Croatian Grocer Presoflex
Mercator, Slovenia's leading retailer, said it acquired 100% of Croatian grocer Presoflex for
an undisclosed sum, in a move that will strengthen the company's foothold on the crucial
Croatian market and increase its market share to 6%
Mercator, Slovenia's leading retailer, said on Monday, 21 May it acquired 100% of Croatian
grocer Presoflex for an undisclosed sum, in a move that will strengthen the company's
foothold on the crucial Croatian market and increase its market share to 6%.
Presoflex has 40 outlets in Croatia and an established brand, Mercator said in a press release,
adding that it would preserve the brand in Croatia and continue to develop it.
Mercator, which held a 3.8% market share in Croatia last year through its subsidiary
Mercator-H, with sales of EUR 280m, said this would raise its market share to 6%.
The contract was signed on Monday, 21 May by Mercator chairman Ziga Debeljak, MercatorH director Alan Krickovic and Presoflex owner and chief executive Josip Galic.
This is the latest move for Mercator in the Balkans, its key growth region, after a tie-up with
Serbian food company Swisslion-Takovo in March.
Last year Mercator entered a joint venture with the Serbian holding Rodic M&B, which
increased its share of the Serbian retail market to 8% to make it the second biggest retailer in
Serbia.
Mercator posted net sales of EUR 2.1bn for 2006, up 18.1% over the year before. The group's
net profit soared by 121.3% to EUR 30.1m, according to unaudited results.
Droga Kolinska Decides to Squeeze Out Small Shareholders
Their shares are to be transferred to Istrabenz
Shareholders of food company Droga Kolinska endorsed at the annual general meeting on
Monday, 21 May a proposal by the company's majority owner Istrabenz to squeeze out small
shareholders.
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Their shares are to be transferred to Istrabenz, the Koper-based energy-to-tourism
conglomerate, which already owns 93.6% of the stock, in exchange for compensation of EUR
16 per share, Droga Kolinska said.
This equals the price Istrabenz offered in its takeover bid, which closed on 28 March and
during which Istrabenz raised its stake from 60.29% to 90.91%.
Railways Still in the Red
The company has the potential to become successful, general manager Peter Puhan told the
press
Slovenske zeleznice, the national railway operator, posted a loss of EUR 1.3m for the first
quarter of 2007, as profits in cargo transport failed to offset losses in the passenger and
infrastructure divisions. The company has the potential to become successful, general
manager Peter Puhan told the press on Tuesday, 22 May.
The passenger transport division ended the quarter with a loss of EUR 1.6m, while
infrastructure maintenance ended EUR 2.24m in the red. The company posted a profit of EUR
1.42m in cargo transport.
According to Puhan, in order to turn the company around the management will have to
restructure expenditures, reduce the debt burden (which currently stands at EUR 256m),
reconstruct old infrastructure and eliminate bottlenecks.
One of the main problems is high labour costs, which account for 58% of all costs. Puhan,
who came to the post in March, said he wanted to bring the costs to below 50% during his
term as chairman.
"There will be no radical cuts, as we will try to find other reserves," he said, adding that wage
or payroll cuts would not be necessary.
He said the new business plan envisaged the reduction of the 10,000-strong workforce by 100
employees. The final decision will be made by the supervisory board this month.
As for infrastructure, Puhan said it was crucial to upgrade tracks on the 5th and 10th panEuropean transport corridors in order to raise speeds to over 160 km/h and even up to 250
km/h on some sections.
The rail market was liberalised this year and the door is open to foreign competitors, he
pointed out.
Puhan said that Slovenske zeleznice intends to "remain the leading operator and become the
first logistics company," but this would require a comprehensive upgrade of all segments of
the company.
Jansa Says State Will Keep Minor Stake in Gorenje
Prime Minister Janez Jansa said that it was in Slovenia's long-term interest to see successful
operation of home appliance manufacturer Gorenje and added that the state would probably
keep a minor stake in the company through the state-run Pension Fund Management (KAD)
Prime Minister Janez Jansa said on Tuesday, 22 May that it was in Slovenia's long-term
interest to see successful operation of home appliance manufacturer Gorenje and added that
the state would probably keep a minor stake in the company through the state-run Pension
Fund Management (KAD).
According to Jansa, the state will not keep a controlling stake in Gorenje and wants to ensure
that the company develops in line with the already plotted strategy that sees it as an
independent company and not an easy takeover target.
It is also in the state's interest that Gorenje consolidates its ownership, Jansa said. Moreover, a
capital share increase is a topical issue, he added as he visited one of Slovenia's largest
companies as part of the cabinet's visit to the mid north-east region of Savinjsko-saleska.
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Gorenje chairman Franjo Bobinac said that the company would increase its share capital, but
was not able to specify under what conditions and how.
He believes that the European Bank for Reconstruction and Development (EBRD) is still
interested in acquiring a stake in the Velenje-based company, however, the bank expects the
state to withdraw from Gorenje and its managers to buy a stake in the company.
Publisher Vecer Posts EUR 717,000 in Profit in 2006
Publishing house Vecer generated 1.9% more revenues in 2006 than in 2005
Publishing house Vecer generated 1.9% more revenues in 2006 than in 2005, as well as
posted a net profit of EUR 717,000, the company's supervisors said after holding a session on
Tuesday, 22 May.
The supervisors also accepted the management's proposal to allocate EUR 640,000 of the
company's EUR 1.08m of distributable profit for dividends.
The supervisors also discussed this year's Q1 results. The daily posted a net profit of EUR
117,000 in the period, while it posted a loss of EUR 53,000 in the January-March period last
year.
The supervisors also decided to propose Rok Strasek of the Koper Faculty of Management as
a new supervisory board member. Strasek will, if confirmed by the AGM on 28 June, replace
Stane Brglez, chairman of investment firm KBM Infond. Brglez stepped down after KBM
infond sold its 14.9% stake to investment firm Infond Holding.
Business School Founds Sustainable Development Association
The IEDC - Bled School of Management has established the Slovenian UN Association for
Sustainable Development aimed at raising social responsibility of leaders who would in turn
promote sustainable development
The IEDC - Bled School of Management has established the Slovenian UN Association for
Sustainable Development aimed at raising social responsibility of leaders who would in turn
promote sustainable development, the IEDC said in a pres release on Tuesday, 22 May.
The IEDC said that all Slovenian companies and other organisations that are socially
responsible could join the association, whose members are to meet for the first time on 7 June.
The founding members include home appliance manufacturer Gorenje, chemical-throughtourism conglomerate Sava, and energy group Petrol.
The association is a part of UN Global Compact, an international network for social
responsibility, which was established in 2000.
The network associates 2,500 companies, NGOs and universities from 90 countries, which are
committed to respect of human rights, labour standards and are environmentally responsible,
the IEDC said.
Mercator Sees Sales Soar, Profits Marginally Higher
The group around Mercator, Slovenia's leading retailer, posted net sales of EUR 537m for the
first quarter of 2007
The group around Mercator, Slovenia's leading retailer, posted net sales of EUR 537m for the
first quarter of 2007, up 23% year-on-year. Net profit increased by 2.4% to EUR 8.1m, the
company said on Wednesday, 23 May.
Excluding the revenues of its Serbian subsidiary M-Rodic, which was merged with the
Mercator group in the last quarter of 2006, net revenues grew by 9.4%.
The brisk revenue growth is attributed to successful performance in Slovenia, where retail
sales grew by 6% despite the fierce competition, as well as strong sales in all other markets.
Mercator chairman Ziga Debeljak told the press that Mercator had a 46% market share in
Slovenia last year.
22
Comparable profit before taxes, excluding the effect of extraordinary proceeds from disposal
of fixed assets, amounted to EUR 9.3m, which is 31 % more than in the same period of 2006.
At the annual general meeting on 27 June, Mercator shareholders will vote on dividends of 4
euros per share, which makes for a dividend yield of just over 1.3% at the current price on the
stock market.
According to board member Vera Aljanic Falez, shareholders will also be asked to endorse a
20% capital increase, which would bring the company fresh capital to the tune of EUR 200m.
"This is a large and important sum which suffices for the implementation of strategic tie-ups
in the next two- or three-year period," Debeljak said.
A part of the money will be used to finalise the tie-up agreed last year with Serbian retailer
M-Rodic.
Just this week Mercator acquired 100% of Croatian retail chain Presoflex, which will increase
its market share in Croatia to about 6% as it adds Presoflex sales of EUR 80m to the bottom
line.
The transaction will be paid in part with own shares, which means that Presoflex owner and
chief executive Josip Galic will become a significant shareholder.
The value of the transaction has not been disclosed, but Galic could get Mercator shares worth
up to EUR 7.2m.
Luka Koper's Sales, Net Profit Up
Port operator Luka Koper posted operating revenues of EUR 28.7m for the first quarter of
2007
Port operator Luka Koper posted operating revenues of EUR 28.7m for the first quarter of
2007, up 14% compared to the same period last year. Sales on foreign markets accounted for
78% of total operating revenues, the company said on Wednesday, 23 May.
Net profit increased by 28%, reaching EUR 5.4m. Earnings before depreciation and
amortisation (EBDA) were 32% up on the same period last year to EUR 10.95m.
The transhipment was up 2% in the first three months of 2007, and amounted to 4m tonnes of
cargo. The transhipment of containers increased by 38%, and the transhipment of cars was
18% higher.
Economy Minister States Support for Inventive Companies
Economy Minister Andrej Vizjak said the government supported development-oriented
companies such as home appliance maker BSH hisni aparati as he visited the company during
the cabinet's visit to the mid north-east region of Savinjsko-salesko
Economy Minister Andrej Vizjak said the government supported development-oriented
companies such as home appliance maker BSH hisni aparati as he visited the company during
the cabinet's visit to the mid north-east region of Savinjsko-salesko.
Vizjak, accompanying Prime Minister Janez Jansa and Development Minister Ziga Turk, said
that the company was drafting ambitious projects that built on technological advances which
made them worthy of government aid.
BSH has applied to calls for bids by the Economy Ministry on foreign direct investment,
however, has been unsuccessful so far. This time Vizjak said that the ministry would probably
support the project of a multi-purpose warm beverages maker.
Asked whether the cabinet would support the construction of the sixth reactor in the Sostanj
coal-fired plant, Vizjak answered that the ministry had already taken a position on the project.
"We have issued an energy permit and want the necessary spatial planning papers to be
drafted as soon as possible. Funds for the investment also have to be allocated," Vizjak said.
23
BSH director Bostjan Gorjup said that the company was entering a new development phase in
2007 that would stress research and development of complex high-tech machines for warm
beverages.
He also said the company allocated 6% of its revenue for investment in research and
development and applied for 11 patents a year on average, 34% of all patent applications in
the country.
The company is planning to launch a EUR 7m line of coffee makers in 2008. This will
increase its revenue by over 40% and boost its workforce by 200, Gorjup said.
Logistics Group Sees 10.9% Rise in Sales
The group made a net profit of EUR 22.4m in the period
Logistics group Intereuropa is the latest Slovenian blue chip to report its first quarter results,
announcing on Thursday, 24 May a 10.9% rise in net revenues, which stood at EUR 58m. The
group made a net profit of EUR 22.4m in the period, beating forecasts by 8.7%.
According to a press release from Intereuropa, Q1 revenues fell 2.4% short of targets, but
with due consideration to seasonal factors operations were nevertheless assessed as successful
by the supervisory board of the company, which met on Wednesday, 23 May to review the
results.
All areas of Intereuropa's operations saw growth compared to the same period last year:
logistics services expanded by 19% in sales terms, land transport was up 5% and
intercontinental transport grew by 22%.
Meanwhile, the company said its first-quarter profit was bolstered by the sale of an 8.33%
stake in the Banka Koper bank. The nearly EUR 25m in proceeds from the sale have been
channelled into development of new services and penetration of new markets, the company
added.
Cabinet Appoints Paulin Acting Director of STA
The government appointed Alenka Paulin, a spokeswoman at the prime minister's office, the
acting director of the Slovenian Press Agency (STA)
The government on Thursday, 24 May appointed Alenka Paulin, a spokeswoman at the prime
minister's office, the acting director of the Slovenian Press Agency (STA). Paulin, who will
replace incumbent Lidija Pavlovcic on 1 June, was appointed to the post for a maximum term
of one year, government spokesman Valentin Hajdinjak told reporters.
According to Hajdinjak, the government dismissed Pavlovcic with a decision effective as of
31 May on the basis of the STA articles of association and the contract of employment and
management, under which the owner can recall the director at any time.
The government is the only shareholder of the STA and as such can take a decision at any
time to replace the director, Hajdinjak said and added that the government had been notified
of the substantive reasons for Pavlovcic's dismissal, but he did not wish to disclose them.
The government "has this right and it has applied it," the spokesman said. He added that
Pavlovcic was entitled to a golden handshake in the amount of six monthly gross pays
provided she was subject to no-cause dismissal.
Answering a reporter's question as to why Paulin had been appointed acting director,
Hajdinjak said to his knowledge a call for applications to fill the post of STA director would
be made. "It will be a matter for the new director to arrange for it."
Paulin has a master's degree in communicology and meets the requirements envisaged for the
post by the STA articles of association, Hajdinjak said further.
Paulin meanwhile told STA that she would not be making any statement regarding the
agency's further activity until she assumed duties.
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Commenting on her dismissal for the STA, Pavlovcic said that director was appointed and
dismissed by the owner. She said her work focused on the agency's development rather than
politics.
She said that in her term in office the STA launched a picture service, started a new desk for
correspondents and enhanced its Brussels office with a second reporter and a photographer.
The government appointed Pavlovcic for a four-year term in office at the beginning of
October 2005, and she assumed office on 1 December 2005.
Gorenje Ups Revenues, Profit in Q1
Home appliance manufacturer Gorenje generated EUR 313.33m in consolidated sales
revenues in the first three months of 2007, up 35.7% over the same period last year
Home appliance manufacturer Gorenje generated EUR 313.33m in consolidated sales
revenues in the first three months of 2007, up 35.7% over the same period last year. The
group's net profit meanwhile increased by 19% to EUR 4.4m, Gorenje said in a press release
on Thursday, 24 May.
The Q1 operating results were reviewed by the Gorenje supervisory board, which found them
to be in accordance with the targets. According to the supervisory board, a high growth in
sales compensated for negative effects of record high prices of raw material.
The company says analysts do not expect such conditions to improve much this year. The
biggest uncertainty surrounds raw material prices, which keep growing, and the
implementation of a directive on electronic and electronic equipment recycling.
Gorenje will try to neutralise those negative impacts by optimising consumption, finding
alternative, cheaper supply sources, selective increase in the prices of household appliances,
improving the structure of sales and by streamlining costs in all areas.
The company intends to focus on effective introduction of new products to the market and the
new refrigerator and freezer production plant in Serbia, which was launched last year, the
release reads.
Due to a considerable growth in operations, the supervisory board decided to back expansion
of the management board, a proposal that is to be formed by chairman Franjo Bobinc.
Experts Agree Slovenian Companies Not Innovative Enough
Even though Slovenian companies are very successful, it is worrying that too few are
innovative, economic experts agreed o at the open day on innovation in Slovenian companies,
organised by the Chamber of Commerce and Industry of Slovenia (CCIS)
Even though Slovenian companies are very successful, it is worrying that too few are
innovative, economic experts agreed on Friday, 25 May at the open day on innovation in
Slovenian companies, organised by the Chamber of Commerce and Industry of Slovenia
(CCIS).
According to CCIS president Samo Hribar Milic, Slovenian companies rely more on
"diligence" of their employees than innovation.
The education system is not directed to innovation, there is a shortage of scholarship
programmes, and the promotion of innovation is poor, added Milic.
According to Maja Bucar from the Faculty of Social Sciences, innovation policy lacks
coordination and joint approaches. Tenders for funds aimed at increasing innovativeness are
late, while the available funds are shrinking, she added.
Companies which do not introduce innovation in the long run cannot be successful, said
Bucar.
The share of Slovenian companies who have introduced an active innovation policy stands at
19% for small companies, and 70% for big companies, while the overall share is 27%. This
puts Slovenia at 14th place among EU countries, said Bucar.
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The head of the Directorate for Entrepreneurship and Competitiveness at the Economy
Ministry, Janko Burgar, said that financing was not the only mechanism for the promotion of
innovation, there is also cooperation among companies.
According to Burgar, the Economy Ministry is to earmark EUR 176m for the development of
competitiveness and innovation in the coming six years. The ministry will this year prepare a
tender for projects aimed at boosting cooperation among companies in the 2007-2009 period,
which is worth EUR 30m, he added.
Skimar Saw Revenues Rise, Profit Fall in 2006
The Skimar group, which comprises ski manufacturer Elan, yachting manufacturer Elan
Marine and sports equipment maker Elan Inventa, upped revenues to EUR 122m in 2006, an
increase of 12% over 2005, but its profit dropped to EUR 595,000
The Skimar group, which comprises ski manufacturer Elan, yachting manufacturer Elan
Marine and sports equipment maker Elan Inventa, upped revenues to EUR 122m in 2006, an
increase of 12% over 2005, but its profit dropped to EUR 595,000.
Profit dropped because of reservations that had to be formed in order to allow investment into
Elan's mortgaged premises, and because of extensive marketing of the Elan trade mark, the
company said after a session of the supervisory board on Friday, 25 May.
The head of the supervisory board, Anton Pogacnik, said after the session that Skimar was
pleased with the results. He praised several breakthroughs in the boating and skiing divisions,
which earned the company several awards. "We hope that this presents a solid basis for future
operations," Pogacnik said.
He said the supervisors did not want to replace the management, which is a wish of Skimar
owners according to media reports. The owners have on the other hand not yet decided on a
capital injection, leaving the date of the annual general meeting uncertain.
"The AGM is the responsibility of the owners and the management will probably publish a
call as soon as agreement is reached," said Pogacnik, who is hoping that the shareholders
could meet next month.
Negative consequences stemming from discord among owners were also pointed out by
management board member Matjaz Sarabon. "A management board which has been on the
chopping block for the past few months cannot be as productive as it could have been,"
Sarabon said.
Skimar's largest single owner is the state-run KAD fund. The other major shareholders are
investment firms Triglav financna druzba and KD nalozbe.
Reporters Flocking to Slovenia for Mass Test Drive
Nearly 900 motoring journalists from around the world are expected to flock to Slovenia to
test the second-generation of Renault's popular city car, Twingo, which is made by Slovenian
carmaker Revoz
Nearly 900 motoring journalists from around the world are expected to flock to Slovenia to
test the second-generation of Renault's popular city car, Twingo, which is made by Slovenian
carmaker Revoz.
Revoz has brought 80 cars to Ljubljana to be tested over the next month by visiting
journalists, public broadcaster TV Slovenija has reported.
The journalists will be arriving in groups of around 50 and staying at Hotel Mons on the
outskirts of Ljubljana for two days. They will be able to test the Twingos, which will be
parked at the hotel, on two routes.
The first test drive will take them to the western Slovenian towns of Idrija and Cerkno, using
the scenic route over Polhov Gradec, while the second day's drive will be either to the
lakeside resorts of Bohinj and Bled or around Ljubljana and its outskirts.
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The event has been billed the "biggest of its kind in the history of Slovenian motoring and
convention tourism" by organiser Liberty Slovenia, the Slovenian subsidiary of the
international convention organiser.
Revoz unveiled the new Twingo in late April. The Slovenian plant is the only one in the
world where the new model of the popular city car will be made.
The new generation of the small Renault model will go on sale in June in Slovenia, France
and Italy and in September elsewhere in Europe.
Austrian Companies to Invest in Spa Complex in NE Slovenia
Municipality of Destrnik in northeast Slovenia signed a letter of intent with Austrian
companies Health Care Company and HGI Beteiligungs
Municipality of Destrnik in northeast Slovenia signed a letter of intent with Austrian
companies Health Care Company and HGI Beteiligungs. The companies will acquire a stake
in company Terme Gaja, which will build a spa complex, Terme Janezovci. The works on the
EUR 60m spa complex are to begin next year, Destrnik Mayor Franc Puksic said on Saturday,
26 May.
Puksic said talks with different potential investors were underway. The goal is to round off
the negotiations within the next three months and then chose the investors which will raise
additional capital and finish Janezovci Thermal Spa project according to schedule, he
explained.
The municipality has already provided land for the five-start spa complex, with the building
permit coming by the end of the year, Puksic added.
The Janezovci Thermal Spa project is one of 35 national development projects for 2007-2023
in total worth of EUR 24bn.
Jurij Pintar, boss of Maribor-based project consulting company Imecon, expressed satisfaction
over the number or investors a municipality as small as Destrnik managed to attract and
warned that Slovenia was not too open for foreign investments.
In the next few weeks, Ormoz municipality, Tovarna sladkorja Ormoz sugar plant, and
engineering company Poyry Energy will sign a contract for the construction of Energy Park
Ormoz, which will be built on the site of the sugar factory, Pintar said.
Slovenia's lone sugar factory, which is scrapping sugar production this year, will lease its free
reservoirs to the Agency for Compulsory Oil Stocks for the storage of heating and residual
fuel oil as part of the restructuring of the factory.
Destrnik municipality is thus hoping that a part of the unemployed people from the
municipality will be able to find work in the Energy Park Ormoz.
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SLOVENIA IN BRIEF
Ministers Adopt Zupan's Proposal on Bologna Process Evaluation
Minister of Higher Education, Science and Technology Jure Zupan told the press on Monday,
21 May that a ministerial conference on the Bologna process held in London on 17 and 18
May adopted a communique, including his proposal that an independent ten-year evaluation
of the Bologna process be carried out by 2009.
EU Interior Ministers Wrap Home Policy Strategy Meeting
A two-day meeting of a high advisory working group on EU's home policy strategy beyond
2010, which included Slovenian Interior Minister Dragutin Mate, wrapped up on Monday, 21
May with no specific agreements. Another session s scheduled for June, the Interior Ministry
told STA.
Government Adopts Decree on Classified Data Protection
The government adopted on Thursday, 24 May a decree on protection of classified
information in communication and information systems. The decree, based on the classified
data act, defines organisational and technical measures for protection of classified data, the
Office for the Protection of Classified Data Said.
Mramor Not to Stand for Central Bank Governor
Former finance minister Dusan Mramor on Friday, 25 May turned down President Janez
Drnovsek's offer to stand for the post of central bank governor, while the president's office
said Drnovsek would continue to search for a new name.
Ministers Agree Preparations for Schengen Accession Going Well
Interior ministers of nine Schengen zone candidate countries agreed in Warsaw on Saturday,
26 May that the preparations of the 2004 EU newcomers for entering the passport-free zone
were going according to the plans, Interior Minister Dragutin Mate told STA.
Exhibition on Koper Port's 50th Anniversary Opened
The development of Slovenia's lone seaport is on display in a special exhibition at a Koper art
gallery, marking the 50th anniversary of the port of Koper. The opening of the exhibition was
accompanied by the release of a monograph on the port's five decades. The first ship sailed
into the port of Koper in 1957. A total of 14 million tonnes of cargo were transhipped at the
port in 2006.
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