Slovenia Business Week no. 35, August 30th, 2004
Table of Contents:
HEADLINES ............................................................................................................................. 3
Slovenian Retailer Opens Shopping Centre in Croatia .......................................................... 3
Bernard Chretien Takes Over as Chief of Renault Nissan Slovenija ..................................... 3
Agriculture and Food Fair Opens ........................................................................................... 4
INTERNATIONAL COOPERATION ...................................................................................... 5
Vajgl Meets Russian Deputy Foreign Minister ...................................................................... 5
Foreign Minister Pays Working Visit to Hungary ................................................................. 5
Agriculture Minister Meets Slovenian Farmers in Austria .................................................... 6
A New Rail Route for Heavy Goods to Link Ljubljana and Belgrade................................... 6
Slovenian Embassy to Become NATO Contact Point in Austria .......................................... 7
EUROPEAN UNION ................................................................................................................. 8
Seven Tourist Projects Get EUR 12.5m in EU Grants ........................................................... 8
Jelsane, Brnik and Dobova Officially Border Inspection Points............................................ 8
Research Commissioner-Designate Gets Acquainted with Future Tasks .............................. 8
Finance Ministers Promote Funneling of Funds to New EU Members ................................. 9
Restrictive Budget Only in Case of CAP Changes, Says Mramor ......................................... 9
STATISTICS/FORECASTS .................................................................................................... 11
Business Confidence on the Rise ......................................................................................... 11
Impact of Oil Prices on GDP Will Be Evident in the Autumn ............................................ 11
FINANCE................................................................................................................................. 12
RKB First Bank to Offer Foreign Investment Funds ........................................................... 12
KAD's Profits Back on the Rise ........................................................................................... 12
Price of Diesel Set to Rise, Regular Petrol Almost Unchanged ........................................... 12
Ljubljana Stock Exchange .................................................................................................... 13
Foreign Exchange ................................................................................................................. 14
Regional information................................................................................................................ 15
Zagorje Expects Arrival of German Automotive Company ................................................ 15
BRANCH INFORMATION .................................................................................................... 16
Real Estate Data Accessible to Public Online ...................................................................... 16
Timber Industry Can Make Comeback with Restructuring, Pogacnik Says ........................ 16
Wage Increase Agreed Upon in Textile & Leather Industries ............................................. 17
COMPANIES ........................................................................................................................... 18
Terme Catez Reports 10% Rise in Half-Year Profits........................................................... 18
Liv Beats Profit Forecasts .................................................................................................... 18
Intereuropa Exceeds Interim Plans by 6% ........................................................................... 18
Adria Raises Fuel Surcharge ................................................................................................ 19
Aerodrom Ljubljana Posts Net Profit of EUR 3m ............................................................... 19
Pasta and Bread Maker Sees Its Profit Slump ...................................................................... 19
Mlinotest Expects Stronger Sales on EU Markets ............................................................... 20
Merkur Doubles Net Profit ................................................................................................... 20
Successful Half-Year for Trade Hub BTC ........................................................................... 20
CPO Back at Step One in Interbrew-Lasko Wrangle ........................................................... 21
Fructal Misses Sales and Profit Targets ............................................................................... 22
Salus Posts EUR 3.3m of Half-Year Net Profit ................................................................... 22
Union's Half-Yearly Profit Down by 48 Percent ................................................................. 22
Gorenje Manages to Overcome Rising Raw Material Prices ............................................... 22
Pivovarna Lasko Publishes Bid for Knjaz Milos Shares ...................................................... 23
Istrabenz Posts Loss in Second Quarter, Not Interested in Sava ......................................... 24
Mercator Bidding for Serbia's Biggest Retail Chain ............................................................ 24
SLOVENIA IN BRIEF ............................................................................................................ 25
EU Citizens Increasingly Interested in Slovenian Property ................................................. 25
FM Vajgl Meets Representatives of Minority in Hungary .................................................. 25
Culture Minister Rihter Meets Swedish Counterpart ........................................................... 25
Olympics: Bronze for Ceplak ............................................................................................... 25
Pandur's Theatre Extravaganza Awarded in Budva ............................................................. 25
2
HEADLINES
Slovenian Retailer Opens Shopping Centre in Croatia
Labour Minister Vlado Dimovski, who was present at the opening of the store, labelled Era's
investment as a good example of economic cooperation between the two neighbouring
countries
Retailer Era and its subsidiary Era Tornado on Thursday, 26 August opened a shopping centre
in Croatia's Samobor. The EUR 15m investment of the Velenje-based company comprises 30
shops with 300 employees.
Labour Minister Vlado Dimovski, who was present at the opening of the store, labelled Era's
investment as a good example of economic cooperation between the two neighbouring
countries.
The shelves of the new supermarket offer about 70 to 80 percent of domestic products, 10
percent of Slovenian products and about 5 percent of products sold under the international
CBA trade network brand name.
Last year, Era launched a partnership with Croatia's Tornado Bakin company, one of the
founders of the CBA in Croatia. This year Tornado Bakin changed its name to Era Tornado
and now places second in the CBA association, which has the annual turnover of HRK 3.2bn
(EUR 433.1m).
Era expects over 40 percent growth in sales in Croatia this year. The company's boom is the
result of the expansion of its supermarket and shop chain, as last year's investments amounted
to HRK 30m (EUR 4.1m). This year's turnover in Croatia is expected to reach HRK 620m
(EUR 84m), Era says.
Earlier this month, Era and Italy's discount chain Eurospin signed a contract on strategic
partnership in expansion of a chain of discount shops in Slovenia and the markets of the
former Yugoslavia. Over the next two to three years, a joint enterprise, Eurospin EKO, plans
to open about 80 shops in Slovenia under the Eurospin's brand name.
Bernard Chretien Takes Over as Chief of Renault Nissan Slovenija
Bernard Chretien will be at the helm of Renault Nissan Slovenija as of September, replacing
as general manager the incumbent Jean-Pierre Ripoll
Bernard Chretien will be at the helm of Renault Nissan Slovenija as of September, replacing
as general manager the incumbent Jean-Pierre Ripoll. After working in Slovenia for three
years, Ripoll will be made director general of Renault in the Czech Republic.
Receiving journalists for a farewell meeting on Friday, 27 August, Ripoll described the
company's business in Slovenia as successful. He stressed tight cooperation with Renaultowned assembly plant Revoz, which gives Renault the advantage of a domestic car maker.
Under his leadership, the company embarked on a sales offensive, increasing its market share
by 4 percent in 2003 and 2004 to 15 percent. There were many problems when the strategy
was introduced, he said, but they were overcome successfully.
Ripoll is convinced that his successor will have to work hard although the company is
successful. "Competition is stiff and the work is never done," he stressed.
Chretien, 48, is coming to the company after a three-year stint at the helm of the marketing
and finance division of Renault's subsidiary RCI Banque, which provides financial services
for major customers and the Renault-Nissan sales network.
On the Slovenian car market, Renault saw growth in sales of 10.85 percent in the first half of
this year, and increased its market share by nearly one percent to 26.09 percent. The number
of vehicles sold increased by over 15 percent year-on-year, to 10,339.
3
The French car maker has been the number one car make in Slovenia in terms of sales for
several years in a row.
Agriculture and Food Fair Opens
The focus this year is on Slovenia's EU accession and its impact on agriculture
The 42nd Agriculture and Food Fair, the largest event of its kind in Slovenia, opened on
Saturday, 28 August. The focus this year is on Slovenia's EU accession and its impact on
agriculture.
Attending the official opening of the event, PM Anton Rop said that Slovenia has been
successful in adjusting its agriculture and food industry to the EU, although it took a lot of
changes and adjustments.
By harmonising legislation, we created firm foundations so that Slovenian farmers and the
food industry can compete on equal footing in the single European food market, he said,
adding that the first test is behind us while a new period of integrating into the single
European market is ahead.
Noting that Slovenian farmers get 85 percent of the direct payments that their EU peers
receive, Rop expressed the conviction that agriculture and the food industry can compete
successfully with the fierce European competition. This requires appropriate support by the
agriculture policy, he added.
Minister of Agriculture, Forestry and Food, Milan Pogacnik, stressed in his address that the
EU's agriculture policy is favourable for Slovenia in many ways, as it will provide farmers
with income stability, and consumers with safer and better food.
We have to build on the advantages we have, he said, stressing the preserved environment, a
tradition of farming, the cultural landscape, safe food and know-how. Our common task is to
make sure that agriculture not only survives but also develops, he said.
The fair, which features 1,410 exhibitors from 21 countries, will include many round-table
debates and conferences addressing changes in the EU market regulations for sugar and the
production of sugar beet, the development of rural areas in the light of the common
agriculture policy, and the drawing of EU and national funds.
An international meeting of food-processing industry representatives will be just one of a total
of 60 events on the programme. Another will be a workshop on investment opportunities and
good practice in agriculture, held by the Agriculture Ministry and the secretariat general of the
Central European Initiative (CEI) on 2 and 3 September.
The fair will also feature a presentation of the German agriculture and food-processing
industry, and presentations of Austria's provincial chambers from Styria and Carinthia, while
new EU member states will put up information stands.
4
INTERNATIONAL COOPERATION
Vajgl Meets Russian Deputy Foreign Minister
Talks focused on the situation in Iraq, Russia's views on reforms to the UN Security Council
and cooperation in the OSCE
Foreign Minister Ivo Vajgl met on Monday, 23 August Russian Deputy Foreign Minister Yuri
Fedotov. Talks focused on the situation in Iraq, Russia's views on reforms to the UN Security
Council and cooperation in the OSCE.
Vajgl pointed out that cooperation with Russia is very important for Slovenia, and not only in
bilateral terms, as Russia plays a significant global role and can contribute to stability and
peace in the world.
Economic cooperation between the two countries is also important, as is the establishment of
mutual relations between Slovenian and Russian people in the fields of culture and tourism,
the foreign minister noted.
Foreign Minister Pays Working Visit to Hungary
Bilateral issues topped Vajgl's agenda in Hungary
Slovenian Foreign Minister Ivo Vajgl met on Thursday, 26 August with his Hungarian
counterpart Laszlo Kovacs for working talks that focused on bilateral issues, particularly ways
of boosting economic cooperation and the status of minorities in both countries. An
agreement on avoiding double taxation was also signed on the occasion.
Based on the 1992 bilateral agreement on ensuring special rights of the Slovenian ethnic
minority in Hungary and the Hungarian ethnic minority in Slovenia, the two countries could
improve the minorities' status and cooperation, the pair agreed according to Vajgl.
Minister Vajgl also told his counterpart about the desires that the Slovenian minority in
Hungary informed him of prior to the visit: they would like improved funding of minority
schools and a radio station in Monoster/Szengotthard.
He made special notice of the minority's desire to be represented in the Hungarian parliament,
a promise that the government has failed to honour so far. "I expressed the expectation of
Slovenia and the Slovenian minority that a solution to this issue will be found," Vajgl told
STA.
According to Vajgl, there is also a lot of room for faster development of economic
cooperation between the two countries, as evident from data stating that only 2 percent of
Slovenia's overall 2003 exports were bound for Hungary and only 2.9 percent of imports came
from the country's eastern neighbour.
Vajgl pointed out that the construction and upgrading of road and rail connections play a
crucial role in this process after Budapest and Ljubljana were finally linked with scheduled
flights in May.
"We stressed that better economic cooperation is a vital interest. Now that both countries are
EU members, it would also be logical that tighter capital connections were forged as is the
case between other neighbouring countries in Europe," Vajgl pointed out.
The pair also touched on EU issues and Slovenia's presidency of the Organisation for Security
and Cooperation in Europe (OSCE) in 2005, while Minister Kovacs also briefed Vajgl on
current changes in the Hungarian government.
Slovenia's exports to Hungary amounted to EUR 222.8m in 2003, while imports totalled EUR
352m. The trade deficit stood at EUR 129.4m, mainly on account of higher imports of
Hungarian agricultural and food products.
5
Slovenia made direct investments of EUR 8.4m in Hungary in 2002, while Hungarian
investment in Slovenia amounted to EUR 12.2m.
Hungary and Slovenia share an interest in setting up transport connections within the 5th panEuropean transport route. Talks are underway about modernising the railway connection
between the two countries.
Agriculture Minister Meets Slovenian Farmers in Austria
Minister of Agriculture, Forestry and Food Milan Pogacnik met with representatives of the
Slovenian Association of South Carinthia Farmers as part of a working visit to Austria
Minister of Agriculture, Forestry and Food Milan Pogacnik met with representatives of the
Slovenian Association of South Carinthia Farmers as part of a working visit to Austria on
Wednesday, 25 August with talks focusing on Austria's experience in the use of wood
biomass.
According to Pogacnik, Austria's experience in this field was the main purpose of his working
meeting with his Austrian counterpart Josef Proell.
It would be best for Slovenia if it introduced the option of generating energy from this
renewable source as soon as possible, he told journalists.
Talks with Slovenian farmers also touched on educational opportunities, as Slovenians do not
have an agriculture school in Carinthia, and cattle and horse breeding which has a long
tradition in the region.
The farmers furthermore briefed Minister Pogacnik on the overall situation of the Slovenian
minority in Austria, underlining the importance of meetings that senior Slovenian officials
often have with the minority prior to official talks with Austrian representatives.
Pogacnik later met Josef Proell, but no statement for the press was scheduled.
A New Rail Route for Heavy Goods to Link Ljubljana and Belgrade
A new heavy goods train is to be introduced on the Ljubljana-Belgrade route in autumn
A new heavy goods train is to be introduced on the Ljubljana-Belgrade route in autumn. This
will be the first such regular connection between the two capitals, offering transport of the
highest quality, Slovenian Railways said.
An agreement introducing the Sava Express train is to be signed by general managers of
Slovenian Railways, Croatian Railways and the Belgrade Public Railway Company in
Belgrade on Thursday, 26 August.
The train will start operating by 1 October at the latest. The decision on the new route for a
heavy goods train was made after a surge in trade between Slovenia and Serbia-Montenegro
in the recent years.
Sava Express will travel the route once a week for the first six months. It will leave Ljubljana
Tuesdays at 11.12 AM and make the return journey from Belgrade Thursdays at 4.21 PM.
After that, the journey will be made three times a week.
The 520-metre long train is to cover the distance between Ljubljana and Belgrade in 14 hours.
Exports of goods from Slovenia to Serbia-Montenegro surged by 73 percent annually between
2000 and 2003, while imports jumped by an annual 395 percent.
Iron and steel are the main goods transported by rail from Serbia-Montenegro to Slovenia's
port of Koper. There is heavy transport of old iron from Serbia-Montenegro and Romania to
Slovenia along the 10th transport route leading to Italy.
There is also considerable shipment of wood between Romania and Italy that crosses
Slovenia. Austria, on the other hand, transports large amounts of paper and pulp, and food
products to Greece, and wood to Turkey.
Slovenian Railways consider the introduction of Sava Express an important step towards
introducing a network of transport connections by rail, Network Europe.
6
The company's ambition is to place Ljubljana at the centre of international rail transport
routes. A route between Ljubljana and Munich, called the LjubljanaLine, was already
introduced last September, while the East-West-Rail-Shuttle has connected Ljubljana and
Bologna since February.
Also planned are connections with Milan, Prague and Istanbul, the Slovenian Railways said in
a press release.
Slovenian Embassy to Become NATO Contact Point in Austria
Becoming the contact point embassy is a recognition for Slovenia
Slovenia's embassy in Vienna will as of 1 September take on the role of the NATO contact
point embassy in Austria, the Ministry of Foreign Affairs said on Thursday, 26 August.
Contact point embassies act as coordinators for non-member countries that are part of the
Partnership for Peace programme.
Slovenia will take over the role of the NATO contact point in Austria from the Czech
Republic, which has held it since 2002.
A contact point embassy represents a bridge between NATO and the partnership country, as it
coordinates communication with the alliance and its activities.
Together with NATO representatives, it cooperates in organising conferences and debates
dealing with the alliance, as well as offers logistic support during visits of the organisation's
high representatives.
Becoming the contact point embassy is a recognition for Slovenia, as Austria is an important
NATO partner country, the foreign ministry stated.
7
EUROPEAN UNION
Seven Tourist Projects Get EUR 12.5m in EU Grants
The Economics Ministry told STA it has so far handed out SIT 4.7bn (EUR 19.6m) obtained
through the EU's structural fund
The Ministry of Economics has awarded SIT 3bn (EUR 12.5m) in grants to seven tourism
projects, mostly spas, as part of a third tender for grants funded by the European Structural
Development Fund.
Terme 3000, one of Slovenia's leading spa resorts, was awarded SIT 1bn (EUR 4.2m) for a
five-star hotel that is to open in July 2006. The whole investment is valued at SIT 4.2bn (EUR
17.5m).
Another spa company, Krka Zdravilisca, was given SIT 500m (EUR 2.1m) for a hotel annex
and the expansion of indoor pools at the Smarjeske Toplice thermal spa. The estimated value
of the entire investment is SIT 1.3bn (EUR 5.4m).
Terme Catez, the country's largest spa operator, will also build a new hotel. The company got
SIT 889m (EUR 3.7m) for an investment whose total value is estimated at SIT 2.2bn (EUR
9.2m).
Terme Snovik, a spa located near Ljubljana, is building a condominium complex valued at
SIT 1.6bn (EUR 6.7m). The spa got SIT 432.2m (EUR 1.8m) in EU funds, the Economics
Ministry reported on Tuesday, 24 August.
Spa company Terme Lendava got SIT 127.8m (EUR 0.53m) for the construction of a new
indoor pool that is worth SIT 332.2m (EUR 1.4m).
The remaining money was awarded for smaller projects to the Bohinj Tourist Board and the
Tourist Association Portoroz.
The Economics Ministry told STA it has so far handed out SIT 4.7bn (EUR 19.6m) obtained
through the EU's structural fund. SIT 1.7bn (EUR 7.1m) was awarded under the first tender,
while the second tender was unsuccessful as no applicant met the criteria.
For tourist projects, Slovenia can spend a total of SIT 8.3bn (EUR 34.6m) in structural funds.
Jelsane, Brnik and Dobova Officially Border Inspection Points
Imports of animal products to the EU are only allowed through appropriately equipped
border inspection points
The European Commission has put the road border crossing Jelsane, the railway crossing
Dobova, and the Brnik airport on the official list of certified border inspection points,
effective as of 19 August.
The three entry points got the green light for the implementation of veterinary control of
animals and foods of animal origin in mid-June, but all procedures had not been completed by
then.
The European Commission's decision has already been published in the EU's Official Journal.
Only one border crossing was certified when Slovenia entered the EU on 1 May - the road
crossing Obrezje. Jelsane is expected to get the necessary approval in the autumn.
Imports of animal products to the EU are only allowed through appropriately equipped border
inspection points. All EU newcomers had to equip at least some of their border crossings to
meet the stringent EU veterinary control standards.
Research Commissioner-Designate Gets Acquainted with Future Tasks
Slovenia's European Commissioner-designate Janez Potocnik met with incumbent
Commissioner for Research Philippe Busquin of Belgium
8
Slovenia's European Commissioner-designate Janez Potocnik met on Friday, 27 August with
incumbent Commissioner for Research Philippe Busquin of Belgium. The pair discussed the
work done so far in this field and future challenges, according to Radio Slovenija.
Busquin, who is leaving the Commission for a seat in the European Parliament, said he was
convinced Potocnik would make an excellent commissioner for research.
Talks were mainly focused on the creation of a European Research Area and the increase of
funds for science and innovation to 3 percent of the member states' GDP.
Potocnik explained that he is still familiarising himself with the basic problems in this field
and with the nature of his future tasks, as he will head a staff of 2,300 persons in five centres
all over Europe.
The new Commission team, headed by Jose Manuel Barroso, is expected to assume office at
the beginning of November.
Finance Ministers Promote Funneling of Funds to New EU Members
The European Commission's proposal that average annual spending would be at 1.14 percent
of the Union's GNP has officially been labelled by Slovenia as a good basis for negotiations
The joint goal of Slovenia, Austria, Hungary and Slovakia for the EU's next budget period
(2007-2013) is an "appropriate funneling of funds into new members," Finance Minister
Dusan Mramor said at a meeting of the four countries' finance ministers in Austria's Salzburg.
If this amount of funding can be achieved with the simultaneous decrease of expenditure from
the EU budget for old members, and the restructuring of expenditure, we could also achieve a
smaller share of spending than that proposed by the European Commission, Mramor told STA
on Saturday, 28 August, the second day of the ministers' three-day meeting.
The European Commission's proposal that average annual spending would be at 1.14 percent
of the Union's GNP has officially been labelled by Slovenia as a good basis for negotiations.
But Slovenia is also in favour of a restrictive budget, provided the common agriculture policy
(CAP) can be overhauled. Austria, on the other hand, is one of the six biggest budget
contributors and has been making efforts to keep budget spending at the current level - up to 1
percent of the GNP.
Austria believes spending can be curbed without afflicting new members, Mramor explained.
This could be done by reducing budget spending allocated to old members, which would be
more easily achieved if funds for the CAP are reduced, he noted.
"Slovenia did not oppose this position. It is crucial that the volume of funding that the
European Commission proposed for the new members be left unchanged," Mramor stressed.
According to Mramor, the participants also agreed that administrative costs in the EU are too
high. They decided to put forward a proposal for streamlining at the unofficial meeting of EU
finance and economics ministers (ECOFIN), to take place in The Hague in September.
"The new members feel these expenses much more - these include additional employees and
additional projects, as well as expenses caused by the European legislation in companies,
institutions and individuals," according to the finance minister.
The officials also talked about the growth and stability pact, and agreed that as long as it stays
this way, its rules must be "observed strictly", according to Mramor.
He said that they allow for possible changes to the pact, but they have to be based on two key
principles - it has to remain "strict and operational", and must not become so complicated as
to enable every violator to dodge the rules.
Restrictive Budget Only in Case of CAP Changes, Says Mramor
The 2007-2013 EU financial perspective and the Stability and Growth Pact topped a meeting
of finance ministers from Slovenia, Austria, Hungary and Slovakia
9
The 2007-2013 EU financial perspective and the Stability and Growth Pact topped a meeting
of finance ministers from Slovenia, Austria, Hungary and Slovakia, which wrapped up in
Salzburg on Sunday, 29 August. Representing Slovenia was Finance Minister Dusan Mramor.
For Slovenia, the European Commission's proposal on an average EU member state
contribution to the EU budget of 1.14 percent of GNP over the seven-year period is a good
basis for negotiations.
A restrictive EU budget is equally in Slovenia interest if there is a possibility to change the
common agriculture policy (CAP).
Aside from the EU financial perspective, the traditional three-day meeting focused on the
Stability and Growth Pact, and the tax harmonisation in the EU.
The common goal of the four neighbouring countries is an appropriate distribution of funds to
the new EU member states, Mramor explained.
If this amount can be achieved alongside a reduction of EU budget spendings for the old
members and the restructuring of these spendings, an even lower amount than the one
proposed by the EU could be possible, according to Mramor.
Regarding the Stability and Growth Pact, the four countries agree that as long as the pact
exists in its present form, its provisions must be strictly observed. Any changes must be based
on two key principles, namely that the pact remain "strict and operative".
As for the tax harmonisation, the ministers agreed that the harmonisation of tax rates and tax
bases would entail "very complex consequences in numerous fields", so the issue cannot be
addressed without some more thorough analyses.
The meetings of finance ministers have been taking place for several years with the aim to
exchange opinions on topical issues. Last year ministers from Slovenia, Austria, Hungary, the
Czech Republic and Slovakia met at the sidelines of an informal meeting of EU finance
ministers in Italy.
10
STATISTICS/FORECASTS
Business Confidence on the Rise
According to the data supplied by the national Statistics Office, the business confidence index
was up 2 points over last month and 7 points year-on-year
The latest business confidence indices suggest a positive trend on all fronts, including among
managers and consumers.
According to the data supplied by the national Statistics Office, the business confidence index
was up 2 points over last month and 7 points year-on-year.
The confidence index in the manufacturing sector gained 2 percent on last month. Compared
to August of 2003, it was 10 points higher.
Also up by 2 points was the retail confidence index, which was 1 point higher than in the
same period last year.
Meanwhile, Slovenian consumers were more optimistic about the future, pushing the
consumer confidence index by 2 points on a monthly level, the Statistics Office said.
Impact of Oil Prices on GDP Will Be Evident in the Autumn
The government Institute for Macroeconomic Analyses and Development (IMAD) as well as
the Bank of Slovenia says it is too early to make estimates, but both institutions agree that
consistently high oil prices could dent GDP growth and push up inflation
It will not be clear before the autumn whether high oil prices will require corrections in the
forecasts of key macroeconomic indicators. The government Institute for Macroeconomic
Analyses and Development (IMAD) as well as the Bank of Slovenia says it is too early to
make estimates, but both institutions agree that consistently high oil prices could dent GDP
growth and push up inflation.
In its spring report, IMAD put the GDP estimate for this year at 3.6 percent and inflation at
3.3 percent. "If oil prices do not go down by the end of the year, GDP growth could be 0.3 or
0.4 percentage points lower, in the worst case scenario," says Bostjan Vasle of IMAD.
Yet some predictions show that prices could go down by the end of the year, which would
lessen the impact on inflation and economic growth, Vasle told STA. This assessment is
based on incomplete data for the first 8 months of the year, when the average price of brent oil
was US$ 35 per barrel.
Given current oil process, inflation could be 0.5 percentage points higher at the end of the
year than the spring forecast suggested, according to Vasle. "Due to more expensive oil,
inflation has been higher by about 0.8 percentage points until mid-August. Had the
government not changed excise duties for petrol, it would have been by another 0.3
percentage points higher," believes Vasle.
The Bank of Slovenia is reluctant to forecast possible changes in its spring forecast, when it
said end-year inflation would amount to 3.5 percent and GDP growth 3.2 percent. "We allow
for the possibility of corrections, but it is too early to talk about it now," member of the
central bank's board of governors Bostjan Jazbec told STA.
"For the Bank of Slovenia, the key is the difference between Europe's and Slovenia's inflation.
Since the effect of more expensive oil is symmetrical, it does not affect the difference
significantly. (The difference) has been reduced lately, which is crucial for us," he explained.
11
FINANCE
RKB First Bank to Offer Foreign Investment Funds
The bank will start to offer foreign investment funds on 1 September
Raiffeisen Krekova Bank (RKB) has been granted approval to start offering foreign
investment funds, as the first bank in Slovenia to do so.
According to RKB, the Slovenian subsidiary of Austria's Raiffeisen group, the Slovenian
Securities Market Agency granted it a license for marketing foreign investment funds in the
country on Monday, 23 August.
Having gained approval, the bank will start to offer foreign investment funds on 1 September
as the first bank to do so in Slovenia. Its offer will consist of ten funds, the bank said in a
press release.
The ten funds, including share, bond and mixed funds with different yield rates, are a
selection from the 190 funds offered by the Austrian company Raiffeisen Kapitalanlage
Gesellchaft.
RKB was one of fastest-growing banks in Slovenia in 2003, when it managed to up its market
share from 2 percent to 2.5 percent to be ranked as Slovenia's ninth-biggest bank by total
assets.
KAD's Profits Back on the Rise
The state-run Pension Fund Management (KAD) reported profits of SIT 1.45bn (EUR 6.05m)
for the first half of the year
The state-run Pension Fund Management (KAD) reported profits of SIT 1.45bn (EUR 6.05m)
for the first half of the year, which is three times the total net profit for the whole of last year.
We are happy with the figures, KAD chairman Borut Jamnik told the press on Wednesday, 25
August.
The KAD finished 2003 with a net profit of SIT 480m (EUR 2m). This was a mere shadow of
the figure seen in 2002, when the company's profit exploded because of the takeover of
pharmaceutical company Lek.
"Excluding any unforeseen event, such as a stock market slump, we expect the profit to grow
significantly in the second half of the year, which is the more important half for us," Jamnik
said.
At the end of June, the KAD managed more than SIT 260bn (EUR 1.08bn) in funds, which is
SIT 20bn (EUR 83.5m) more than at the end of 2003. The KAD's four pension funds, which
have more than a quarter of a million clients, were worth over SIT 80bn (EUR 333.6m).
At the moment, the KAD's long-term portfolio consists of ownership shares in 316
companies, including many of Slovenia's leading firms.
Asked whether the KAD may be interested in purchasing shares in Slovenia's top retailer
Mercator that are being sold by the Restitution Fund, another state-run fund, Jamnik said he
did not want to comment on this particular case, but added that the KAD was interested in all
attractive investment opportunities.
The KAD also has some SIT 23bn (EUR 96m) invested on foreign markets, where the fund
has managed to secure positive yield numbers despite the poor performance of these markets
in general.
Price of Diesel Set to Rise, Regular Petrol Almost Unchanged
Temporary calculations revealing that the price of diesel may go up by SIT 1 (EUR 0.004),
while changes in the prices of heating oil and petrol should not be particularly dramatic
12
Prices of petrol derivatives are set to rise on Tuesday, 31 August, temporary calculations
revealing that the price of diesel may go up by SIT 1 (EUR 0.004), while changes in the
prices of heating oil and petrol should not be particularly dramatic.
Slovenian petrol retailers adjust prices every fortnight according to an appropriate government
decision. The price change depends primarily on the price of petrol derivatives on the
Mediterranean markets and the exchange rate of the US dollar.
Analysts of Petrol, the Ljubljana-based petrol retailer, have included the stock exchange
quotations on Friday, 27 August in their calculation. Oil prices slightly increased on 27
August especially due to the threat of a possible attack on Iraq's pipelines.
These calculations are based on the presumption that excise duties will not be changed. They
cannot be changed for heating oil and diesel anyway: the consistent curbing of excise duties
has brought them down to the minimum still allowed by the EU.
The current price of regular petrol is SIT 205.80 (EUR 0.85), while that of premium petrol is
SIT 210.60 (EUR 0.88). The price of extra light heating oil is currently SIT 109.90 (EUR
0.46), while diesel currently costs SIT 188.50 (EUR 0.79).
Ljubljana Stock Exchange
The SBI 20 closed the week up 1.10 percent, at 4,777.66 points
Several listed companies disappointed with their semi-annual results last week, but this has
not dented investor confidence and trading pushed the benchmark SBI 20 index to new record
highs. The SBI 20 closed the week up 1.10 percent, at 4,777.66 points.
The PIX investment fund index outperformed the SBI 20, jumping by 1.45 percent (59.02
points) on the week to 4,139.06 points. The free market IPT index was up 17.86 points (0.47
percent) to 3,779.46 and the bond BIO index edged down a mere 0.01 percent to 117.99
points.
The total value of deals concluded in the five trading days topped a solid SIT 5.5bn (EUR
22.9m), although block deals accounted for 44 percent of the total turnover.
Many of the block deals involved food company Droga, which saw a total turnover of SIT
704m (EUR 2.94m) mostly due to block trading. The block deals priced Droga at SIT 102,000
(EUR 425.36), well above the closing price of SIT 87,056 (EUR 363.04) on Friday, 27
August. Droga gained 4.80 percent on the week.
Pharma company Krka continued to perform strong, largely due to encouraging news that it
will probably free up reservations after it won a patent lawsuit against US pharma giant
Merck and allocate the money into profit. Krka closed up 2.55 percent to an all-time-high of
SIT 74,582 (EUR 311.02).
Energy and tourism company Istrabenz did not have such good news: it reported a Q2 loss of
SIT 221m (EUR 0.92m) as compared to a profit of SIT 1.64bn (EUR 6.84m) the same period
last year. Although it closed at SIT 9,774 (EUR 40.76), down 1.01 percent, on Friday, 27
August it nevertheless gained 0.76 percent on the week.
The stock market will have one less security traded: the Ljubljana Stock Exchange
management decided on Friday, 27 August to withdraw shares of spa company Terme 3000
from the market as of 30 August. This comes after the spa's majority owner Sava took a
decision at the company's AGM to pull out of the stock exchange.
The free market was firmly dominated by Triglav Steber 1, the investment fund which
announced it would transform into a mutual fund. Smelling bigger returns, investors grabbed
up the shares and created a shortage on the supply side, pushing the price up 3.43 percent on
the week to SIT 3,620 (EUR 15.1).
13
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR) - SIT 239.79 (-0.02)
U.S. dollar (USD) - SIT 198.19 (+3.60)
Swiss franc (CHF) - SIT 155.61 (-0.37)
British pound (GBP) - SIT 357.05 (+1.85)
14
REGIONAL INFORMATION
Zagorje Expects Arrival of German Automotive Company
Schefenacker was the only company to bid for the purchase of over 6,000 square metres of
land in the industrial zone of the central Slovenian town of Zagorje
The German company Schefenacker is about to decide about an estimated EUR 10m
investment in Slovenia's Zagorje, as talks about the investment with the producer of
automotive parts have wrapped up.
Schefenacker was the only company to bid for the purchase of over 6,000 square metres of
land in the industrial zone of the central Slovenian town of Zagorje.
The selection terms oblige the bidder to start setting up production capacities as early as this
year, stay at Zagorje for at least 15 years and employ 150 workers in two years.
The Economics Ministry has drafted a very generous offer, according to analysts, as it
includes a number of subsidies.
Matej Kovac, the director of the Slovenian Trade and Investment Promotion Agency,
confirmed that the talks have concluded, but refused to say anything about the outcome.
"We are waiting whether Schefenacker will sign the contract," Kovac said.
The German company also applied for the agency's call to bids for the encouragement of
foreign direct investment. "The decision has already been submitted to Schefenacker," Kovac
said.
Kovac refused to speak about the amount of funds granted to the German company, saying
that the state usually grants EUR 5,000 for every new job.
The results of the call, which will distribute SIT 400m (EUR 1.7m) for the encouragement of
FDI, will be made public once the contracts are signed with the selected bidders, Kovac said.
Schefenacker has been present in Slovenia since 1997, when it established the joint venture
Schefenacker Grah Automotive, which employs about 500 workers.
Seated in Esslingen, Schefenacker produces automotive parts, specialising in lighting, audio
and vision systems. It has companies in Europe, the US, Asia and Australia.
The company will be very welcome in Zagorje, as it is expected to create jobs for both
workers with lower education and highly qualified personnel in one of the Slovenian regions
with the highest unemployment rate.
The region, dominated by mining a decade ago, has been struggling with a high jobless rate
after the industry was slowly abandoned and restructuring called for substantial job-cuts.
15
BRANCH INFORMATION
Real Estate Data Accessible to Public Online
Registered and other users will now be able to access the databases of the Surveying and
Mapping Authority online, as the administration, together with related institutions, has
launched computer access to data on real estate
Registered and other users will now be able to access the databases of the Surveying and
Mapping Authority online, as the administration, together with related institutions, has
launched computer access to data on real estate, said director general Ales Seliskar on
Wednesday, 25 August.
There are three possible ways of accessing the data: public access, subscribers access, and
private access. While the first is pay-per-view, the other two are possible only with a secure
digital signature.
Unlimited access for one year will set back the registered users by SIT 62,000 (EUR 259),
while public access users will have to pay SIT 50 (EUR 0.21) per visit and then SIT 1 (EUR
0.004) per inquiry. Meanwhile, the insight into the data on real estate in private property is
free of charge, Seliskar explained.
Public access is currently possible only for customers of leading mobile services provider
Mobitel, through its mobile payment service Moneta.
As Seliskar pointed out, the only costs for the visitors will be the service of accessing the data,
while the data itself will be completely free of charge.
The mapping authority thus hopes to cut down on the paper work, as the current number of
requests processed by its offices amount to 142,000 annually.
The institution is also introducing the option of getting official forms in the electronic format.
"Slovenia is one of the first countries in Europe to conclude digitalisation of all land and
cadastre plans and establish a homogeneous base of digital data," said Environment Minister
Janez Kopac at the presentation.
His satisfaction with the project was shared by Information Society Minister Pavel Gantar and
head of the Government Centre for Informatics Marin Silic, who were present at the press
conference.
The data access system was created by the Surveying and Mapping Authority together with
the Government Centre for Informatics, Geological Survey of Slovenia and other partners.
Timber Industry Can Make Comeback with Restructuring, Pogacnik Says
Attending the opening of the 48th International Wood Fair in Austria's Klagenfurt, Slovenia's
Agriculture, Food and Forestry Minister Milan Pogacnik asserted to the similarities between
Slovenia and Austria as far as forestry is concerned
Attending the opening of the 48th International Wood Fair in Austria's Klagenfurt, Slovenia's
Agriculture, Food and Forestry Minister Milan Pogacnik asserted to the similarities between
Slovenia and Austria as far as forestry is concerned. Both countries have large areas of woods,
Pogacnik said.
Touching on the problems faced by the timber industry, which has been in a decline for some
time, the Slovenian minister said that a new boom can be achieved, but only through
restructuring that includes rationalisation and modernisation.
Slovenia and Austria have similar standpoints on how to promote the agricultural sector,
Pogacnik said, adding that this should be a reason enough for the two countries to work closer
together.
16
As far as the timber industry is concerned, there is room for mergers among companies that
produce similar products, a move that would help cut costs and make struggling companies
competitive again, Pogacnik suggested.
Pogacnik also had a political message for the participants, among them Governor General of
Austria's province of Carinthia, Joerg Haider, saying that "the 'political wood' needs to be
used to build bridges rather than construct walls".
The Klagenfurt International Wood Fair, which will run until 29 August, is the biggest in the
region, attracting 412 exhibitors from 19 countries this year.
Wage Increase Agreed Upon in Textile & Leather Industries
Employers and the Union of the Textile and Leather-processing industries have reached an
agreement on a SIT 5,000 (EUR 20.85) wage increase
Employers and the Union of the Textile and Leather-processing industries have reached an
agreement on a SIT 5,000 (EUR 20.85) wage increase.
Whereas the general increase will stand at SIT 5,000, wages will rise by SIT 5,500 (EUR
22.94) in those companies whose added value per employee grew last year and which did not
end finish the year with a loss.
The employers and trade union could go on to agree on additional wage increases for
individual companies depending on last year's business results.
Both sides said they were satisfied with the agreement, as both are aware that business results
in these branches hardly allow any such increase in wages.
Around 10,000 workers of the 25,000 employed in the sector are expected to get the higher,
SIT 5,500 raise as many big companies operated successfully last year, Anton Rozman, the
secretary general of the trade union said on Friday, 27 August.
Rozman actually expects the most successful companies of the industry to give out higher
raises than the agreed sum.
The trade unions had at first proposed an increase of SIT 8,000 (EUR 33.36), which they later
reduced to SIT 6,500 (EUR 27.11). The employers insisted on SIT 5,000.
The negotiations were renewed after the trade union threatened to stage a strike on 31 August
and 7 September.
Such a work stoppage would cause significant damage in a branch whose situation, judging
by its half-year business results, is still not promising, said Joze Smole of the Chamber of
Commerce and Industry (CCIS).
17
COMPANIES
Terme Catez Reports 10% Rise in Half-Year Profits
According to Terme Catez, its profit for the first half of the year stood at SIT 357.6m (EUR
1.5m), with total revenues at SIT 2.53bn (EUR 10.55m)
Slovenia's leading spa resort has reported a 10 percent jump in half-yearly earnings.
According to Terme Catez, its profit for the first half of the year stood at SIT 357.6m (EUR
1.5m), with total revenues at SIT 2.53bn (EUR 10.55m), which is 6 percent more than last
year.
Terme Catez said on Monday, 23 August it had recorded 244,735 overnight stays, 8 percent
more than last year. According to the company, the growth in the number of visitors would
have been even greater if it were not for the bad weather.
The company also revealed it is planning to build a new 125-bedroom hotel that will focus on
wellness programmes. It has already received confirmation from the Economics Ministry on a
grant of SIT 889m (EUR 3.7m) from European structural funds.
Shares of Terme Catez closed the trading day on the Ljubljana Stock Exchange 1.64 percent
higher at SIT 38,482 (EUR 160.47).
Liv Beats Profit Forecasts
Liv's net profit for the first six months came in at SIT 302m (EUR 1.26m), which is 3 percent
more than last year and 53 percent more than anticipated
Plastics- and steel-product maker Liv has beaten profit forecasts for the first half of the year.
Liv's net profit for the first six months came in at SIT 302m (EUR 1.26m), which is 3 percent
more than last year and 53 percent more than anticipated, the company said on Tuesday, 24
August.
The company said exports accounted for 71 percent of all sales in the first half of 2004, with
operating revenues down five percent of the first half of 2003.
The company expects to finish the year with a net profit of SIT 374m (EUR 1.56m), which is
25 percent more than last year.
Faltering sales of vacuum cleaners on the Slovenian market is said to be the main reason for
the drop in revenues. Liv said it was not bothered by the drop in sales of vacuum cleaners as it
is focusing on production of technologically more advanced products, such as cement mixers
and pumps.
Intereuropa Exceeds Interim Plans by 6%
The logistics company Intereuropa posted sales revenues of SIT 25.6bn (EUR 106.7m) over
the first half of the year
The logistics company Intereuropa posted sales revenues of SIT 25.6bn (EUR 106.7m) over
the first half of the year, 16 percent more than in the same period last year. Plans were
exceeded by 6 percent, the company said on Tuesday, 24 August.
Intereuropa's net profit reached SIT 2.5bn (EUR 10.4m), 71 percent more than planned and 48
percent more than last year.
All plans of the Koper-based group were exceeded despite numerous economic changes
affecting its business operations, the company said, adding that it had turned many of these to
its own advantage.
Targeted investments into logistics capacities, streamlining and advantageous financial effects
helped the company improve last year's net results almost by half.
18
Intereuropa obtained 5,126 sq. metres of new warehouse areas in Croatia's Zagreb and Zadar
over the first six months of the year, and managed to adapt successfully to the new market
conditions dictated by Slovenia's EU entry.
Adria Raises Fuel Surcharge
Adria has decided to raise the surcharge by 2 euros to 7 euros for one-way tickets and by 4
euros to 14 euros for return tickets
Slovenian flag carrier Adria Airways has followed the example of airline companies around
the world in deciding to raise a fuel surcharge on its passenger flights.
Adria has decided to raise the surcharge by 2 euros to 7 euros for one-way tickets and by 4
euros to 14 euros for return tickets.
The measure is aimed at offsetting the losses the company is incurring due to the record high
prices of jet fuel and will last only until warranted, Adria said in a press release on
Wednesday, 25 August.
Adria introduced the fuel surcharge at the beginning of June, when oil prices first hit US$ 40
a barrel. Back then, the company said it would be forced to raise the surcharge if oil prices
went above US$ 42 a barrel.
Adria, which saw passenger numbers rise be 7 percent to 503,550 in the first six months of the
year, did not specify how much its operating costs have risen as a result of rising prices of
crude oil.
Adria operates around 140 flights each week to 40 destinations.
Aerodrom Ljubljana Posts Net Profit of EUR 3m
Net profit was up 6.3 percent
Aerodrom Ljubljana, the company running the Brnik International Airport, posted SIT 2.49bn
(EUR 10.4m) in operating revenues in the first half of the year according to unaudited data.
This is an 11.5-percent increase on 2003 half-year figures, the company said.
Net profit was up 6.3 percent, to SIT 732m (EUR 3m), in the year to June, Aerodrom said in a
press release.
As much as 84 percent of the total operating revenues were generated with the sale of services
on the domestic market, and 14 percent with the sale of services abroad.
The airport saw a total of 15,951 planes landing at and departing from Brnik in the first six
months, up 6.4 percent over the same period last year.
A total of 431,022 passengers passed through Brnik, a 10.2-percent increase year-on-year.
What is more, 6,070 tonnes of cargo were shipped through Brnik, up 2.9 percent on last year.
Aerodrom expects to see further growth in passenger numbers, as the British low-cost airline
EasyJet announced recently it will open a new route between Ljubljana and Berlin in
November.
Pasta and Bread Maker Sees Its Profit Slump
The group's profit fell in spite of a 2.2-percent increase in sales, which stood at SIT 14.79bn
(EUR 61.7m)
Pasta and bread group Zito has seen its half-yearly net profit slump by over 45 percent
compared to last year to amount to SIT 71m (EUR 312,800). The group's profit fell in spite of
a 2.2-percent increase in sales, which stood at SIT 14.79bn (EUR 61.7m).
The group's half-yearly report suggests that a large drop in the company's financial revenues
is to blame for the slump in the net profit. The group's operating profit was, meanwhile, 64
percent higher than last year's, standing at SIT 259m (EUR 1.08m).
Zito, which employs 2,620 workers, said it generated 82 percent of its sales in Slovenia, with
the rest being exports.
19
The group provided few indications about the anticipated results in the second half of the
year, saying only that the company's operations will be directed at further rationalisation.
Mlinotest Expects Stronger Sales on EU Markets
The food group Mlinotest made a net profit of SIT 86m (EUR 360,000) in the first half of the
year
The food group Mlinotest made a net profit of SIT 86m (EUR 360,000) in the first half of the
year, which was 1 percent over the target figure, the group said in a press release on
Thursday, 26 August.
Net sales revenues totalled 2.3bn (EUR 9.6m), down 3 percent year-on-year. Around 9
percent of all revenues were generated on foreign markets.
The group expects increased sales of its bakery line products and pasta in the second half of
the year and in 2005, particularly in Italy, Germany and Sweden.
The Ajdovscina-based group said in a press release on Thursday, 26 August that, in spite of
increased competition, it has managed to preserve its market share in the wake of Slovenia's
EU accession.
Merkur Doubles Net Profit
Hardware retailed Merkur doubled its net profit to SIT 1.53bn (EUR 6.4m) in the first half of
the year
Hardware retailed Merkur doubled its net profit to SIT 1.53bn (EUR 6.4m) in the first half of
the year, with sales up 26 percent to SIT 81.6bn (EUR 340.3m), Merkur CEO Bine Kordez
revealed as he talked to the press following the opening of a new Merkur megastore in the
Ljubljana retail hub BTC.
According to Kordez, all nine subsidiaries that make up the group alongside the parent
company saw sales increase, including its home entertainment division Bofex.
Bofex made headlines at the end of July when business daily Finance reported that its loss for
2002 had been understated.
The management later admitted that instead of SIT 388m (EUR 1.62m), Bofex's loss actually
amounted to SIT 1.1bn (EUR 4.59m) last year.
Kordez noted that Bofex saw sales increase by 12 percent in the first six months of the year,
with the operating loss at SIT 387m (EUR 1.6m) for the period.
He was quick to point out, however, that Bofex accounts for only 10 percent of the Group's
sales. It is crucial that the group's results are good and that the situation in Bofex is brought
back on line, Kordez added.
The company's supervisory board did not discuss the fate of Bofex at a session on Thursday,
26 August. Things will be clearer in September, said Kordez, when it becomes clear whether
Bofex stays in the group or is sold, he said.
Successful Half-Year for Trade Hub BTC
Ljubljana-based trade hub BTC reported SIT 4.18bn (EUR 17.43m) in sales in the first six
months of this year
Ljubljana-based trade hub BTC reported SIT 4.18bn (EUR 17.43m) in sales in the first six
months of this year, up by 7 percent from the same period last year. Net profit increased by 35
percent year-on-year and now amounts to SIT 679.73m (EUR 2.83m), the company said on
Thursday, 26 August.
The management and the supervisory board of BTC, which operates the biggest retail and
wholesale trade centre in Slovenia, deemed the operations in the first half-year as successful.
The business results and SIT 2bn (EUR 8.34m) worth of investment contributed to the
success.
20
The two largest investments of the BTC are the aquatic park (SIT 1.1bn/EUR 4.6m),
scheduled to be constructed by spring 2005, and the car park (SIT 615.7m/EUR 2.6m), which
should be open to the public by the end of August, the company said.
CPO Back at Step One in Interbrew-Lasko Wrangle
Lasko countered Interbrew's takeover attempt for Union in late 2001 by issuing a counter bid
for the Ljubljana brewer's shares, officially gaining 48 percent of Union in the process and
preventing Interbrew from getting more than half of the shares
The legal wrangling over whether Slovenia's largest brewer, Pivovarna Lasko, secretly
acquired a majority stake in domestic rival Pivovarna Union as part of a takeover battle with
Belgium's Interbrew is back to step one as the anti-trust watchdog confirmed it would go
about drawing up a new study on the matter.
The Competition Protection Office (CPO) will not defend its much unpopular verdict on the
consolidation between the two Slovenian brewers, in which it ruled that Lasko was not in
breach of anti-trust regulations, but will instead draft a new ruling, the watchdog said on
Thursday, 26 August.
The announcement comes a month after the Administrative Court ruled that the CPO's
original study on the matter was flawed and needed to be redone. The CPO could have
appealed the ruling, but decided against this "because there was no realistic chance of the
Supreme Court overturning the Administrative Court's decision".
The latest development is all part of the legal fallout of Lasko and Interbrew's battle for
control of Union, which began almost three years ago and which has produced no winner
since neither company has officially managed to gain a majority stake.
Lasko countered Interbrew's takeover attempt for Union in late 2001 by issuing a counter bid
for the Ljubljana brewer's shares, officially gaining 48 percent of Union in the process and
preventing Interbrew from getting more than half of the shares.
Interbrew, which acquired 41 percent of Union, cried foul, claiming that Lasko actually had
more than 50 percent in Union if its associated companies were taken into account.
In a response to Interbrew's request that the CPO finds Lasko in breach of anti-trust
legislation, the watchdog agency said last July that no consolidation between Lasko and
Union had taken place in the first place, since Lasko held less than a 50-percent share in
Union.
Moreover, the CPO also turned down a demand by Pivovarna Lasko for the office to endorse
a Lasko-Union merger under Lasko's terms. Explaining its decision back then, the office said
that Lasko will have to fulfil a number of conditions for a period of at least three years,
including selling several Union brand names, if wants to be a majority owner of Union.
Since neither side was happy with the CPO's ruling - Interbrew continued to claim that LaskoUnion consolidation had taken place, while Lasko disputed the CPO's conditions for a merger
- the matter was sent to the Administrative Court, which in turn decided to nullify the CPO's
verdict.
The Administrative Court's ruling on the verdict was a rare case of Interbrew and Lasko
having reason to celebrate at the same time. The CPO, meanwhile, was left with the
unappealing prospect of having to handle the matter all over again.
"This is by no means a simple case; it's extensive and very complicated," director of the CPO
Andrej Plahutnik told the STA.
According to Plahutnik, the anti-trust watchdog will now launch a new study. The verdict that
comes from this new study cannot be predicted, said Plahutnik, adding that it could be
different from the first one.
21
It is expected that it will take three months for the CPO to come up with a new verdict on the
Lasko-Union consolidation. "It would be foolish to think that we could complete this thing in
a month," Plahutnik asserted.
Fructal Misses Sales and Profit Targets
Fructal is one of the country's largest producers of soft drinks and is owned by brewery
Pivovarna Union
Beverage company Fructal failed to meet sales or profit targets for the second quarter. Sales
in the January-June period amounted to SIT 8.4bn (EUR 35m), down 10 percent over last
year, which resulted in a loss of SIT 228m (EUR 0.95m).
Sales volumes were 7 percent lower on the domestic market and down 13 percent abroad, the
company said in a press release on Thursday, 26 August.
The supervisory board, which met on Thursday, 26 August, assessed that negative trends will
continue and authorised the management to take appropriate short- and long-term cost-cutting
measures.
Based in Ajdovscina, Fructal is one of the country's largest producers of soft drinks and is
owned by brewery Pivovarna Union.
Salus Posts EUR 3.3m of Half-Year Net Profit
Net sales revenues were up 9.4 percent to SIT 18.51bn (EUR 77.2m)
Salus, a wholesaler of drugs and medical instruments, posted SIT 790m (EUR 3.3m) of net
profit in the first six months of the year, which is a 9.2-percent increase year-on-year.
Net sales revenues were up 9.4 percent to SIT 18.51bn (EUR 77.2m), the company said in a
press release. Sales volume figures were met to 99 percent in the first half of year.
Company operations were focuses on intense preparations for Slovenia's entry to the EU in
the first half of the year, the company also said.
Union's Half-Yearly Profit Down by 48 Percent
The group said it generated sales revenues of SIT 17bn (EUR 70.9m)
Union, the beverages group, has reported a 48 percent slump in its half-yearly profit, which
amounted to SIT 337m (EUR 1.41m).
Union's results were dragged down by the poor performance of its soft drinks unit, Fructal,
which made a loss of SIT 228m (EUR 0.95m).
The group said it generated sales revenues of SIT 17bn (EUR 70.9m), or 5.9 percent less than
in the first six months of 2003.
The sales of the Ljubljana-based group, known mainly for its beer products, fell short of
expectations due to weaker sales in SE Europe, a press release from Union said.
What is more, Union warns that its sales could be additionally hit in the second half of the
year, in the wake of findings by Serbian authorities that Fructal's blueberry juices contained
excessive traces of radioactive substances - although it was later established that the juices in
question met EU food safety standards.
Union's largest owner is rival beverages group Pivovarna Lasko, which holds 48 percent, and
Belgian brewer Interbrew, which has 41 percent.
Gorenje Manages to Overcome Rising Raw Material Prices
Home appliance maker Gorenje said it managed to overcome the rising prices of raw
materials to up its half-yearly profit by 2.5 percent to SIT 1.8bn (EUR 7.51m)
Home appliance maker Gorenje said on Friday, 27 August it managed to overcome the rising
prices of raw materials to up its half-yearly profit by 2.5 percent to SIT 1.8bn (EUR 7.51m).
22
According to the group, operating revenues grew by 9.1 percent to SIT 99bn (EUR 413m) in
this period.
The management of Gorenje said it was pleased with the results. Earlier this year, the
management had warned the group may see its profit fall short of targets because of the
soaring prices of raw materials, particularly steel.
Moreover, the company also battled lacklustre demand on the markets of western Europe and
tougher conditions on the US market due to the weak dollar.
Gorenje expects that market conditions will remain difficult in the second half of the year. In
a bid to ensure continued strong performance, Gorenje will strive to continue to bring down
operating and material costs, while raising prices of select products, the group said in a press
release.
Meanwhile, the supervisory board of Gorenje was acquainted today with the company's
efforts to purchase 5.7 hectares of industrial land in the Serbian city of Valjevo, where it
wants to launch production of home appliances.
The new plant in Valjevo, which is valued at around 12 million euros, is expected to employ
200 to 250 workers at the scheduled launch of operations in the second half of 2005.
Pivovarna Lasko Publishes Bid for Knjaz Milos Shares
Brewer Pivovarna Lasko published a public bid for the acquisition of a stake in the largest
mineral water company in Serbia-Montenegro, Knjaz Milos
Brewer Pivovarna Lasko on Friday, 27 August published a public bid for the acquisition of a
stake in the largest mineral water company in Serbia-Montenegro, Knjaz Milos.
While Slovenia's leading brewer wants to buy no more than 40 percent of Knjaz Milos, i.e.
146,170 of the company's 365,425 shares, it will only consider the bid as successful if it
acquires at least 25 percent.
Lasko's bid - which has been made in collaboration with Belgrade's Broker Point company will be valid until 20 September. Lasko also has the option of obtaining more shares than
stated in the bid.
Lasko CEO Tone Turnsek told STA on Thursday, 26 August that Knjaz Milos sells 2.2
million hectolitres of various soft drinks annually, and holds a market share of between 60
and 70 percent in Serbia-Montenegro.
"There is not a single bar in Serbia-Montenegro that does not sell Knjaz Milos products, so
many other candidates aside from us are interested in the company," he noted.
According to unofficial sources quoted by the Serbian press agency Beta, Lasko has four
rivals for the bid: the company FPP Balkan, London's investment fund Ashmore, the French
company Danone, and Belgrade's Delta.
Ashmore and Delta are reportedly offering the highest price per Knjaz Milos share, namely
10,000 dinars (EUR 136.80), while Lasko would be willing to pay 9,500 dinars (129.96) per
share, which is 43.04 percent more than the book value of Knjaz Milos shares.
The only other public bid for the acquisition of Knjaz Milos so far was published by the
company FPP Balkan, which offered 9,000 dinars (EUR 123.12).
The state of Serbia-Montenegro is the owner of a 41.28-percent stake in Knjaz Milos, the rest
belonging to a number of small shareholders.
The Slovenian brewer is just the latest bidder trying to get its hands on Knjaz Milos.
Legendary Serbian basketball player Vlade Divac has recently given it a try, but was left
empty-handed after failing to find common grounds with the shareholders and the Serbian
Agency for Privatisation.
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Istrabenz Posts Loss in Second Quarter, Not Interested in Sava
Despite the half-yearly loss, Istrabenz plans a hefty end-of-year profit, SIT 9bn (EUR 37.5m)
Istrabenz posted a loss of SIT 221m (EUR 0.92m) for the first six months of this year, down
from last year's profit of SIT 1.64bn (EUR 6.8m) in the same period, the energy and tourism
group said. Meanwhile, Istrabenz's chair Igor Bavcar denied on Friday, 27 August that the
group wanted to acquire chemical and tourism group Sava.
Despite the half-yearly loss, Istrabenz plans a hefty end-of-year profit, SIT 9bn (EUR 37.5m),
mostly from participation in profit of subsidiary companies and the sale of its 50-percent stake
in petrol retailer OMV Istrabenz to Austria's OMV.
The Istrabenz holding company generated financial revenues of SIT 592m (EUR 2.47m) in
the first six months of the year from stakes in subsidiary companies in the Istrabenz Group,
the group said.
Speaking to the press, chairman of Istrabenz Igor Bavcar denied rumours that his company
was planning a takeover of chemical and tourism group Sava. Istrabenz and Sava have been
working well together in tourism, Bavcar said, adding that Istrabenz was not interested in
acquiring the Kranj-based group.
Meanwhile, head of Istrabenz's supervisory board Janko Kosmina explained the company's
decision to sell off its petrol retail business to partner OMV, saying the decision was the right
one to take "because it is difficult to make money from petrol trading if you don't have access
to the raw material".
Shareholders of Istrabenz also approved today a plan that would allow the group to carry out a
capital injection of up to half of the current capital, if the need for this should arise.
Analysts believe this move may indicate that Istrabenz intends to continue its buying in the
food industry, where it has recently upped its stake in Izola-based company Droga from 6.12
to 12.14 percent, or in other sectors, including tourism.
Mercator Bidding for Serbia's Biggest Retail Chain
Mercator asked the Serbian Securities Market Commission for approval of the offer for the
acquisition of the Belgrade-based retailed and is awaiting its response
Mercator, the leading Slovenian retailer, submitted a takeover bid for C market, Serbia's
largest retail chain. Mercator is reportedly aiming to buy one third of C market shares. The
supervisory board of Mercator on Tuesday, 24 August approved of the management's
decision. Mercator asked the Serbian Securities Market Commission for approval of the offer
for the acquisition of the Belgrade-based retailed and is awaiting its response. Serbian media
meanwhile said that the Serbian government supports a rival domestic bid for the country's
biggest retail chain.
Mercator's supervisors also reviewed the business results for the first six months of the year.
The retailer's net sales soared by 41.1 percent year-on-year to EUR 436.5m, with net profit up
by a third to EUR 18.1m. The Mercator Group - which includes food production, catering ant
hotel businesses - saw sales go up 15.3 percent to EUR 749m, with net profit topping EUR
11.8m, up 5.4 percent.
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SLOVENIA IN BRIEF
EU Citizens Increasingly Interested in Slovenian Property
While EU citizens were able to buy property in Slovenia a year before the country joined the
EU, interest has increased after the 1 May entry date. Data from the Tax Administration
reveal that 147 new owners from the EU bought houses in Slovenia between 1 May to 31
July.
FM Vajgl Meets Representatives of Minority in Hungary
Financial problems and future plans to improve the situation of the Slovenian minority in
Hungary topped a meeting held on Tuesday, 24 August between Foreign Minister Ivo Vajgl
and representatives of the minority in Hungary. Vajgl received in Ljubljana Joze Hirnoek,
head of the association of Slovenians in Hungary, Martin Ropos, mayor of
Felsoszolnok/Gornji Senik (one of the towns in the Raba region with a Slovenian population),
and Francek Mukic, editor of the local radio of Szengotthard/Monoster.
Culture Minister Rihter Meets Swedish Counterpart
The potential to upgrade the exchange in arts and culture between Slovenia and Sweden and
cooperation within the EU topped the agenda as Culture Minister Andreja Rihter met her
Swedish counterpart Marita Ulvskog in Stockholm on Friday, 27 August.
Olympics: Bronze for Ceplak
Slovenian track star Jolanda Ceplak has taken third place in the women's 800 metres at the
Athens Games.
Pandur's Theatre Extravaganza Awarded in Budva
The latest extravaganza by one of Slovenia's most acclaimed theatre directors has won over
the jury of the 18th Theatre City festival in the Montenegrin town of Budva. "100 Minutes"
by Tomaz Pandur was awarded the prize for "contributing to the advancement of theatre".
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