Slovenia Business Week no. 03, January 17th, 2005
Table of Contents:
HEADLINES ............................................................................................................................. 2
Central Bank Expects Inflation Will Continue to Drop ......................................................... 2
Golf Named Slovenian Car of the Year ................................................................................. 2
Istrabenz Offer for Takeover of Kolinska Expires ................................................................. 2
INTERNATIONAL COOPERATION ...................................................................................... 3
Russian Deputy FM Discusses OSCE Issues with Ministry Officials ................................... 3
Parliament Speaker Meets Chinese Ambassador ................................................................... 3
Agreements Needed to Upgrade Trade between Slovenia, Kosovo ...................................... 3
Speaker Cukjati Meets Ambassador Mortimer ...................................................................... 4
EUROPEAN UNION ................................................................................................................. 5
Report: Slovenia Will Not Reach EU GDP Before 2025 ....................................................... 5
STATISTICS/FORECASTS ...................................................................................................... 6
Industrial Output Up 3.8% Y/Y ............................................................................................. 6
Trade Gap Doubles in November........................................................................................... 6
Electricity Consumption up 2.1% in 2004 ............................................................................. 6
FINANCE................................................................................................................................... 7
Export Credit Agency Undergoing Transformation ............................................................... 7
Mrak Reiterates Call for Bolder Structural Policies ............................................................... 7
Study Says Government Should Raise Excise Duties on Fuel ............................................... 8
New LJSE Chair Points to Poor Liquidity as the Main Problem ........................................... 9
Ljubljana Stock Exchange ...................................................................................................... 9
Foreign Exchange ................................................................................................................. 10
BRANCH INFORMATION .................................................................................................... 11
EU Accession Worsens Business Performance of Food Industry........................................ 11
COMPANIES ........................................................................................................................... 12
Istrabenz Has Majority Stake in Kolinska............................................................................ 12
Record Production at Car Maker Revoz in 2004 ................................................................. 12
Velenje Coalmine Turns Loss into Profit in 2004 ................................................................ 13
KAD to Sell Kolinska Shares to Istrabenz ........................................................................... 13
Rogaska Glassworks Files for Bankruptcy Protection ......................................................... 13
Post of Slovenia Ups Revenues by 9% ................................................................................ 14
Software Company Hermes Posts Revenues of EUR 30M.................................................. 14
An Austrian Airline Launches Maribor-Paris Route ............................................................ 15
SLOVENIA IN BRIEF ............................................................................................................ 16
OSCE Chairman Congratulates Yushchenko ....................................................................... 16
Austrian-Slovenian Venture to Build a Clinic near Ljubljana ............................................. 16
Archbishop Receives US and Italian Ambassadors ............................................................. 16
All Seven Slovenian MEPs Vote for Constitution ............................................................... 16
Rupel Says Slovenia Wants to Revitalise, Reform and Rebalance OSCE ........................... 16
Government for Accord with Austria on Diplomatic Representation .................................. 16
Economics Faculty Set to Introduce Bologna Study Programmes ...................................... 16
Social Partners Debate Key Development Issues with PM Jansa ........................................ 16
HEADLINES
Central Bank Expects Inflation Will Continue to Drop
The Bank of Slovenia expects that core inflation will drop towards 2.5 percent as a result of
the gradual curbing of overall inflation
The Bank of Slovenia expects that core inflation will drop towards 2.5 percent as a result of
the gradual curbing of overall inflation. Slovenia could thus meet the inflation criteria for
eurozone entry by the middle of next year, the central bank board of governors reported after
its session on Thursday, 13 January.
Discussing the macroeconomic situation, the central bankers also noted that loan growth
slowed down in the recent months, although is still high, buoyed by strong GDP growth and
low interest rates. The share of loans denominated in foreign currency is dropping, but it
remains an important form of crediting.
The governors furthermore eased regulations on minimum liquidity requirements - they
expanded the list of securities that banks can use to include appropriately rated domestic serial
debt securities regardless of maturity date.
Golf Named Slovenian Car of the Year
Second place went to Renault Modus, while the Peugeot 407 was third
Motoring fans have chosen the Volkswagen Golf as car of the year 2005 in Slovenia. Second
place went to Renault Modus, while the Peugeot 407 was third.
The Mazda RX-8 and Hyundai Tuscon were also among the five finalists shortlisted by
readers of magazines Motorevija and Avto foto market, the dailies Delo, Dnevnik, Vecer and
Slovenske novice, the weekly Nedeljski Dnevnik and radio station Val 202.
Over 60,000 people cast their vote. The final decision was made by editors and journalists of
the participating media outlets.
The Mazda 3 won the title last year.
Istrabenz Offer for Takeover of Kolinska Expires
The energy and tourism holding already acquired over half of Kolinska until 12 January
Istrabenz's offer for the acquisition of food company Kolinska expired at noon on Friday, 14
January. The energy and tourism holding already acquired over half of Kolinska until 12
January and looks set to raise its ownership stake to over 85 percent.
All major Kolinska shareholders accepted the offer to sell at SIT 6,500 (EUR 27.11) per
share, which values the food company at SIT 20.6bn (EUR 85.91m).
The last major owners to do so were the state-owned Pension Fund Management (KAD) and
Restitution Fund (SOD), which hold 11.56 and 106 percent, respectively.
The takeover had previously been given approval by the management board of Kolinska.
Moreover, its members are among the many small shareholders who have already sold their
shares to Istrabenz.
Istrabenz CEO Igor Bavcar has said that the takeover will be a step forward in the company's
bid to consolidate Slovenia's food-processing industry. Istrabenz also owns a share in Droga, another Slovenian food company, which is planning to
merge with Kolinska. At last count that stake was around 6 percent.
2
INTERNATIONAL COOPERATION
Russian Deputy FM Discusses OSCE Issues with Ministry Officials
Russian Deputy Foreign Minister Vladimir Chizhov met Foreign Minister Dimitrij Rupel,
State Secretary Bozo Cerar and head of the Slovenian government OSCE task force, Boris
Frlec
Slovenia's presidency of the OSCE and political relations between Slovenia and Russia have
dominated the talks between Russian Deputy Foreign Minister Vladimir Chizhov and officials
of the Slovenian Foreign Ministry.
Chizhov, who concluded his two-day visit to Slovenia on Monday, 10 January, met Foreign
Minister Dimitrij Rupel, State Secretary Bozo Cerar and head of the Slovenian government
OSCE task force, Boris Frlec.
According to a press release by the Foreign Ministry, Chizhov briefed the Slovenian officials
on Russia's standpoint on the future development and role of the OSCE.
The Slovenian side, according to the press release, assured the Russian guest that one of
Slovenia's main priorities during its OSCE presidency in 2005 would be to prevent new
divisions within the organisation.
Russia has been among the countries making most demands for the OSCE reform. The
Kremlin has criticised the organisation for promoting human rights, particularly in the East, at
the expense of security and economic issues.
The Foreign Ministry officials agreed, according to the press release, that the organisation has
to pursue a balanced policy in what regards the security problems, economic policies, and the
issue of human rights.
The talks also focused on bilateral relations, which the officials labelled as very good. They
also pledged to promote further business cooperation between the two countries.
They moreover agreed, according to the ministry, that EU enlargement could contribute to
even stronger relations between the EU and Russia.
Parliament Speaker Meets Chinese Ambassador
Ways of consolidating relations between Slovenia and China, as well as further cooperation
in business, education and technology were discussed
Speaker of the National Assembly France Cukjati received Chinese Ambassador to Slovenia
Wang Fuyuan on Tuesday, 11 January.
Ways of consolidating relations between Slovenia and China, as well as further cooperation in
business, education and technology were discussed, a press release from the parliament said.
Cukjati told Wang that a group of friendship with China was established in the Slovenian
parliament. This, he said, should strengthen the ties between the two countries.
The speaker also highlighted the successful economic cooperation. He believes that business
represents the strongest tie between Slovenia and China.
Wang Fuyuan assumed the post in Slovenia in February 2004, when he replaced Xu Jian.
Agreements Needed to Upgrade Trade between Slovenia, Kosovo
Several agreements should be concluded in order to boost economic cooperation between
Slovenia and Kosovo, including one to protect investment and another on free trade
Several agreements should be concluded in order to boost economic cooperation between
Slovenia and Kosovo, including one to protect investment and another on free trade.
This was a view shared by Slovenian FM Dimitrij Rupel and Kosovo's top officials, among
them President Ibrahim Rugova, Speaker of Parliament Nexhat Daci and PM Ramush
Haradinaj.
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While visiting Kosovo as the OSCE chair on Tuesday, 11 January, Rupel also took this
opportunity to discuss Slovenian-Kosovo relations, and labelled them "excellent", STA has
learnt from the delegation accompanying the minister.
The idea for a free trade agreement was given by the Kosovo side; the province is currently in
talks on this type of agreement with Albania and Macedonia.
Asked by STA whether problems faced by some Slovenian companies in the province were
discussed during the visit, the source in Rupel's delegation said this was not one of the topics
on the minister's agenda.
Before completing his visit to Kosovo, Rupel also met representatives of the Slovenian police
and soldiers in the province, who told him they are able to do their work here without any
major problems.
As part of his visit to Pristina, Rupel also met the head of the UN mission to Kosovo
(UNMIK) Soeren Jessen-Petersen, the head of the OSCE mission in Kosovo Pascal Fieschi
and Kosovar Serb representatives.
Speaker Cukjati Meets Ambassador Mortimer
The two officials shared a view that, politically, the year 2005 will be interesting and difficult
for both countries
EU topics dominated a meeting between Speaker of the National Assembly France Cukjati
and British Ambassador to Slovenia Hugh Mortimer on Wednesday, 12 January. The two
officials shared a view that, politically, the year 2005 will be interesting and difficult for both
countries.
The major challenge for Slovenia this year will be the OSCE chairmanship. Moreover, the
country will "complete" its first year of full EU membership later this year.
A difficult task for Great Britain, however, will be chairing the G-8 group of the world's most
industrialised countries and Russia in the second half of the year, a press release from the
National Assembly said.
Cukjati and Mortimer also discussed the European constitution, with Cukjati stressing the
document was of utmost importance for the entire Europe: it will bring into being a new
Europe.
Mortimer, on the other hand, said the British referendum on the EU Constitution, planned for
2006, will be one of the most important events in Great Britain's recent political history.
The British diplomat believes the country's upcoming EU presidency will have a major impact
on the British public opinion on the constitution, the same press release said.
Cukjati and Mortimer also agreed that Slovenian-British relations were good. The
ambassador, moreover, urged for a strengthening Slovenia's role as a role-model country for
political stability in the region.
4
EUROPEAN UNION
Report: Slovenia Will Not Reach EU GDP Before 2025
At the moment, Slovenia's GDP amounts to around 76 percent of the EU average
A leading Slovenian economic institute has concluded that Slovenia is unlikely to catch up to
the average GDP per person in the European Union before the year 2025. This is 12 years
later than predicted in the current national development strategy.
At the moment, Slovenia's GDP amounts to around 76 percent of the EU average, which
means that the country's economy would have to grow annually by 4.9 percent between 2002
and 2013 if it is to catch up to the average EU GDP by 2013.
However, the Institute for Macroeconomic Analysis and Development (IMAD) predicts that
economic growth in Slovenia until 2013 is to amount to around 3.6 percent annually. This
means that Slovenia will need at least 12 additional years to catch up to the average GDP in
the EU.
According to IMAD's Economic Mirror publication, Slovenia's economy grew at an average
pace of 4.1 percent annually between 1993 and 2002. Contributing most to growth was a rise
in physical capital, whereas human capital contributed little.
Human capital is expected to continue to make only a minor contribution to GDP growth until
2013, IMAD believes, while the effect of the rise in physical capital is expected to fall in this
period.
The study also points out that differences between the trends in human and physical capital in
Slovenia and the rest of the EU are not such as to warrant a 24 percent developmental gap.
The main reason for the difference lies in technological progress, IMAD says.
The study concludes that Slovenia still lags behind the EU average in terms of spending on
new technology, both as concerns research as well as foreign direct investment.
5
STATISTICS/FORECASTS
Industrial Output Up 3.8% Y/Y
On a monthly basis, output grew by 3.1 percent, while in the first eleven months of 2004 the
growth of industry amounted to 4.7 percent
Industrial output rose by 3.8 percent year-on-year in November 2004, according to Slovenia's
Statistics Office.
On a monthly basis, output grew by 3.1 percent, while in the first eleven months of 2004 the
growth of industry amounted to 4.7 percent.
The biggest annual growth in November was registered in electricity, gas and water output,
which expanded by 19.7 percent.
Output in the manufacturing sector grew by 2.5 percent, while mining and quarrying output
rose by 10.6 percent.
Trade Gap Doubles in November
Slovenia's exports amounted to EUR 1.12bn in November
Slovenia's exports amounted to EUR 1.12bn in November, while imports totalled EUR
1.26bn, resulting in a trade deficit of EUR 141.9m, twice as much as in October. Importexport coverage stood at 88.7%, according to the Statistics Office.
Exports increased by 14.3% year-on-year and imports were up 17.8%. November export
figures are meanwhile by 4.5% lower than October's, while imports were higher by 1.4%,
according to the preliminary data of the Statistics Office.
Slovenian exports rose by 10.4% in the first eleven months of 2004 to EUR 11.51bn, and
imports increased by 12.2% to EUR 12.55bn. The trade gap amounted to EUR 1.04bn in the
January-to-November period with the export-import coverage at 91.7%.
As much as 66.4% of November exports were to the EU. Imports from the EU, on the other
hand, accounted for 82% of all imports.
Electricity Consumption up 2.1% in 2004
Electricity consumption in Slovenia topped 12.37 billion KWH in 2004
Electricity consumption in Slovenia topped 12.37 billion KWH in 2004, an increase of 2.1%
over the previous year. The consumption of five main electricity users fell by 0.9% year-onyear, while the consumption of the five distribution companies was up 3%, the national power
grid operator Elektro-Slovenija (Eles) said in a press release.
Despite the increased demand, supply was never threatened last year, the company said.
Power plants generated 13.40 billion KWH of electricity last year, increasing their output by
9.5% year-on-year. Annual plans were exceeded by 6.8%. Hydroelectric power plants,
generating 3.61 billion KWH, increased their production by over 30%.
To ensure a smooth power supply, Slovenia imported 4.26 billion KWH of electricity (up
6.3%). Exports amounted to 5.18 billion KWH, up 30%. About half of the electricity
produced at the Krsko Nuclear Power Plant was exported to Croatia, while the rest was
shipped to Italy.
6
FINANCE
Export Credit Agency Undergoing Transformation
SID now insures export credits and outward investments against non-commercial risk, and
medium-term export credits against commercial risks and commercial (non-marketable) risks
on behalf and on the account of the state
The Slovenian Export Corporation (SID) is undergoing a transformation in line with the act
on the insurance and financing of international commercial transactions. In line with the act,
passed in December 2003, the agency has had to separate its own business from the business
conducted for the state by the end of the year.
In order to guarantee smooth operation of its insurance services, the export credit agency
established a specialised credit insurance company, SID-Prva kreditna zavarovalnica, which
will be in charge of credit insurance that can be post-insured. SID will meanwhile continue to
insure credits on the account of the state.
The SID credit insurance company, which will have a capital of SIT 1bn (EUR 4.2m), has
very ambitious plans. It expects insurance volume to be up 23% and revenues from insurance
premiums to increase by 20% this year. An increase of 100% is expected by 2008. Currently
it still waits for a license of the Insurance Supervision Agency to begin operating.
SID now insures export credits and outward investments against non-commercial risk, and
medium-term export credits against commercial risks and commercial (non-marketable) risks
on behalf and on the account of the state. Previously, these insurance operations were made
on the agency's behalf on the account of the state.
The corporation is meanwhile preparing to bring its non-insurance operations into line with
regulations on banking operations. These operations are expected to be transferred to a bank
specialising in financing international business deals. The process has to be completed by 31
December 2006 according to the act on the insurance and financing of international
commercial transactions.
The Slovenian export credit agency posted EUR 33m of revenues in the first ten months last
year. Last year's pre-tax profit is expected to exceed that posted in 2003 when it amounted to
EUR 1.6m.
In the first ten months of 2004 SID insured EUR 2.1bn of deals on its own account, a rise of
34% year-on-year. Insurance premiums collected from these deals were higher by 25%.
Claims paid out were lower by 22%.
The volume of operations from export credit financing rose last year as well, totalling EUR
446m at the end of October 2004.
The volume of guarantees issued last year (EUR 35m) was somewhat lower but still much
higher than the average figure in the past few years, the agency said.
In 2005 SID plans to see a further increase in the financing of international trade and
investment transactions. The agency expects its total assets to amount to EUR 670m at the
end of the year.
Mrak Reiterates Call for Bolder Structural Policies
According to Mojmir Mrak, a professor at the Ljubljana Economics Faculty, fiscal and
structural policies are now the key to meeting the conditions for the adoption of the euro
A leading Slovenian economist has said that Slovenian fiscal and structural policies must
assume the burden resulting from the loss of sovereignty over monetary policy following the
country's entry into the ERM II exchange rate mechanism.
According to Mojmir Mrak, a professor at the Ljubljana Economics Faculty, fiscal and
structural policies are now the key to meeting the conditions for the adoption of the euro.
7
Mrak's statements came as he spoke about the economic challenges facing Slovenia in the
wake of its entrance into the ERM II, a grooming phase for euro zone memberships.
Fiscal and structural policies are also the key to creating conditions conducive to achieving
robust economic growth, Mrak believes.
Mrak said that Slovenia needs to take two key steps in the near future. Firstly, it must carry
out comprehensive reform of budget spending, aimed at reducing fixed items in the budget.
Secondly, the country must draw up a quality investment programme.
Without taking these steps, Slovenia will not be efficient in drawing EU funds, something that
should in turn threaten the implementation of Slovenia's economic development strategy.
According to Mrak, Slovenia is facing the crucial issue of deciding whether to create
conditions for the robust drawing of EU funds or to continue on the path of gradual structural
reforms.
Last November, Mrak made a call for the scrapping of the gradualist approach to economic
reforms in the country. His comments back then came the same week the director of the
Institute for Macroeconomic Analysis and Development, Janez Sustersic, said "gradualism"
was no longer effective.
Mrak spoke as part of a business meeting in Maribor organised by the Abanka bank.
Study Says Government Should Raise Excise Duties on Fuel
The study, commissioned by the Slovenian National Committee at the World Petroleum
Council (WPC), concluded that the government must increase the share of excise duties in the
retail price of petrol if given the chance
A study on the fuel price policy best suited to the adoption of the euro in Slovenia has
concluded the government should raise excise duties in the event that global oil prices fall to
build a "reserve" for the crucial period between September 2005 and August 2006, when
Slovenian prices will have to be stable if the country wishes to meet the criteria for adopting
the euro in 2007.
The study, commissioned by the Slovenian National Committee at the World Petroleum
Council (WPC), concluded that the government must increase the share of excise duties in the
retail price of petrol if given the chance.
This, the study says, should give the government a chance to neutralise oil price rises in the
future, including the crucial period between September 2005 and August 2006. According to
economists Joze P. Damijan, Igor Masten and Saso Polanec, the authors of the study, the
share of excise duties in the retail price of fuel in Slovenia stands at 27 percent compared to
40 percent in Great Britain.
However, the main finding of the report was criticised by representatives of the Institute for
Macroeconomic Analysis and Development (IMAD), who said that forcefully raising excise
duties on fuel could endanger inflation targets and not help meet them.
According to Bostjan Vasle of IMAD, Slovenia would have to raise duties by 20 percent in
order to raise their share in the retail price of fuel to a desirable level. Such a move would
raise inflation by 0.6 percentage points, Vasle highlighted.
While saying he agrees with the view that it would be good if Slovenia had a "reserve" in
hand if oil prices rose, IMAD director Janez Sustersic stressed that Slovenia currently has the
capacity to neutralise the effects of a US$ 20 rise in oil prices.
Sustersic said Slovenia has time to work on building up that reserve only until the middle of
this year, after which the effects of any such measures would be too detrimental to the
country's inflation.
The study in question also recommends to the government to lead restrictive fiscal policies,
with the main priorities being to keep the lid on wages and government-administered prices.
8
New LJSE Chair Points to Poor Liquidity as the Main Problem
The management will have to take appropriate measures to rectify the situation, or the best
companies will delist from the Ljubljana bourse
The main problem faced by the Ljubljana Stock Exchange (LJSE) is exceptionally low
liquidity. The management will have to take appropriate measures to rectify the situation, or
the best companies will delist from the Ljubljana bourse, Marko Simoneti, the new LJSE
chair, told the press on Thursday, 13 January.
The market capitalisation of quoted securities is good, amounting to over 27 percent of the
GDP. Yet it takes 14 years for the market cap to turn over compared to less than a year on
stock exchanges of old EU members and three years in EU newcomers, he explained.
The stock market conducted a survey on the quality of the listed shares. It emerged that 50
percent of the securities on the official market trade well, but only 16 percent of the shares on
the free market and less than 54 percent of quoted investment funds. This is not an
encouraging picture, he stressed.
According to Simoneti, the bourse will undertake to make changes to the regulations,
including those on disclosure. It will also make efforts to have the stock market members stay
on, not because of legal provisions but because of their own interest. Changes will
furthermore be made to attract international portfolio investors.
It is also problematic that the bourse has high operating expenses: with the current turnover,
prices have to be 20 to 30 percent higher than in comparable markets to keep the bourse in the
black. This is not sustainable in the long term, according to Simoneti, who said that the
system will have to be tweaked to achieve the break-even point with more competitive prices.
Asked about possible mergers with other stock exchanges, Simoneti reiterated that integration
must result in an entry into the EU's capital markets and the arrival of international portfolio
investors. Cooperation with stock markets in SE Europe must be secondary to this objective,
he emphasised.
Simoneti became LJSE chair on 1 January this year. The change in leadership came after the
former head, Drasko Veselinovic, resigned in mid-June 2004 over a Securities Market
Agency probe against the stock market management. Simoneti, a doctor of economics, is a
lecturer at the Ljubljana Faculty of Law.
Ljubljana Stock Exchange
After passing 5,000 points the previous week, the SBI 20 benchmark index hovered around
that mark for the whole of this week as major Slovenian stocks saw mixed trading
After passing 5,000 points the previous week, the SBI 20 benchmark index hovered around
that mark for the whole of this week as major Slovenian stocks saw mixed trading. In the end,
the index closed the week 0.27 percent lower at 4,990.41 points.
Volumes returned to normal last week after the lull in the first week of the new year. A total
of SIT 7.2bn (EUR 30m) worth of stocks changed hands during the five days in 5,285 deals,
including SIT 3bn (EUR 12.5m) in block deals.
Shares in drug maker Krka were the most active last week, racking up almost SIT 1bn (EUR
4.17m) in turnover. The share shed 0.55 percent to close the week at SIT 85,539 (EUR
356.74).
Among the other big names, retailer Mercator slipped 1.16 percent to SIT 40,643 (EUR
169.5) and petrol trader Petrol remained virtually unchanged at SIT 66,962 (EUR 279.26).
Topping the list of winners this week were shares in airport operator Aerodrom Ljubljana,
which gained as much as 9.2 percent to close at SIT 13,655 (EUR 56.95). Aerodrom's
management attributed the rise to the company's strong performance in 2004.
9
The mood was more upbeat on the free market, where the PIX investment fund index edged
up 0.28 percent to 4,603.70 points and the IPT free market index put on 0.65 percent to
4,256.52 points.
Shares in chemical group Helios led the IPT higher as they gained 0.95 percent to SIT
240,305 (EUR 1,000.02) in some lively trading.
Among the popular investment companies, KD ID led the way, picking up 1.52 percent to end
the week at SIT 234.65 (EUR 0.98).
The BIO bond index, meanwhile, shed 0.95 percent to 120.98 points.
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR) - SIT 239.78 (+0.01)
U.S. dollar (USD) - SIT 182.98 (+1.54)
Swiss franc (CHF) - SIT 154.84 (+0.03)
British pound (GBP) - SIT 342.05 (+0.89)
10
BRANCH INFORMATION
EU Accession Worsens Business Performance of Food Industry
Food exports fell by almost 10% in the first ten months last year,
The Slovenian food industry has witnessed a considerable deterioration of business
performance last year, particularly after Slovenia's EU accession. Food exports have dropped,
and imports have been on the rise, stressed Ales Kuhar of the Chamber of Commerce and
Industry of Slovenia (CCIS). He also noted a considerable drop in output in this branch of
industry.
Food exports fell by almost 10% in the first ten months last year, most notably those of
beverage, oil and fats. There was a hefty rise in the exports of milk and dairy products, and a
slight growth in the exports of fish and meat, Kuhar, an agrarian economist, said at a session
of the CCIS Food Industry Association on Thursday, 13 January.
The industry witnessed the biggest drop in exports of processed food to the markets of former
Yugoslavia, where Slovenia used to export two thirds of its food production. Exports to
Serbia-Montenegro dropped by 25%, those to Bosnia-Herzegovina by 15% and exports to
Croatia were down 5%.
Exports of processed food to the EU, meanwhile, edged down only by 1.3% in the first ten
months of the year. Food imports rose by 8% in that period, most notably imports of milk,
dairy products, beverages and sugar.
All this resulted in a considerable, 8% drop in the production of food, beverages and tobacco
products, according to Kuhar. The biggest drop was noted in the production of beverages,
which used to be heavily exported to the markets of former Yugoslavia.
The data show that the Slovenian food industry is facing a breaking point in its development,
as its stands before a number of demanding tasks, according to Kuhar.
Food companies must first join forces, also in terms of capital, and specialise their production,
he said. They must also work on their promotion to make Slovenian products visible on the
EU market.
Agriculture Ministry State Secretary Franci But said that a slight improvement of the situation
can be expected after Croatia's accession to the EU. Slovenia, along with some other
countries, would like to see Croatia lose its special trade status that has placed Slovenian
exporters into a worse situation after EU accession.
Echoing Kuhar's view about the integration of the food industry, the state secretary stressed
the need for more intense capital integration among food companies in order to be able to
weather globalisation pressures.
Bosko Srot, a member of the Pivovarna Lasko management board, said that the markets of
former Yugoslavia are very attractive for the Slovenian food industry, because its brands are
well-established there, but they are completely unknown on the European market.
The food industry, which employs 19,000 workers, added 2.38% to the GDP in 2003,
according to Kuhar. The biggest export markets for processed food products in 2003 were the
markets of former Yugoslavia (61%), followed by the EU (24%). Most imports came from the
EU (55%), third countries (32%) and the markets of former Yugoslavia (13%).
11
COMPANIES
Istrabenz Has Majority Stake in Kolinska
The energy and tourism group Istrabenz has already acquired more than 50 percent in
Ljubljana-based food company Kolinska as part of its takeover bid
The energy and tourism group Istrabenz has already acquired more than 50 percent in
Ljubljana-based food company Kolinska as part of its takeover bid, Istrabenz said on Monday,
10 January. This means that its acquisition is almost certain to succeed.
Istrabenz published the takeover bid on 8 December 2004, offering SIT 6,500 (EUR 27.11)
per Kolinska share, which would make the deal worth SIT 20.6bn (EUR 85.91m). The offer
runs out on Friday, 14 January.
The takeover had previously been given approval by the management board of Kolinska.
Moreover, its members are among the small shareholders who have already sold their shares
to Istrabenz.
One of the large shareholders that has also sold its stake to Istrabenz is investment company
Maksima, which held 10.18 percent, Istrabenz said.
Apart from Istrabenz, the biggest owners of Kolinska are the state-run funds KAD and SOD
(owning 11.55 percent and 10.59 percent, respectively), which are still weighing up whether
to sell.
The two state-run funds are expected to make their decisions ahead of the 14 January
deadline. Both are likely to sell their stakes.
Istrabenz CEO Igor Bavcar has said that the takeover will be a step forward in the company's
bid to consolidate Slovenia's food-processing industry.
Istrabenz has decided to invest in the food industry because it believes there is enough
potential to create the value added, Bavcar said in a recent interview. According to him,
Istrabenz intends to stay in this industry.
Istrabenz also owns a share in Droga, another Slovenian food company, which is planning to
merge with Kolinska. At last count that stake was around 6 percent.
The group's plans transcend Slovenian borders, with the aim being cross-border integration
involving companies in the rest of Europe, including SE Europe.
The previous week, Istrabenz announced it had made a bid for the acquisition of a 70-percent
stake in Rubin, a leading producer of spirits, wine and soft drinks in Serbia-Montenegro.
Record Production at Car Maker Revoz in 2004
The Novo mesto-based car maker Revoz saw record production of 131,761 cars last year
The Novo mesto-based car maker Revoz saw record production of 131,761 cars last year. The
Renault-owned company said the increase in the output of Clios followed the cancellation of
Clio production in a Spanish factory last year.
The highest production in Revoz until last year was in 2002, when a total of 126,661 cars
were manufactured.
The increased demand from Renault also required the introduction of a night shift at Revoz at
the end of last year, which resulted in the creation of more than 400 jobs.
Renault currently manufactures Clio in two European factories: France's Flins and Slovenia's
Revoz. The cars produced at Revoz are sold on western European markets.
The Novo mesto-based company exports over 95 percent of its production, most of it to
France, Italy and Germany.
Marcel Brouiller, the Revoz CEO, said in a press release the company plans even higher
output in 2005. Moreover, the production of a new vehicle will be in the focus this year.
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Velenje Coalmine Turns Loss into Profit in 2004
In 2004 the Premogovnik Velenje coalmine operated with a profit for the first time since 1996
In 2004 the Premogovnik Velenje coalmine operated with a profit for the first time since
1996. While it posted a loss of SIT 280m (EUR 1.17m) in 2003, it generated a profit of SIT
100m (EUR 417,000) last year.
The coalmine posted SIT 28.6bn (EUR 119m) of revenues in 2004, SIT 500m (EUR 2m) less
than in 2003, its manager Evgen Dervaric told the press on Tuesday, 11 January.
The company managed to cut operating costs by 2%. "Our goal is to cut production costs by
15%, which we'll achieve by a 3% reduction in the number of employees a year," Dervaric
said about the company, which employs 2,000 workers.
The coalmine, which celebrates 130 years in 2005, produced 4.2 million tonnes of coal last
year, exceeding the annual plan by 2%. Over the next 25 years, approximately the same
amount of coal is expected to be produced a year.
In an attempt to secure itself stable business, Premogovnik Velenje signed a 10-year contract
with the Slovenian electricity holding and the hydroelectric power station Sostanj on the
supply of coal.
The company will have to acquire funds in the amount of SIT 6.5bn (EUR 27m) to speed up
the closure of a pit, which has failed to go according to plan. The pit should be closed in the
next five years. So far, only SIT 750m (EUR 3.1m) has been allocated for this purpose.
KAD to Sell Kolinska Shares to Istrabenz
Istrabenz published the takeover bid on 8 December 2004, offering SIT 6,500 (EUR 27.11)
per Kolinska share
The supervisory board of the Pension Fund Management (KAD) has approved the sell-off of
its 11.55 percent share in food company Kolinska to tourism and energy group Istrabenz. The
move came on Wednesday, 12 January after another state-run fund recently decided to sell its
10.59 percent stake.
Istrabenz published the takeover bid on 8 December 2004, offering SIT 6,500 (EUR 27.11)
per Kolinska share, which would make the deal worth SIT 20.6bn (EUR 85.91m). The offer
runs out on Friday, 14 January.
The takeover had previously been given approval by the management board of Kolinska.
Moreover, its members are among the small shareholders who have sold their shares to
Istrabenz.
Istrabenz CEO Igor Bavcar has said that the takeover will be a step forward in the company's
bid to consolidate Slovenia's food-processing industry.
The company decided to invest in the food industry because it believes there is enough
potential to create the value added, Bavcar said in a recent interview.
Istrabenz also owns a share in Droga, another Slovenian food company, which is planning to
merge with Kolinska. At last count that stake was around 6 percent.
Rogaska Glassworks Files for Bankruptcy Protection
The company, which generates around 90 percent of its revenues on foreign markets, expects
to sell 27 million euros worth of products this year
Slovenia's world-famous glassworks, Steklarna Rogaska, has filed for bankruptcy protection
in a last ditch attempt to deal with an increasingly dire situation that has seen it run up huge
debts with banks.
Steklarna Rogaska's debts amount to SIT 12.6bn (EUR 52.6m), including over SIT 9bn (EUR
37.5m) to banks. The debts of Steklarna's holding company are even higher, amounting to SIT
23bn (EUR 96m), 60 percent of which is owed to banks.
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According to Steklarna's chair Bojan Bevc, the debts are a result of mistakes made by the
previous management of the holding.
Bevc, who took over at Rogaska in October, said the decision to file for bankruptcy protection
- commonly known in the US as Chapter 11 - is a sensible decision aimed at getting the
company back on its feet.
The CEO believes the bankruptcy protection will give Steklarna a chance to restructure its
debts in agreement with its creditors. Steklarna will keep operating while it is restructuring.
Bevc said some of Steklarna's assets will be sold off, but did not wish to specify which and
what their worth would be. Steklarna is facing its moment of truth, Bevc said, and added that
the restructuring of debts will be part of a wider restructuring that must be carried out in order
to increase the competitiveness of the company.
Bevc refused to say how many jobs would go as a result of the current troubles, but said all
options for restructuring would be considered. The glassmaker currently employs 956
workers.
Another priority at the moment, said Bevc, is to ensure that the company finds around 1.5
million euros needed to carry out an urgent overhaul of its three melting furnaces. In the event
that even one of the furnaces breaks down, the company will have to end operations, Bevc
warned.
The money for the overhaul of the furnaces is expected to be provided by the company's
creditors, primarily banks.
According to Bevc, the state gave the company the money needed to pay for the overhaul of
the furnaces last year, but the money was used for other purposes.
Bevc also said the company needs to see an urgent rise in orders, something he hopes will
happen in March. Future production will involve only economically-feasible products, he
stressed.
The company, which generates around 90 percent of its revenues on foreign markets, expects
to sell 27 million euros worth of products this year, a drop of 10 percent over last year.
Post of Slovenia Ups Revenues by 9%
The Post of Slovenia finished 2004 with revenues of SIT 45.4bn (EUR 189.3m)
The Post of Slovenia finished 2004 with revenues of SIT 45.4bn (EUR 189.3m), up 9 percent
year-on-year. Pre-tax operating profit topped SIT 2.1bn (EUR 0.76m), director Alfonz
Podgorelec told the press on Thursday, 13 January.
It is expected that 2005 will be less successful: revenues are to grow to the tune of 2 percent,
with pre-tax profit remaining flat.
Letter delivery is still the Post's core business, accounting for 62 percent of the sales.
Handling payments brought in 16 percent of the total sales and sale of merchandise 7 percent.
Yet it is the segment of package deliveries, alongside non-addressed mail, that saw the fastest
growth, 16 percent year-on-year, according to Podgorelec.
One of the country's biggest employers with 6,276 people on the payroll, the Post runs 557
post offices around the country.
Almost 71 percent of the households get mail six times a week while 29 percent have theirs
delivered five days a week.
Software Company Hermes Posts Revenues of EUR 30M
The management of the Ljubljana-based company, which ranks among large-size European
software and IT companies, told the news conference that the revenues exceeded the annual
targets by EUR 1.4m
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Software company Hermes Softlab generated consolidated unaudited operating revenues of
EUR 30m in 2004, while the operating profit topped EUR 2m, the company said on Thursday,
13 January.
The management of the Ljubljana-based company, which ranks among large-size European
software and IT companies, told the news conference that the revenues exceeded the annual
targets by EUR 1.4m.
According to its financial director Branka Jerse, the company made a recovery last year after
overcoming a crisis of the IT sector. While the company's revenues totalled EUR 39m back in
2001, they dropped to EUR 28.5m in 2003 due to the crisis.
As for the future plans, the supervisory board has already approved a plan for 2005-2006,
which anticipates revenues to amount to EUR 30.5m in 2005, chair of the board Gregor
Smrekar revealed.
In the coming year, the management expects to see the biggest growth in operations of SPI
products, embedded and storage software development, and development of solutions for
mobile and fixed telecom operators.
Smrekar also said that investments in 2005 were anticipated to exceed EUR 3m and were
merely to go for developing new application management products, strengthening the sales
network in the EU and the US, and upgrading training.
An Austrian Airline Launches Maribor-Paris Route
Styrian Spirit will operate flights on the new route from Monday to Saturday, with all flights
making a stop in Austria's Salzburg
An Austrian air carrier is launching a new route between Slovenia and France on Monday, 17
January. Styrian Spirit will operate flights on the new route from Monday to Saturday, with
all flights making a stop in Austria's Salzburg.
A Canadair CRJ200 will take off from Slovenia's Maribor at 7 AM and land at Charles de
Gaulle at 9.40 AM.
The return flight will leave Paris at 6.30 PM and land at Maribor at 8.50 PM from Monday to
Friday. On Saturday, the 50-seat plane will take off at 11 AM and land in Maribor at 1.30 PM.
After 23 January, Styrian Spirit will also fly the route on Sundays, taking off from Maribor at
3.25 PM and landing at Paris at 6 PM.
Return tickets will be available from EUR 199 plus airport tax.
The introduction of the new air route is according to the CEO of Styrian Spirit, Otmar Lenz,
an important step in the development of the company.
The flights from the Maribor airport will introduce the Austrian company to the Slovenian
market, where Lenz sees considerable opportunities for business.
The Maribor airport is in majority ownership of the Slovenian company Prevent, which also
has a stake in Styrian Spirit.
Moreover, the Slovenian airport is only 55 km away from Graz, the capital of the Austrian
province of Styria, which is why the company expects the route to be used by Austrians as
well.
Styrian Spirit will be the third airline flying from Slovenia to Paris, as Air France and
Slovenia's Adria Airways also operate that route from the national Brnik airport.
15
SLOVENIA IN BRIEF
OSCE Chairman Congratulates Yushchenko
The OSCE's chairman-in-office, Slovenian Foreign Minister Dimitrij Rupel, has sent a letter
of congratulations to Viktor Yushchenko, who was declared the winner of the repeated
presidential election in Ukraine on Monday, 10 January.
Austrian-Slovenian Venture to Build a Clinic near Ljubljana
A private clinic will be erected in the town of Domzale just outside Ljubljana within a year
and a half in what will be the first joint venture between a Slovenian and a foreign company
in this line of business. The Domzale clinic is a joint venture of Slovenian company Klinika
Ljubljana (60%) and Austrian company Humanomed (40%).
Archbishop Receives US and Italian Ambassadors
Ljubljana Archbishop and Slovenian Metropolitan Alojz Uran received separately on
Tuesday, 11 January the US and Italian ambassadors to Slovenia for talks on topical issues,
according to the Slovenian Bishops' Conference.
All Seven Slovenian MEPs Vote for Constitution
All seven MEPs from Slovenia were among the 500 MEPs who voted in favour of the
resolution on the European constitutional treaty in Strasbourg on Wednesday, 12 January. In
what is a symbolic approval of the document signed last October, the European Parliament
backed the resolution with 500 "yes" votes. 137 MEPs voted against, while 40 abstained.
Rupel Says Slovenia Wants to Revitalise, Reform and Rebalance OSCE
The biggest challenge for the OSCE and as such Slovenia's priority in 2005 is "the triple-R
agenda: revitalise, reform and rebalance". This is what Foreign Minister Dimitrij Rupel said
as he addressed the OSCE Permanent Council in Vienna on Thursday, 13 January.
Government for Accord with Austria on Diplomatic Representation
Slovenia should reach an agreement with Austria on mutual representation at both countries'
diplomatic and consular missions in issuing visas, the Slovenian government decided on
Thursday, 13 January. Under this agreement, a diplomatic mission of one of the two counties
would be able to issue a visa to a citizen of the other country, if the latter does not have its
own diplomatic or consular mission in a relevant third country, according to the Government
PR and Media Office.
Economics Faculty Set to Introduce Bologna Study Programmes
The Ljubljana Faculty of Economics will be among the first in Slovenia to introduce study
programmes in line with the Bologna process this autumn. Its dean says that the aim of the
reformed study programmes is to have as many students as possible study at European
faculties for at least six months and to have more foreign students at the Ljubljana faculty.
Social Partners Debate Key Development Issues with PM Jansa
Social partners making up the Economic and Social Council convened on Friday, 14 January
for the first session after the general election, using the opportunity to inform PM Janez Jansa
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