BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 30 OCTOBER – 6 NOVEMBER 2009 )
Sections/headline briefs:
MACROECONOMY:
· Bulgaria confirms EC permission for nuclear plant construction
· Government to spend a billion levs on gas depot projects
· Bulgarian government to outline renewable energy zones
· Bulgaria yogurt dominates 60% of Japanese market
· Lactobacillus bulgaricus - A museum exhibit or world virus?
· What to do with the euro?
· World Bank VP Georgieva warns over Bulgaria bad loan growth
· Export of grain via Varna Port increases 25 per cent in January-October 2009 Y/Y
· Putin makes Bulgaria a natural gas dispathcher
· Green energy loans sell like hot cakes in Bulgaria
INVESTMENTS:
· Korean companies willing to invest in Pernik
· AES invests EUR 1.3 billion in Galabovo TPP
· Bulgaria's Foreign Direct Investments to collapse by 50% in 2009
· Kraft Foods eyes Bulgaria as manufacturing hub for the Balkans
· Key investors eye Sofia
COMPANIES:
· Sweden’s EQT buys Bulgaria's CableTel, Eurocom in €200 M deal
· Bulgarian Aquachim formally acquired by German giant Merck
· Tirista Ltd purchased a ship from Bulyard for $21M
· Global downturn affects battery manufacturers
· Pharmaceutical producer Sopharma raises sales by 18% y/y in October
THE CRISIS:
· EBRD: Eastern Europe dodges repeat of Asian financial crisis
· Crisis eats up banks' profits
· Think-Tank: Bulgaria to stay in recession in 2010
· Bulgaria to exit Crisis in 2011
· Wood-processing first Bulgarian industry to recover from Crisis
Articles:
MACROECONOMY:
Bulgaria confirms EC permission for nuclear plant construction
Bulgaria Foreign Affairs Minister, Rumiana Jeleva, stated Monday that Bulgaria has permission to construct Belene Nuclear Power Plant from the European Commission.Jeleva, speaking after her participation in the “Energy Diplomacy and the EU Integrated Policy for Energy and Climate Change” conference in Sofia, said that “the one positive thing regarding the existing permission for constructing Belene NPP, is that there is such a thing.”Regarding the pipeline Burgas-Alexandropolis natural gas pipeline Jeleva pointed out that there is new impetus to speak about the project, “especially after meeting of PM Borisov with our Greek partners.” It became clear, she said that the new Greek Government has the same environmental and the technological concerns as Bulgaria about implementing the project.Concerning a possible new gas crisis, Jeleva said that problems can always be expected as Bulgaria is currently 100 % dependent from outside energy sources.In her speech to the conference Jeleva said "Particular attention should turn to the specific features of Russian energy policy and Russia's role in European and global energy security," she added that her Citizens for European Development of Bulgaria (GERB) party would remain committed to the Nabucco pipeline project.Jeleva concluded that “energy security requires the nascent Bulgarian energy diplomacy to take a more thorough look at the innovative energy technologies offered by the USA.”
Government to spend a billion levs on gas depot projects
Nearly 1 billion levs (1 euro = 1.95 levs) will be spent to implement two major projects of Bulgaria’s gas storage facilities. Expanding the gas depot in Chiren and erecting one in Galata will be a key part of the 2010-2011 strategy of Bulgaria’s Ministry of Economy, Energy and Tourism, as pointed out in the ministry’s budget plans for 2010-2012. About E250 million will suffice, according to preliminary estimates, to increase Chiren’s “active gas” volume from 540 million cubic metres to 850 million. The future depot in Galata will be constructed in two stages, one consuming between E90-180 million, and the other - around E110-120 million, as envisaged in the budget.Without mention to any specific figures, the ministry is also planning to work on Bulgaria’s gas transfer links to Romania and Greece.
Bulgarian government to outline renewable energy zones
Bulgaria’s environment ministry will develop a strategy to designate areas that can host clean energy projects with no environmental impact, said minister Nona Karadjova. The announcement comes after in end-October the economy ministry said it has embarked on an analysis of the renewable energy potential in different regions and is studying grid-connection options. Striving to meet its EU-binding 16% green energy target by 2020, Bulgaria has a pipeline of 8,000 MW wind farms and 4,000 MW solar power plants. Karadjova pointed out that consented projects encroaching upon territories outside the designated areas will not be demolished. Following the inclusion last month of Kaliakra cape into the EU Natura 2000 Network of protected species habitat sites, the environment ministry suspended the construction of an 80 MW wind park of Austrian utility EVN near Balgarevo, close to the northern Black Sea coast. Bulgaria’s environment ministry will pool efforts with the economy ministry to lay the groundwork for an eco-efficient economy.
Bulgaria yogurt dominates 60% of Japanese market
Bulgaria has a stake of about 60% of the Japanese yogurt market, where 40 M people regularly consume the product.This became clear at a meeting Thursday between the Ambassador of Japan to Bulgaria, Tsuneharu Takeda, and the Minister of Agriculture and Foods, Miroslav Naydenov,LB Bulgaricum Plc. and Japanese company Meiji Dairies are working successfully on three licensing contracts for the development of dairy produce based on sour bacteria, the ministry stated.The two companies have also signed an agreement for cooperation in relation to branding the yogurt as "Bulgaria" throughout the Asian region.LB Bulgaricum, the only Bulgarian state owned company in the milk-processing sector, possesses the original starter culture for Bulgarian yogurt.“At the moment, attempts are being made to broaden the market of Bulgarian yogurt in other Asian countries,” Takeda pointed out. He added that Bulgaria is also well-known in Japan for its rose oil. Exports of this Bulgarian product to Asia have consistently increased over the past few years.“Bulgaria is an interesting importer of foodstuffs because they are quality products, delicious and ecologically pure. You should increase the export of vegetables, pork and chicken meat, as well as Bulgarian wines, to the Japanese market,” he said.Naydenov stated that, although Bulgaria has extremely great potential in production of quality and tasty foods, regretfully over the past few years this market had not been exploited.“Our country has turned into a net importer of foods due to bad management. The new government has the desire and will for this to change,” Naydenov said. He added that, apart from yogurt and rose oil, white brine cheese could become an attractive product on the Japanese market.During the meeting, Min Naydenov outlined to the Japanese Ambassador the priorities of the new Bulgarian government, saying that the two main targets are the fight against corruption and the maximum assimilation of EU funds in the current financial crisis.
Lactobacillus bulgaricus - A museum exhibit or world virus?
For hundreds of years and even for millennia Lactobacillus bulgaricus is travelling in time. But it is always here, on the luxuriant Bulgarian meadows. Many years have passed since the shepherds used to turn the cow milk into yoghurt using their own bodies' heat. In the summertime they used to pour the frsh milk into leather bags and add some ferments. Then they used to fling the bag over their shoulders and took their sheep out to grass. The leather bag used to bounce all day long while being exposed to the flaming sunrays. Thus, at noon the exhausted farmer had a refreshing beverage to quench his thirst and restore his energies. Opening a jar and scooping up the tasty thick Bulgarian yoghurt is just a dream for the majority of the Bulgarian since there is almost nobody to make it at home. Paradoxically, today in the homeland of Lactobacillus bulgaricus there are quite fishy ingredients to be found in the plastic jars. Moreover, Bulgaria is among the few countries whose grannies are not allowed to sell their own produce. Instead of stimulating the production of natural ferments, our rulers forbade it and require the ferments to be produced only on industrial basis under certain conditions. What is produced there, however, contains quite few live organisms. Today they remain "conserved" just in the dusty books at institutes and libraries. In fact, exact data on the origin of Lactobacillus bulgaricus could not be found even there. one of the theories goes back to the Thracians, who used to keep many sheep. They found out that the fermented milk last longer than the fresh one. Than they began to add fermented milk to the fresh one so as to get a product known as sour milk or "prokish". Some researchers think that we owe the yoghurt not to Thracians, but to the proto-Bulgarians who made a beverage of mare milk known as "kumis". Bulgarian yoghurt gained popularity in Western Europe thanks to Francis I King of France. He was suffering from a grave incurable stomach upset and asked Ottoman Sultan Suleyman the Magnificent for help. He sent him a physician who managed to cure the king through a diet, including the consumption of yoghurt. In acknowledgment of this service, the French king disseminated the fame of the food that cured him. At the beginning of XX century the Nobel Prize laureate Ilya Mechnikov was working in Paris over problems pertaining to human ageing. A survey that he carried out in 36 countries showed that the country that boasted the biggest number of centenarians - four per 1,000 - was Bulgaria. Mechnikov was the one to promote the idea that the longevity is due to the yoghurt. Its microflora was studied for the first time in 1905 by Stamen Grigorov, a Bulgarian student at the Geneva Medical Institute. This is the brief history of yoghurt, which today is one of the most consumed foods across the world. There are few, however, to know that its homeland is exactly Bulgaria. It is produced everywhere although being named in different ways (yugurt or ayran in Turkey; busa in Turkmenistan; leben or leban in some Arabic countries; zabadi in Egypt and Sudan; mast or dug in Iran and Afghanistan; roba in Iraq; dadhi in India; katak in Caucasus). The simple truth is that neither our country, nor the scientists and entrepreneurs have taken a significant step towards not only popularising, but also towards protecting the Bulgarian yoghurt. In contrast to France, for example, which doesn't yield the precedence of its champagne, we didn't demonstrate at all that one of the most popular foods owes its beneficial qualities exactly to a bacterium that is found only in Bulgaria. Most of the consumers name all sour milk products "yoghurt", not knowing that they have nothing to do with the authentic and healthful yoghurt that is produced in Bulgaria. According to the Lisbon Agreement of October 31, 1958, an appellation of origin means the name of a country, region or countryside, which is used to signify a product that has originated there and whose qualities or properties are owed mainly to the specific local environment, its natural and human factors included. The protection against any attempts for misappropriation or counterfeit is provided in every country. Bulgarian yoghurt and its ferment were registered under the Lisbon Agreement still in March 1978 under AO 0649 and AO 0659, respectively. The protection has been demanded from the then state enterprise "Milky Industry". In practice, however, this means that the appellation of origin is protected only in the countries that have signed the Lisbon Agreement. In all other cases, no law protection can be sought and even if it could be sought our country seems to lack the intention to set out and vindicate the bacterium's credit. There is only one Bulgarian company that has the right to sign agreements for providing a general package of know-how, technologies, technical assistance, original Bulgarian ferments, as well as the yoghurt trademark. In the past, Bulgaria used to have 16 licence agreements. The first was signed in 1967 with Germany, followed by Japan and France. Currently, the country has actual agreements with Japan, Germany, Switzerland, Finland and South Korea. The foreign producers of the above countries are obliged to specify on the label that the product has been made with original Bulgarian ferments. And just some 20 Bulgarian companies have the right to export yoghurt to the European Union. Thus, the Lactobacillus bulgaricus' homeland turns out to be a second fiddle in its production and protection. Moreover, even the local stores are abundant in "Bulgarian yoghurt made in Poland". Our country doesn't put enough efforts in order to popularise and protect its discovery. Moreover, it has also forgotten the yoghurt's discoverer. And if today many Americans think that yoghurt is French, the Japanese are no doubt convinced that Stamen Grigorov is Greek. His birthplace is the godforsaken village of Studen izvor in Tran municipality where the only Yoghurt Museum can be found. Well, it is not exactly a museum since there is only a miniature model of the yoghurt production process and several brochures. The state has nevertheless destined only this small corner to hand down the once glorious past of a big discovery.
What to do with the euro?
On paper, the logic of expanding the eurozone is simple – whoever meets the Maastricht criteria can join and those that do not meet them cannot. Short and clear, but only in theory.Some Western countries were allowed into the eurozone without meeting the requirements – whether by manipulating the statistical data or by circumventing the requirements or on political grounds. Furthermore, there are countries that even after joining the eurozone do not meet the requirements, especially in the current conditions of an economic crisis.At the same time, Bulgaria meets almost all Maastricht criteria and, should it maintain a prudent policy course, will soon meet the last requirement, namely inflation. In other words, very soon Bulgaria will meet all Maastricht criteria for membership in the eurozone.For years now, the situation is that countries outside the eurozone are better prepared for membership than some countries inside it. Making the next step forward, we will have a situation in which a country outside the eurozone is doing better on the Maastricht criteria than all countries in the eurozone. Considering how unprepared some countries were when they joined the eurozone, Bulgaria should be the ideal candidate and join smoothly, correct?Unfortunately, that does not appear to be the case. Bulgaria is yet to be accepted into the exchange rate mechanism (ERM-2), the waiting room, of sorts, for the eurozone. Joining the ERM-2 is traditionally easy and does not require meeting a set of criteria. Despite that, Bulgaria is yet to be allowed into the ERM-2.So, Bulgaria is behaving like a good pupil, ratifying constitutions, Lisbon treaties and any rational and irrational paperwork from Brussels. In exchange, it is not even allowed into the eurozone waiting room.New test: Bulgaria is now making a new attempt to join the ERM-2 and this time its arguments are bulletproof: we are a country that meets the criteria for adopting the euro; we are a country that is managing to deal with the economic crisis without the International Monetary Fund’s help; we are a country that scores better on stability indicators than many other countries that are members of the eurozone.If even under these circumstances Bulgaria is not allowed into the ERM-2, then clearly the rules in the European Union are not the same for everyone. Bulgaria’s accession treaty stipulates that the country has the right and obligation to join the eurozone. If we are not being allowed into the eurozone, there is a clear violation of the treaty – a violation by the EU institutions.If they breach the treaty and are not allowing us into the eurozone, why should we comply with them, why not introduce the euro ourselves? We can adopt the euro unilaterally by invoking the accession treaty and the Maastricht criteria. We have met the criteria and are taking what is rightfully ours.European institutions will not like this approach. They would prefer for us to wait for years and decades until they grace us with the permission to join the eurozone. But should they pause to reflect, they will understand that they are very wrong.The first scenario would be for us to remain outside the eurozone, and reduced support for prudent economic policies. Some politicians will think that reforms are pointless if they are not rewarded, by acceptance into the eurozone in this instance. In this case, the EU gains nothing, because it encourages populism and imprudence in yet another country.The second scenario would be for Bulgaria to stay outside the eurozone and manage on its own. Let us imagine, however, that prudent policies continue to be pursued for 10-15 years with Bulgaria outside the eurozone. Confidence in the Bulgarian currency will become even higher than now and it would be impossible to persuade voters to exchange the leva for the euro. In other words, Bulgaria would turn into a new Sweden or United Kingdom and never join the eurozone, a scenario under which European institutions would lose the most.In conclusion, they should either allow us into the ERM-2 and the eurozone soon or allow us to adopt the euro on our own. The other alternatives are not good ones.
World Bank VP Georgieva warns over Bulgaria bad loan growth
World Bank Vice President, Kristalina Georgieva, has stated that if bad loans continue to grow in Bulgaria the situation could get complicated within a year.Georgieva told participants at the Fourth Annual Meeting of business with the Bulgarian government, that it is “dangerous that bad loans have begun to grow and if we continue for another year we may be in a complicated situation, it could become a problem.”According to her, the International Finance Corporation, which is part of the World Bank Group, has started a program for cleaning bad loans. She expressed hope that a significant proportion of the funds would be available to Eastern Europe.Georgieva cited a survey, that about 86 % of the private business in Bulgaria said that the crisis has struck them as more than 30 % of firms recorded a fall in sales of over 40%.The crisis will mean slower world growth, more expensive and more difficult to finance lives, higher unemployment and erosion of capital, Georgieva concluded.
Export of grain via Varna Port increases 25 per cent in January-October 2009 Y/Y
Export of grain via the Varna Port increased 25 per cent in January-October 2009 compared to the like period in 2008, Varna Port Executive Director Danail Papazov said Tuesday. The export, estimated at more than 2 million t, mainly goes to Portugal, Spain and Arab countries. In January-October 2009 a total of 6 million t of cargo passed via Varna Port, Papazov said, adding that this was an 11 per cent decrease from the like figure in 2008. The greatest reduction, by about 40 per cent, is in cargo coming from the industries in nearby Devnya, he said. The downward trend in out-bound cargo is offset by the increase in the exports of grain and in transit cargo, Papazov said. Transit cargo increased almost twice compared to last year which made the management of the port invest into two new facilities for the handling of such cargo, he said.
Putin makes Bulgaria a natural gas dispathcher
Zagreb was a major energy policy center this weekend, as the city gathered Prime Ministers and Heads of State from fifteen countries, who discussed the most pressing problems in the sector. The forum was also attended by Russian President Vladimir Putin.
In his speech he touched on some major energy issues, such as the construction of underground gas storage facilities in several Balkan countries and the construction of an energy ring including the electricity transmission networks of Eastern and Western energy companies, following the adoption of uniform electricity transmission standards.
"Russia will participate in the construction of new energy-generating facilities in the Balkan countries and the privatization of operating ones," President Putin said.
On the sidelines of the forum Russia's Head of State had a meeting with Bulgaria's PM Georgi Parvanov, which lasted for over an hour.After the meeting it transpired that, according to Mr. Putin, Bulgaria might supersede Austria as a major distribution center of natural gas and energy resources for Europe. From this statement it is clear that Putin intends to promote Bulgaria as a key distributor of energy supplies from Russia to the EU. Putin and Parvanov discussed a new energy project called South Stream, which will ensure the transit of Russian natural gas to italy through Bulgaria. The northern coastal city of Varna will be the Bulgarian center of the project, which, experts say, is worth over ten billion US dollars, and its construction will take at least three years. It is still to become clear whether Bulgaria will participate in the South Stream.According to President Parvanov, the Bulgarian state institutions should discuss technical and financial aspects of the project and then take a decision. The European Commission regards the project positively. Russian energy monopolist Gazprom signed a contract with the Italian energy company ENI for the construction of the new pipeline under the Black Sea.
Green energy loans sell like hot cakes in Bulgaria
In a sign that Bulgaria’s renewable energy industry might be taking off the ground, developers have thronged to tap bank loans to finance projects. “In the past few months, we have seen more funding applications for clean power plants, which has exhausted the credit lines of two lenders,” Iliya Iliev of local consultants Encon Services told Dnevnik on Thursday without elaborating. The company is advisor of the European Bank for Reconstruction and Development (EBRD) for the second Bulgarian Energy Efficiency and Renewable Energy Credit Line (BEERECL), which will make available up to EUR 55 million. As it works towards an EU-binding goal to generate 16% of its energy from sustainable sources, Bulgaria has built up a project pipeline of 4,000 MW of solar plants and 8,000 MW of wind farms. The Bulgarian environmental ministry is currently drafting a strategy to foster renewable energy development. It will map out areas with the most abundant sun and wind which are not habitats for endangered species.
INVESTMENTS:
Korean companies willing to invest in Pernik
Companies from South Korea have expressed interest to invest in the new industrial zone near the town of Pernik. on 2 hectares, one of them plans to build an enterprise for growing, processing, and canning of special mushrooms and exporting them to the European market. Other companies offer to assemble solar panels and manufacture cars. The production will be environmentally friendly.
AES invests EUR 1.3 billion in Galabovo TPP
Recently AES Maritsa Iztok 1 thermal power plant (TPP) changed its name to AES Galabovo TPP to mark the construction of its new plant. It will be the biggest and most modern TPP in Bulgaria, with an investment amounting to EUR 1.3 billion. Some 75% of the construction work is already finished, Ivan Tsekov, financial manager of AES Bulgaria, told the Pari daily in an interview. The project is expected to be ready by the middle of the next year. The equipment meets all Bulgarian and European environmental standards in the sector. The desulfurising facility is unique with its special ability to block the work of the whole TPP in case of failure. In this way no hazardous emissions will be released. Despite the crisis, the project is financially secured. AES provides 30% of the funds and the rest 70% comes from a group of 29 financial institutions. The project was distinguished by the prestigious Project Finance magazine as the best energy deal of 2005 in Europe. The company invested EUR 270 million in Sveti Nikolay wind park near the town of Kavarna. With its 52 wind turbines it will be the biggest AES project of this kind in Europe.
Bulgaria's Foreign Direct Investments to collapse by 50% in 2009
The foreign direct investments in Bulgaria in 2009 are going to be less than 50% of the EUR 6,5 B the country attracted in 2008.This becomes clear from data of the Bulgarian National Bank and forecasts by analyzers, as cited by the Pari Daily.Preliminary BNB data shows that in January-August 2009 Bulgaria attracted only EUR 1,95 B in FDI (5,8% of the GDP), which is EUR 2,28 B less than in the same period of 2008.Georgi Ganev, Chair of the Bulgarian Macroeconomic Association, has predicted that the foreign investments in Bulgaria in 2009 would total EUR 3 B. The head of the InvestBulgaria Agency, Stoyan Stalev, believes the figure could go up to EUR 3,5-4 B.Georgi Prohaski, head of the Center for Economic Development, has said that 2010 would be worse for Bulgaria than 2009 in terms of foreign direct investments.The InvestBulgaria Agency has issued 13 “first-class investor” certificates in the first ten months of 2009. Most of those are investments into renewable energy sources including five projects for wind parks, three photovoltaic projects, and one green energy project.The Netherlands is the largest foreign investor in Bulgaira in first seven months of 2009. It is followed by Romania, which, according to experts, is the result of both Romanian companies investing in Bulgaria and the Romanian branches of international companies making secondary investments in Bulgaria.In 1996-2008, Austria was the largest foreign investor in Bulgaria with total investments for EUR 5,36 B (16% of the total FDI), followed by the Netherlands (EUR 4,07 B, 12%), and Greece (EUR 2,99 B, 9%).In that period, Bulgaria’s real estate sector attracted the largest volume of investment – EUR 7,4 B, or a share of 22%. Financial services are second with EUR 6,5 B, or 19%. Industrial investments are third with EUR 6 B and a share of 18%.
Kraft Foods eyes Bulgaria as manufacturing hub for the Balkans
The Bulgarian subsidiary of the US Kraft Foods has set itself the ambitious goal to become a manufacturing hub of the company for the Balkans, its executive director said in an interview for Novinite.com.“Kraft Foods recently invested BGN 40 M into the enlarging of the production capacities in the chocolate factory in Svoge, thus confirming its strategic interest in Bulgaria. With the investment, which is the largest investment of this type in Southeast Europe for the company, we are strongly positioned to become a manufacturing hub of the company for the Balkans,” Franco Del Fabbro said.According to him the new technological lines and solution will provide opportunity for production of a wide range of chocolate articles from Bulgarians and for Bulgarians, among which are favorite brands as Milka, Suchard, and the traditional Bulgarian Svoge, Sezoni and Moreni.The decision for the investment was made after the closure of a Kraft Foods plant in the Romanian town of Brasov, but Franco Del Fabbro says Bulgaria may start boasting bigger advantage over other countries only after it addresses the issues of EU funds absoprtion, rule of law and infrastructure.The company has detected a slight decrease in consumption in the first months of 2009, but its head says there has been no dramatic change.As for 2010, Franco Del Fabbro does not foresee a quick rebound.“The economy has been hit hard and a lot of the speculation that was boosting the economy in the past years has come to a dramatic halt. People and companies have debt that needs to be paid back and personal income has been declining. A lot will depend on the actions that the government is taking to sustain the economy and provide new stimulus,” he said.
Key investors eye Sofia
Five large-scale investors are interesting in developing projects in Sofia in 2010, the capital’s chief architect Petar Dikov told the BalREc real estate conference that opened in the city yesterday. Dikov was mum about names but revealed that authorities are considering an application for a permit to build a multi-task housing and retail complex. Participants at the forum predicted the local real estate market is facing a bumpy road in 2010 but the year will set the direction in which it will develop. Most said the outlook was bright, though. Experts divided on whether real estate prices have hit the rock bottom or are in for a steeper fall. Dikov advised investors to lower profits from an estimated 150% at present to 10-15%.
COMPANIES:
Sweden’s EQT buys Bulgaria's CableTel, Eurocom in €200 M deal
Swedish investment fund EQT has acquired 100 per cent in Bulgarian cable TV and internet services provider Eurocom and 70 per cent of its former rival CableTel for the price of 200 million euro.After completion of the purchase, EQT will merge the two companies, creating Bulgaria’s largest cable TV operator.The two companies were previously owned by New York-based Warburg Pincus private equity fund and Gene Phillips, respectively. As part of the deal Ron Finley will retain his minority 30 per cent holding in CableTel.The two transactions have a combined price tag of 200 million euro and are taken as a positive signal for investors' interest in the sector. This is underpinned by the fact that 63 per cent of the funding, or 125 million euro, was secured through equity capital by a consortium led by Calyon, ING, Unicredit Bank Austria, Welst LB and Avenue Capital.Mid Europa Partners, another major equity investor in the region, recently concluded the acquisition of Bulgarian satellite TV provider ITV Partners. EQT will join forces with Ron Finley to pump capital into what will be the new leader on the Bulgarian digital TV and broadband Internet market. The two companies will continue to operate as separate market structures for at least two months since announcement of the merger. CableTel claims it has a 13 per cent market share, while Eurocom says it has captured 12 per cent. But data by the Commission for Protection of Competition filed by other market players puts their combined grip on the market at almost 80 per cent. With annual revenue of some 70 million euro and nearly 500 000 subscribers, the new company will be a leader on the Bulgarian and Macedonian markets. The merger has already obtained the thumbs-up by the Bulgarian anti-trust body.
Bulgarian Aquachim formally acquired by German giant Merck
Merck KGaA, the German pharmaceutical and chemical giant, announced Monday that it has acquired Merck the products related operations of Aquachim EOOD.Aquachim had successfully represented Merck as its exclusive distributor in Bulgaria for the past 17 years.The acquisition process, covering the majority of overall Aquachim’s turnover, has now been completed. one month ago, the Bulgarian Commission for Protection of Competition (CPC) had approved the planned takeover.Aquachim will continue to develop its remaining business interests in the fields of laboratory equipment and diagnostics, as well as logistics, education and analytic controls.Merck has now established the fully operational Company of the Merck Group (CMG) under the name Merck EAD, as its first such company in Bulgaria. It will focus on its core businesses related to pharmaceuticals and chemicals.Stefan Slosarik, who has extensive experience with Merck’s businesses in Central Eastern Europe, will assume responsibility for the operations of the new Bulgarian subsidiary.“Speaking on behalf of the management of Merck KGaA, I would like to express our gratitude to Professor Velikov, to Aquachim’s director Kamelia Tzankova and to the entire staff for their valuable contribution to the business growth over the years,” said Stefan Slosarik Professor Dr. Borislav Velikov, founder of Aquachim, has agreed to serve as an advisor to the new Merck subsidiary. Moreover, Aquachim will continue to support Merck EAD by providing warehousing and logistics services as well as office space. Merck is retaining the entire Aquachim staff of 36 employees.The Merck Group is a global pharmaceutical and chemical company based in Darmstadt, Germany, with total revenues of EUR 7,6 B in 2008, a history that began in 1668, and a future shaped by about 33,000 employees in 60 countries.Aquachim is a Bulgarian company founded in 1992 by associate Professor. Dr. B. Velikov. Starting from zero, it quickly grew on fully professional basis and obtained significant market recognition. In 2008 Aquachim attained total revenues of EUR 15 M.
Tirista Ltd purchased a ship from Bulyard for $21M
Tirista Ltd., Marshall Islands purchased a ship from Bulyard for $ 21 million on November 1 2009, Investor.bg has reported.Tirista Ltd is a subsidiary of Industrial Holding Bulgaria (IHB) PLC through Private Engineering AD and purchased the vessel with designated number 459 from Bulyard Shipbuilding Industry EAD, which is still currently under construction, but the report says that the delivery date is July 2010.The vessel has 21 000 tons of water displacement, 'with unlimited level of floating'. Earlier in October, Industrial Holding Bulgaria reported that another contract for the construction of a vessel worth in excess of $23 million was canceled.Bulyard Shipbuilding Industry EAD is a subsidiary of Bulyard AD, in which Industrial Holding Bulgaria PLC currently holds 61.5 per cent of the voting shares.In the last three months, Industry Holding Bulgaria's shares have increased in value by 7.11 per cent, reaching 1 912 leva for a share, with 83.7 million leva of market capitalisation.
Global downturn affects battery manufacturers
The global economic downturn has not spared the listed starter battery plants. That emerged from the non-consolidated reports of Monbat and Elhim Iskra for the first nine months of 2009. Monbat's net profit fell 43% year on year to BGN 13.2 million. The slump in Elhim Iskra's profit was 65% to BGN 1.19 million. The figures are not so bad in the light of the losses posted by many other companies in the branch, Vassil Velev, executive director of Elhim's majority shareholder Stara Planina Hold, said. Sales income also dropped: 40% to BGN 80.4 million for Monbat and 50% to BGN 14.12 million for Elhim Iskra. The decrease is bigger on foreign markets. For the third quarter of the year Monbat's total exports stood at BGN 62.7 million.
Pharmaceutical producer Sopharma raises sales by 18% y/y in October
Sales of the country’s leading pharmaceuticals producer Sopharma increased by 18% y/y in October, including 25% y/y of exports and 5% y/y of sales on the domestic market, according to a note posted on the local stock exchange. The growth rate accelerated from 6% y/y in August. In the year-to-date readings sales have risen by 8% y/y as domestic market expanded by 10% y/y and sales abroad added 8% y/y. The net non-consolidated profit of Sopharma soared 105% to BGN 30.9mn (EUR 15.8mn) in Jan-Sep on sales growth of 5.8% y/y to BGN 143.3mn respectively. The drugsmaker expects to retain the same performance by end-December and to double its profit and raise sales by 8% this year. It posted BGN 19.2mn net profit and BGN 187.5mn sales last year.
THE CRISIS:
EBRD: Eastern Europe dodges repeat of Asian financial crisis
Transition economies are suffering a deep recession but the integration of their economies is sustainable even in the face of crisis, as the online English edition of Dnenvik Daily informs. on the whole, the region steered clear of currency and banking crises that have erupted in previous economic concussions. These are the main conclusions in the latest Transition Report 2009 of the European Bank for Reconstruction and Development (EBRD). "The global recession has plunged the transition region into crisis, but at the same time demonstrated the resilience of reforms and economic integration achieved over the last 15 to 20 years,” writes EBRD chief economist Erik Berglof. In the latest edition of its report, the EBRD has downgraded the reforms being implemented in four transition economies, the first reversal since 2005.
Crisis eats up banks' profits
The profits of listed banks slumped in the third quarter of 2009, the reports of Corporate Commercial Bank (KTB), Bulgarian American Credit Bank (BACB), Economic and Investment Bank (EIBank), First Investment Bank (FIB) and Central Cooperative Bank (CCB) show. The situation gets uglier when the strong profit drop of bond issuer Eurobank EFG Bulgaria is taken into account. CCB's profit for Jul-Sep more than quadrupled on the preceding quarter to BGN 2.7 million. Year on year the bank posted a 1.7-percent rise to BGN 10.4 million. FIB logged a 31.8-percent increase on a quarterly basis to BGN 8.5 million. For the first nine months of the year, though, its earnings declined 21.3% to BGN 27.6 million. KTB boasted 40-percent year-on-year profit growth for the nine-month period. However its quarterly results edged down 0.04% to BGN 13.7 million. KTB does not allocate provisions, that is why its earnings increase on a yearly basis, Karoll's financial analyst Kamelia Lazarova said. EIBank's Q3 profit fell 16% to BGN 579,000. For Jan-Sep the bank netted BGN 9.8 million, down 53.25% on the year-ago period. The biggest decrease was registered by BACB. For the first nine months the bank's profit dropped 45.6% to BGN 23.9 million. Quarter on quarter, profit slumped 98.23% to BGN 181,000. The decrease in banks' profits is due to the worsening of their credit portfolios and the need to allocate more provisions, Bultrend Brokerage's Vladimir Malchev said.
Think-Tank: Bulgaria to stay in recession in 2010
Bulgaria’s economy will continue to contract in the second half of this year and will fail to return to growth next year, a report by a local think-tank shows.Bulgaria, the European Union’s poorest country, is currently going through its first recession in 12 years after a three-year lending boom stalled and foreign investment dried up.Gross domestic product may drop 6% in the third quarter of this year, 5% in the fourth quarter and slightly grow in the second or third quarter of next year, the Center for Economic Development (CED) said in an analysis, entitled “Bulgaria's economy – October 2009”.FDI inflows in the country in 2010 are expected to fall sharply to their lowest levels over the last few years, totaling no more than EUR 2,5-3 B, down from EUR 3.5-4 B this year.Inflation for this year is expected to stay below 1%, while the jobless rate is said to reach its peak in the winter of 2009-2010, surging as high as 9-9,5%.The Bulgarian government’s most recent estimate was for a 6.3% decline in 2009 and 2% next year. The International Monetary Fund expects GDP to fall 6.5% this year and 2.5% next year. EBRD forecasts GDP to fall by 1.5%, following a 6% drop this year.
Bulgaria to exit Crisis in 2011
EC expects GDP to decline by real 5.9% this year and by 1.1% next year, according to the autumn economic forecast released yesterday. Investments, which were the main contributor to the economic expansion in the boom years, will suffer from fastest contraction. Private consumption will also decline due both to falling incomes and rising unemployment. Net exports will contribute positively in both years as a result of steeper decline of imports over exports this year and rebound in exports as of next year on recovery of EU partners. The local economy is expected to start to recover as of H2 of 2010 and GDP will rise by real 3.1% in 2011. EC expects the foreign demand to continue contributing more than domestic demand thus changing the growth pattern from previous years when strong investment and consumption pushed up the imports and the price level. The EC admits upside risks as FDI inflows may recover next year, the country may improve EU funds utilisation, a rebound in inventories or a credit easing may take place. on the negative side, the unemployment may rise faster than expected and external debt servicing may crowd out domestic investment and spending. The government and the IMF are more pessimistic with forecasts for 6.3% and 6.5% GDP decline this year and 2% and 2.5% next year respectively. Last month, deputy central bank governor Dimitar Kostov projects that the country’s GDP will decline by 4.2% this year and will grow by 0.5% next year on EU economy recovery. Fitch also projects that the local economy will grow by 0.5% next year and 3.5% in 2011 after contracting by 5.5% this year. The crisis will help the country counteract to the accumulated imbalances in the previous years as CA deficit is seen contracting to 13.7% of GDP this year and 9.8% of GDP next year from above 20% of GDP last year. Inflation will also slow to slightly more than 2% in both years as compared to 12% last year. The Commission expects the general budget to run deficit of 0.8% of GDP this year, 1.2% next year and 0.4% in 2011. We note that the government has announced a target for balanced budget for this year and next year but it recently clarified that EU fund flows are excluded in the calculations. Thus the overall consolidated fiscal stance is expected to be negative at BGN 465mn (EUR 237.8mn) or 0.7% of GDP next year and negative at 0.4% of GDP in each of 2011 and 2012.
Wood-processing first Bulgarian industry to recover from Crisis
The wood-processing industry is one of the first economic sectors in Bulgaria which has started to recover from the economic crisis.This has been stated by Kalin Simeonov, Chair of the Bulgarian Chamber of Wood-Processing and Furniture Industry, as cited by BTA. Simeonov reminded the wood-processing industry in Bulgaria was one of the first economic sectors affected by the crisis.Over the last year, Bulgaria’s import of lumber declined by 50% whereas its export dropped by only 8%.According to Simeonov, over 50% of the wood-processing firms in Bulgaria expect an increase of their turnover of 5-15% by the end of 2009, and only about 5% of the companies expect a decline.30% of the firms in the industry are planning to hire more employees but some 60% point to the shortage of qualified workers as a huge problem.Bulgaria’s furniture producers, however, are still struggling as the slump in their sales is predicted to reach 40% by the end of 2009 because of the sharp decline of demand on the Bulgarian market after the collapse of the construction sector.The average furniture prices have dropped by up to 25% since the start of the crisis, and some producers are said to be ready to sell at a loss in their attempts to secure cash.Bulgaria’s furniture import dropped by 40% in the first six months of 2009 year-on-year, whereas its export declined by 30%.