BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 30 NOVEMBER - 4 DECEMBER 2009 )
Sections/headline briefs:
MACROECONOMY:
· Japan supplies engines to Bulgaria shipbuilder Bulyard
· Business climate in Bulgaria improves in November 2009
· Import starts growing
· WB provides EUR 81 М for water sector in Bulgaria
· IT business calls for order in public procurement tenders
· Businesses promised EUR 664 M in 2010
· Import of non-EU workforce to be limited
· Car sector attracts lion’s share of foreign investments
· Equest sells Rodacar plant for nearly EUR 10 M
· S&P raises outlook on Bulgaria
· 1% expected GDP deficit for 2009
· Euro adoption will slash bank interests in Bulgaria
· Economy Minister lays emphasis on trade liberalization at WTO forum
· North Korea, Bulgaria cooperate in health, medical science
· Sofia seeks quick ERM-2 entry
· Austria's Raiffeisen to launch online banking in Eastern Europe
INVESTMENTS:
· Solar power plants look risky to investors
· Wind parks REITs' new market niche
· Greece cuts investment but stays on Top 3
· IMF representative for Bulgaria forecasts foreign investment melt
· Manchester United manager sir Alex Ferguson to invest EUR 50 M in Bulgaria
· Trade logistic complex GO plans EUR 10 M expansion
COMPANIES:
· Coca-Cola, M-Tel named best brands in Bulgaria
· Information Services modifies call for tenders for BGN 500 000
· Bulgaria has 280,000 active enterprises
· New brands to revive PC market in Bulgaria
THE CRISIS:
· Bulgaria's luxury properties construction unaffected by crisis
· Bulgaria lost 29 000 jobs in machinebuilding sector over crisis
· Crisis sweeps one-fifth of the Hotels in Bulgaria
· Crisis doubles drug makers' profit
Articles:
MACROECONOMY:
Japan supplies engines to Bulgaria shipbuilder Bulyard
Bulyard Shipbuilding Company, the largest Bulgarian marine constructor, has recently begun work on an international project.The shipbuilder, based at the Black Sea port of Varna, has taken delivery of two 235-ton marine engines built in Tokyo by the Mitsubishi Corporation. A third engine is expected to arrive in December.Bulyard designs and constructs merchant vessels of up to 100 000 tons. The Japanese engines will be fitted into ships currently under construction at the private shipyard.Since the beginning of the company’s activity 90 years ago more than 800 vessels have been delivered to owners from 27 countries.
Business climate in Bulgaria improves in November 2009
Bulgarian business climate slightly improved by 0.4 points in November, driven by services and industry, according to figures released by the national statistics institute NSI on Friday. However, the decline in the construction sectors carries on. The industry indicator grew by 1 point from its October levels. In the past four months it moved up by 3.7 points from its lowest point, registered after the autumn of 2008, when the downward trend in the sector started. The increase last month is due to the managers’ better estimates of the current business situation of companies. At the same time, expectations for the next six months are worse compared with October. Business leaders saw a decrease in output in the past three months, and forecasts for the next three months are also worse than in October. Entrepreneurs also see further reductions in workforce. The order backlog dwindled compared with last month, while stocks registered a slight increase. The situation in the construction sector pursued its downward trend in November, as the indicator for the sector slipped by 2.9 points versus October. Construction activity is still shrinking and order levels are diminishing. Expectations for future activities in the next three months are gloomy, and further job cuts are expected. In the services sector business sentiment rose by 2.6 points on the back of better estimates for the current situation of businesses and optimistic expectations for the next six months. Demand contracted in the sector in the past three months, but forecasts for the next three months are upbeat. There are no expectations for rise in employment in the next three months.
Import starts growing
Although that a relatively small part of the canned foods on the local market comes from abroad, the crisis in the sector over the last year led to a gradual increase of import. Statistics shows that as of the middle of 2009 the growth of imported tinned foods has exceeded 7%, compared to the same period a year ago. The biggest growth was registered in the bottled fruits, mostly in that made of apricots, plums and pineapples. Retail prices of a standard 700-ml jar of peeled apricots range between BGN1.5 and 2.5 Bulgarian levs. The most expensive among the made-in-Bulgaria bottled fruits are that made of raspberries and blackberries. Their retail prices range between BGN1.7 and BGN3.0 per jar. And the most expensive among the imported ones are that made of several exotic fruits such as pineapples, bananas and mango. They cost some BGN5 for a standard jar of 700 millilitres. The import of vegetable canned foods is weaker, mostly of foods that are not produced on a mass scale in Bulgaria such as mixtures of peas, carrots and various maize species. However, for many years now the ingredients of the canned foods produced in Bulgaria have been coming mainly from abroad. According to the statistics, in 2008 the country imported 70% of the raw materials needed, from gherkins to red peppers and tomato sauce. Some time ago Bulgaria has ceased the production of tomato sauce since it is cheaper for the canning factories to import it. And this is a very important ingredient for most of the vegetable canned foods. In other words, this autumn the trucks loaded with fruits and vegetables from Turkey, Greece and Macedonia will keep coming here since without them the local processing industry will die out once and for all. The tinned food factories cannot afford the Bulgarian vegetables intended for processing, branch representatives say. They therefore stuff their jars with Turkish gherkins, Macedonian red peppers, Polish mushrooms, and tomatoes from all over the world.
WB provides EUR 81 М for water sector in Bulgaria
The World Bank (WB) board of directors approved a EUR 81 million loan for development of municipal infrastructure in Bulgaria late on Tuesday, the WB said in a press release. The amount will be used for preparation of 48 master plans for water supply and sewerage systems, for completion of the construction of three dams that was interrupted about 20 years ago, and for rehabilitation of a fourth dam that is currently operational. Upon completion of the project more than 141,000 Bulgarians in the municipalities of Rudozem, Madan, Tryavna and Panagyurishte will have a secure and reliable supply of quality water. Water shortages in some parts of Bulgaria have become critical over the last 15 years due to increased incidence of dry years. As a result, the delivery of water has been unreliable and a conservation plan has been put in place with many days of water rationing and restrictions. The master plans are expected also to lead to investments (funded by EU and other sources) that will help Bulgaria to fully implement the EU directives in the water and wastewater sector. The project is the last operation within the framework of the Partnership Strategy for Bulgaria for 2006-09. The project is financed from a loan with a 19-year maturity, including a 7-year grace period.
IT business calls for order in public procurement tenders
Pari daily organised a second successive ICT business forum in Bulgaria and the council of ministers approved the national strategy for boosting internet coverage in the country. Broadband internet coverage of the whole country is one of this cabinet's priorities, deputy minister of transport and ITC Parvan Rusinov told the participants in the event. In the next two years pilot projects will be launched in 76 towns. The country needs unified policy, planning and partnership in fund absorption, he added. Representatives of information technology and communication companies lent their support to the cabinet's ideas and called for order in the execution and assessment of public contracts. The government should define the framework and the sectors to help develop the necessary infrastructure for electronic services. Broadband access is as important as highways, Microsoft Bulgaria's director Ognyan Kiryakov said. Another request of the IT business is the outsourcing of services. It is high time the country began buying services and not equipment. Financing is also a problem. E-government, which is one of the priorities, is not financially secured.
Businesses promised EUR 664 M in 2010
A total of 13 operations under the competitiveness operational programme will be launched in 2010. They will amount to EUR 664 million and will be in the innovation and high-tech areas, like clusters, business incubators etc., the annual programme shows. Eight of the operations will be in entirely new spheres. By the end of this year all documents should be signed with the European Investment Fund for setting up a holding that will kick-start the JEREMIE initiative under the programme. The initiative will help small and medium-sized enterprises get financing worth up to EUR 200 million.Guarantee, risk capital and microcredit funds will be set up. All possible steps have been taken to ensure better management of the programme, minister of economy Traycho Traykov said.
Import of non-EU workforce to be limited
Minister of labour Totyu Mladenov is holding negotiations with big companies in Bulgaria in a bid to persuade them to hire Bulgarian workers. one of the companies is Turkey's Mapa Cengis, which is building Lyulin motorway. We have signed an agreement that by March 2010 the company will have 1,300 Bulgarian workers and only 200 Turkish ones, the minister said. Currently the share of Bulgarian and Turkish builders is equal. Data of the Employment Agency show that the bulk of non-EU workers in Bulgaria come from Turkey, Serbia and Russia. The regime for import of workforce will be tightened, minister Mladenov said a week after employers' organisations refused to back up the prepared changes in this area. The access of foreign citizens to certain occupations and industries, where unemployment has risen more than 0.5% for a month, will be limited.
Car sector attracts lion’s share of foreign investments
The net inflow of foreign investments in the car sector in Bulgaria totalled over EUR 170 million in the third quarter, representing nearly 40% of the total investments, according to figures released by the national statistics office NSI. Trade and repair of vehicles contributed the most to investments in the period. The figures represent a significant improvement from the second quarter, when a net outflow of EUR 9 million was registered in the sector. The total investment inflow in Bulgaria came in at EUR 278.4 million in the period July-September, up by almost 100% compared to the second quarter. The statistics institute calculates the sum as the difference between the funds that were invested and pulled out from the country in the period. The data is preliminary and not exhaustive, as it does not reflect all new investment projects in Bulgaria. Therefore, it is difficult to gauge the sum of foreign direct investments, which are a key factor in the country’s balance of payments and offset the large current account deficit. Most international organisations as the United Nations and the World Bank forecast a sharp decline in foreign investments not only in Bulgaria, but in central and eastern Europe as a whole. The region benefited from a record growth of foreign funds in the last years but the crisis led many large companies to shelve their investment projects.
Equest sells Rodacar plant for nearly EUR 10 M
Investment company Equest Investments Balkans said it had sold the plot of Varna-based former automobile plant Rodacar. The buyer is Kreditanstalt Bulus, part of Unicredit Leasing, and the amount of the deal stands at EUR 9.93 million. Equest said that the proceeds from the transaction will be used to repay part of its debt. The group is currently negotiating its debt restructuring with its creditors, Equest said in a statement. Rodacar was one of the ambitious projects in the car sector in Bulgaria fifteen years ago. However, the UK investor Rover pulled out of the country due to the economic crisis of 1996. The current deal is one of a series of asset sales by Equest Group. Recently Equest Balkan Properties negotiated the sale of its majority holding in Sofia-based cinema Serdika at a price 30% lower than the sum it had paid for it. Earlier the investment group separated from automobile distributor Avto Union Group and insurer Uniqa Bulgaria. At the beginning of the year Equest announced it would start selling part of its assets in the region and would focus on consumer electronics distribution. The group owns retail chains Technomarket and Domo, estimated by the company as one of its strategic investments.
S&P raises outlook on Bulgaria
Standard & Poor's Ratings Services has lifted the outlook on Bulgaria to stable from negative, the agency said. The management of public finance is satisfying to the agency, as the change in the outlook was in response to the fiscal policy led by the government. The stable outlook reflects the engagement of the country’s government to stick to the fiscal discipline and shows that it has the will to carry out structural reforms, especially in social security, despite the complex economic environment, S&P said. The country’s long-term sovereign credit rating was maintained at BBB, and the short-term rating at A-3. The economic uncertainties facing Bulgaria still persist and they are linked to the shaky outlook of foreign demand, on which the economy is highly dependent. The tightened financing for commercial banks by their foreign parents, which reflects on domestic demand, also contributes to the uncertain situation. The agency reduced the country’s key rating to BBB from BBB+ in the autumn of last year. It is now only two levels above the threshold under which the rating is considered negative and bearing risks for investors. The agency justified the downgrade with the difficult economic and fiscal situation in the country at the time.
1% expected GDP deficit for 2009
Bulgarian credit rating has been changed, press centre of the Ministry of Finance announced. on December 1, 2009 the Standard & Poor's Ratings Services revised its perspective about the Republic Bulgaria from negative to steady. Bulgarian long-term BBB rating and the short-term rating A-3 were confirmed. Bulgarian rating reflects our opinion on sensible fiscal policy of the government and low gross loan, stable perspective for growth in medium-term aspect and the membership of our state in the EU. These strong sides are balanced to a certain extent from big foreign misbalances and risks of the unfavorable economy environment, which we expect to continue in 2010. Bulgaria is faces economy risks due to the dubious perspective for foreign search and sharp shrunk of foreign channel for commercial credits, which has negative impact over local search. However, the new government changed the situation due to corrective budgetary measures. Thus expected deficit in 2009 is expected to run up to 1% from the GDP, the lowest one in the EU.
Euro Adoption Will Slash Bank Interests in Bulgaria
What makes the adoption of the common European currency, Euro, in Bulgaria particularly important is that this will slash the interests on bank loans and will facilitate the access to cheaper financial resources, said Martin Dimitrov, leader of the Union of the Democratic Forces, during debates in Plenary Hall. After the adoption of the Euro, Bulgaria will have access to cheaper external financial resource,he went on. on December 1, Standard & Poor's Ratings Services lifted its outlook on Bulgaria to stable from negative, citing the country's strong track record of prudent fiscal policy and low gross debt. This can be regarded as an important step towards the introduction of the Euro.
The measures that the Bulgarian government has taken to stabilize the economy are the main reason for S&Ps higher outlook on Bulgaria,Deputy PM Simeon Djankov said in Plenary Hall. According to Standard & Poor's Ratings Services, in 2010 Bulgarias budget deficit will be less than one percent, which makes it one of the lowest in the EU. S&P expects Bulgaria's gross domestic product to contract by about 6% this year and a further 2% in 2010, followed by growth in 2011. Bulgaria`s government is doing everything possible to overcome the negative effects of the crisis as fast as possible,Mr. Djankov added.
Economy Minister lays emphasis on trade liberalization at WTO forum
Addressing the Seventh Ministerial Conference of the World Trade Organization (WTO) in Geneva, Economy, Energy and Tourism Minister Traicho Traikov, who heads the Bulgarian delegation, said that as a member of the WTO and the EU, Bulgaria firmly believes in the principles of economic integration and the benefits of liberalization and the open global trade system based on clear and transparent rules. Traikov also underlined the WTO's importance for the proper functioning of the global trade system. He voiced Bulgaria's position that if the ongoing economic crisis is to be handled successfully, the countries should reach agreement on a quick conclusion of the eight-year-old Doha Round negotiations.The session involves ministers and government representatives of 153 WTO member States, as well as 113 countries and international organizations with observer status.Talking with his Macedonian counterpart Fatmir Besimi, Traikov expressed Bulgaria's support for Macedonia's international integration as being inextricably linked with the European integration of the Western Balkans for the strengthening of regional confidence, stability and security. The two ministers discussed possible ways to deal with the economic crisis affecting countries of the region, as well as cooperation in energy, trade, investment and tourism.
North Korea, Bulgaria cooperate in health, medical science
An inter-governmental agreement on cooperation in the fields of public health and medical science between the DPRK and Bulgaria was signed in Sofia on Nov. 19. It was inked by the DPRK ambassador to Bulgaria and the minister of health of Bulgaria.
Source: KCNA website, Pyongyang, 25 Nov 09
Sofia seeks quick ERM-2 entry
Bulgaria is just a step away from joining the pre-euro Exchange Rate Mechanism (ERM-2). This forecast has been confirmed after it has become clear that Bulgaria’s application for participation in ERM-2 enjoys growing international support - Eurozone finance ministers’ chairman Jean-Claude Juncker has expressed a positive opinion of Bulgaria’s accession into the euro waiting room, the Standart was informed.A few days ago, Bulgaria’s finance minister Simeon Djankov said Bulgaria had met all the necessary criteria, inflation rate included, for ERM-2 entry.From this point on, the adoption of the Euro in Bulgaria is a matter of political debates, Djankov said. This is why today’s visit of Mr. Djankov to Madrid is associated with continuing the negotiations for Bulgaria’s ERM-2 accession. Moreover, Standard&Poor's crediting services said Bulgaria’s budget deficit for 2009 and 2010 will be less than one percent of the country’s GDP, which makes it one of the lowest in the EU.
Austria's Raiffeisen to launch online banking in Eastern Europe
Austrian bank Raiffeisen International, number three in central and eastern Europe, said on Thursday it intended to launch online banking services for customers in selected countries in the region from next year.The new direct bank, to be based in Vienna, "will address the unique needs and interests of Internet-focused customers, who represent a fast-growing group in central and eastern Europe," said chief executive Herbert Stepic."By investing in a new direct bank, we are also underlining our commitment to central and eastern Europe and our conviction that the region's convergence process will continue," he said.It would target retail customers and "initially focus on providing deposit products," the bank said.Raiffeisen International said last month that profits more than trebled in the third quarter as a result of lower risk provisions.But taking the first nine months of 2009, earnings were still sharply lower as the bank continued to feel the effects of the financial crisis.
INVESTMENTS:
Solar power plants look risky to investors
Despite the great interest in photovoltaic energy, some 4 or 5 mW capacities have been built in Bulgaria so far. The reason is that investment incentives have a negative side as well. one of the stumbling blocks for potential investors is the preferential buy-out price, which is the main stimulus in such type of projects. The problem is that the price is not fixed, the energy regulator could change it every year by up to 5% and this makes projects unattractive for banks, Nikola Gazdov, chairman of the Bulgarian Photovoltaic Association, pointed out. The association called for a fixed tariff for each project.
The second hindrance is the high interest rate on loans. The reason in that domestic financial institutions have no access to the cheaper funding of the European Investment Bank allocated for such ventures. Foreign banks have cheaper financial resource but no interest in investing in schemes under EUR 20 million. Banks from abroad are also concerned about forex fluctuations as such projects are long-term investments and no security is offered over a 25-year period.
Wind parks REITs' new market niche
Companies improve land, sell it to investors in energy projects Real estate investment trusts (REITs) have discovered a new market niche: sale of land for wind parks, a Pari daily's inquiry shows. With the decrease in land prices funds started looking for additional income sources. The law does not allow REITs to build renewable energy plants, CEOs said. However, companies can improve the plots and sell them at higher prices to potential investors in renewable energy sources.
Activity
Advance Terrafund has sold land to would-be investors in wind parks, CEO Radoslav Manolov told the Pari daily. The properties in the company's portfolio are suitable not only for wind parks but for solar plants, too, he added.
Decision
The Financial Supervision Commission recently licensed Elarg Wind as a servicing company of Elarg Agricultural Land Opportunity Fund REIT. Elarg Wind was set up to survey land plots and establish if they can be used for construction of wind or solar parks, CEO Stoyan Malkochev said. The aim is to raise the price of suitable land and sell it to investors that will build such projects.
Policy
We have not considered such projects so far and we are not going to revise our policy in the short term, Agro Finance REIT CEO Desislava Yordanova said. Although the company is specialised in land rentals, it is open to any new ideas.
Price
The four funds included in the BGREIT index are owners of a total of 74,053 ha of agricultural land. Elarg has acquired the plots at an average price of 2,190 leva/ha, Advance, at 2,480 leva/ha. Agro Finance has paid 2,808 leva/ha and Bulland Investments, 2,805 leva/ha.
Deals
If the plots are found suitable for renewable energy projects, the price can jump more than ten-fold. We recently sold nearly 0.7 ha for such a project and the price reached 25,000 leva/ha, Radoslav Manolov said. The sales price depends on how suitable the plot is for investment and can top 15 times the purchase price, Stoyan Malkochev said.
Greece cuts investment but stays on Top 3
Business between Greece and Bulgaria has been very active for years but it, too, has been affected by the crisis. The investment of Greek companies in Bulgaria in the first half of 2009 shrank more than 4.3-fold to EUR 53 million, central bank data show. Bilateral trade was also hurt, with Bulgarian exports decreasing 35.16% to EUR 265.2 million. Imports from Greece dropped 24.6% to EUR 241.8 million. Nevertheless, Greece remains among the top 3 investors in Bulgaria. It holds the third place with nearly EUR 2.8 billion, following Austria and the Netherlands. Greek investors operate in a number of areas: from the light industry to the financial sector, where they hold about 29% of the market. More than 4,000 Greek companies do business here and provide jobs to over 80,000 Bulgarians. However, Bulgarian investment in Greece totalled just EUR 31.4 million in 2008. That was underscored during president Georgi Parvanov's recent visit to Greece. Tourism is equally important to Bulgaria and Greece. To a certain extent, the two countries are competitors in attracting foreign tourists. As a matter of fact, the people on both sides of the border like making trips to neighbouring countries. The purchase of a second home in Greece has also become very popular among Bulgarians. Improving infrastructure, opening new border checkpoints and boosting cooperation in energy were the main topics discussed during president Parvanov's visit to Athens. The checkpoint at Makaza-Komotini will be opened by the end of 2010.
IMF representative for Bulgaria forecasts foreign investment melt
The International Monetary Fund (IMF) representative for Bulgaria and Romania, Tonny Lybek, forecasts a sharp decline in foreign investments in Bulgaria.The information was reported Friday by pari.bg.Lybec says the direct foreign investments will melt by 60% to 70% to just EUR 3 B.According to the IMF representative, the main problem for all Central and Eastern European countries regarding the effects of the global economic crisis is precisely the recession and the slump of investments.Lybec does, however, point out Bulgaria is not among the countries that have been hit the worst by the crisis and ranks it in “the middle.”In the meantime, Bulgaria's Economy Ministry announced they are going to prepare a map of the local territories suitable for investment with the goal to encourage them. In 2010, they will also prepare a map of renewable energy resources.
Manchester United manager sir Alex Ferguson to invest EUR 50 M in Bulgaria
Sir Alex Ferguson, the manager of Manchester United, might invest up to EUR 50 M in the construction of stadium and sports complex in the northern Bulgarian town of Gorna Oryahovitsa.This information has been reported by the Bulgarian paper Pari Daily, which says that negotiations between the Gorna Oryahovitsa Municipality and representatives of UK investors including Ferguson, have been in progress for a few days.The paper reports that the Gorna Oryahovitsa Mayor, Yordan Mihtiev, is considering what exactly to offer to the UK investors in the form of a public-private partnership, which will then have to be approved by the Town Council.The UK investors led by Ferguson are reported to request the purchase of the entire Locomotive Stadium together with the adjacent plots in order to create a complex for 15 different kinds of sports, hotels, and restaurants.The future investment is reported to be as high as EUR 50 M. The information has not been confirmed on part of any UK companies yet.
Trade logistic complex GO plans EUR 10 M expansion
Local Trade Logistics Complex GO plans to launch rehabilitation and expansion works of its trade and logistics facilities in the industrial area of the northern city of Gorna Oryahovitsa . The investment is valued at EUR 10mn and will comprise repair of the existing storing, office and trade complex located on about 22,000 sqm and building new storing, office and production units (including refrigerating storages and site for clean and high-technology production). Construction works are to start next year and to be completed by 2014. The complex is located on more than 70,000 sqm, some three kilometres away from the international airport in Gorna Oryahovitsa. It uses own railroad.
COMPANIES:
Coca-Cola, M-Tel named best brands in Bulgaria
For a second straight year M-Tel got the award for the strongest Bulgarian brand in Superbrands ranking of consumers goods and services. Coca-Cola is the leader among foreign brands and winner of consumers' on-line vote. The catalogue tracks the 50 strongest brands in Bulgaria. The Pari daily, which already holds a superbrand award, this year was distinguished as partner of the event. The Superbrands' jury changes every year and includes marketing specialists, managers of key companies and business organisations and journalists. A total of 10,000 people participated in the on-line survey. This year the publication offers a special Responsible Superbrands supplement on the importance of socially responsible businesses.
Information Services modifies call for tenders for BGN 500 000
Bulgarian state-run IT company Information Services slightly corrected the conditions for a call for tenders worth BGN 500,000, which stirred opposition by the Bulgarian Agency of Information Technologies (BAIT) at the beginning of the month. The procedure is for selecting contractor for a project of the country’s Customs Agency. The modifications included the extension of the deadline for submitting offers to eight from one working days and the reduction of the turnover requested by companies to BGN 4 million from BGN 5 million. According to IT sector representatives, the condition for one completed project with CCN Gateway communication channel with the European Commission predetermines the choice of a contractor. The cited company is Gravis Bulgaria, managed by the former deputy director of the Customs Agency, Georgi Grigorov. Gravis Bulgaria confirmed its intention to participate in the competition and claimed that in Bulgaria there are at least 6 or 7 companies that have done a CCN Gateway project.
Bulgaria has 280,000 active enterprises
More than 90,000 businesses have started operation since the beginning of last year and other 192,000 companies had renewed their registrations by the end of October, data of Bulgaria's trade registry show. However, the deepening crisis has reduced considerably the number of start-ups. The peak was in June 2008 when 8,919 firms were launched and more than 20,000 renewed their registrations. The legal form of choice for a new business is EOOD, which is a limited trade company run by a single person, followed by OOD (limited trade company) and sole proprietors.
New brands to revive PC market in Bulgaria
Fujitsu, Lenovo stake on consumers, no big shifts expected Just before the Christmas holidays two leading computer makers have declared their plans for the Bulgarian market. Lenovo now offers four new products of its IdeaPad series: from ultraportable to desktop devices. Fujitsu in turn has closed a contract for distribution of its consumer range of products with Vali Computers. This is the second distributor in Bulgaria of the Japanese producer after Polycomp. The move is aimed at expanding the company's market presence in the mass product segment.We plan to triple our market share in the next few years, Lenovo's general country manager Radoslav Vodenicharov said. The company's strategy in Bulgaria is connected mainly with notebooks, where it holds 2.9% of the market, according to third-quarter data. Fujitsu holds 0.6% of the sales of portable computers in Bulgaria, IDC data for Jul-Sep show. Leader in Bulgaria is Acer, which sells 39.2% of all laptops. However, overall laptop sales shrank 16.8% in the third quarter of 2009. Lenovo and Fujitsu have been in the consumer segment for quite a long time. I do not expect any big changes, at least not long-term ones, Polycomp manager Nadezhda Genova said. According to Asbis's regional manager Mitko Topalov, competition is yet to intensify. We can only hope it will be fair competition, he pointed out. Hardware distribution is one of the worst hit segments of the IT market, Genova commented. According to different forecasts, computer sales in Bulgaria will shrink up to 30% for the full year. Specialists also differ in the projections for 2010. According to Genova, an increase of 4 to 5% will be a real achievement. The optimistic forecast is for 10% growth but the pessimistic projection is for a 5% drop in sales, Topalov said.
THE CRISIS:
Bulgaria's luxury properties construction unaffected by crisis
The downturn in the real estate sector in Bulgaria caused by the global economic crisis has not affected the construction of luxury properties in the country.This opinion has been expressed by entrepreneurs and experts who participated in the “High Class in Construction” exhibit which took place in Sofia over the weekend.Experts believe that the economic crisis has led to a greater focus precisely on high-quality properties.According to the Chief Architect of Sofia, Petar Dikov, Bulgaria has a very good potential for a dynamic market of luxury properties.The participants in the expo believe that the crisis has hit mostly the low-quality construction projects in the country, and that most investors actually have made mistakes by seeking quick returns on property investments without accounting for good quality.
Bulgaria lost 29 000 jobs in machinebuilding sector over crisis
The economic crisis has had a “devastating impact“ on the machine building sector in Bulgaria, according to Iliya Keleshev, head of the Bulgarian Branch Chamber for machine building.In an exclusive interview for Novinite.com (Sofia News Agency), Keleshev announced that about 29 000 jobs had been lost in Bulgaria’s machine building sector since the crisis started in the fall of 2008.Thus, of the 143 000 people employed in the sector in the first half of 2008, only 114 000 remained a year later.“The greatest matter of concern is the fact that the number of qualified laborers is declining. In the “Production of Machines and Equipment” sub-sector, the number of qualified workers has dropped from 15 030 down to 10 421, whereas the number of machine operators declined from 12 570 to 9 995. It takes many years to create qualified laborers in the machine building sector. once they leave it, they hardly return to the firm – some go into the gray economy, others go abroad, and still others are re-qualified but don’t come back. There is no data about that but probably no more than 1 in 4 are going to come back when the crisis is over,” Keleshev told Novnite.com.He stressed the fact the Bulgarian state was supposed to help out the export-oriented firms retain their qualified staff amidst the raging crisis.
Crisis sweeps one-fifth of the Hotels in Bulgaria
About one-fifth of the hotels in Bulgaria will not open doors next summer because of the economic crisis. This means that over 200,000 beds in the Bulgarian resorts will be unavailable for tourists, said Roumen Draganov from the Institute for Analyses and Evaluation of Tourism in an interview with the Bulgarian News Agency, BTA. Hotel keepers hope that those who survive the crisis will make higher profit next summer.
This winter, the ski resort in Bulgaria will not offer packages for the middle class, but only cheap all-inclusive offers and deluxe packages for the rich, Draganov said further.
The new border checkpoint between Bulgaria and Greece and the entry visa lift for Bulgaria's neighbors will probably make up for the lack of charter flights for tourists.
Crisis doubles drug makers' profit
Publication: Pari Daily
The profit of the listed pharmaceutical companies doubled in the first nine months of 2009 to BGN 35.8 million. That emerged from a Pari daily's analysis of the reports of Sopharma, Biovet, Bulgarska Roza Sevtopolis, Septona Bulgaria and Unipharm.
Reasons
Pharmaceutical makers were almost unaffected by the crisis, financial analysts are unanimous. Demand for drugs is not related to the condition of the economy. The crisis even had a positive effect on pharmaceutical companies, because cost-cutting measures as a rule improve earnings, Elana Trading's Tsvetoslav Tsachev pointed out.
Leader
Nearly 90% of the total profit in the sector was generated by Sopharma. The drug giant raised its earnings 90% to a touch above BGN 32 million. The impressive result was due to the anti-crisis policy of cost cutting. According to CEO Ognyan Donev, Sopharma will achieve its projections for an 8-percent rise in sales and a double profit in 2009, year on year.
Results
The profit of the second biggest listed drug maker, Biovet, increased 31-fold to BGN 2.14 million. The bottom-line result of Bulgarska Roza Sevtopolis was 28-percent higher and amounted to BGN 683,000. Septona Bulgaria's profit doubled to BGN 918,000. only Unipharm's earnings dropped 58% to BGN 702,000.
Income
The companies' sales also rose, though much less than profits. Sopharma's sales edged up 1.6% to BGN 350.6 million. Its subsidiary Bulgarska Roza Sevtopolis boosted sales 5.6% to BGN 9.8 million. Biovet reported a 4-percent rise to BGN 85.9 million.