BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 5 – 12 FEBRUARY 2010 )
Sections/headline briefs:
MACROECONOMY:
· Brussels to unpackage funding under seven programmes
· Foreign deposits bring dividends to Bulgarian budget
· Hospitals for millions of Bulgarian levs
· Gemalto's smart cards selected by Bulgaria health system
· Bulgarian, Romanian PMs discuss Danube bridge 2 project
· Bulgaria presented at Tel Aviv IMTM 2010 tourism expo
· Grocery Chain wants to buy Bulgaria Science Academy building
· Agricultural machinery - between modern times and comminism
· LG launched its affordable ecophone on Bulgarian market
· PM Borissov asks London to support 'Nabucco' project
· KING cigarettes make breakthrough on arab market
· Bulgaria's new car market sees total collapse
- Russia's Gazprom wants to enter Bulgaria electricity market
- Brussels unlocks waste management cash pot for Bulgaria
· Bulgaria's rail infrastructure firm launches modernisation tender
INVESTMENTS:
· Bulgaria to make electric cars
· Oman invests USD 1 billion in Super Borovets project
· Construction of Sofia's Serdika Center mall to resume
· Schneider Electric invests EUR 8 M in new production capacity
COMPANIES:
· Bulgaria 'Dynamo' factory supplies US army with generators
· Bulgaria railways company, Germany's Deutsche Bahn eye JV
- Tengelmann sells Plus discount stores in Bulgaria, Romania to Lidl
· Car batteries maker Monbat to launch recycling unit in Romania in October
· Small companies get access to state financing in Bulgaria
THE CRISIS:
· Beer production has shrunk mostly due to crisis
· Sales of Technomarket, Domo off 6%
· Crisis spawns more buyout offers in Bulgaria
· Bulgarian economy stabilising, 2009 GDP drop seen at 5.0%
Articles:
MACROECONOMY:
Brussels to unpackage funding under seven programmes
The European Commission (EC) will soon unlock payments to Bulgaria under the seven operational programmes that account for 80%, or EUR 6.67 billion of the total cash pot the country is entitled to by 2013. At a session of the Bulgarian parliamentary committee on European affairs held on Sunday, it emerged Bulgaria expects to receive Brussels’ official nod on the programmes’ conformity assessments on which unblocking hinges. They have already been rejected twice. “Bulgaria is currently the only EU country without a single approved assessment,” said committee chair Svetlin Tanchev. He revealed the EU aid absorption rate in Bulgaria is precipitously low at only 1.3% of the total financing. He urged speedier action to catch up from the delay inherited by the former government. In the report, the Cabinet of right-of-centre GERB openly admits for the first time that Bulgaria faces losing a portion of the funding under Transport and Environment programmes. The bulk of the blame for the delay is pinned on the lack of completed projects as well as the lack of funding to finance land expropriation and archaeological works. Bulgaria mush hand out EUR 86 million for highway construction in 2010 or see the money slip through its fingers. Another project in the balance involves improving navigation in the Bulgarian-Romanian section of the Danube at Batin and Belene islands. The EUR 117 million scheme is being crippled by sluggish implementation of operations financed by the Romanian side under the Ispa pre-accession programme. More trouble is brewing down the road under Environment programme, with an infringement procedure initiated against Bulgaria in the waste management sector. Bulgaria is still dragging its feet on the construction of 23 regional landfills that is yet to begin. Bulgaria has paid a total EUR 245 million as at February 1, 2010, according to the Ministry of Finance.
Foreign deposits bring dividends to Bulgarian budget
Bulgaria's foreign currency reserve is about thirteen billion levs (1euro=1.95 levs) and the fiscal reserve of the government makes about 7.6 billion levs of this sum. Over seventy percent of the fiscal reserve has been invested in state securities in the Eurozone countries, with the exception of Greece, bringing annual dividends to the budget on interest, the national bank said. In addition, less than fifteen percent of the fiscal reserve has been deposited in foreign banks and less than one percent has been invested in state securities in US dollars.
Hospitals for millions of Bulgarian levs
Publication: Banker Weekly English
Provider: Financial Information Agency Ltd.
In defiance of the fears that the disputable healthcare reform will make the state pay through the nose, the Health Ministry loudly boasted of having enough money to modernize the country's medical institutions. The European Union has granted BGN148 million for free under the Regional Development Operational Programme that will be used for the hospitals alone. In order to get the money, the hospital managers just have to draw up a project and hope it will be approved. This procedure is entitled "Support for reconstruction, renovation and equipment of state-owned medical institutions in urban areas" and it is already open for applications. The programme's ultimate goal is 86 municipalities to have their hospitals renovated and facilitate the access of the underprivileged to medical institutions. To this end, almost BGN80 million of the total sum have been earmarked for repair, reconstruction, renovation and equipping of state hospitals, purchase of ambulances included. The main requirement is that the actions have to comply with the National Healthcare Strategy 2008-2013, as well as with the Conception for restructuring of the hospital care system over 2010-2017. To cut the long story short, if in a certain region there are enough echographs or ambulances per capita, the hospitals there will not have to apply for new ones. But if they nevertheless do it, their projects will not be given the green light. Measures for energy efficiency or use of renewables may hope to be approved instead. All projects related to the construction of special elevators or platforms for handicapped people will also likely be a success. The money that will be granted to each of the applications amount to between BGN5 and BGN10 million, but those who are willing to avail of the subsidies have to hurry up since applications will be received until March 31, 2010. Similar is the scheme for additional financing under which orphanages for children aged to three may compete. Another BGN10 million have been earmarked for them. The streamlining of these structures may include not only repairs and equipping, but also building-up of adjacent vacant plots or adding to already existing buildings. The actions should comply with the Government's vision on the deinstitutionalization of the Bulgarian children and the deadline for it is January 31, 2011 The remaining BGN58 million were earmarked for oncology hospitals with the deadline for projects on their renovation being set at September 31, 2010. Against this background, the announcement that in February new emergency consulting rooms will open doors at 14 Bulgarian municipalities should be good news. However, on February 4, 2010 news came like a bolt from the blue and played additional havoc with the system. It turned out that as at December 31, 2009 the medical institutions owed more than BGN100 million to their suppliers of medical and laboratory equipment and supplies. More than half of the above sum are overdue debts, most of which under public orders. The traders immediately began to murmur against since they have been crediting for years now the country's healthcare sector getting not the interests of the hospitals' due debts. on the top of it all, the state is intending to significantly downsize the market by closing down more than 160 medical institutions thus depriving the companies of their customers. If we add also the financial crisis with all its negative impact on the business, we will see that the suppliers have good reason to murmur. That's why, 22 branch companies appealed through a special address to Health Minister Bozhidar Nanev that the institutions in charge have to take urgent measures and cover the debts of the hospitals. However, there is nobody to know where these BGN100 million will come from. And the future is not rosy at all. If the medical equipment suppliers (and also that of pharmaceuticals) stop to supply their products to hospitals until the latter pay them, the hospitals will then be forced either to purchase not equipment, or will pay more for it since their choice will be limited. This, in turn, will affect the patients and the quality of the healthcare services provided, which are key factors in the healthcare reform. And if the Government sacrifices even a minimal part of them, its ambitious undertaking will very likely break down.
Gemalto's smart cards selected by Bulgaria health system
Provider of digital security Gemalto announced that Bulgaria has started deploying its smart cards to secure access to personal health records for the country's military personnel and their family.Under the agreement, financial details of which were not available, Gemalto delivered double-slot readers and smart cards with the associated middleware to KIM-2000, a Bulgarian company specializing in eHealth projects.KIM-2000 acted as prime contractor for the electronic health record system commissioned by the Bulgarian Military Medical Academy.Gemalto said that its card is compliant with the Identification Authentication Signature (IAS) European standard to ensure the highest level of security for accessing personal electronic health records.
Bulgarian, Romanian PMs discuss Danube bridge 2 project
Romanian Prime Minister Emil Boc will pay a one-day working visit to Bulgaria on February 12 at the invitation of his Bulgarian counterpart Boyko Borissov. The sides will discuss the progress of the Danube Bridge 2 project, linking Vidin and Calafat, and the opportunities to accelarate its construction, the government press office said. Following a one-to-one meeting between the PMs at the premises of the Vidin Regional Administration, the delegations will held plenary talks. Bulgarian Regional Development and Public Works Minister Rosen Plevneliev and Romanian Regional Development and Tourism Minister Elena Udrea will sign a Memorandum of Understanding under the Romania - Bulgaria Cross-Border Cooperation Programme 2007-2013.The Bulgarian delegation includes Regional Development and Public Works Minister Rosen Plevneliev, as well as Transport, Information Technology and Communications Minister Aleksandar Tsvetkov, Bulgaria's Ambassador to Romania Valentin Radomirski, Deputy Foreign Minister Marin Raykov, Deputy Transport Minister Ivaylo Moskovski, Vidin Regional Governor Plamen Stefanov and Vidin Mayor Roumen Vidov.
Bulgaria presented at Tel Aviv IMTM 2010 tourism expo
Bulgaria is to be presented at the International Mediterranean Tourism Market (IMTM) 2010 in Israel’s Tel Aviv Tuesday and Wednesday.Bulgaria Presented at Tel Aviv IMTM 2010 Tourism Expo. Its participation in the oldest tourism expo in the Eastern Mediterranean is led by Bulgarian Deputy Economy Minister in charge of tourism, Ivo Marinov.The Economy Ministry is presenting Bulgaria as a year-round destination including winter and summer tourism, as well as spa and cultural tours. During his visit to Israel in January 2010, Bulgaria’s PM Boyko Borisov promised a large-scale presentation of Bulgaria at the IMTM expo.In 2009, the IMTM expo was attended by 870 participants from 40 nations.
Grocery Chain wants to buy Bulgaria Science Academy building
A large grocery chain store is interested in buying a building of the Bulgarian Academy of Sciences (BAS), according to Stefan Vodenicharov, the Chair of the General Assembly of the Academy.Vodenicharov, speaking after holding a meeting with Bulgarian Socialist Party MPs and leader Sergey Stanishev, said the grocery company had written official letter to Finance Minister Simeon Djankov, Education Minister Sergey Ignatov as well BAS Chair Nikola Sabotinov.Vodenicharov’s meeting with Stanishev was held regarding the reform by the center-right GERB government of BAS, which they both oppose, including job cuts, closures and mergers of research institutes.Vodenicharov added that the building involved was at the address 67 ‘Shipshenski Prohod’ in Sofia and that scientists were still working there. He concluded that “different interests are certain to appear when there is talk of BAS being wound up.”Last week Sabotinov said that the Bulgarian Academy of Sciences (BAS) is near bankruptcy. He announced that the Academy can afford to pay their electric and heating bills only for February and the money has been collected through BAS’s own savings.
Agricultural machinery - between modern times and comminism
Rusty tractors, dilapidated combine harvesters...This is the situation with most of the machines in the country's agricultural sector, according to branch organizations and trade unions. The average age of tractors is approximately 22 years, and this of harvesters - about 18 years. only 10% of the equipment has been renewed over the last six years, sector representatives complain. A total replacement of old equipment would cost nearly EUR600 million, a survey carried out by Bultrex, a company selling agricultural machines, showed. According to its manager, Ivan Popov, investments in new equipment would cut production costs by 30 to 50 percent. For example, for the harvesters' efficiency it is important not only the size of the land they can till within a certain time, but also their ability to minimize losses of production during harvesting, experts remind. Chairman of Grain Producers Association, Radoslav Hristov, added that a machinery renovation would increase the competitiveness of Bulgaria's agricultural sector. Data by the National Control Technical Inspectorate showed that a total 130 new combine harvesters were imported in the country in 2008, the number of state-of-the-art machines thus coming to 800 out of a total 9,900 registered harvesters. Of these, however, only 6,000 participated in the last harvest campaigns since another 1,500 have been put out of exploitation upon request of their owners or because of technical failures. A wonderful opportunity for renewing the equipment is provided by the Modernization of Farms measure, which is part of the Rural Development Programme. Because of the great interest, the funds offered under it have been quickly exhausted. Some farmers were nevertheless able to benefit from this, which made Kalina Ilieva, Executive Director of the Agriculture Fund, express public disagreement with allegations that the tractors in Bulgaria date back to the Fall of the Berlin Wall. "I do not know where the producers have collected this information from," Ms Ilieva said and promised Ministry experts to carry out diligent analysis of the entire measure. According to her, it had benefited people with little land who have applied for the purchase of "more powerful machines than they actually need. " once the check is complete, the state will try to persuade EU to allow restructuring of the local Rural Development Programme. The idea is funds from other unpopular measures to be transferred to that for modernization of farms. Unfortunately, the prospects are not very good, because this programme as a whole shows low absorption of funds. Its budgets for 2008 and 2009 show that by June last year only 8.71% of the funds were absorbed. one reason for the stagnation is the lack of experts to deal with the processing of applications. All measures under the programme have been opened together and in practice the system was thus blocked. The administration has simply not managed to cope with reviewing of the applications, according to the paying agency. After the general elections when the Agriculture Fund's new management body entered into office, it found out that over 11,000 projects have not been processed. As at February 2, 2010, a total 2,970 proposals remained for processing and the work on them will be completed by April this year. Some farmers interpreted data presented by Kalina Ilieva as yet another attempt at diverting attention from important pending problems such as subsidies being only partially paid, missing sums inetnded for agroecology, frozen measures under the Rural Development Programme and so on... All violations of the previous government have been revealed and it would be good if apart from merely announcing them, there are also court cases and convicted people in the end, branch representatives say. They also reminded they were still waiting for the paying agency to announce its strategy of how to tackle the current situation. BANKER KAPE: Who's number one? Over BGN2 million in bonuses have been paid to the Agriculture Fund's officials in December 2008. This has been established by an audit of the Supreme Audit Office, submitted by the Executive Director of the paying agency Kalina Ilieva on February 2, 2010. The inspection on the fund has covered the period from January 2008 to June 2009. Bonuses have been given without an order from the Executive Director. "The biggest bonuses have been received by employees in the Fisheries and Aquaculture Department, although that Fisheries Operational Programme has not yet been launched", Ms Ilieva emphasized. Thus, during the period audited, an employee has received BGN20,000 on the average for processing 0.5 applications. As a result of the check on cases of conflict of interests, as ordered in late October 2009, a total 18 employees were laid off from the fund. It showed that two of the officials in the regional unit in Blagoevgrad were engaged also in private consulting work on projects relating to the Rural Development Programme. Three other people from the fund's Technical Inspectorate in Montana helped their relatives join the procedure. And two officials from the fund's headquarters have been dismissed due to erroneous calculations of grants in applicants' favour. A total five warnings have been sent to the Prosecution Council with regard to violations committed by people of the Agriculture Fund's management, as well as to the implementation of the Rural Development Programme and SAPARD.
LG launched its affordable ecophone on Bulgarian market
All Bulgarians with "green' consciousness can already buy with ecological phones at affordable price. LG Electronics' GD510 POP is offered with optional solar battery, panel of decomposing material without PVC and even packed in recycling cellulose.
PM Borissov asks London to support 'Nabucco' project
PM Boyko Borissov asked his British counterpart Gordon Brown for support on the 'Nabucco' project. Last night before the meeting Borissov explained he would present the request of Turkish PM Recep Erdogan for speeding up the gas pipeline project. The meeting with Gordon Brown was the last on the agenda of the two-day working visit of PM Borissov to London.Vice Prime Minister Tsvetan Tsvetanov and Foreign Minister Nikolay Mladenov are also on the delegation. During their meetings in London they informed about the priorities of Bulgaria's cabinet, the fight against corruption, the measures for stabilizing the economy and Bulgaria's wish to join the Schengen and the Eurozone.In the future the UK would like to hear Bulgaria’s opinion on issues like Russia, Turkey and energy projects, explained Bulgaria Foreign Minister, Nikolay Mladenov. Mladenov talked with the British Secretary of State for Foreign and Commonwealth Affairs, David Miliband. At the beginning of the meeting the Bulgarian Foreign Minister informed his host about the Bulgarian Government’s priorities and paid special attention to the commitment No. 1 - combating corruption and organized crime. The two top diplomats discussed the situation in Afghanistan, the Western Balkans and the energy security issues.In a foreign-political aspect, Britan’s Foreign Secretary showed a special interest in the vision and evaluations of Bulgaria about the processes on the Western Balkans, in particular, in Bosnia and Herzegovina, sources from Bulgaria Foreign Ministry informed.Bulgaria Foreign Minister Nikolay Mladenov and his Briatish counterpart David Miliband discussed European energy security and the necessity for diversification and the guarantees for the security of supplies.
KING cigarettes make breakthrough on arab market
As of April 2010, Bulgarian cigarettes KING will be exported to the UAE as manufacture King's Tobacco signed several big contracts for export of the brand to the UAE, the Near East and Africa. The total size of the contracted quantities is over 30,000 masterboxes a month. KING cigarettes will be sold in all Arab countries under the same name, sources from the company informed. The deal was signed during one of the most prestigious world exhibitions Middle East Exclusive (MEE), which was held last week in Dubai. With its participation the blend KING which are Bulgarian most successful brand for 2009, entered Top 100 of the world’s golden brands.
Bulgaria's new car market sees total collapse
The sales of new cars in Bulgaria dropped by almost 50% in January 2010 year on year.According to data of the Association of Car Producers and Authorized Dealers, only 1 160 new cars were sold in Bulgaria in the first month of the year, a 47,6% decline compared to the number sold in January 2009.(The January 2009 figure itself showed about 50% decline compared to the number of new cars sold in January 2008, several months before the economic crisis kicked in.)Three brands have managed to increase their sales of new cars on the Bulgarian market in January 2010 – Kia (up by 43,3%), Renault (41,9%), and Dacia (38%). However, these three brands actually sold only 225 cars combined, which is a market share of only 20%.Citroen, Volkswagen, and Mercedes saw sizable drops – 72,4%, 69,7%, and 67,2% respectively. Volvo sold only 10 new cars in Bulgaria in January (65,5% drop), and BMW – only 25 new cars (59% decline).Only three new motorbikes were sold in Bulgaria in January 2010 – 2 Yamaha and 1 Honda bike; the decline is 50% year on year.The sales of new buses dropped by 42,7% - down to 55 vehicles.
Russia's Gazprom wants to enter Bulgaria electricity market
UK-registered Russian company Gazprom Marketing & Trading has requested a five-year license for trading with electricity in Bulgaria.The company is 100% owned by the Russian energy giant Gazprom, according to a report of the State Commission for Energy and Water Regulation (DKEVR). DKEVR is going to consider Gazaprom’s request at a meeting next Tuesday.Gazprom Marketing & Technology trades with electricity in the UK, France, Germany, the Netherlands, and Switzerland.According to the DKEVR reported, the company has provided a guarantee deposit of BGN 150 000, and has demonstrated it has sufficient staff.
Brussels unlocks waste management cash pot for Bulgaria
The Environment operational programme yesterday received a positive conformity assessment by the European Commission (EC) and the Bulgarian government now has BGN 3.5 billion in interim payments at its disposal. “The assessment means that the way the programme is being handled guarantees that the financing -- both European and national -- will be spent on effective projects,” said Bulgaria’s environment minister Nona Karadjova. Up till now, schemes financed under the programme could only tap into advance payments of 10% or 20% of the cost. The state footed the entire BGN 33 million bill in interim payments for completed works. The ministry said a total of BGN 200 million in European monies will be dished out in 2010 alone. The financing will be used to speed up the development of regional landfills and waste treatment facilities in the major cities. The huge delay in the projects is threatening to earn Bulgaria new infringement procedures. one of the factors for the positive assessment are the new project approval criteria drawn up by the environment ministry. These include reference prices for the facilities depending on the number of people they will service in a bid to prevent inflation of project tags. If project exceed the reference levels municipalities will be required to submit evidence, said Malina Krumova, who is in charge of the operational programme.
Bulgaria's rail infrastructure firm launches modernisation tender
Bulgaria's National Railroad Infrastructure Company (NRIC) has launched a public tender to pick a company to modernise the Plovdiv – Bourgas railroad section, Bulgarian National Television (BNT) said on February 11 2010.The project is worth 187 million euro, of which 64 per cent will be financed with European Union structural funds. This is the first large-scale project to be launched under EU's operational programme Transport. Public procurement procedures documents announcing the launch of public tenders for the rehabilitation of the Plovdiv-Bourgas railway section were published in November 12 2009.As part of the rehabilitation process, the 21km section from Mihailovo to Kaloyanets, the 120km Stara Zagora – Yambol section, and the 122km between Bourgas and Karnobat will undergo renovation. Train stations along the way will also be overhauled, BNT said.This massive infrastructure project is considered of primary importance for Bulgaria because the section is part of the international European corridor. once the rail section is modernised and rehabilitated, it will facilitate the further integration of the national railway system with the international European railway network Experts say that once the line is completed, the average speed will be between 130km/h and 160km/h, whereas the current average speed is around 80km/h. The journey time between Plovdiv and Bourgas would be reduced by more than an hour.
INVESTMENTS:
Bulgaria to make electric cars
English investors will pour 100 million levs into a factory for electric automobiles in Bulgaria. The project was worked out by the US Company Corus Construction Ventures and the financing comes from British companies. This became clear from a statement of Bulgaria PM Boyko Borissov after his meeting with representatives of Corus Ventures, who assured him that the electric cars will be marketed in Bulgaria at affordable prices. Germany presently produces two hundred environment-friendly prototypes. The electric automobiles can seat four passengers and their maximum speed is 120 km/h. The automobile’s battery lasts for thirty kilometers. After his meeting with the businessmen, Borissov had a phone conversation with Mr. Svetlin Tanchev, mayor of Stara Zagora town, where the factory will be built. Representatives of Corus Ventures are expected to meet the mayor of Stara Zagora today. As the Standart wrote earlier, the first single-seat electric automobile in Bulgaria was assembled in the town of Stara Zagora.
Oman invests USD 1 billion in Super Borovets project
The Sultanate of Oman will invest over a billion US dollars in the development of Super Borovets. “The Sultan’s investment fund - State General Reserve Fund (SGRF) and a branch of the British Equest Investment Balkans Plc. will develop a ski resort for 800 million euro in Bulgaria,” a state official from Oman said, as quoted by Reuters. SGRF holds 40% of the project and the other main investor is Equest, the state official reportedly explained. The resort which is situated at an hour’s drive from Sofia airport is expected to be completed in 2012. SGRF took hold of the controlling package in Super Borovets project from Equest in the beginning of 2009. The grandiose design envisages enlargement of the resort with new hotels, ski runs, lift systems and a variety of sports and entertainment facilities.
Construction of Sofia's Serdika Center mall to resume
Construction of Sofia's Serdika Center shopping mall, currently being built on Sitnyakovo Boulevard, is on the verge of being resumed after, on January 28 2010, Sofia mayor Yordanka Fandukova issued an order freezing it, Bulgarian media reported. on February 5 2010, Fandukova paid a surprise visit to the site to see if builders have complied with the city hall’s recommendations. The inspection found that all requirements had been met. One of the reasons that Fandukova had ordered a halt to the project was that the mall's builders had closed access to the nearby Popova Shapka Street and had started using it as a construction site without having the proper permit to do so. This had been corrected and the mall’s construction site had been cleaned up, Bulgarian news agency Focus said. The final decision on the construction project is scheduled to be taken on February 8 2010 but now it seems that the all-clear will be confirmed. Focus quoted a municipal official as saying that the mall’s builders will also be asked to invest money in renovating a lake in one of Sofia’s parks or part of another park in the area. This was because the financial sanction of 10 000 leva which was imposed by Fandukova on January 28 2010 was too small. It was the most recent of a total of 12 warnings and fines that the municipality had imposed on the mall's builders for a number of offences, including closing lanes of Sitnyakovo Boulevard. By investing in park facilities, the Turkish company building the mall will compensate the city hall for the time during which city streets were used as building sites, Fandukova was quoted as saying. Sofia's Serdika Center shopping mall is scheduled to open on March 16 2010. The project is driven by ECE Project Management Bulgaria and Sparkassen Immobilien AG. The total investment in Serdika Center is 220 million euro. Serdika Center is designed to be one of the largest shopping malls in Sofia, encompassing 50 000 sq m of trade area and 35 000 sq m of office space. It will have more than 1600 parking spaces.
Schneider Electric invests EUR 8 M in new production capacity
The German leader in electric solutions Schneider Electric, which entered the local market in 1998, announced a BGN 16mn (EUR 8mn) investment in capacity upgrade in its factory near Plovdiv . Four new production lines for automatic circuit breakers have been installed which will double the production output. The plant managers plan to increase employment at the facility near the second largest city of Plovdiv by 20% in the next two years. The total amount of the investment so far has been estimated at BGN 37mn.
COMPANIES:
Bulgaria 'Dynamo' factory supplies US army with generators
The Bulgarian “Dynamo” factory in the Southern city of Sliven exports high-quality generators for the US, their PR company Image Advertising informs.The DEA 450 generator can function during extreme weather conditions and is effective in buses, fire trucks and military vehicles with high-power diesel engines and high electric consumption. The DEA 450 has received in 2007 a gold medal from the Plovdiv International Technology Fair.Currently “Dynamo” sells over 90% of its production on international markets, of which 80% outside the EU – Russia and the US.Despite the fact that the factory is without competition in Eastern Europe, it has been hurt by disloyal competition of China products, the company notes.In addition, a Russian company has started a legal procedure to declare the Bulgarian factory insolvent. The Director of “Dynamo”, Dimitar Kolev, says the claim has been filed without warning and qualifies it as racket, pointing out this predecessor, who has been fired for embezzlement, is among the claimants.Kolev states he expects an increase of 30% of the sales on the local market for 2010, adding in the next few days the factory will begin making wind generators to be used in residencies and family farms.3 months ago, “Dynamo” introduced its new production of time-circuits for the automobile industry and the repair equipment Аvantеchno 611.The management explains the global crisis is working in their favor over the use of old equipment that needs more repairs and spare parts.
Bulgaria railways company, Germany's Deutsche Bahn eye JV
Representatives of German national rail operator Deutsche Bahn are expected to come to Bulgaria on February 15 to set up a joint venture company for cargo transport with the Bulgarian state railways company BDZ, according to reports.The visit was initially scheduled for last month, but was eventually postponed.A joint venture with the German company was first discussed in late 2009, but the form of partnership is yet to be agreed. one option is for a logistic subsidiary of Deutsche Bahn to apply for a railway operator license. According to Pari daily's sources, that will be DB Schenker.The Bulgarian state railways company hopes to tap the experience and financial potential of the German company in a bid to revive its cargo transport business, which has been heavily hit by the crisis and the winding up of operations at Kremikovtzi steel mill.It is still unclear whether the German company will accept the offer of the Bulgarian side, which counts primarily on the strategic location of the country.The German and Bulgarian railways companies signed in 2006 a memorandum under which Deutsche Bahn consults BDZ with the goal of turning it into a profitable enterprise.
Tengelmann sells Plus discount stores in Bulgaria, Romania to Lidl
German retailer Tengelmann has confirmed it is in talks to sell its discount retail chains in Romania and Bulgaria to its rival Lidl, which is part of Germany's Schwarz retail group, according to reports.The news comes on the heels of reports that Lidl has indicated interest in acquiring the Bulgarian business of its German competitor Plus retail chain.Tengelman, the parent company of Plus, owns 94 and 16 stores in Romania and Bulgaria respectively.Last year Lidl announced its intention to open 50 nearly new stores in Romania, in early in 2010. This will allow the company to become a leader in the Romanian discount market within a few months, with a total number of stores more than 150.Lidl plans to launch its business in Bulgaria in spring 2010.In 2007 and 2008 Plus sold its business in most European countries. For the last several years the chain has been active in Austria, Romania and Bulgaria, with divisions in those countries in May 2008 united under the name of Plus Eastern Europe.According to realtors the economic crisis in the past year has proved fertile for the discount retailers stepping on Bulgarian soil in recent months and the country will see their boom in 2010.Three food discount chains are currently operating in Bulgaria; Kaufland, Penny Market and Plus.Kaufland is a part of the Swartz Group which also owns Lidl. It is a soft discounter that entered the Bulgarian market in 2006 in Plovdiv. Now it is strongly positioned on the market with more than 26 hypermarkets.Penny Market (Rewe Group) is another German soft discounter with an aggressive growth strategy for Bulgaria.
Car batteries maker Monbat to launch recycling unit in Romania in October
The country’s largest car battery producer Monbat plans to inaugurate its lead recycling unit in Romania in October, chairman of the managing board Atanas Bobokov said for Dnevnik Daily. The project has been postponed for more than a year because of the economic downturn and the slower than expected administrative procedures in Romania . Last month, the company informed that it will raise the capital of its Romanian subsidiary Monbat Recycling SRL by 16.6% to EUR 3.51mn through a cash instalment. At the end of last year, Monbat received environment permit from the line authorities in Serbia and expects to launch operation of its lead-recycling unit in Serbia shortly. The sales and the net profit of the company reached BGN 125.9mn (EUR 64.4mn) and BGN 17.1mn, down by some 30% as compared to 2008. The sales exceeded slightly the full-year plan while the profit was a bit less than expected. Monbat expects to improve its financial this year. As recalled, the net sales of Monbat rose by 10.8% y/y in December accelerating from 3.15% y/y in November after declines in the previous months.
Small companies get access to state financing in Bulgaria
“Small and medium-sized companies will be allowed to participate in tenders for public procurements in Bulgaria,” Deputy PM Simeon Djankov said. “From now on, the Ministry of Finance will divide the big public procurements into smaller lots, so as to give a chance to SMEs to participate in the bidding,” he added. In times of crisis, it’s very important to support the small and medium-sized companies, including through public procurements,” Minister Djankov said in conclusion.
THE CRISIS:
Beer production has shrunk mostly due to crisis
Beer production has shrunk mostly due to the economic crisis, which increased unemployment rate, brought down purchasing power and caused a drop in foreign tourists numbers, experts said.In 2009, the average beer consumption was 67 litre per person, nearly as much as in 2006, said Vladimir Ivanov, Chairman of the Union of Brewers in Bulgaria.The eight breweries in Bulgaria produced and sold slightly over 50 million hectolitres of beer, which is 11 per cent down from 2008.In the past few years, the production and consumption of beer grew between 7 and 10 per cent, Ivanov said.Beer production is expected to shrink 2-3 per cent in 2010, according to experts.In 2009, Union members exported over 51,421 hectolitres of beer to neighbouring countries, the European Union and the US. Exports are bought primarily by Bulgarian expatriates in these countries.In 2009, 42.5 per cent of beer in Bulgaria was sold in bottles, and 48 per cent in PET packaging. Draught beer accounted for 5.5 per cent of the beer market, and canned beer for 4 per cent. Some 28 per cent was sold in stores, while 72 per cent, in pubs and restaurants. In Europe, the ratio is 60 to 40.Some 3,070 people are employed in Bulgaria's brewing industry and the Union hopes that there will be no lay-offs in the sector.In 2009, brewers invested 66 million leva in the sector.In 2009, the brewing industry used 100,000 tonnes of malt, of which approximately 50 to 60,000 tonnes were domestic production. Nearly all tops, labels and bottles are produced here too. The same goes for 20-25 per of hops. Bulgaria has six breweries with eight factories and three small breweries restaurants.
Sales of Technomarket, Domo off 6%
Bulgaria’s white and brown goods chain Technomarket and furniture outlet Domo have seen revenue slide by 6% year-on-year to EUR 394 million, owner TMD Group said in its unaudited report. The company’s Romanian business has fared even worse, posting a 17% drop to EUR 167 million. In 2009, seven new Technomarket and Domo stores opened doors in the two countries, taking the total to 219.
Crisis spawns more buyout offers in Bulgaria
Majority owners of Bulgarian public companies with disposable cash in hand are seeking to cash in on the economic tailspin, seeking to buy out minority shares, too. At least nine buyout bids have been pitched to minority shareholders, with among the standouts Lovech-based bike maker Balkan and water bottler Devin, where the latter follows from a change of ownership.“The trend is pronounced and was triggered off by the low prices on the Bulgarian Stock Exchange (BSE),” Ralitsa Againe, deputy chairwoman of the Financial Supervision Commission (FSC) who oversees investment operations, told Dnevnik. Sliding share prices, coupled with companies’ tepid financial performance and asset writedowns are driving down evaluations on which majority owners base their buyout offers. Thus investors who have money to spare can bolster their holdings in much better terms than, say, two years ago. By snapping up minority stakes some investors also fulfill the goal of delisting the company from the BSE. For instance, Napredak Holding, which holds the majority stake in Balkan, has made a buyout offer to minority shareholders to buy their stakes at BGN 11.57 apiece, or double the company’s share price for the past three months. Still, this is 31% beneath the net asset value per share. The holding company plans to delist Balkan. Some buyout bids have been prompted by a change of ownership as with water bottling company Devin. Majority owner Advent Water has added nearly 7.8% to its holding for a price of BGN 4.9 million, taking the total to over 97.9%, which is enough to enable it to delist the company.
Bulgarian economy stabilising, 2009 GDP drop seen at 5.0%
A recent improvement in key indicators has signalled that Bulgaria's economy is starting to stabilise, local analysts said. Analysts polled by SeeNews mostly forecast that the contraction in the country's gross domestic product (GDP) will come in at around 5.0% in 2009, lower than initially expected, thanks to rising exports and a recovery in the industrial sector. The national statistics office, NSI, will release its flash fourth-quarter and full-year GDP estimates for 2009 on Friday. Bulgaria's GDP rose by a real 6.0% in 2008. It dropped by 3.5% in the first quarter of 2009, by 4.9% in the second and by 5.4% in the third quarter. I guess on an annual basis the fourth quarter will show a 5.0% slump and probably for the whole year it will be somewhere between 4.5% and 5.0%," Krassen Stanchev, board chairman of Sofia-based independent think-tank Institute for Market Economics, said. The latest forecast of the International Monetary Fund (IMF), issued in September last year, was for the Bulgarian economy to show an annual contraction of 6.5% in 2009, lower than its 7.0% estimate made earlier that year. Italy's UniCredit has projected a negative growth of 5.2% in real terms for 2009.The consensus estimate for a 5.0% GDP drop last year is also lower than 6.3% target initially set by the government in Sofia. In January, it revised that target down to 4.9%. It is mostly due to exports. Exports is the only factor that is improving," Stanchev said, adding that this trend will continue. Of course, there are seasonal year-end factors like a pick-up in household consumption [] which has improved particularly as compared to the third quarter," Stanchev said. The indicators show that the negative GDP trend persists, but is stabilising, head of research at Sofia-based Elana Trading Tsvetoslav Tsachev told SeeNews. "The 10% fall in industrial sales will likely add at least two percentage points to the GDP drop figure as the industrial sector accounts for over 30% of the economy." Industrial sales fell by an annual 9.8% in December, according to preliminary data released by the NSI on Wednesday. Industrial sales were 13.1% lower on the year in November and 19.6% down on an annual basis in October. Tsachev expects a 5.0%-5.5% GDP drop on an annual basis for the fourth quarter of 2009 and a 5.0% fall for the whole year. In my view, it maybe will be one of the last quarters to see such a big decline on an annual basis. The end of 2008 showed the sharpest annual slowdown and now things are stabilising," Tsachev said. The steepest deceleration in the country's economic growth after the onset of the global crisis was recorded in the fourth quarter of 2008 when GDP rose by only 3.5% compared to a 6.8% increase in the previous quarter. I guess we will see a far smaller GDP contraction on an annual basis in the first and the second quarter of this year," added Tsachev. Local think-tank Centre for Economic Development (CED) estimates that the country's economy shrank by 5.0% in the three months to December 2009 due to a slide in industry and exports, a deepening recession in services and falling domestic demand. The CED estimate is for a 5.0% drop for the whole of 2009.
2010 OUTLOOK
The polled analysts were unanimous that Bulgaria will continue on the recovery path this year and may even end it with positive economic growth. The CED expects the country's economy will expand by 0.5-1.0% this year. Tsachev also believes that economic growth can be expected, most probably in the second or third quarter of 2010. However, the government reined in public spending last year and that may dampen economic growth at least during the second half of the year. The cut cannot be offset by other factors, even if domestic demand and investment stabilise, he said. Imports are mostly falling which bodes well for economic growth. The other factor with major implications is the stabilisation of the industry in terms of sales, Tsachev said. It is a good thing that inflationary pressures eased, disappeared, which helps real growth. If we had high inflation, the nominal contraction would have been several-fold bigger," he added. Bulgaria's EU-harmonised annual consumer price index measured 1.6% at the end of 2009, compared to 7.2% at the end of 2008. Stanchev said he could not make a forecast for the performance of the country's economy this year as there are many unknowns like demand abroad, international developments and delayed settlement of payments by the government to private parties, including the reimbursement of Value Added Tax. He added that the rising price of raw materials will be another factor that will impact the country's economy. In January, the government in Sofia projected a real GDP growth of 0.3% for 2010, abandoning its earlier forecast for a 2.0% fall.