불가리아 주요 경제뉴스 (3 - 10 December 2010 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (3 - 10 December 2010 )

 

Sections/headline briefs:

 

 

 

MACROECONOMY:

• Economy expands by 0.7% q/q in September
• Exports surge by 33.1% y/y in Jan-Sep
• Bulgaria gives up repair works on 110 km of roads
• Bulgaria's economy proves flexible to crisis - central bank analysis
• Government to establish management company for current infrastructure projects

 

INVESTMENTS:

·         Austrian Christof Consulting to invest EUR 52mn in energy projects in Bulgaria

COMPANIES:

• Bulgaria’s Chelopech Mining to get USD 66.75mn credit to expand gold mine
• New vehicle sales fall by 29.69% in Jan-Nov
• Bulgaria announces possible China partnership in train production
• Drug maker Sopharma says Jan-Nov sales rise 15% on higher exports
• Sopharma to invest EUR 35.8mn in drugs plant in Sofia
• LG Electronics sees local consumer electronics market to grow by 15% in 2011

 

 

 

 

 

 

 

 

 

 

 

Articles:

 

MACROECONOMY:

Economy expands by 0.7% q/q in September

Bulgaria's gross domestic product rose by 0.7% q/q in the third quarter of the year, according to data provided by the statistical office. The growth rate is by 0.2 pps higher than the flash estimate released in late Nov and accelerated by 0.2 pps as compared to Q2 when it stood at 0.5% q/q. In annual terms, the economy turned to growth for the first time this year in Jul-Sep, expanding by 0.5%. The increase continued to be engined by exports, which rose by 18.5% y/y and 8.9% as compared to Q2. Final consumption on the other hand marked a considerable decrease both in quarterly and annual terms - down by 2.7% q/q and 6.4% y/y. The gross fixed capital formation component also remained in negative territory although the annual decrease dropped to 4.9% in Q3 from 12% in Q2. The individual final consumption category which is indicative to the developments in domestic demand plunged by 2.2 pps to -5.9% in annual terms and by 1.6 pps to -2.6% in quarterly terms. Intellinews comment: We remind that in Q3 the statistical office started presenting chain-linked estimates of the GDP components based on average 2000 prices in line with the EU standards. This approach, as compared to the volume index that was used till now presents much more favourable results of GDP (GDP dropped in Q1 and Q2 by 0.8% y/y and 0.3% y/y respectively in 2000 prices while the two decreases as per the volume index previously used were 3.2% and 1.4%).

 

Exports surge by 33.1% y/y in Jan-Sep

Exports increased by 33.1% y/y to BGN 22bn in Jan-Sep, preliminary data of the statistical institute showed. The upward trend continued for a 12th month in a roll with exports increasing by 37.2% y/y to BGN 2.8bn (EUR 1.43bn) in September. The expansion of sales to non-EU countries far outpaced exports to EU countries in September (rates of increase were 67.1% to non-EU as opposed to 22.6% to EU). Since the start of the year exports to the EU picked up by 23.9% y/y. The main trading partners were Germany, Italy, Romania and Greece, forming 61.4% of total exports to EU countries. Imports (fob) rose by 15.1% y/y in September, accelerating by 7.1 pps since August. In Jan-Sep the increase approached 8.5% y/y. The trade balance in Sep submerged in negative territory again, after registering a surplus in the previous month. The gap reached BGN 2.9bn in Jan-Sep and accounted for 4.1% of the full-year GDP forecast.

 

Bulgaria gives up repair works on 110 km of roads

The Bulgarian government decided to give up the repair works on 110km of roads under the World Bank-backed programme for the upgrade of 450km of roads, Dnevnik daily reported. The government, which prepared a letter to the World Bank with the requested amendment to the loan agreement, also asked for extension of the agreement’s validity until 2013 from the current deadline, set for June 30, 2011. The country will also ask to scrap the construction of three lots in the regions Karlovo, Shumen and Tran, with a combined length of 110km, since the work on them has not begun yet. After the loan agreement change, Bulgaria will repair 340km of roads with EUR 90mn from the World Bank. The country has so far utilised 16% of the funding as of October. The government decided to restructure the loan in order to secure sufficient funds for co-financing EU-supported road projects, while the maintaining a budget deficit under 3% of GDP. 

 

Bulgaria's economy proves flexible to crisis - central bank analysis

Bulgarian economy has proven flexible in dealing with the challenges of the financial crisis, an analysis of the central bank has shown, Bulgarian Telegraph Agency reported. Local companies managed to register profits from the fixed exchange rate of the Bulgarian lev to the euro, Mariela Nenova, head of the Economic Researches and Prognoses Directorate at the Bulgarian Academy of Sciences, said. The monetary fund has prevented the local currency from depreciation and allowed companies to take advantage of the decreased prices of materials, fuels and resources on the world markets. Bulgaria started to feel the impact of the world economic crisis at the end of 2008 with the decreasing shares of exports and industry sector’s revenues. The inflow of foreign direct investments also registered a fall, Nenova said. Bulgarians withdrew from investing in long-term material assets and turned to depositing their savings at banks. Demand for consumer credits also started to fall, as a result of the crisis.

 

Government to establish management company for current infrastructure projects

The government plans to establish in 2011 a project management company to be in charge of the country’s strategic infrastructure projects, the regional development ministry said in a statement. The priority projects are the motorways Struma, Hemus and Cherno More. The management company will co-operate with the ministry and the State Roads Agency. The company will also assist the roads agency in utilizing the available funds under the EU transport operational programme. 

 

INVESTMENTS:

Austrian Christof Consulting to invest EUR 52mn in energy projects in Bulgaria

Sofia airport expects the number of serviced passengers to rise by 6% on the year to over 3.32mn in 2010, investor.bg reported. The number of handled flights is seen increasing by 3.1% y/y to 47,130 this year, the airport’s CEO Nikolay Kabakchiev said, adding that the airport’s full year profit is forecast to reach BGN 14mn (EUR 7.2mn). We remind that the passenger traffic at Sofia airport fell by 3% to 3.13mn in 2009, as the number of flights decreased by 6% to 45,700.

 

COMPANIES:

Bulgaria’s Chelopech Mining to get USD 66.75mn credit to expand gold mine

The European Bank for Reconstruction and Development (EBRD) and Bulgaria’s Unicredit Bulbank will provide a USD 66.75mn loan to finance a modernisation programme at Bulgarian Chelopech mine, the EBRD said. The Chelopech mine is the largest gold deposit in Europe that is still in production. It is operated by Chelopech Mining, a wholly-owned subsidiary of Canadian mining company Dundee Precious Metals. The company produces copper-gold-silver concentrate at its mining facilities located approximately 70 kilometres east of Bulgaria’s capital Sofia. The loan will finance an expansion programme at the mine that involves the introduction of state-of-the-art equipment and new technology. The project will enable Chelopech Mining to double its annual production to two million tonnes of ore, while cutting its fuel consumption by approximately 50% per tonne of ore mined. The investment will bring considerable environmental benefits to the mine’s operations by optimising the production process and reducing to a minimum reliance on external sources of water. The EBRD will provide USD 48.75mn of the total loan and UniCredit Bulbank - USD 18mn. The EBRD has so far invested USD 2.4bn in Bulgaria.

 

New vehicle sales fall by 29.69% in Jan-Nov

Sales of new vehicles in Bulgaria fell by 29.69% on the year to 17,327 in January to November 2010, investor.bg reported citing data from the Association of Car Producers and Importers. In November alone, however, new vehicles sales increased by 16.26% compared to October 2010 and by 13.3% compared to a year earlier. November sales posted a record high in comparison with previous months of the year. Sales of new cars in Jan-Nov registered a 30.12% fall to 16,560 units. Market leader was Toyota with 1,786 sold cars, accounting for 10.79% of the overall. Second ranked Ford with sales of 1,547 cars and a market share of 9.34%. Volkswagen was third reporting sales of 1,506 cars and a market share of 9.09%. Sales of new buses and trucks decreased by 18.92% to 767 units in Jan-Nov, with Iveco and Mercedes accounting for more than half of the overall sales - 242 and 236, respectively. In November, bus and truck sales soared by 125% y/y to 126. Sales of motorcycle went down by 27.74% y/y to 323 units through November. Peugeot was the most popular motorcycle brand with sales of 131 units. 

 

Bulgaria announces possible China partnership in train production

A team of Chinese experts will visit Bulgaria to explore the opportunities for joint production of train wagons and locomotives in Bulgaria, the transport ministry reported. The visit follows a bilateral agreement between the transport ministers of the two countries, discussed during a railway forum in China. The agreement stipulates that Bulgaria will be a transit territory for a high-speed railway between Europe and Asia. The railway is expected to start from China, enter Europe through Turkey and Bulgaria and then continue to central and western Europe.

 

Drug maker Sopharma says Jan-Nov sales rise 15% on higher exports

Bulgarian drug maker Sopharma’s sales increased by 15% in January to November 2010 on the back of higher exports, the company said in a statement to the Bulgarian Stock Exchange, Dnevnik daily reported. Sopharma exports rose by 23% on the year in the first 11 months of the year, while domestic sales fell by 1%. The Jan-Nov results are in line with expectations of Sopharma management that forecast full-year sales to rise by between 12% and 15% thanks mainly to the increasing share of exports. Sopharma’s net profit rose by 17% on the year to BGN 36mn (EUR 18.4mn) in the first nine months of 2010, as sales went up by 19% to BGN 153mn.

 

Sopharma to invest EUR 35.8mn in drugs plant in Sofia

Bulgarian drug maker Sopharma will invest BGN 70mn (EUR 35.8mn) in the construction of a pharmaceuticals plant in Sofia, Standart daily reported. The plant will have an annual production of four million pills and will produce over 100 different types of medicines. It will employ 420 people and is expected to start operations in mid-2012. The new plant will be Sopharma's 13th production plant that meets the standards of good manufacturing practice (GMP), a quality system covering the manufacture and testing of pharmaceutical products. We remind that Sopharma reported a 15% y/y increase in Jan-Nov sales mainly on the back higher exports. The company has strengthened its position on traditional foreign markets and experienced growth in countries it recently entered - Turkey, Serbia, Austria and Bosnia and Herzegovina.

 

LG Electronics sees local consumer electronics market to grow by 15% in 2011

South Korean LG Electronics expects the consumer electronics market in Bulgaria to grow by 15% in 2011, driven mainly by strong sales of TV sets and mobile devices, Dnevnik daily reported citing Ivan Ivanov, the managing director of the company’s Bulgarian unit. LG sales in the country are also seen rising by at least 15% next year, after increasing by 20% in 2010 supported by a 20% sales growth in the TV segment. LG Electronics estimates its market share on the plasma TV segment at 40% and claims it sells every third LED TV in the country. LG Electronics’ analysis has shown that the growth of consumer electronics prices in Bulgaria this year is less than 10%, mainly due to currency fluctuations. Prices are expected to remain stable in 2011, when only prices of smartphones and 3-D TVs are seen posting a decrease. According to Business Monitor Internetional (BMI), Bulgaria’s consumer electronics market is estimated to generate a turnover of USD 1.2bn in 2010 and the figure is forecast to reach USD 1.44bn by 2014.

EVN to Sign Contract for Bulgarian Hydro Power Plant in 2011 Q1

Austrian company EVN is expected to purchase a 70% stake in the Bulgarian hydro power plant project "Gorna Arda" from Turkish company Ceylan in the first quarter of 2011. This has been announced by Joerg Solgelner, Regional Manager of EVN Bulgaria, as cited by the Pari Daily. EVN and Ceylan are currently in negotiations for the buyout. According to Solgelner, there are still important questions with respect to the Gorda Arda ("Upper Arda") project that have to be settled before a contract for starting work on it could be signed. Thus, the project company for the construction of the 160 MW cascade could be formed by the spring of 2011, with a 70% of EVN and a 30% share of the Bulgarian National Electric Company NEK. Yet, the project could be delayed by land expropriation procedures. EVN is expected to receive a Class A investor status that will provide it with benefits for the construction since the Rhodope Mountain where the hydro power plant is located, is considered an underdeveloped region.  In July 2010, Austrian utility EVN signed a deal with Bulgaria's state power utility NEKto take a majority stake in the Bulgarian hydropower project. Under the agreement Austrian utility EVN will own a 70% stake, while NEK will hold the remaining 30% in the joint venture. Back then the opposition Socialist Party criticized the government for the agreement asking how and why the EVN company was selected for the project without a tender, to which Economy Minister Traikov replied no tender was necessary for this specific project under the existing legislation. The agreement for the construction of Gorna Arda hydropower project in southern Bulgaria, between Austria's energy firm EVN and Bulgaria's dominant state power utility NEK was signed during the visit of Prime Minister Boyko Borisov in Vienna in the middle of July. Austria's Alpine Bau withdrew from the construction of Gorna Arda hydropower project in the middle of May, leaving energy firm EVN, which holds a 67% stake in one of Bulgaria's three power distributors and serves clients in Southwestern Bulgaria, the sole partner of NEK. At the beginning of September 2009, Bulgaria's new government sealed a letter of approval for the construction of the hydro power project on the Arda river. This was a requirement for wrapping up of the sale of a 30,1% stake, owned by Turkey's CCG, part of the Ceylan conglomerate, to an Austrian consortium of EVNand Alpine Bau. The move was made after a trial in the International Court of Arbitration, in whichCeylan Holding filed claims for EUR 75 M against the other member in the joint venture - Bulgaria's National Electric Company NEK, was suspended for three months. The Turkish company was contracted to implement the project under an electricity-for-infrastructure swap deal Bulgaria and Turkey signed in 1998, during the term of the government of Ivan Kostov. The launch of the hydropower construction was delayed after the Turkish company ran into financial troubles. The Gorna Arda hydropower project is expected to cost around EUR 500 M, which should be paid by the consortium. It is planned to have an electricity production capacity of 160 MW.