불가리아 주요 경제뉴스 (1 - 8 April 2011)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (1 - 8 April 2011)

 

Sections/headline briefs:

 

 

 

MACROECONOMY:

Ø  Retail sales fall 0.1% y/y in February 2011 – Eurostat

Ø  Bulgaria’s Industrial Production Up by 15% y/y February 2011

Ø  Construction output declines by 13.6% y/y in February 2011

 

INVESTMENTS:

Ø  GDF Suez to invest EUR 100mn in biomass power plants.

Ø  Winslow plans wind farm in northeastern Bulgaria

Ø  US to remain largest investor in Bulgaria in 2011 - US ambassador

Ø  Bulgaria to seek investor for Sofia Airport 

Ø  EVN to invest EUR 5.1mn in solar park near Burgas

 

COMPANIES:

 

Ø  Bulgaria Launches 2 Airport Tenders in June  

Ø  First UK Electric Cars to Be Assembled in Bulgaria in 2011 

Ø  Bulgaria to ask VMZ Sopot prospective buyers to show accounts  

Ø  Exports fuel Sopharma's revenue in Q1 2011

Ø  Bulgaria Bankrupt Steel Mill Tagged at BGN 316 M in Fourth Auction

Ø  Lidl targets expanding chain to 40 units in months

 

 

 

 

Articles:

 

MACROECONOMY:

 

Retail sales fall 0.1% y/y in February 2011 - Eurostat

The decline of retail sales narrowed further to 0.1% y/y in February from revised 0.2% y/y in January and 3.7% y/y in December, Eurostat data showed. In monthly seasonally-adjusted terms, the index added 0.2% in February decelerating from revised 2.3% in January. The index has been falling in the previous months. In all the 27 EU member states, retail sales increased by 0.9% y/y slowing from 1.7% y/y in January on non-food products sales deceleration. In annual terms, retail sales dropped faster in Spain (5.6%), Romania (4.8%), Portugal (4.5%), Malta (3.7%), Ireland (3%), Denmark (1.9%), and Austria (1.2%). The national statistical institute will publish detailed trade data on Thursday (Apr 7). 

Bulgaria’s Industrial Production Up by 15% y/y February 2011

Bulgaria's working day adjusted Industrial Production Index rose by 15.2% year on year February 2011, according to preliminary data by the country National Statistical Institute. on a monthly basis, the Industrial Production Index, seasonally adjusted, decreased by 1.4 in February 2011 as compared to January 2011. In February 2011, the Bulgarian year on year Industrial Production Index, calculated from working day adjusted data in the manufacturing grew by 22.3%, in the electricity, gas, steam and air conditioning supply by 5.9%, while in the mining and quarrying industry a drop by 0.7% was seen. Annual increases were registered in the production of energy by 21.2%, in theproduction of intermediate goods by 16.2% and in the production of investment goods by 3.6%. In February 2011 as compared to January 2011, the seasonally adjusted IndustrialProduction Index in the mining and quarrying industry decreased by 13.0%, in the manufacturing by 5.7%, while in the electricity, gas, steam and air conditioning supply an increase by 8.1% was registered. The most significant  monthly decreases of production in the manufacturing were seen in the manufacture of fabricated metal products, except machinery and equipment by 21.9%, in the manufacture of paper and paper products by 7.7%, in the manufacture of basic metals by 6.7%. There was a monthly increase in the manufacture of pharmaceutical products and pharmaceutical preparations by 6.1%, in the manufacture of beverages by 4.9%, in the manufacture of other non-metallic mineral products by 4.4%.

 

Construction output declines by 13.6% y/y in February 2011

Construction output declined by 13.6% y/y in February, according to preliminary data of the statistical office. The contraction accelerated from revised 12.2% y/y in January. The decline in construction of buildings continued to narrow to 9.5% y/y in February from 11.6% y/y a month earlier and 17.2% y/y in December. Civil engineering works went down by 19% y/y in February as compared to 12.5% y/y in January. In seasonally adjusted and working-days-adjusted terms, total construction output contracted by 1.1% m/m and 13.6% y/y in February, respectively. 

 

INVESTMENTS:

 

GDF Suez to invest EUR 100mn in biomass power plants

France’s GDF Suez intends to invest EUR 100mn in biomass power plants in the country, agriculture minister Miroslav Naydenov informed according to a note posted on the website of the agriculture ministry. The company mulls building four power generators in towns in the country but has not unveiled possible locations. Minister Naydenov informed that Bulgarian and Spanish companies are also interested in such projects.

 
Winslow plans wind farm in northeastern Bulgaria

Bulgarian company Winslow Wind power, a unit of local real estate developer Winslow Group, intends to build a wind power facility in northeastern Bulgaria, according to a Environment Ministry decision requesting an environmental impact assessment (EIA) of the project. The wind park will be located on agricultural land near the village of Yagnilo, in Vetrino municipality, and the villages of Pamoukchii and Stan in the municipality of Novi Pazar. The project has a planned capacity of up to 105 MW, with 35 turbines with a capacity of 2.5-3MW each. Currently, the largest wind power project in Bulgaria is the St Nicola facility, near Kavarna, on the northern Bulgarian Black Sea coast. The 156MW wind park is owned by AES Geo Energy.

US to remain largest investor in Bulgaria in 2011 - US ambassador

US ambassador to Bulgaria James Warlick predicted that his country would retain its position as the biggest investor in Bulgaria this year, maintaining its contributions to the energy, biotechnology, high technology, agriculture and manufacturing segments. According to data by InvestBulgaria Agency, 218 US companies made investments in Bulgaria in 2010, the bulk of which were channelled into the manufacturing and energy sector, 84 million euro, followed by the trade industry with 23 million euro. Warlick, together with Bulgaria's ambassador to the US, Elena Poptodorova, will visit in May 2011 Chicago, Houston, Phoenix, and San Francisco to present opportunities for doing business in Bulgaria.

Bulgaria to seek investor for Sofia Airport

Bulgaria will seek a private investor for the Sofia Airport and will launch the tender for picking a concessionaire no earlier than three to four months from now, Transport Minister Alexander Tsvetkov said in Parliament on April 6 2011. The decision is a consequence of the need to overhaul the existing airport infrastructure and was the best solution to ensure the construction of a new cargo, general aviation and VIP terminals, as well as the improvement of the overall airport structure and the construction of new jet fuel storehouses, he said. The prospective investor would be asked to take up the airport's upgrade and the repayment of loans to the European Investment Bank and the Kuwaiti Fund for Arab Economic Development, used for the construction of Terminal 2. The airport's total debt stood at 85 million leva at the end of 2010. The Transport Ministry was still looking for investors for the airport in Plovdiv, southern Bulgaria, and for the airport in the Danubian town of Rousse. It was also looking to launch a procedure to award a concession for the airport in Gorna Oryahovitsa.

 

EVN to invest EUR 5.1mn in solar park near Burgas

Local Naturkraft, part of Austrian energy group EVN, has started the construction of a photovoltaic park near the village of Trastikovo in the region of the southern Black Sea city of Burgas, EVN Bulgaria announced through its website. The facility with a total capacity of 2,000 kWp is expected to have annual electricity production of 2.4mn KWh. The investment is estimated at BGN 10mn (EUR 5.1mn). The plant will be located on 80 decares land plot and should be constructed by the beginning of July, 2011. In May 2010, Naturkraft launched its first photovoltaic park with total production capacity of 836.7 kWp near the village of Blatets in the municipality of Sliven in the southern part of the country. The investment was estimated at BGN 6mn. 

 

 

COMPANIES:

 

Bulgaria Launches 2 Airport Tenders in June

Bulgaria seeks investors to lease two of its airports – in the country's second-largest city, Plovdiv, and in the Danube port of Ruse – for 35 years. The Plovdiv airport needs an investor for upgrading its 195 200 square meters of its cargo zone. The candidates for the concession must have had an income of at least BGN 18 M over one of the past 3 years. The offers may be received until the end of May and will be opened on June 6. The Ruse airport, which has not been functioning since 1999, needs BGN 43 M to upgrade its passenger terminal and build a cargo terminal, according to the Bulgarian Dnevnik daily and Bloomberg. The candidates must have made at least BGN 3 M fromairport management and exploitation in one of the last 10 years and must have invested at least EUR 20 M in airports under the last 5 years. A French company has declared interest in the concession of the Ruse airport, a ruling right-centrist GERB MP recently announced. According to the MP, Plamen Nunev, the most realistic scenario for the RuseAirport is to develop it as a low-tariff cargo hub thanks to its location which allows combining air transport with the Danube river port, railways, and roads. The runway of the Ruse Airport is 2 500 meters long. The restoration of the activities of the Ruse Airport as a civil airport for public use is one of the priorities of the Bulgarian Transport Ministry and is included in the Strategy for Development of Transport Infrastructure in Bulgaria until 2015.

 

 

First UK Electric Cars to Be Assembled in Bulgaria in 2011

UK electric car company Zero Carbon 2020 will produce the first cars from a new assembly line in Bulgaria in the second or third quarter of 2011. The assembly line will be near the southern city of Stara Zagora and will initially have the capacity of 100 cars; output is planned to expand to some 5,000 units by 2015. The initial investment is estimated at BGN 6.5 M, and if the market reacts well, it is planned it would reach EUR 10-12 M. "We are a company offering niche products and have no ambitions for mass production," Zero Carbon CEO Jamie Roberts explained, adding that his plans for Bulgaria envisage assembling an urban model, developed jointly with Swiss electric car maker Rinspeed, and a sports car. Zero Carbon 2020, founded in 2006, has so far launched two models with an annual production of not more than 20 units. The company will further develop models with the so-called inductive charge – without cables to connect the vehicle with the charging stations. Zero Carbon work in partnership with another UK company - Liberty E Cars, which is considering investing in Bulgaria as well – in the manufacturing of electric cars parts (batteries, electronics etc). one year ago, the international fund Corus Ventures announced they have secured a British investment for the making of electric cars in Stara Zagora. Later, the investors visited the city to research the possibilities and the time frame of launching the production line for, as it was reported then, a 4-seat electric car that could reach speeds of 120 km/h.

 

Bulgaria to ask VMZ Sopot prospective buyers to show accounts

Investors interested in the privatisation of arms manufacturer VMZ Sopot will be asked to show accounts data to prove that they have sufficient funds to buy the company and settle debts, according to the privatisation strategy for the plant, published in the Official Gazette on April 1 2011. The chosen buyer will be also required to keep the current number of employees and abstain from lay-offs over the next three years. Following changes to the sell-off strategy proposed by MPs from socialist opposition, the future owner will be also required to pay off the plant's overdue labour costs, including wages, social security contributions and taxes. At the same time, the buyer will be allowed to negotiate the terms for the repayment of VMZ's obligations to other parties. In debate in Parliament on VMZ's privatisation strategy, socialist MP and former economy minister Roumen Ovcharov said the plant's overdue debt amounted to 140 million leva.

 

Exports fuel Sopharma's revenue in Q1 2011

Bulgarian pharmaceuticals maker Sopharma saw a 13 per cent annual rise in sales revenue in the first quarter of the year, the company said in a filing to the Bulgarian Stock Exchange. Sales on the domestic market contined to decline in the first three months of the year, resulting in a two per cent annual drop in revenue, but were offset by the 21 per cent jump in exports. In March alone, sales went up 19 per cent compared with the same period of 2010, triggered by a 27 per cent year-on-year rise in sales on foreign markets. For more than two years, Sopharma has been seeking to shift its production towards foreign markets in order to ensure the company's sustainable development, chief executive Ognyan Donev said. For January to March 2011, sales in Russia, Ukraine, Moldova and the Balkan region registered a double digit growth on an annual basis, while sales on other markets such as Belarus, Kazakhstan and Turkmenistan were doubled compared to the same period of 2010, he said. Sopharma reported a 12 per cent growth in revenue to 228 million leva in 2010, mainly due to a significant increase in sales abroad.

Bulgaria Bankrupt Steel Mill Tagged at BGN 316 M in Fourth Auction

The fourth auction of bankrupt steel giant Kremikovtzi, considered the pride of the communist-era industry in Bulgaria, will take place on April 12, the factory's receiver confirmed. The starting price will be BGN 316 M, down by 10% over the tag in the previous tender. A 10% deposit is to be paid in advance. The bidder with the highest offer will be selected for buyer. The tender will be with open bidding as required by the country's trade law. The first two auctions of Kremikovtzi failed to attract any bidders last year. The price started at BGN 565 517 510, which according to trade unions and analysts is far below the market price. The third tender for the mill's production capacities was held in February 2011, but fell though after the sole prospective bidder failed to submit a deposit. The site and assets of the struggling company, built in the 1960s, were offered for sale four months after the behemoth was sent into liquidation, its businesses -  wound up and its assets – offloaded. The smelter shut down some of its furnaces in 2009 due to lack of raw materials after Ukrainian tycoon Konstyantin Zhevago canceled a deal with the plant. It was previously owned by Pramod Mittal, the younger brother of ArcelorMittal Chief Executive Officer Lakshmi Mittal. The auctions come more than a year after the majority of creditors of the troubledsteel-maker rejected the rescue plan for the struggling company, while workers staged numerous rallies to call on the state to approve the recovery plan and bring to justice those, who have allegedly siphoned the company. The sprawling communist-era behemoth near Sofia was declared bankrupt end of May and cleared for liquidation in June, after years of struggle with dire economic conditions, and multiple controversies about mismanagement and financial draining. In a high profile case, Alexander Tomov, former CEO of Kremikovtzi and Bulgarianfootball great CSKA, faced trial. At the end of January this year Tomov was sentenced to nine years in jail by a Sofia city court for selling off plots of land owned by Kremikovtzi at well below the market price. He was also found guilty of embezzling EUR 7.5 M while serving as the company's chief executive after it was taken over by Global Steel Holdings, controlled by Pramod Mittal. The total debts of Bulgaria's former largest steel-maker amount to BGN 1,9 B, whereas the market value of all of its assets has been estimated at BGN 837 M. Kremikovtzi, one of Bulgaria's biggest companies, provided jobs for over 5 000 people and its future was a politically sensitive issue ahead of the general elections in the summer of 2009. Different views about the future of Kremikovtzi site have been recently discussed by the Bulgarian public and authorities, including a possible retainment of the operating mill, creating a museum, a residential neighborhood and a new industrial park.

 

Lidl targets expanding chain to 40 units in months

German discount retailer Lidl targets expanding its chain in the country to a total of 40 supermarkets in next few months, investor.bg reported. The company opened four new stores yesterday (April 7, 2011) in Gorna Oryahovitsa, Targovishte, Silistra and Provadia, all located in northeast Bulgaria, occupying sites of the Plus chain stores. At present, Lidl runs 34 stores in 25 towns in the country. In October 2010, Lidl, which is part of Schwarz Group, received permission from the state anti-trust watchdog to buy the local chain of Plus, part of German Tengelmann. Plus operated 23 stores in the country. Lidl opened its first 15 stores in Bulgaria on November 25, 2010. Also, Lidl opened a BGN 56mn (EUR 28.6mn) logistics hub in Ravno Pole, near Sofia, in early October 2010.

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea