불가리아 주요 경제뉴스 (22 - 29 April 2011)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (22 - 29 April 2011)

 

Sections/headline briefs:

 

MACROECONOMY:

Ø  Business sentiment improves 2.4pps m/m in April 2011

Ø  IMF: Bulgaria’s Economy to Grow 3%

Ø  Domestic market bolsters Bulgarian companies' performance in Q1 2011

 

 

INVESTMENTS:

 

Ø  Petr Dokladal, CEZ Regional Manager: we want larger investment threshold

 

COMPANIES AND INDUSTRIES:

 

Ø  Bulgartabac swings back to profit in Q1 2011

Ø  Bulgarian-Austrian consortium to build 2nd section of Maritsa motorway

Ø  Bulgaria relaunches privatisation of Bulgartabac

Ø  Soft drinks consumption falls by 5% y/y in Q1 2011

Ø  Bulgarian-Austrian consortium to build second section of Maritsa motorway

Ø  Textile Industry Expects Increased Employment

 

 

 

 

 

 

 

 

Articles:

 

MACROECONOMY:

 

Business sentiment improves 2.4pps m/m in April 2011

The composite business sentiment indicator improved by 2.4pps m/m to 17.53 in April after one-off deterioration in March, the monthly survey of the national statistics institute showed. The annual increase slowed further to 5.7pps as compared to 7.7pps a month earlier. The indicator in April was 10pps below its long-term average. The improvement during the month was due to the industrial and the services sectors while the managers from the retail business and the construction companies shared pessimistic views. Although industrial companies see both the current and future situation as better, the average capacity utilisation has decreased by 0.4pps to 70.1% in April from its January level and is expected to drop further in the months to come. The services and the construction companies expect the prices to increase in the future while the industrial companies and the retailers have contained their inflationary expectations. 

IMF: Bulgaria’s Economy to Grow 3%

According to the latest forecast of the International Monetary Fund IMF, Bulgaria’s economy may grow by three percent by the end of 2011 and by another three and a half percent in 2012. For comparison, Bulgaria’s government expects 3.6% economic growth this year and 4.1% in 2012. An economic growth of 4.4% is expected in 2014. The recent unrest in the Arab world and the earthquake in Japan have made the government’s expectations of economic growth in Bulgaria less optimistic.he IMF increased its outlook on Bulgaria to 3% economic growth in 2011, following the government’s report for 0.2% growth in 2010. At the same time, consumer prices in Bulgaria are expected to increase by 4.8% this year. Inflation rate in Bulgaria is expected to ease to 3.7% in 2012, according to an analysis of the IMF, while the unemployment rate is set to fall to 6.7% in 2012.

 

Domestic market bolsters Bulgarian companies' performance in Q1 2011

The financial performance of most of Bulgaria's public companies registered an improvement in the first quarter of 2011, triggered by an upturn in domestic market sales apart from stable earnings from sales abroad. According to local analysts, the results of some entities even topped their forecasts but still, there are companies which find difficulties in coping with the current market conditions, reminding that hard times are yet to pass. Local fertilisers maker Neochim saw a strong improvement in its quarterly performance thanks to operations in the local market, with sales increasing three times. Cables and conductors maker Gamakabel and syringe manufacturer Momina Krepost also recorded an increase in turnover, while cigarette maker Sofia BT reported a rise in sales at home earlier this week. The announced results have been the first sign for an awakening of the domestic market since the start of the crisis in 2008. According to analysts, however, it is still early to talk about a recovery of the domestic consumption, but nevertheless the signals are positive. Furthermore, banking sector data showed that for the first time in a year consumer loans registered a growth, which is expected to trigger a quick revival of the economy. Bulgarian export-oriented companies also enjoyed a rebound in their results in the period, chiefly companies engaged in the manufacturing and machine-building segments. The results of these entities, in particular M+S Hydraulic, Hydraulic Elements and Systems and Elhim-Iskra, headed for the better over a year ago, but showed even stronger growth in the last quarters.

 

INVESTMENTS:

 

Petr Dokladal, CEZ Regional Manager: we want larger investment threshold

Sofia. “Our goal is providing maximum comfort for our clients. Investments come as part of the approved framework but, regretfully, large part of the equipment has exceeded its operation life and money for renovation is not enough”, said CEZ Regional manager Petr Dokladal. State Commission fro Energy and Water Regulation (SCEWR) has approved annual investment threshold of only BGN 71 million, which is insufficient for rehabilitation and modernization of the power grid, Dokladal explained. We have already asked the regulator to raise the investment threshold to BGN 152 million, he said.

 

 

 

COMPANIES AND INDUSTRIES:

 

Bulgartabac swings back to profit in Q1 2011

Bulgaria's tobacco group Bulgartabac Holding ended the first quarter of 2011 with a net profit of 1.3 million leva, recovering from a loss of 1.67 million leva in the same period of the previous year, the company's financial report shows. Revenue surged 67.36 per cent on an annual basis to 6.9 million leva in the period, thanks to the flat levels of excise duty and the rebound in exports. The group's earnings were also favoured by the lower labour and amortisation costs, which decreased by four per cent and 38.48 per cent, respectively. Bulgartabac estimated that official sales of cigarettes in Bulgaria contracted 30 per cent in the first three months of the year, while illegal sales remained unchanged. According to the latest report by international major Philip Morris, Bulgaria's illegal cigarette market reached about 40 per cent in 2010. Currently, Bulgartabac's share on the domestic market stands at 37 per cent. The group's cigarette exports totalled 3.5 billion pieces between January and March, or 93 per cent of the targeted amount. Bulgartabac sold abroad 2.5 billion pieces in the corresponding period of the past year. The group is set to boost its cigarette exports by 19 per cent to 15.5 billion pieces in 2011.

 

Bulgaria's Organic Food Market Grows Tangibly in 2010

The sales of organic foods in Bulgaria grew by more than 15% in 2010 year-on-year, according to Lubomir Popiordanov, head of the Bulgarian Association forAlternative Tourism (BAAT). Popiordanov spoke in Sofia Thursday at the opening of "Green Days", a festival that he initiated to support healthy life and environment-friendly practices, alternative and eco tourism as well as the production of green or organic food and bio-cosmetics. According to the chair of the alternative tourism association, the production of biofood is on the rise in Bulgaria, and is the only trade that has seen uninterrupted growth in the recent years. He further interpreted the 2010 growth in sales to mean that Bulgarian consumers trust organic food. In his words, it is crucial for the people to support the producers of green food because of the many challenges they face.

 

Bulgarian-Austrian consortium to build 2nd section of Maritsa motorway

Maritsa Highway, a consortium between Bulgarian company Patnostroitelna Tehnika and Austria's Porr Technobau und Umwelt, has won the tender for building the second section of the Maritsa motorway. The 34-km (21 miles) stretch links the towns of Dimitrovgrad and Harmanly, in southern Bulgaria. The consortium offered the lowest price of BGN 122.137 million (USD 91.4m/EUR 62.4m) for the section, compared with an estimated cost of BGN 200 million. The approved construction costs translate into a price of EUR 1.83 million (USD 2.7m) per kilometre. The highest price offered at the tender, BGN 171.5 million, was filed by Greek company Terna. "The tender for the second lot of the Maritsa motorway broke three records - for number of tenders (14), open prices (10) and cost per kilometre," said Regional Development Minister, Rossen Plevneliev. The first section of the motorway, connecting the towns of Orizovo and Dimitrovgrad, will be built by Italian Cooperativa Muratori e Cementisti for BGN 133 million.

 

Bulgaria relaunches privatisation of Bulgartabac

Bulgaria said Tuesday it was reviving plans to privatise its cigarette maker Bulgartabac, six years after the failed attempt to sell it off to British-American Tobacco (BAT).
Sofia hopes to sell a 79.83-percent stake in the company to a "strategic investor", while the remainder would be floated on the stock exchange, the national privatisation agency said in a statement. Any potential buyer would have to be active in the tobacco industry, have annual turnover of at least 1.0 billion euros ($1.5 billion) and be able to handle at least 12,000 tonnes of tobacco per year, the privatisation agency said. Three companies who have met those conditions have expressed their interest so far said agency chief Emil Karanikolov: US giant Philip Morris, Japan Tobacco International and Korea's KT&G.
British-American Tobacco, on the other hand, was not among the candidates.
The deadline of August 27 has been set for bids, with a decision to be announced on September 6, Karanikolov said. Bulgartabac employs a workforce of 2,400, generates annual profits of 8.8 million euros and is worth an estimated 40 million euros. vs/spm/rl

 

Soft drinks consumption falls by 5% y/y in Q1 2011

The consumption of soft drinks declined by 5% to 272mn litres in Q1 2011, the soft drinks producers association informed quoted by investor.bg. The contraction narrowed from 7% last year. Cold teas consumption was the only segment, which continued increasing on annual basis (6% y/y in Q1) while the steepest decrease was still registered by fruit juices (down by 11% y/y, respectively). The consumption of soft drinks retained a share of 61.7% of all drinks consumption last year. Consumption per capita fell to 210 litres last year from 226 litres in 2009. In value terms the market reached BGN 1.3bn (EUR 664.7mn), down by BGN 152mn in a year. 

Bulgarian-Austrian consortium to build second section of Maritsa motorway

Maritsa Highway, a consortium between Bulgarian company Patonstroitelna Tehnika and Austria's Porr Technobau und Umwelt, has won the tender for building the second section of the Maritsa motorway. The 34-kilometre stretch links the towns of Dimitrovgrad and Harmanly, in southern Bulgaria. The consortium offered the lowest price of 122.137 million leva for the section, compared with an estimated cost of 200 million leva. The approved construction costs translate into a price of 1.83 million euro a kilometre. The highest price offered at the tender, 171.5 million leva, was filed by Greek company Terna. "The tender for the second lot of the Maritsa motorway broke three records - for number of tenders (14), open prices (10) and cost per kilometre," Regional Development Minister Rossen Plevneliev said. The first section of the motorway, connecting the towns of Orizovo and Dimitrovgrad, will be built by Italian Cooperativa Muratori e Cementisti for 133 million leva.

 

 

 

Textile Industry Expects Increased Employment

Bulgaria could have 200,000 jobs in the textile industry, Bertram Rollman, Vice President of the Board of the Bulgarian Association of Producers and Exporters of Clothing and Textile and member of the Board of Directors of Euratex, told BTA. Even though the purchase of clothing is low in the list of spending items for Bulgarian households, he is optimistic about this industry's prospects for the next seven to ten years. In 2007, before the downturn, some 170,000 people were employed in the textile industry but their number has since dropped to 130,000-140,000. Official statistics has over 4,000 companies - most of them small and mid-sized, in the clothing and textile industry. Rollman expects a boom in demand for seamstresses in the next three years, largely due to the expected transfer of production facilities of major world producers away from China and other Asian countries to the Balkans, Estonia, Lithuania, Poland and Belarus. This process is called for by the hefty transportation costs and the long time it takes now to fulfill orders (which can be as much as nine months for factories in China). Also, labour costs in China are rising. In Bulgaria, a big order (with materials of the client) can get fulfilled in one month with an extra three days for shipping, Rollman said adding that a full business service here takes four to six months. He says it is unrealistic to expect a large number of textile investors coming to invest in own production facilities in this country - but there will be an increasing number of small- and medium-sized enterprises from Germany, Austria, Italy, Greece and Turkey placing orders here. Rollman, who owns the biggest clothing manufacturing company in Bulgaria, said that he will increase the number of his employees to 3,000 from 2,700. Rollman said that the expenditures for salaries are gradually increasing in Bulgaria. There is a misconception about low wages for textile workers, which he blames on wrong statistics - it is based solely on the officially reported wage levels. Rollman believes the share of the grey sector in clothing manufacturing to be around 50 per cent. The sector began to recover from the downturn in April 2010 and the first to emerge from the crisis were the companies whose products are of medium and high price range. Those putting out cheap products continue to have problems and some have even disappeared from the market, Rollman said. The textile sector expects the price of cotton to drop this year after it reached unprecedented highs in January 2011, gaining some 360 per cent from January 2009. Analysts say the price increase was driven by the increasing purchasing power and growing demand for cotton in Eastern Asia and especially China, as well as by the limited export by one of the biggest cotton producers, India.

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea