불가리아 주요 경제뉴스 (19 - 26 August 2011)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (19 - 26 August 2011)

 

Sections/headline briefs:

 

 

MACROECONOMY:

• ILO-defined unemployment confirmed at 11.2% in Q2 2011
• Finance minister vows not to raise taxes during CEDB ruling
• Local tourist visits decline by 7.4% y/y in Q2 2011

 

INVESTMENTS:

• EVN Bulgaria Invests in Sliven Region Grid
• Bulgarian Industry Cluster Plans To Invest in Silk Factory Project
• Sofia City to build EUR 62.6mn integrated public transport system

 

COMPANIES AND INDUSTRIES:

• Bulgaria's Struma highway stretch draws 15 bids
• Sofia airport concessionaire to require EC approval
• Toplivo sinks into EUR1.3m loss in H1 2011
• Battery producer Monbat's sales up 22.3% y/y in Jan-Jul 2011
• Patinzhineringstroy starts EUR 21.7mn repair of Shumen-Silistra road
• Glavbolgarstroy starts construction of traffic control tower at Sofia Airport
• Plaza Centers to launch construction of trade centre in Shumen in 2013
• Bulgaria's Furniture Industry Lost Forever 20% of Pre-Crisis Volume - Expert

·         Strategic changes at HP to skirt Bulgaria

 

 

 

 

 

 

 

Articles:

 

MACROECONOMY:

 

ILO-defined unemployment confirmed at 11.2% in Q2 2011

The rate of unemployment measured by the ILO and Eurostat methodologies rose by 1.2pps y/y but fell by 0.8pps q/q to a period average of 11.2% in Q2 thus confirming preliminary results released about a month earlier, according to a survey run by the statistical office. The number of the discouraged increased by 6.1% y/y decelerating from 11.5% y/y a quarter earlier to account for 62.9% of the total (down from 64.1% a year earlier) while the total jobless number went up by 8.1% y/y to 369,800. The long-term unemployment rate went up by 2pps in a year to 6.3% in Q2. The employment rate in the age group from 20 to 64 years reached 63.4% in Q2, down by 2.5pps in annual terms and far from the target of 75% set in the Europe 2020 strategy. 

 

Finance minister vows not to raise taxes during CEDB ruling

Deputy PM and finance minister Simeon Dyankov said for the state TV channel BNR that the cabinet will not increase the tax rates while the ruling centre-right CEDB is in power, investor.bg reported. Dyankov, however, did not elaborate whether he considers all major rates. Also, the minister said that the already taken measures to contain the expenditures will suffice to overcome the consequences of the downturn. If the autumn forecasts for the major world economies prove to deteriorate, Dyankov will propose a more prudent budget for next year. 

 

Local tourist visits decline by 7.4% y/y in Q2 2011

The number of visits of domestic tourists decreased by 7.4% y/y to a total of 1.01mn in Q2, according to a survey of the statistical institute comprising tourist visits to the country and abroad of citizens of 15 years or older. The contraction sustained for a seventh quarter in a row but decelerated significantly from 36.6% y/y in Q1. Those visiting relatives were 30.3% of the total while the ones travelling on vacation were 43.4%, respectively. Tourist visits in the country fell by 8.9% y/y (down from 40.1% y/y in Q1) to 78.2% of the total. The number of Bulgarians travelling abroad also dropped by 1.4% y/y after rising by 5.6% y/y in Q1. 

INVESTMENTS:

 

EVN Bulgaria Invests in Sliven Region Grid

Power distributor EVN Bulgaria Elektrorazpredelenie said on Monday it invested in the first half of the year over 1.2 million levs ($883,500/613,600 euro) to upgrade its power grid in the region of Sliven, in southeastern Bulgaria. EVN Bulgaria Elektrorazpredelenie upgraded power lines and cables with a total length of nearly 10 kilometres and set up two new substations, the company said in a press release. The planned investment programme for the entire territory served by EVN Bulgaria in 2011 amounts to 113.1 million levs, the company added. EVN Bulgaria Elektrorazpredelenie supplies electricity to over 1.5 million customers in southeastern Bulgaria. It is licensed to purchase, distribute and sell electricity to households and corporate clients. EVN Bulgaria Elektrorazpredelenie is co-owned by Austrian power utility EVN AG, which holds 67%, and the Bulgarian state which has a 33% stake.

 

Bulgarian Industry Cluster Plans To Invest in Silk Factory Project

The Sofia-based Silk industry cluster plans to make an initial investment of 7.5 million euro ($10.8 million) in the construction of a silk processing and weaving factory in northwestern Bulgaria, local media reported on Monday. The factory, which will be located in Byala Slatina, will be launched in two stages and namely in May and September 2012, news daily Dnevnik (www.dnevnik.bg) reported, quoting the chairperson of the cluster's board of directors, Milka Dimitrova. The output of the new factory will be exported to European markets, Dimitrova added.

 

Sofia City to build EUR 62.6mn integrated public transport system

The municipality in the capital city of Sofia plans to invest EUR 62.6mn in the integrated public transport system in the city, mediapool.bg reported. The aid from the EU under the country’s regional development operational programme amounts to a total of EUR 50mn and the remaining EUR 12.6mn will be lent from the EBRD. Sofia city will buy new trolleybuses, build smart traffic management systems on 20 crossroads and a new tram line, and will also rehabilitate 3.5km tram line under the project, which is to be launched at the beginning of next year. It should be completed at the end of 2013. 

 

COMPANIES AND INDUSTRIES:

 

Bulgaria's Struma highway stretch draws 15 bids

Fifteen local and foreign construction firms have filed offers to build a 15-km stretch of Bulgaria's Struma highway at an estimated value of EUR 53 million (USD 36.9m). The construction of the 133-km motorway, which links the Bulgarian capital Sofia with the Koulata checking point at the Greek border, is worth EUR 1.1 billion. The 15-km stretch between Sandanski and Koulata is funded by the EU's Transport operational programme. Nearly all Bulgarian construction heavyweights, including Glavbolgarstroy, and global suitors for major infrastructure projects in Bulgaria, are among the candidates to build the 15-km section. Glavbolgarstroy, which is currently engaged on the Sofia beltway expansion project and has recently completed the construction of the new sport hall in Sofia, has submitted a joint bid with Italian Impresa and local Patstroy 92, owned by Tsolo Vutov. The companies had earlier won the construction of the motorway stretch between Dolna Dikanya and Doupnitsa, but are yet to ink the contract as their winning bid is being contested by Lena-Isa 2000, which is also among participants in the tender for the Struma stretch. Patstory 92 has filed a separate offer for the Sandanski - Koulata stretch, teaming up with Spanish Construciones Arans Asinas (as spelled by the source) and Bulgarian Geya 21. The Sandanski-Koulata tender has also drawn the bids of two consortia grouping companies related to Bulgaria's Holding Roads, controlled by local businessman Vasil Bozhkov. Holding Roads has also been contracted to build a section of the Trakia highway. Bulgarian Patengineering M has joined forces with Austrian Porr Technobau for the Struma stretch. Bulgarian Trace and Greek Aktor, which are the other contractors on Trakia motorway, are also vying for the Struma section between Sandanski and Koulata. Bulgarian firm Stanilov and German Hochtief are new participants in such infrastructure tender. The two companies have won the competition for the construction of Sofia's waste treatment plant. Bulgaria is expected to pick the winner for the 15-km stretch between Sandanski and Koulata by the end of October and kick off construction works in November. This section passes through protected areas inhabited by rare species such as tortoise and extra work will be done, including the construction of concrete walls and tunnels, to save the animals from being smashed on the road.

 

Sofia airport concessionaire to require EC approval

The European Commission has given the go-ahead to the Bulgarian Transport Ministry's plan to award a concession to revamp and develop Sofia Airport but insisted that the private investor would need to be vetted by the Commission. The news was announced by Deputy Transport Minister Kamen Kichev at the signing of a contract for the construction of a new control tower at the airport between state-run enterprise Air Traffic Control and local construction firm Glavbolgarstroy. However, it was not clear whether the entire airport or only parts of it will be given under concession. The reason that the airport concession needs approval from Brussels is that the construction of the airport's second passenger terminal was funded in part with 50 million euro from the EU's pre-accession programme ISPA. The terminal's construction was also financed by loans from the European Investment Bank and Kuwait Fund for Arab Economic Development. The future private investor will have to pay off the loans for Terminal 2. An economic analysis on the benefits of a potential concession is currently underway and the final decision will be made once the analysis is complete. State company Airport Sofia, which is the current manager of the airport, plans to upgrade the existing two terminals and the adjacent infrastructure with its own funds. However, a private investor is needed to build new terminals. Bulgaria's two major Black Sea airports Varna and Bourgas are being managed by a joint venture between Greman Fraport and a local firm, owned by industrial conglomerate Chimimport. The Transport Ministry has so far made abortive efforts to pick concessionaires for the other airports in Rousse, Gorna Oryahovitsa and part of the Plovdiv airport.

 

Toplivo sinks into EUR1.3m loss in H1 2011

Bulgarian fuel and construction materials retailer Toplivo plunged into a consolidated loss of BGN 2.6 million (USD1.9m/EUR1.3m) for the first half of 2011 from a BGN 322,000 profit in the same period of 2010. The company blamed the negative result on the more rapid increase in expenses, which widened by 15% to BGN 90.5 million, outpacing revenue growth of 11% to BGN 87.9 million. The bulk of the revenue was sales of goods, which accounted for BGN 85.9 million, while rental and services revenues generated the rest. However, the financial statement of the company, which is 73.42% owned by local industrial group Synergon Holding, does not give a breakdown of fuel and building materials sales. Toplivo's construction materials segment has been hit by the property market slump over the past few years. Expenses on outsourced services and costs for materials have widened slightly, while salary and social security pay-outs have dropped, according to the financial report.

 

Battery producer Monbat's sales up 22.3% y/y in Jan-Jul 2011

The net consolidated sales of the country’s largest car battery producer Monbat increased by 22.3% y/y to BGN 115.4mn (EUR 59mn) in Jan-Jul and by 31.7% y/y to BGN 16.6mn in July alone, according to information posted on the website of the local stock exchange. The increase of the pre-tax profit of the company decelerated to just 1.3% y/y to BGN 12.8mn in Jan-Jul as the indicator plunged by 61.7% y/y to BGN 712,000 in July. The producer explains the deterioration with legislative changes, which reduced the supplies to Monbat Recycling by some 70% during the month. The latter affected adversely the production of the Bulgarian recycling unit and consequently the consolidated profit. The consolidated results comprise those of Monbat and its unit Monbat Recycling. In April 2010, Monbat decided to spin off its recycling operations in order to improve its efficiency and make its activities more attractive to potential foreign investors. 

 

Patinzhineringstroy starts EUR 21.7mn repair of Shumen-Silistra road

PM Boyko Borisov and regional development minister Rosen Plevneliev launched on Thursday (August 25) the field works on the repair of the 107-km road between the northeast major towns of Shumen and Silistra, the regional development ministry said on its website. The project is estimated at BGN 42.4mn (EUR 21.7mn), VAT excluded. The EIB has provided 65% of the amount and the remaining part and the VAT will come from the state budget. The local company Patinzhineringstroy will run the project.

 

 

 

Glavbolgarstroy starts construction of traffic control tower at Sofia Airport

Bulgaria’s largest construction and engineering holding Glavbolgarstroy and the state company Air Traffic Services Authority signed a contract for the construction of a new air traffic control tower at the country’s largest airport in the capital city of Sofia, the transport ministry informed on its website. Glavbolgarstroy received the highest technical assessment in the tender while offering shortest deadlines at the same time. The Holding vows to complete the construction works in less than ten months. The price of the contract is BGN 14.8mn (EUR 7.57mn), VAT included. It will be fully financed by Air Traffic Services Authority. The facility will be located on more than 2,400 sqm and will be 50 metres high. The tower will have exploitation period of above 40 years and will service the airport after its expansion as well.

 

Plaza Centers to launch construction of trade centre in Shumen in 2013

Plaza Centers, the subsidiary of the Israel’s Elbit Imaging for real estate investments in CEE countries and India, plans to launch the construction of a trade centre in the northern city of Shumen in 2013, investor.bg informed. The centre, named Shumen Plaza, will comprise gross rentable area of 20,000 sqm and should be completed in 2014.According to the initial plans, the facility should have been built by 2009. Plaza Centers acquired the project in 2007 at the price of EUR 38mn.

 

Bulgaria's Furniture Industry Lost Forever 20% of Pre-Crisis Volume - Expert

Bulgaria's furniture industry will hardly ever manage to recover its pre-2008 output even after the economic crisis is overcome, according to the director of furnitureproducers' chamber. The Bulgarian furniture industry will lose permanently about 20% of the volume it had before the crisis, Stefan Ganev, executive director of the Bulgarian Chamber for Wood-Processing and Furniture Industries told BNR Thursday. Because of the decline in construction of new homes and new hotels, Bulgaria's domestic furniture market has declined by about 50% since the start of the economic crisis three years ago, the Chamber estimates. The Chamber has no information about bankruptcies among Bulgarian furnitureproducers but reports that some companies from the sector have forced their workers to take leaves. Ganev has forecast that even after the crisis is fully overcome, there will hardly be a substantial growth in Bulgaria's domestic market because of the devastatingconstruction slump. He welcomed the opening of the first IKEA store in Bulgaria which is to come in the fall of 2011. "We shouldn't deamonize the arrival of strong players on the market. They introduce their standards and their way of doing business, which helps our producers," he commented.

Strategic changes at HP to skirt Bulgaria

 

Potential changes in Hewlett-Packard's business strategy will bypass Bulgaria, company executives told Dnevnik on August 24. The technology giant last week announced it would halt production of tablets and smartphones and might exit computer making business. HP said it would revise its Personal Systems Group (PSG) division that combines computers, tablets and smartphones, generating a third of the group's revenue. The division posted a $9.59 billion turnover in the third fiscal quarter alone. "No final decision has been made yet. The company has authorised its board to examine business prospects for the PSG division, which will take 12 to 18 months," said Iravan Hira, general manager of HP Bulgaria. "There will be no changes in Bulgaria as last week's announcement does not alter in any way the long-term strategy," Hira said. "Our strategic approach is shifting towards services, software and provision of integrated solutions. At the same time, the 3000 employees we hired in our Global Delivery Center (GDC) in Sofia are no longer catering only to international clients". The GDC now provides various services to Bulgarian companies as well and HP is hiring new staff in line with plans unveiled last autumn. The GDC offers services in 20 business segments, including business process and services outsourcing. The official said HP was adding 150 to 170 employees each month. he company's strategy is to offer added value in all market segments, mostly services, including cloud services, which is among the most lucrative segment. Income from services stood at $9.1 billion in the third fiscal quarter, according to the company's financial report. HP has retained its dominant position in Bulgaria's PC market for the past ten quarters with a market share of over 20 per cent in some segments, said Ilia Toshev, head of the PSG division. This solid market foothold is partly due to the direct distribution model HP adopted earlier this year, signing distribution contracts with consumer electronics chains Technopolis and Technomarket, Toshev said. He sees at least three possible scenarios for the PSG division, including its spin-off and sale and concurrent growth with the company's other segments. It is still not clear whether HP will offer new tablets and smartphones in Bulgaria. However, the company will continue to develop the webOS operational system it acquired from Palm last year, using it in its other products, Toshev said.

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea