불가리아 주요 경제뉴스 (27 January – 3 February 2012)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (27 January – 3 February 2012)

 

Sections/headline briefs:

 

MACROECONOMY:

v  Bulgaria's industrial PPI grows 4.1% y/y in Dec 2011

v  Business sentiment in Bulgaria deteriorates in Jan 2012

v  Bulgaria’s general budget deficit narrows by 43.2% in 2011 to 2.1% of GDP

 

INVESTMENTS:

v  Bulgartransgaz to invest above EUR 71.6mn in expansion in 2012

v  Bulgaria To Stop Investing In Green Energy Under New Law

v  Sofia’s heating utility to invest EUR 179mn until 2015

 

 

COMPANIES AND INDUSTRIES:

v  Beer Sales in 2011 Unchanged from 2010

v  Net profit of Bulgaria’s telecom BTC plunges 92.7% in 2011

v  Net profit of Bulgaria's drugmaker Sopharma rises 0.3% in 2011

v  Bulgaria's Chimimport improves individual profit by 0.1% in 2011

v  Bulgaria's Bulgartabac Non-cons Net Profit Jumps to 16.3 Mln Euro in 2011

v  Bulgarian Brewer Kamenitza 2011 Sales Rise 11%

v  Bulgaria's Emblematic Cosmetic Factory to Be Listed for Sale

v  LUKErg Renew acquires 40MW wind power park in Bulgaria for EUR 52mn

 

 

 

 

 

Articles:

 

MACROECONOMY:

Bulgaria's industrial PPI grows 4.1% y/y in Dec 2011

The industrial producer price index (PPI) increased by 4.1% y/y in December, slowing further from 5.9% y/y in November, statistics office data shows. In monthly terms, producer prices remained unchanged as compared to one month earlier after rising by 0.6% m/m in November. The prices of the mining industry declined by 3.1% y/y speeding from 2.7% y/y a month earlier. The price growth of manufacturing decelerated to 5.4% y/y from 8% y/y in November. The prices of the utilities expanded by 2.7% y/y slowing from 3.5% y/y in November. In terms of final use, the price growth decelerated in energy (from 8.4% y/y in November to 4.7% y/y in December) and intermediate consumption goods (from 1.6% y/y in November to 1% y/y in December), remained unchanged at 1.5% y/y in consumer durable goods, and accelerated in investment (from 3.7% y/y in November to 4.4% y/y in December) and consumer non-durable goods(from 6.3% y/y in November to 6.4% y/y in December). The broader index including export sales also decelerated to 4.1% y/y in December as compared to 6.8% y/y in November. 

 

Business sentiment in Bulgaria deteriorates in Jan 2012

The composite business sentiment indicator deteriorated by 0.7pps in monthly terms to 15.43 in January, the monthly survey of the national statistics institute shows. In annual terms, the indicator also turned to decline of 1.1pps y/y as compared to an increase of 1.5pps in each of the previous two months. The worsening of the overall indicator was due to the retail business only (down by 15.2pps in a month) while the sentiments in the construction and the services improved (up by 3.7pps and 7.3pps m/m, respectively) and the business climate in the industry remained unchanged in monthly terms. The retailers asses the business situation as worse and do not see any optimism for improvement in the near future, which on its part indicates that private consumption is still far from recovering. The same implications are given by the increase in the importance of the demand and the competition as negative factors to the development of the retail business. Therefore, the managers in this sector envisage reducing the workforce. The services’ managers also plan staff cuts despite the improvement of the overall indicator during the month. The capacities utilisation of the industrial sector has increased by 2.5pps as compared to October 2011 to 71.9% but the companies expect to have excess capacities in the following months. only the services companies expect prices to start growing in the next three months. 

 

Bulgaria’s general budget deficit narrows by 43.2% in 2011 to 2.1% of GDP

The general budget posted a deficit of BGN 1.58bn (EUR 809mn) in 2011, down by 43.2% y/y, according to preliminary data of the finance ministry. The contraction decelerated from 43.8% y/y in Jan-Nov. The gap accounted for 2.1% of the full-year GDP estimate as compared to 1.4% of GDP a month earlier and 4% of GDP in 2010. The budget deficit ran below the target of 2.5% of GDP set in the 2011 budget law. Total budget revenues increased by nominal 6% y/y and 1.7% y/y in CPI-deflated terms to 33.3% of GDP and 96.8% of the full-year plan while the respective increases in tax revenues were 8.3% y/y and 3.9% y/y in 2011 (99.5% of the plan in the 2011 budget law). Indirect tax revenues accounted for 102.2% y/y of the target in 2011, direct taxes were 96.9% while social security contributions were 95.8% of the planned for the year. Total expenditures increased by 0.9% y/y last year and were 95.7% of the target. In December alone, the general budget posted a deficit in the amount of BGN 533mn, down by 41.9% y/y but up from BGN 207.1mn in November 2011. Budget revenues were up by 6.3% y/y in December, but tax revenues contracted by 4% y/y. Total expenditures decreased by 6.3% y/y. The government will target a budget deficit of 1.35% of the projected full-year GDP in 2012, down from 1.5% planned in the midterm framework. 

 

INVESTMENTS:

 

Bulgartransgaz to invest above EUR 71.6mn in expansion in 2012

Natural gas transmission utility Bulgartransgaz, part of the state-run Bulgarian Energy Holding (BEH), plans to invest more than BGN 140mn (EUR 71.6mn) in expansion, modernisation and maintenance of the gas network this year, CEO Kiril Temelkov said in an interview for Capital Daily. The company intends to raise the capital expenditures by some 50% and their value to reach some BGN 200mn in 2013 and 2014. It will build and inaugurate some 200km gas transmission pipelines in next three years to start providing gas to new regions. Bulgartransgaz expects pre-tax profit in the amount of some BGN 130mn. 

 

Bulgaria To Stop Investing In Green Energy Under New Law

Bulgaria has cooled investors' interest in the construction of green energy plants. The country will not sign new contracts for the accession of renewable energy plants or contracts to purchase electricity produced by them because doing so would overachieve targets for the production of green energy by 2020. These motives are written into the new law. With the changes in the Law on Renewable Energy Sources (RES), which the parliament will vote on, the uncertainties and risks for companies and banks are increasing. To protect consumers against dramatic appreciation of electricity sourced from wind and solar plants, the ruling political party has decided to give priority to biomass production. In all cases both the statements of the Prime Minister and the legal changes will influence the investment climate. According to Economy Ministry, the production of renewable energy increased by 67 per cent in 2010 when compared to 2009. The intended target for Bulgaria for 2010 was an 11 per cent share of green energy in gross inland consumption. The country reported over-performance of this goal by 4 per cent. According to the chairman of the Association of Producers of Ecological Energy, Velizar Kiryakov, the country cannot achieve its goal by 2020 because of the investment restrictions imposed by the new law. The Bulgarian government believes this is not so. "To date, in this respect [green energy], the leader is Bulgaria - we have already met the quotas for 2020 for the production of green energy by way of solar, wind and small hydropower plants," the Prime Minister, Boyko Borisov, said on Wednesday to some German companies. He added that the country is now a leader in green energy production. With the plan for the development of renewable energy by 2020 Bulgaria plans to build 2300 MW worth of power production from wind, solar and biomass. Besides its current affiliates, Bulgaria has signed final contracts for more than 1,000 MW, the infrastructure of which are already built, the Deputy Minister of Economy and Energy, Delian Dobrev, said to BTA. So far 700 MW have been built and preliminary contracts have been signed for about 3,000 MW. Investors paid for a bank guarantee of 12,000 or 15,000 euro per megawatt installed as required by law for renewable energy. "Due to lack of sufficient capacity, each of the new facilities will work with half of its capacity," Deputy Minister Dobrev said to BTA. If the Parliament approves the changes in the law, we will have the right to connect to the grid when the network is able to absorb the new capacity. The European directive on renewable energy provides priority for the connection of plants. "We will apply the first come, first served principle," Dobrev said. He added, "the plan for developing the electrical network will include indications of where there is free capacity for accession. The Electricity System Operator (ESO) will give an investor a date for accession of future output, then the investor will have one month to decide whether to abandon his intention and get back his bank guarantee. If he decides that the date is suitable for him, he will continue with his project."

 

Sofia’s heating utility to invest EUR 179mn until 2015

Sofia’s heating utility, Toplofikacija Sofia, plans to spend BGN 350mn on repairs and investment until 2015, investor.bg reads. Up to BGN 100mn will be own funds while the remaining amount will come from the EU funds. The utility will replace old equipment with more efficient one, overhaul its thermo-power plant, build installation for processing the scrapings of the future waste-processing plant (to save up to BGN 40mn from natural gas consumption), and replace the heating network by 2015 (32-34 kilometres annually, to cost BGN 36mn). The company will spend some BGN 47mn of the amount this year, including a BGN 14mn EBRD grant. In December, Toplofikacija Sofia informed that it is launching the construction of a BGN 32mn (EUR 16.4mn) cogeneration facility, which is part of a bigger installation to burn waste from the waste-processing plant. Sofia municipality fully controls the utility, which is one of the largest energy suppliers in the country with a heat production capacity of more than 3,000MW and co-generation units with a total electricity production capacity of 280MW. 

 

 

COMPANIES AND INDUSTRIES:

 

Beer Sales in 2011 Unchanged from 2010

The companies affiliated with the Union of Brewers in Bulgaria sold 4,840,000 hl of beer in 2011, making for an average annual consumption of 67 l per person. These figures leave beer sales on the level of 2010, said the Union Tuesday. The Union includes the largest breweries in Bulgaria. Their goal is to keep sales unchanged this year as well. The figures show that the market has not yet recovered from the aftermaths of the economic downturn, beer makers say. Consumption is still in the process of shifting from drinking out to drinking home and towards lower-prices beers. The share of sales continues to grow for beer in PET bottles and is now 57 per cent and sales of beer in glass bottles have dwindled to 32 per cent, 5 percentage points down from 2010. Beer cans made up 5 per cent of all sales and kegs 6 per cent. The Union's analysts comment that the beer market is being strongly influenced by the shrinking household budgets and the warnings of a new recession. A further adverse factor is the large number of bars and restaurants going out of business, the dropping sales in eateries in general and in the resorts, the wide preference for the all-inclusive holiday packages, and the large-scale introduction of supermarkets' own low-cost beer brands (sometimes imported), among others. Last year breweries invested over 50 million leva in new equipment, logistical centres and production facilities.

 

Net profit of Bulgaria’s telecom BTC plunges 92.7% in 2011

The consolidated net profit of the country's largest telecom services provider BTC, trading as Vivacom, declined by 92.7% y/y to BGN 8.4mn (EUR 4.3mn) in 2011 and the contraction sped from 76.9% y/y in Jan-Sep and 60.5% y/y in H1, BTC announced in a stock exchange filing. The company explains the deterioration with discontinued operations, reduction of the revenues from fixed line services and lower retail prices. Total revenues went down by 1.2% to BGN 885.9mn as compared to a contraction of 22.9% y/y in Jan-Sep. The revenues from the mobile segment increased by more than 17% to BGN 327.2mn last year but could not compensate the 8% reduction of the revenues from fixed lines. The telecom managed to cut the prices, which led to 28% increase of its clients to more than 4mn. Mobile data transfer soared by more than 10 times in a year and the number of the respective users went up by 200%. The TV subscribers of BTC added more than 280% last year. BTC assets totalled BGN 1.67bn as of the end of December, down from BGN 1.82mn at end-2010. BTC is implementing a BGN 600mn investment programme to develop its services and broaden its infrastructure over the next three years. 

 

Net profit of Bulgaria's drugmaker Sopharma rises 0.3% in 2011

The net non-consolidated profit of leading local pharmaceutical producer Sopharma added 0.3% y/y to BGN 40.7mn (EUR 20.8mn) last year, according to the company's results posted on the website of local stock exchange. We remind that the net consolidated profit of the producer dropped by 15.7% y/y in H1 as expenses, both operating and financial, grew faster than revenues but in Jan-Sep the indicator recovered to 0.4% y/y growth. The non-consolidated total revenues increased by 2.8% to BGN 245.1mn, including sales growth of 1.5% y/y to more than 94% of total revenues. Domestic sales (up by 3.4% y/y) accounted for 31.2% of all sales as compared to 30.2% in 2010. Exports sales declined by 0.9% y/y. The sales in Russia had the largest market share of 37% (down by 5% in a year), followed by the local market (31%) and Ukraine (16%). The drugmaker claims 5% market share in the country in value terms and 13% of all drugs sales in Bulgaria in volumes. At the beginning of this month Sopharma explained that the economic and political problems in Europe, the echo of the economic crisis and some administrative issues have reduced the growth rate last year. However, CEO Ognyan Donev expects the first months of this year to offset the slowdown from the past several months. 

 

Bulgaria's Chimimport improves individual profit by 0.1% in 2011

The net profit of the country's largest holding company Chimimport increased by 0.1% y/y to BGN 92mn (EUR 47mn) in 2011, according to the non-consolidated financial report posted on the website of the local bourse. The rate slowed from 4.2% y/y in Jan-Sep and 1.7% y/y in H1. Total revenues added 0.3% y/y to BGN 141.9mn. Financial revenues declined by 22.7% y/y to account for 72% of total. Chimimport controlled assets amounting to BGN 1.41bn as of the end of December, up by 9.3% on annual base. 

 

Bulgaria's Bulgartabac Non-cons Net Profit Jumps to 16.3 Mln Euro in 2011

Bulgarian tobacco group Bulgartabac Holding said its non-consolidated net profit increased to 31.9 million levs ($21.5 million/16.3 million euro) from 5.8 million levs a year earlier. The company's revenues rose to 62.2 million levs in 2011 from 42.1 million levs in 2010, Bulgartabac Holding said on Monday in a statement filled with the Bulgarian Stock Exchange. Bulgaria's anti-trust regulator approved the sale of a 79.83% state-owned stake in Bulgartabac Holding to Austria's BT Invest in September.

 

Bulgarian Brewer Kamenitza 2011 Sales Rise 11%

Bulgarian brewer Kamenitza AD boosted its sales volume by 11.1% last year, the company's general manager said on Tuesday. Last year, the company posted higher sales against a flattish broader market, Dragan Radivojevic told SeeNews on the sidelines of a news conference of the Union of Brewers in Bulgaria (UBB). Because of legal restrictions, he declined to provide a figure for the company's sales volume in 2011. According to UBB data released on Tuesday, Bulgaria's top five brewers sold a combined 4.84 million hectolitres of beer last year, nearly unchanged from the 4.815 million hectolitres sold in 2010. UBB data covers the business of Kamenitza, owned by StarBev, Carlsberg Bulgaria, part of Danish brewer Carlsberg, Zagorka, part of Dutch group Heineken, as well as locally-owned brewers Boliarka VT and Lomsko Pivo. The five brewers account for over 85% of the domestic market. Radivojevic declined to make projections about the company's sales in 2012. He, however, said exports may increase by up to 10%. Kamenitza exports about 25,000 hectolitres annually with 90% of the volumes shipped to Macedonia and Albania. Sales in Albania stand at some 6,000 hectolitres. "As you see, a rise by some 10%, even though a big success, is not that impressive in terms of the company's overall sales volume," Radivojevic said. The beer market in general is very traditional and dominated by local brands, and the potential for exports is limited, he explained. Not surprisingly, Kamenitza's other foreign markets are the U.S., Italy, Spain, Greece and Cyprus where there is a large Bulgarian expat community. Kamenitza operates breweries in Haskovo and Plovdiv, both in the south of the country.

 

Bulgaria's Emblematic Cosmetic Factory to Be Listed for Sale

Bulgaria's cosmetics factory "Alen Mak," functioning since the times of the Socialist regime, will be listed for sale in just days. The news was reported Thursday by the factory's syndic, attorney Stefan Georgiev, cited by Darik Radio. Georgiev said that the expert evaluation of thefactory's assets and liabilities is expected in a couple of day. The minimum price will be EUR 10 M which should cover the bond loans and expenses. "Alen Mak" has outstanding debt of EUR 5.7 M to a large number of creditors such as retirement and mutual funds, two banks, suppliers and even workers with unpaid salaries. Machines, other equipment, buildings, the land and the brand names of thefactory will be sold only together. Creditors have asked the patent institutions to terminate "Alen Mak's" right on fivebrand names which include a baby shampoo, whitening lotion, toothpaste, shaving foam, and hair color. The attorney team, working on the licenses revocation, informs the brand nameswill be reinstated by the end of March. According to electronic registries data, cited by dir.bg, the rights on some of thesebrand names belong partially to the offshore company VVPP Investment, registered in Lichtenstein, with headquarters in the Bulgarian capital Sofia.

 

LUKErg Renew acquires 40MW wind power park in Bulgaria for EUR 52mn

LUKErg Renew, a joint company (50%/50%) between Russia’s oil major Lukoil and Italy’s ERG Renew (part of ERG Group), has agreed to acquire a 40 MW operational wind power park from Raiffeisen Energy & Environment, Windpower Monthly informs. The transaction value is estimated at some EUR 52mn. The deal is to be closed by the end of June. The wind park is located near the northeast city of Dobrich and has been operational since 2009. Also, LUKErg Renew informs that it is evaluating other acquisitions and green-field investments in Bulgaria and Romania. LUKErg Renew was established in May 2011 to run wind and solar energy projects in Bulgaria and Romania and later in Ukraine and Russia. Lukoil is currently building a 1.25 MW solar power park near the southern Black Sea city of Burgas at the price of EUR 4mn, which should be completed by the end of this year. Lukoil owns the country’s oil refinery in Burgas Lukoil Neftochim and the petrol retailer Lukoil Bulgaria. 

 

 

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea