불가리아 주요 경제뉴스 (3 - 10 August 2012)

BULGARIAN ECONOMIC TOP NEWS DIGEST WEEKLY REPORT(3 - 10 August 2012)

 

Sections/headline briefs:

 

MACROECONOMY:

       Retail sales in Bulgaria turn to growth in June – Eurostat

       Bulgaria's unemployment rate drops to 12.3% in Q2 - labour force survey

       Bulgaria may receive up to 15% more EU structural funds in 2014-2020

       In 2012 Bulgaria Can Export as Much Electricity as in 2011

       Bulgaria’s industrial production grows 1.4% y/y in June

       Bulgaria’s construction output contracts 1.5% in June 2012

       Bulgaria Exports Lv 19,400 Mln Worth of Goods in First Half of 2012

 

INVESTMENTS:

 

 

COMPANIES AND INDUSTRIES:  

       VTB Bank, Corpbank Acquire Bulgarian Telco Vivacom – Report  

       Bulgarias Ruse embarks on 15-mln-euro public transport upgrade  

       Bulgarian Railways BDZ Avert Collapse as Govt Restores Subsidy

       Bulgarian construction company Glavbolgarstroy wins EUR 51mn contract - report

       China Sunergy to supply 50MW in PV modules to Bulgarian partner V2M

       Revenues of wireless telecom GloBul up by 1.1% in Q2 2012

       Varna Port Reports Record Cargo Volume in 2012

 

 

 

 

 

 

 

 

 

Articles:

 

MACROECONOMY

Retail sales in Bulgaria turn to growth in June – Eurostat

The volume of retail sales in Bulgaria turned to both monthly and annual growth in June after falling by 0.3% m/m and 1.8% y/y in May, Eurostat data showed. Seasonally adjusted retail sales volume inched up by 0.3% m/m in June and thus Bulgaria was one of the seven countries in which total retail trade rose during the month. In working day adjusted annual terms, retail sales volume went up by 0.4%. Overall retail sales in the EU dropped by 0.3% m/m (up 0.1% m/m in the euro area) and by 0.7% y/y (down 1.2% y/y in the euro area) in June. 

 

Bulgaria's unemployment rate drops to 12.3% in Q2 - labour force survey

Bulgaria's unemployment rate inched down to 12.3% in the second quarter of the year from 12.9% in Q1, according to the latest labour force survey carried by the statistical institute. When compared to a year earlier, the rate has increased by 1.1 pps. Some 66.6% of the population aged 15-64 were economically active. This is slightly higher compared to Q1 2012 (65.4%) and Q2 2011 (65.5%). The employment rate in the 15-64 age group went up to 58.3% from 56.9% in Q1 and 58.1% in Q2 2011. The labour force survey represents a continuous sample survey which provides data on the economic activity of the population aged 15 and over on a quarterly and annual basis. The survey covers noninstitutional households. 

 

Bulgaria may receive up to 15% more EU structural funds in 2014-2020

Bulgaria may obtain 10-15% more EU structural funds in the next programming period (2014-2020), according to estimations of EU funds minister Tomislav Donchev, Standart daily reported. Some 30% of the funds will be allocated to water, roads and railway sectors. The main part of the financing (52%) will be used to support energy efficiency projects, urban development, small and medium-sized enterprises, innovations. Another 18% will be earmarked for social and professional training projects. As of end-June, Bulgaria has contracted some 75% or EUR 5bn of the funding under the seven operational programmes for the current programming period. Some 23% of the payments have been made as of end-H1. 

 

In 2012 Bulgaria Can Export as Much Electricity as in 2011

The level of electricity production in Bulgaria in 2012 allows the country to export at least as much electricity as in 2011, the Electricity System Operator said on Tuesday. The operator reacted to media reports that Bulgarian electricity exports so far this year have decreased by 22 per cent compared with last year. The company admitted that there has, indeed, been a fall in electricity exports, partly due to shrinking electricity consumption in Southeastern Europe. Another reason is that electricity traders have difficulty making payments due to the Greek debt crisis. Transborder power transmission lines allow maximum export of 1,700 MW of electricity, but the actual amount has rarely reached 1,350 MW over the last few months, the operator said.

 

 

Bulgaria’s industrial production grows 1.4% y/y in June

Bulgaria’s industrial production index increased by 1.4% y/y in real terms in June after falling by 0.5% y/y in May, preliminary seasonally adjusted data of the statistics office shows. This is the first annual rise in output after the index started falling in January. When compared to May, the output has however shrank by 0.8%. The manufacturing sector expanded by 2.8% y/y in June driven by the expected surge in drinks manufacturing during the month (up 12.8% y/y). Other sub-sectors that contributed positively were manufacturing of tobacco, clothes, rubber and plastic products and motor vehicles. The mining industry turned positive in July and registered an 8.2% annual increase due to the metal ore mining and the non metals sub-sectors. The utilities sector remained below the year-ago levels and the contraction stood at 3.3% y/y in July. In seasonally-unadjusted terms, the industrial production rose by 1.9% m/m but fell by 0.3% y/y in June. 

 

Bulgaria’s construction output contracts 1.5% in June 2012

Construction output in Bulgaria contracted by 1.5% in real terms in June after rising for three consecutive months, according to statistics office preliminary seasonally adjusted data. The output was pushed down by buildings construction, which fell by 7.1% y/y in June. Civil engineering works registered their sixth straight increase in June rising by 6.4% y/y, yet below May’s hike of 9.8% y/y. In seasonally unadjusted terms, total construction output edged down 0.5% from June 2011 due to 11.4% annual drop in the volume of building construction, but rose by 1.3% when compared to May.

 

Bulgaria Exports Lv 19,400 Mln Worth of Goods in First Half of 2012

In the first half of 2012, the value of all goods exported from Bulgaria amounted to 19,400 million leva, up 2.8 per cent from the comparable period of 2011, the National Statistical Institute said on Thursday. The total value of all goods imported into Bulgaria in the January - June 2012 period amounted to 24,500 million leva (at CIF prices), or by 12.9 per cent more than in the first half of 2011. The total foreign trade balance (exports FOB - import CIF) was negative in January - June 2012, amounting to 5,077.9 million leva, up by 2,263.8 million leva from the balance in the first half of 2011. Bulgaria – EU: In May 2012, Bulgaria's exports to the EU increased by 5.1 per cent compared to May 2011 and amounted to 2,100 million leva. In the January - May 2012 period, Bulgarian exports to the EU did not change from their level in the comparable period a year ago: 9,600 million leva. The main trading partners of Bulgaria were Germany, Italy, Greece, Romania, France and Belgium that accounted for 71.4 per cent of the exports to EU Member States. The most significant growths were observed in the exports to Portugal and Slovenia. Bulgarian imports from the EU in January - May 2012 increased by 9.6 per cent compared to the same period of 2011 and exceeded 11,600 million leva at CIF prices. Imports grew most significantly from Cyprus and Portugal, and the steepest fall was reported for imports from Malta. In January - May 2012, Bulgaria ran a trade deficit with the EU amounting to 2,073 million leva (export FOB - import CIF). At FOB/FOB prices (after elimination of freight and insurance costs on imports), the trade balance was also negative and amounted to 1,533.3 million leva. Bulgaria - Third Countries: In January - June 2012, Bulgarian exports to third countries increased by 7.8 per cent from the like period a year ago and amounted to 7,800 million leva. Bulgaria's principal trading partners in this group were Turkey, China, Russia, Serbia and Macedonia, accounting for 46.3 per cent of the exports to non-EU countries. Exports to the United Arab Emirates, Israel, Canada, Syria, China and Brazil increased significantly, while the most significant decline was reported for exports to Singapore, Iran, India and Croatia. Bulgarian imports from third countries in the first half of 2012 increased by 13.0 per cent compared to the same period of the previous year and added up to 10,200 million leva (at CIF prices). The most significant growths were reported for imports from Canada, Peru, Bosnia and Herzegovina, Iran and Brazil, while the largest decreases were detected in imports from Kazakhstan and Israel. Bulgaria's foreign trade balance with third countries in January - June 2012 was in a deficit of 2,372.4 million leva (export FOB - import CIF). At FOB/FOB prices (after elimination of freight and insurance costs on imports), the trade balance was also negative, amounting to 1,858.4 million leva.

 

 

 

INVESTMENTS:

 

COMPANIES AND INDUSTRIES:

VTB Bank, Corpbank Acquire Bulgarian Telco Vivacom - Report

Bulgarian lender Corporate Commercial Bank and Russian peer VTB Bank have taken over debt-ridden Bulgarian telco Vivacom after creditors accepted the offered sale terms, according to insiders. The tie-in submitted a bid for the Bulgarian telecoms company two weeks ago and it was accepted by the creditors a week later, insiders close to the negotiations told Capital daily. Two weeks ago Tsvetan Vassilev, chairman of the supervisory board of CCBank, announced that CCBank and VTB Capital have agreed to form a tie-in and it will be picked as preferred buyer by the senior creditors' committee. CCBank holds nearly half of the deposits by state-run companies and is widely known as the government's darling. The deal is expected to be wrapped up in September. Hong Kong telecoms and media tycoon Richard Li's PineBridge Investmentscurrently owns a 94% stake in BTC, which operates under the brand nameVivacom, while the rest is floated on the Bulgarian bourse. BTC announced at the end of last month it has received notification from the Royal Bank of Scotland on the conditions for the sale of BTC to two financial investors. The lenders were expected to hold restructuring talks, which aimed at securing better terms and reducing the debt, which is burdening BTC, its parent companyNEF Telecom Bulgaria and the holding company that owns NEF Telecom. Under the proposed restructuring, CCBank and VTB Bank have offered to pay EUR 130 M in cash to senior lender for a majority stake, with EUR 588 M of reinstated loans, according to media reports. A minority stake in BTC will be owned by the senior secured creditors. If all options are exercised, senior lenders will be able to exit their loan positions after investors pay a total of EUR 617 M. The price is a fraction of the EUR 1.4 B Turkey's Turkcell was reportedly willing to fork out for Vivacom earlier this year. The Royal Bank of Scotland, Deutsche Вank, Castle Hill, the European Investment Bank and Raiffeisen Zentralbank arranged EUR 1.3 B of loans to finance Vivacom 's 2007 buyout. The mezzanine subordinated non-performing loans total EUR 400 M. The mezzanine lenders include French financial group AXA, Austrian investor Mezzanine Management, US Tennenbaum Capital Partners, Darby Overseas Investments, Deutsche Bank andRoyal Bank of Scotland. The creditors hired Morgan Stanley in London last year to help sell the company, after it breached the terms on the loan. In April 2011 Turkcell emerged as the most likely buyer of the Bulgarian telco, but the deal collapsed after the Turkish operator demanded that a huge part of the price (from EUR 100 M to EUR 200 M) is deposited in an escrow account until the state settles its scores with BTC previous buyers. The Turkish company reportedly put in a bid of over EUR 870 M. Earlier reports said the Turkcell valued Vivacom at about USD 1.4 B, but the Turkish company described the potential bid amount in the media as "groundless". BTC's creditors, who put the company for sale, described the other two bids – byBulgaria's Corporate Commercial Bank and Icelandic businessman Thor Bjorgolfsson - as too low, insiders said. Vivacom - formerly known as the Bulgarian Telecommunications Company(BTC) - has gone through a number of controversial privatization deals. The long-drawn-out and widely criticized EUR 230 M sale deal for 65% stake inBulgaria's telecom operator BTC was sealed at the end of February 2004 after nearly two years of procedural predicaments, legal and political battles. Months later Icelandic businessman Thor Bjorgolfsson bought Viva's stake for EUR 300 M and resold it to the investment company AIG Central Europe for EUR 1.08 B. AIG Investments acquired 65% of the former state-owned telecommunications firm in May 2007. Then in August of the same year it upped its investment to 90%. Chinese telecoms and media tycoon Richard Li, chairman of Asian telco PCCW, inherited control of Vivacom in March 2010 as part of the acquisition of AIG Investments, a unit of the troubled US insurance group which spans asset management and private equity investments. The unit was renamed Pinebridge Investments ahead of the takeover by Li's Pacific Century group. Dubai-based Oger Telecom was the closest to taking over the management of the company following negotiations that dragged on for nearly half a year. The deal however failed because the final offer was not satisfactory, according to insiders.

 

Bulgarias Ruse embarks on 15-mln-euro public transport upgrade

Bulgarias northeastern city of Ruse, on the Danube river, will carry out upgrade works worth 29.4 million levs ($18.4 million/15 million euro) to improve its public transport system, the regional development ministry said Monday. Some 26 million levs will be provided under EU-funded operational programme Regional Development, while the municipalitys contribution will amount to 256,200 levs, the ministry said in a statement. The project includes the development of an e-ticket system, construction of bicycle alleys, and the rehabilitation of the trolley infrastructure among other upgrades. It seeks to motivate 1,600 people to quit daily use of their cars and switch to public transport. Ruse is the seventh municipality to receive a grant for public transport revamps after Sofia, Burgas, Plovdiv, Stara Zagora, Varna and Pleven all signed their contracts last month.

 

Bulgarian Railways BDZ Avert Collapse as Govt Restores Subsidy

Bulgaria's Finance Minister Simeon Djankov has agreed to restore the legal government subsidy of the severely indebted Bulgarian State Railways BDZ,Transport Minister Ivaylo Moskovski announced Monday night. At the end of last week, Bulgarian Finance Minister Simeon Djankov gave theBDZ Holding management one weekend to come up with new reforms to save the company; this happened as BDZ was about to collapse financially as a result of Djankov's decision to withhold the BGN 14 M subsidy for the state railways in July even though BDZ is entitled to it by law. The reason for Djankov's move was BDZ's failure to service two 1995 World Bankloans whose interest has had to be assumed by the Finance Ministry. "The subsidy to BDZ Passenger Services will be fully restored. There will be nolayoffs and no termination of train services," Bulgarian Transport Minister Moskovski told reporters after a meeting between the Finance Ministry, the TransportMinistry, and the BDZ management. Moskovski elaborated on the package of measures and reforms that the three institutions agreed upon in order to patch up the situation at the Bulgarian StateRailways whose total debts near BGN 1 B. "We have agreed to implement as soon as possible all short term measures to reduceBDZ's expenditures in any way possible," he stated. In his words, the first measure to be implemented will be a major legislation amendment to allow Transport Police and the BDZ conductors to fine free-riders. "Keep in mind that the railways can make millions by cutting the gratis trips," Moskovski said. The second measure that is supposed to help prop up the ailing Bulgarian StateRailways has to do with introducing harsher punishments for theft of fuel or spare parts from the railway inventory – a rampant form of crime in Bulgaria. "Third, we agreed with the Finance Ministry that BDZ will make non-cash contributions – buildings or perhaps holiday properties – that can be used to guarantee its payments to the creditor, the World Bank, on this old loan," Moskovski explained. "Let's not forget that this loan dates back to the time of [the Socialist Cabinet of] Zhan Videnov, to those smart gentlemen who God knows how could afford to take any sort of loans. That was the total lack of responsibility back in 1995. So we are now honored to have to pay for that," the Transport Minister argued. He said the government experts are going to work out in the next couple of days what BDZ assets can be used in order to guarantee the servicing of its old loan to the World Bank. He also added that the Bulgarian railway company will have to do away very quickly with any untypical activities by selling its shares in any other companies. "The state subsidy for July will be paid in full by the end of the year, the way it is stipulated by the law. We will work out the details in the next couple of days. There is no reason not to allocate the money," he said. "The reforms in question are not anything new for us. We have been working on them for a while anyway. The matter now is that we hope to have results in the near future," stated in turn BDZ CEO Yordan Nedev. Moskovski also revealed that he has been assured by the Bulgarian Privatization Agency that by the end of the year BDZ Freight Services – the one profitable department of the state-owned company – will be sold. Last week, Bulgarian Prime Minsiter Boyko Borisov offered German company Siemens and German bank KfW to take over BDZ Freight Services in exchange for a debt thatBDZ owes to them for the purchase of 50 Siemes Desiro trains.

 

Bulgarian construction company Glavbolgarstroy wins EUR 51mn contract - report

Bulgarian largest construction and engineering holding Glavbolgarstroy has won the tender for selection of a company for the finishing works at Sofia South Ring Mall, Capital daily reported. Glavbolgarstroy has sealed the deal with the two investors in the project - Greek companies Danaos Development and Fourlis Group, CEO Andrey Tsekov confirmed for the daily. According to reports, the value of the contract is close to BGN 100mn. Glavbolgarstroy was also one of the main contractors in the first phase of the construction and was responsible for the excavations, concrete work and rough construction. 
The investment in Sofia South Ring Mall will exceed EUR 120mn. The trade centre will be located on the Sofia city ring road and is expected to be completed by July 2013. Sofia South Ring Mall will have 70,000 sqm rentable area and will host 200 shops, cinema complex, supermarket, etc. Some 40% of the area has been already pre-leased. 

 

China Sunergy to supply 50MW in PV modules to Bulgarian partner V2M

Solar cell and module manufacturer China Sunergy Co. said it will supply 50MW in multi-crystalline PV modules to Bulgarian partner V2M and its affiliates. The modules will be used for projects in Romania and Macedonia, the financing for which has been secured from Tokuda Bank. China Sunergy held market share of more than 11% in Bulgaria as of end-2011, according to company's estimates. Totally 24.38MW in PV modules for solar parks and rooftop systems have been shipped by the company to Bulgaria since the start of the year. V2M is a solar system developer and EPC contractor, which has recently completed 2.2 MW Orlova Mogila solarpark project near Dobritsch, on Bulgaria's Black Sea coast.

 

Revenues of wireless telecom GloBul up by 1.1% in Q2 2012

Revenues of the country's second-largest wireless telecom GloBul rose by 1.1% y/y to EUR 102.5m in Q2, the company said on its website. The sluggish growth was due to subdued domestic demand and falling retail prices. Service revenues inched down by 0.3% in Q2 due to intense competition. Total revenues for the first half of the year rose even slower - by 0.7% y/y to EUR 199.2mn. The earnings before interest, taxes, depreciation and amortisation (EBITDA) of the telecom increased by 1.3% y/y in Q2 as a result of cost optimisation, Globul said. In H1, however, EBITDA shrank 4.1% as compared to a year earlier. The total customers' base of GloBul in Bulgaria reached some 4.4 million in Q2, up 8% y/y. Postpaid customers rose by 10.3% y/y to 2.7 million (62% of the total clients) and the prepaid customers added 4.4% in Q2. The average monthly consumption rose by 2.4% y/y to 155 minutes per month in Q2 but the average revenue per user dropped by 9% y/y to BGN 14.2 (EUR 7.3). 

 

Varna Port Reports Record Cargo Volume in 2012

Record quantities of cargo have passed through Varna Port since the beginning of the year, the Ministry of Transport, Information Technology and Communications said Thursday. In July alone, the port has processed 1.146 million tones of cargo. A total of 5.350 million tones of cargo passed through the port quays in January-July 2012, which is 16 per cent more than the successful for the state-owned company 2011. An increase has been reported for nearly all types of cargo: cereals, containers, cement, clinker, groats, sugar, coke, ores and concentrated ore, scrap, lumber, vegetable oil and petrochemicals. A decline was observed only in coal imports. The cereal harvest has come up with very good results. A total of 1.302 million tones of grain have been exported through the port, or twice the amount in 2011. An increase in the case of container-contained cargoes was also reported, with 7 per cent more processed to date compared to last year. Thanks to the increase of cargo turnover since the beginning of the year, Port Varna has collected revenue of 31,306,000 leva (+ 16 per cent) and made a pure profit of 2,384,000 leva (+ 72 per cent). The good results allow Port Varna to implement its investment programme full-scale. The investment plans for infrastructure and equipment repairs for 2012 total 3,200,000 leva. A procedure for the purchase of new equipment is also under way, the company having planned 12 million leva of own funds for the implementation of this ambitious undertaking.

 

 

 

 

 

Reported by:

GeorgiIliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea