Business

25 Feb 2020, 12:15 PM

STA, 24 February 2020 - The novel coronavirus COVID-19 outbreak has so far had no profound effect on Slovenia's economy, but problems have arisen in certain areas. Economy Minister Zdravko Počivalšek said on Monday that the government was deliberating mitigation measures, such as subsidies to compensate for shorter working time.

The minister pointed out though that any measures to protect public health must not interrupt the flow of goods because the country's exports depended on that.

After meeting several CEOs whose companies have been feeling the consequences of the outbreak, Počivalšek said that the ministry had been keeping track of the situation and its effect on the economy since the start.

He said the situation in Slovenia had been under control so far, but since the country had no influence on future global developments, it needed to be ready to deal with potential challenges.

Despite no major effects being determined so far, the ministry has decided to act in prevention and consider a future strategy in cooperation with economy representatives. Počivalšek intends to present potential measures at the government session on Thursday.

Problems have so far been detected mainly in tourism and logistics while a drop in sales and orders has been recorded in manufacturing, which could lead to a slowdown in production. The government is considering introducing subsidies for those waiting for work to help the affected companies and avoid lay-offs.

Slovenia introduced this measure a decade ago during the economic crisis and Počivalšek said he hoped it would not need to be introduced again.

Closing the borders would be the country's last resort, he stressed.

Slovenia's tourism has been worst hit by the outbreak of the coronavirus - mostly due to travel cancellations of Asian tourists. The situation could be exacerbated by the virus spreading to neighbouring countries.

Last year, 160,00 Chinese tourists visited Slovenia, while Italy is a key market, with 600,000 guests visiting Slovenia a year.

The Slovenian Tourist Board will step up its promotion efforts in nearby countries and it is also hoping to get EU funds for this purpose.

Meanwhile, the Chinese-owned household appliances maker Gorenje said that the situation was under control, but there was some disruption in supplies in China.

Port operator Luka Koper expects to feel the effects of coronavirus in the next two weeks, with its transshipment from or to China accounting for 30% of its total transshipment.

All our stories on cornonavirus and Slovenia are here

25 Feb 2020, 11:06 AM

STA, 25 February 2020 - A company in Chinese ownership that used to lease the Maribor Airport plans to file a damage suit against the state after it terminated the lease in early 2019, whereupon the airport management was turned over to a state-owned consulting and engineering company.

The company, Aerodrom Maribor, said in a press release Tuesday it will demand EUR 2.1 million in damages, the equivalent of the lease payments for the duration of the agreement, plus costs and lost profits.

The lawsuit will claim that the state dragged its feet on the adoption of a zoning plan that would have allowed the Edvard Rusjan Maribor airport to extend the runway.

Aerodrom Maribor will claim that after the company terminated the lease, the state engaged in violations of the law by continuing to use real estate at the airport that remains in the ownership of Aerodrom Maribor.

Consequently, they will demand the erasure from the land register of an easement on the property that they say the state entered into the records based on a contract that never took effect.

Aerodrom Maribor also accuses the state of continuing to deceive potential investors by stating in a recent call for public-private partnership that a zoning law was in the making.

"It appears the state continues with its contentious conduct - by misleadingly attracting new investors willing to invest in the Maribor Airport in the conviction that the state will fulfil its promises," the company said.

After the lease was terminated, the management of the airport was entrusted to the state-owned firm DRI, which also hired all workers.

The move was designed as a stop-gap measure to keep the airport open until a new operator is found so as to prevent a scenario under which it would have to return EU funds: in accordance with the commitments accompanying a EUR 6 million injection of EU funds, the airport must stay open at least until mid-November 2021.

The termination of the lease ended a testy relationship between the state and a lessee that promised investments in excess of EUR 600 million and passenger numbers reaching two million by 2028, figures widely seen as unrealistic considering the location of the airport and nearby rivals Graz and Zagreb.

The company however maintains that its plans had been viable, assuming the state would keep its promises.

Outgoing Infrastructure Minister Alenka Bratušek responded to the development today by arguing the first assessments indicated the plaintiff had absolutely no chance of success.

She stressed that Aerodrom Maribor stopped paying rent almost immediately after she became minister and that it was Aerodrom Maribor that cancelled the lease.

"The ministry had honoured all the terms set down in the contract," Bratušek added, while saying that a kind of promise that the zoning plan would be changed by March 2018, issued in writing by the then Infrastructure Ministry State Secretary Jure Leben, was not binding on the state.

"The relevant institutions will be the ones to judge if this letter entails any commitments for the state," the minister said, while arguing that the Infrastructure Ministry was in fact not authorised for making such zoning changes.

Maribor airport remains virtually abandoned: without a single scheduled flight, it is confined to occasional charter flights and small sports aircraft.

It recorded only 2,700 passengers in 2018, the latest year for which figures are available.

24 Feb 2020, 16:47 PM

STA, 24 February 2020 - The SBI TOP index fell 3.76% to 942.73 points on Monday as the Ljubljana Stock Exchange took its cue from global stock markets as they plummeted amid concerns over spreading coronavirus outbreaks. The issues of port operator Luka Koper, energy company Petrol and pharma Krka were worst hit.

Of the EUR 3.9 million in overall trading volumes, a good million euro was in Krka shares, which lost 4.43% to EUR 73.40.

Luka Koper, which is already feeling the consequences of the novel coronavirus, saw its shares plunge 5.83% to EUR 22.60 and Petrol lost 4.88% to EUR 370.

Insurance shares were also hit with Sava Re shedding 2.97% to EUR 19.60 and Zavarovalnica Triglav closing 2.79% lower at EUR 34.80.

Related: Invest in Slovenia - Meet the Companies in the Benchmark Investment Index, the SBI TOP

All our stories on coronavirus and Slovenia are here

24 Feb 2020, 14:45 PM

STA, 21 February 2020 - Slovenian banks generated a combined pre-tax profit of EUR 597.4 million last year, which the central bank says is the highest pre-tax profit on record. The figure is up 12.5% from the year before.

Profit after tax rose by 8% last year to EUR 534.9 million, while the banks increased their total assets by 6.3% to EUR 41.2 billion, the latest report by the central bank shows.

Net interest revenue rose by 1.6% to EUR 682.7 million and non-interest revenue increased by 19.1% to EUR 573.4 million.

The banks' bottom line was positively affected by net release of impairments and provisions. The pre-tax return on equity was 12.3%. Costs rose by 5.6% to EUR 706.8 million.

The growth in lending to the non-banking sector slowed down in December to 5.8% year-on-year, mainly because of a slowdown in corporate loans.

"The volume of loans to companies decreased by EUR 262 million in December, the most since 2016, and is partly attributable to the maturity of major loans agreed mid-last year," Banka Slovenije said.

Year-on-year growth in housing loans stayed at 5.8% in December. "After two distinctively above-average months the net monthly growth in those loans, at EUR 23 million, was lower than the average for 2019, at EUR 29 million."

The growth in consumer loans, at an average rate of 11.7% in 2019, slowed down to 8.9% year-on-year in December following the central bank's restrictions on consumer lending.

"An increase in the volume of consumer loans in October was followed by a decrease in November and December by EUR 15 million and EUR 21 million, respectively," says the report.

In the last quarter of the year, housing loans increased by EUR 105 million and consumer loans rose by EUR 14 million, which compares to EUR 64 million and EUR 69 million, respectively in 2018.

"We assess that the changed trends in retail lending were partly affected by the implementation of the decision on macro-prudential restrictions on retail lending in November," said the central bank.

However, it added that it was premature to draw any conclusions on the effects of the measure, because it was necessary to take into consideration non-typical conduct by banks and borrowers in anticipation of the measure, and after its implementation, delays in loan drawing and the effect of holidays and season.

Banks also continued to reduce exposure to non-performing loans last year; these decreased by EUR 128 million in December to one billion euro, and their proportion in total exposure to 2.2%.

The non-banking sector's deposits in 2019 increased by 7.2%, the annual growth since 2014. In December, household loans increased by 8.7% year-on-year, which compares to 11-month average 7.5%

The growth in corporate deposits have been slowing down since mid-2018; in December it decreased by 0.4% year-on-year.

21 Feb 2020, 09:38 AM

STA, 20 February 2020 - The government has adopted a decree establishing a public company which will be the sole provider of maritime piloting services in the port of Koper, and which will be operated by Slovenian Sovereign Holding (SSH), the state asset custodian.

Under the decree, maritime piloting in Slovenia's sole maritime port will be provided as a public utility service and the government will be able to price the service on its own.

The service is currently provided by the private company Piloti Koper, whose workers threatened the management with a strike in early 2019, demanding greater safety at work through additional hirings and pilot boats, as well as higher wages.

The government said after Thursday's correspondence session that it wanted to "provide undisturbed and permanent maritime piloting service, which is currently provided as a monopolist activity on the market, and avoid navigation safety risks, pollution and economic damage".

The decree was adopted after SSH approved at the beginning of the month the annual maritime piloting management plan, drafted based on a government decision from last summer.

The plan was prompted by "risks related to the existing manner in which the service is provided," the government said, adding that maritime piloting was the responsibility of the state.

The Ministry of Infrastructure said at the beginning of February that the maritime code had been stipulating since 2010 that the state must establish a public company which would perform such service under a concession contract.

"The ministry is thus realising the legislative provision which has not been implemented yet," it told the STA at the time.

The government decree follows warnings about two employees of Piloti Koper who have pointed to the difficult working conditions and staff shortage receiving contract termination threats.

The trade union of crane operators at Luka Koper has also warned that the management of Piloti Koper, despite the strike-averting agreement reached in April 2019, continues repressing, mobbing, harassing and mistreating employees.

The company responded by saying that the developments did not affect the quality, safety and continuity of the service, and that the trade union was only trying to create an alleged state of emergency at the port of Koper.

19 Feb 2020, 15:42 PM

STA, 19 February 2020 - As of today, Slovenian companies are able to do business on Amazon Europe, which comes after a delay as the US tech company had to make technical adjustments to include Slovenia among supported countries, the Slovenian Ministry of Economic Development and Technology has announced.

The start of operations for Slovenian companies on Amazon Europe had been announced for last year, but the ministry said that the deadline has been moved forward in order to provide better user experience.

Last year the ministry worked intensively with Amazon to enable Slovenian firms to do business on Amazon Europe's e-commerce platform as soon as possible, it added.

The ministry said last April that the Amazon Europe platform would be enabled for Slovenian companies soon, but then said at the end of August that the operations would start in November 2019.

"Amazon had envisaged that all required technical solutions will be implemented in the third quarter of last year, but there was a delay in order to establish a better user experience for the participating companies."

The ministry has called on all interested companies to utilise the new e-commerce channel to place their products on the market, labelling Amazon the largest such channel in the world and an exceptional opportunity for Slovenian companies.

19 Feb 2020, 11:19 AM

STA, 18 February 2020 - The business newspaper Finance has reported that the energy company Petrol will acquire E3, the subsidiary of the power distributor Elektro Primorska which is one of the largest electricity sellers in the country. The acquisition would bring Petrol's share on the electricity retail market up to 20%.

According to Tuesday's report in Finance, the sale has been approved by the supervisors of Elektro Primorska, and the contract is expected to be signed by the end of February.

Petrol responded with a posting on the website of the Ljubljana Stock Exchange saying it had been chosen as the most favourable bidder to buy E3 and was continuing talks on the company's acquisition.

Finance reported in its online edition that Petrol would pay roughly EUR 15 million for E3. The value of the deal is not known officially.

Elektro Primorska distributes electricity in south-western, western and north-western Slovenia, covering around 22% of the country's territory.

It had decided to sell the electricity retailer E3 because Elektro Primorska provides a public utility service and must not finance commercial activities, Finance explained.

The buyer of the subsidiary will have to meet certain conditions, including preserving the brand, the current number of employees and the seat in Nova Gorica, and further developing the company.

By selling E3, Elektro Primorska will get out of the electricity retail business, and meet one of the formal criteria for obtaining concession for a system operator for the distribution network in the region of Primorska.

In the past, the plan was to merge the energy distributor ECE and E3 under the wing of the state-owned power utility HSE, but it failed as the market regulator said this would violate market concentration rules.

Elektro Primorska continued with the procedure to offload E3, with Gen-I, Petrol and HSE submitting bids, and the fuel retailer being selected as the most favourable bidder.

E3 has a 11% market share in Slovenia, and an even higher, 15% share, in the sale of electricity to households. This makes it the fourth largest electricity retailer in the country.

According to Finance, the acquisition brings Petrol's share on the electricity retail market up to 20%, while its market share in the supply of households will reach almost 25%.

18 Feb 2020, 17:23 PM

STA, 18 February 2020 - The Trade Union of Journalists and the Journalists' Association (DNS) issued a protest on Tuesday against the ongoing layoffs at Delo, the largest newspaper publisher in the country. The two organisations say the management is abusing social dialogue and demolishing the newspaper and Slovenian journalism.

The first pink slips were issued at Delo on Tuesday as part of a programme that last envisaged 11 layoffs along with 94 contract terminations tied to a new contract offer, the press release says.

The trade union and DNS claim the management is laying people off in a way that is at odds with the law and social dialogue requirements.

They said that 16 workers had already left by mutual agreement in fear of layoffs before 15 January, meaning that not 11 but 27 workers will end up leaving.

Thus, the leading media company in the country in the field of printed media will have shed a quarter of its workforce within three years, the two organisations said, noting that Delo has practically given up on its entire network of correspondents.

Delo, which first announced the latest layoffs last October when it highlighted a drop in sales of newspapers and magazines, and advertising revenue, confirmed it had laid off seven journalists and photographers today.

It however rejected the accusations, saying the Trade Union of Journalists as well as the Pergam trade union confederation had been included in the talks.

The management tried to consider social criteria to the greatest extent possible and adopted a number of measures to mitigate the consequences of the layoffs, Delo said, while arguing reorganisation was inevitable.

As for the reproach that the paper and access to quality information were being undermined, Delo said its workforce was still larger than envisaged by international standards and that concerns that content would suffer were unjustified.

Securing a sustainable business model in the changing situation in the media market, especially for printed media, requires adjustments and this must not be seen as something that undercuts the social role media play in democracy.

Delo already said in October that new media technologies and reading habits, which changed drastically in the last decade, affect media operations. It adding that printed media sales were dropping globally, while people's readiness to pay for on-line media contents remained low.

At the time, Delo employed 322 people, of whom 150 were journalists.

The circulation of papers issued by Delo - its namesake broadsheet, weeklies Nedelo and Nedeljske Novice, tabloid Slovenske Novice, and magazines Ona+ and Suzy - dropped by almost 2,000 a paper on average in 2018.

The most popular is Slovenske Novice, which was issued in 48,516 copies a day on average in 2018, which compares to 53,404 in 2017.

The circulation of the broadsheet Delo dropped from 27,116 to 25,512 in 2018, Delo's audited business report suggested.

The publisher Delo recorded EUR 34.9 million in net sales revenue in 2018, a 5% drop from 2017. Net profit shrunk by 46% to EUR 598,000. Operating profit stood at EUR 857,700, which is 30% less than the year before.

18 Feb 2020, 12:11 PM

STA, 18 February 2020 - With the acquisition of the logistics company Intereuropa finalised, the national postal operator Pošta Slovenije plans to further expand on the markets of the Southeast Europe and make EUR 195 million in investments in the next six years.

The company said on Tuesday, after its strategic development programme through 2025 was recently confirmed by Slovenian Sovereign Holding, that EUR 457 million in revenue was expected to be generated as early as this year.

The new strategy takes into consideration the steep growth of global e-commerce, technological progress, changed habits and expectations of users and liberalisation of postal service market, which puts an emphasis on modern technologies, digitalisation, automation and e-commerce.

Boris Novak, the chairman of the state-owned company, said that Pošta Slovenije would focus its logistics and parcel services on the markets of the Southeast Europe, which was expected to result in further growth of the entire group.

One of the key points of the development programme, which is expected to secure balanced growth and profitability over the next six years, is further expansion in Southeast Europe, which was made possible with last year's acquisition of Intereuropa.

The plan envisages a total of EUR 195 million in investments until 2025 in Pošta Slovenije and Intereuropa, which employ a combined 8,000 people. The bulk of funds will go for automation and digitalisation in postal logistic centres and in transport, as well as for expanding capacities.

"We will also invest a lot in energy efficiency and sustainable development, both in terms of the car fleet and energy efficiency of the network and buildings," added assistant director Vesna Kos Tomažič.

The company will continue to optimise the postal network, and expects that its network at the end of 2025 will feature a combination of its own postal offices, franchise offices, self-service parcel terminals and other solutions.

Pošta Slovenije wants to become a leading provider of parcel distribution services in Slovenia, and it plans to generate more than half of its revenue with logistics and parcel services as early as this year.

16 Feb 2020, 10:06 AM

Ex-Yu Aviation reports that events surrounding last year’s collapse of Adria Airways are now under investigation by the Slovenian police, who are looking into suspected abuse of office and fraud. Adria was last owned by a Luxembourg based German fund, 4K Invest, which liquidated a number of affiliated companies after the carrier’s collapse, making investigations of the circumstances more complicated. What’s more, 4K itself has closed its website and cut off its phone lines, as well as disappearing from business registries in a number of companies

The whole story is worth a read, and although no specific allegations are being made yet by the police, there are enough odd facts and suspect actions to raise questions as to whether 4K was ever sincere in its wish to run Adria Airways, and why the Slovenian government did not choose to find a strategic partner within the aviation industry.

All our stories on Adria Airways are here

14 Feb 2020, 12:29 PM

STA, 13 February 2020 - Bia Separations, a world leader in the development of purification processes for biologics, in particular for gene therapy, is launching a EUR 6 million investment into expansion of its production facilities in Ajdovščina in March. Major investments are also planned in the US and Canada.

The facilities in Ajdovščina will be five times bigger after the EUR 6 million investment, which will be funded entirely from the company's surplus.

"We will introduce second-generation production lines and the possibility of making products of larger volume. We are creating about 100 new jobs," said CEO Aleš Štrancar about the plans for Ajdovščina.

Construction work is to be completed at the beginning of next year.

The company also plans to build production facilities in its most important market, North America, where Bia Separations has been recording high demand.

The construction of the facility, which will be three- to four-times bigger than the new, expanded facility in Ajdovščina, is expected to start in 2022 and conclude by the end of 2023.

According to Štrancar, the company generates 80% of revenue in North America. "Buyers expect our production of the key products they use in their production of medicines and vaccines to be as close to them as possible and not depend on the extremely unpredictable business environment and the increasingly uncertain transport routes," he said.

The management presented the plans for expansion into North America in detail to US Ambassador to Slovenia Lynda C. Blanchard on Wednesday.

The ambassador invited the company to get in touch with US institutions and offered the Embassy's help in the strengthening and expanding of its presence on the US market.

Last year, Bia Separations completed court-mandated debt-restructuring early and its revenue doubled to EUR 12 million. The plan for this year is EUR 25 million in revenue.

You can learn more about the company on its website

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