Business

06 Mar 2020, 16:19 PM

STA, 6 March 2020 - Certain hotels in Slovenia have been temporarily closed in response to the novel coronavirus outbreak, the head of the Slovenian hotelier association Gregor Jamnik told the STA on Friday, highlighting that the situation was serious, with hotels recording cancellations and few new bookings on a daily basis.

The situation varies according to individual hotels - spas are less affected than accommodation facilities in Ljubljana, lakeside resort Bled and on the coast, said Jamnik.

Currently, hotels in the capital are detecting a 30% decrease in occupancy rate and an even bigger slump in revenue. So far, there is no detailed information provided for other parts of Slovenia.

Apart from closing doors for the time being, certain hotels have already started slimming down their workforce as well, said Jamnik, adding that the revenue lost to the outbreak would be impossible to offset.

Meanwhile, the Chamber of Trade Crafts and Small Business (OZS) warned today that Slovenian small businesses, including hoteliers, coach companies and pub and restaurant owners, were already feeling the ramifications of the coronavirus spread, urging the government to introduce temporary tax exemptions and sick pay subsidies.

Tourist guides expressed concern over the situation as well, listing cancellations spanning the entire tourist season and a looming threat of complete loss of income.

There are currently seven confirmed cases of infection with the novel coronavirus in Slovenia. The outbreak has taken a heavy toll on Italy, one of Slovenia's key tourist markets. The Foreign Ministry advised today against all travel to northern Italy and against non-urgent travel to other parts of the neighbouring country.

Small business group calls for tax relief and subsidies

STA, 6 March 2020 - Small businesses are already feeling the effects of the novel coronavirus spread, shows a recent survey by the Chamber of Trade Crafts and Small Business (OZS) indicating that some 80% of its members experience disruption. The chamber is thus urging the government to introduce temporary tax exemptions and sick pay subsidies.

Among those already seeing a slump in sales and demand are pub and restaurant owners, bus and shuttle companies, and hoteliers.

The survey was conducted between 4 and 6 March and included 233 respondents, who estimate that revenue will be halved in the first half of 2020, said the OZS today, urging tax breaks amid the coronavirus outbreak as well as subsidising paid sick leave for workers on furlough due to the emergency situation.

The OZS proposed additional measures as well, such as allocating funds for keeping companies afloat during the outbreak. "The measures should be adopted as soon as possible since we're already on red alert," said OZS head Branko Meh.

Moreover, OZS pointed to the unenviable situation coach companies have found themselves in since the outbreak, listing cancellations from travel agencies spanning until June and demand dropping by as much as 95%. The chamber highlighted that companies would have to deal with long-term ramifications as well.

The Labour Ministry has already drafted an emergency bill to subsidise pay for workers temporarily sent on furlough. It has announced that it will send the proposal for examination to social partners as early as today so it was ready to be passed should the need arise.

Under the proposal, subsidies would be granted to companies that would be forced to temporarily lay off at least half of their workforce. The workers on furlough for up to three months would get 80% of the average pay for the past three months.

The state would cover 40% of their pay as well as 40% of the pay for the employees under quarantine ordered by the Health Ministry. The remaining 60% would be covered by employers.

The companies claiming subsidies would have to commit to preserve the jobs of the workers on furlough for at least six more months after the start of such temporary lay-offs.

All our stories on coronavirus and Slovenia are here

06 Mar 2020, 09:40 AM

STA, 4 March 2020 - Lotrič Meroslovje (Lotrič Metrology) is the winner of this year's Business Excellence Award conferred by the Ministry of Economic Development and Technology and the SPIRIT agency. The metrology company was also given at Wednesday's ceremony the certificate promoting the EFQM European model of excellence for the next three years.

 This is the second Business Excellence Award for the private company based in Selca, east of Kranj, with the first coming in 2012.

Coming second in this year's selection process was the operator of the Brestanica Gas Thermal Power Plant, which too received the certificate from the European Foundation for Quality Management (EFQM).

The award ceremony in Ljubljana was attended by Economic Development and Technology Minister Zdravko Počivalšek, who said that business excellence should be put in the spotlight, as it was a foundation for competitiveness.

He added that achieving business efficiency and competitiveness was closely related to digital transformation.

"The ministry is establishing a systemic approach supporting companies, with EUR 32 million to be secured through implementing organisations by the end of the current financial perspective," Počivalšek said.

Moreover, the ministry will earmark EUR 12 million for projects aimed at improving the efficiency of operations and sustainable strategic transformation this year.

Ajda Cuderman, the head of the SPIRIT agency, said on the occasion that Slovenia was making progress on international competitiveness rankings, adding that the results could be further improved by introducing business excellence.

Marko Lotrič, the director of the award-winning company, confirmed in a statement for the STA that the business excellence certificate was "key for opening markets".

"This and the fact that we are a family company are the important reasons why business partners pick us," he said, adding that achieving business excellence was a matter of changes in many fields, including leadership and strategies.

Last year, the Business Excellence Award went to the British-owned car industry supplier GKN Driveline Slovenija, following two years during which the award was not conferred.

You can learn more about the company here

06 Mar 2020, 09:30 AM

STA, 5 March 2020 - The Slovenian ultralight aircraft maker Pipistrel has signed a letter of intent with Australian company Eyre to There for the production of the electric two-seaters Alpha Electro. In the first phase 15 aircraft are to be exported to Australia, later the aircraft would be produced there.

Eyre to There would thus become the first producer of electric planes in Australia. It could produce up to a hundred planes a year, Pipistrel told the STA, adding that the deal with the Australian company is still in its initial phase.

A two-seat electric plane is ideal for flight training, Eyre to There CEO Barrie Rogers told the Australian magazine Aviation.

The 250 flight schools registered in Australia are currently using some 3,400 aircraft for training. A quarter of the training is dedicated to take-offs and landing near airports and Pipistrel's aircraft are very much appropriate for this, Rogers said.

05 Mar 2020, 15:34 PM

STA, 5 March 2020 - Slovenia's per capita gross domestic product (GDP) in purchasing power standards reached 87% of the EU average in 2018, which is up two percentage points compared to 2017. GDP per capita is a key criterion for eligibility for EU structural funds.

The Western Slovenia region exceeded the EU average by 5%, while Eastern Slovenia was at 72%, fresh Eurostat data show. This means the country may see an even bigger drop in the amount of cohesion funds it will have available in the bloc's 2021-2027 financial framework.

Having recorded solid economic growth since 2014, Slovenia saw its economy expand by almost 5% in 2017. In 2018 and 2019 growth slowed but was still significantly above the EU average.

The country's performance in GDP per capita relative to the EU average thus improved by two percentage points each in 2016, 2017 and 2018.

The gap between the Western and Eastern Slovenia has meanwhile been deepening. In 2017, Western Slovenia exceeded the EU average by 2%, while Eastern Slovenia reached only 70% of the EU average.

GDP per capita in the whole country totalled EUR 22,100 in 2018 and purchasing power parity (PPS) 26,400.

In Western Slovenia, GDP per capita stood at EUR 26,500 and PPS at 31,600, while in Eastern Slovenia the figures were EUR 18,100 and 21,700, respectively.

The highest GPD per capita in the EU after the UK exited the bloc was recorded in Luxembourg, where it exceeded the EU average by 163%, followed by Southern Ireland (125% above EU average), and Eastern and Midland Ireland (110%).

You can see more of this data, in PDF form, here

03 Mar 2020, 11:37 AM

STA, 28 February 2020 - Luka Koper, the operator of Slovenia's sole maritime port, saw a group net profit plunge by 32% to EUR 40.4 million in 2019 due to a slowdown of global trade. Revenue remained broadly flat at EUR 228.7 million, six percent below plans, the company said on Friday.

Profit before interest, taxes, depreciation and amortisation (EBITDA) declined by over a quarter to EUR 73.1 million and operating profit (EBIT), at EUR 45.3 million, was 35% lower than in the year before.

The volume of cargo shipments declined across the board, with general cargoes and dry bulk hit particularly hard: the former dropped by 16% and the latter by 17%.

Containers, a major category, saw a small drop in terms of tonnage, but measured by unit (TEU), the transhipment declined by 3%. Cars, another major category, saw a 4% drop.

Liquid cargoes are the only category in which the port registered an improvement, with tonnage increasing by 12%.

The company said that the second half of 2019 had been marked by the cooling of the global economy, in particular the automotive industry, electronics and the production of iron products.

Nevertheless, the bottom line is still 5% above the projections.

In line with the expectations, the results were affected by the implementation of a new business model for port services and the levy on transhipment for the construction of a new Koper-Divača railway.

The return on equity was at 10%, 6.1 percentage points down from 2018 but still 0.4 percentage points above plans.

The figures were also affected by the receipts in damages compensation for a crane to the tune of EUR 9.3 million in 2018 and EUR 0.4 million in 2019.

Going forward, the company will face the challenge of the coronavirus outbreak. CEO Dimitrij Zadel has recently said that the company is yet to feel the impact of restrictions in China.

Zadel would not speculate about expected decline in throughput yet, but he did say that transhipment of goods from China represented 30% of the port's total transhipment.

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

28 Feb 2020, 10:22 AM

STA, 28 February 2020 - The insurance group Sava collected EUR 599.3 million in gross premiums last year, which is 9.7% more than in 2018, while its net profit was up 16.7% to EUR 50.2 million, show the unaudited financial results released by the parent company Sava Re on Friday.

The report says that the gross premium growth was contributed mainly by the Slovenian non-life insurance business, which was up 12.2%, and the non-life insurance business in foreign countries (+20.3%).

Sava Re noted that part of this came from an acquisition in Croatia, with the group member Zavarovalnica Sava acquiring outright stakes in the insurers Ergo Osiguranje and Ergo Životno Osiguranje.

The group's operating revenue was up by 10.1% last year to EUR 584.9 million, while pre-tax profit increased by almost 10% to EUR 60.7 million.

Return on equity also increased by 0.8 of a percentage point compared to 2018 to 13.8%.

The management of the reinsurer Sava Re, the parent company in the group, will present last year's results in detail at a press conference today.

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

28 Feb 2020, 10:12 AM

STA, 26 February 2020 - The Slovenian NLB bank announced on Wednesday it had signed an agreement with the Serbian government to acquire the 83% state stake in the bank Komercijalna Banka. The deal worth EUR 387 million is pending regulatory approval and is expected to be finalised in the last quarter of the year.

Announcing the deal signed today between the NLB management and the Serbian government, the bank said the conclusion of the transaction was pending approvals from several institutions, including the European Central Bank and the countries' central banks.

According to the NLB, the purchase price for the 83.23% stake in Komercijalna Banka is EUR 387 million, which will be payable in cash on completion.

The Slovenian market leader added that, in accordance with the Serbian bank privatisation regulations, it was not required to launch a mandatory tender offer for the rest of the shares in the Serbian bank.

The purchase price implies a valuation of EUR 465 million for 100% of Komercijalna Banka's ordinary share capital.

It will be subject to a 2% annual interest rate between 1 January 2020 and closing, with NLB benefiting from the bank's earnings during that period.

Subject to approval of the Serbian central bank, the existing shareholders of Komercijalna Banka will receive a dividend equating to 50% of 2019 net profit up to a maximum of EUR 38 million before closing.

As a result of the transaction, NLB's market share in Serbia will increase to over 12.1% by total assets, making it the third largest banking group in the country, the Slovenian bank added.

"NLB's operations in Serbia will be by far the largest outside of Slovenia," commented Blaž Brodnjak, the CEO of the bank which already operates the NLB Banka Beograd subsidiary.

The Serbian subsidiary, which has 28 offices and which had total assets of EUR 614 million and posted EUR 4.1 million in net profit last year, posted a 29% growth in net loans to customers in 2019, the biggest in the group.

According to the Serbian media, Komercijalna Banka has EUR 3.5 billion in total assets, and last year posted EUR 74 million in profit. The bank has 2,744 employees and 200 offices in Serbia, Montenegro and Bosnia-Herzegovina.

27 Feb 2020, 09:58 AM

STA, 25 February 2020 - The Bank Association has observed a "marked fall" in freshly approved retail loans in the months following the central bank's brake on lending to households, both for consumer and housing loans.

"In the field of consumer loans, the situation has resulted in net repayments - a nominal decline - which increased further in December," the association said on Tuesday.

Data that 13 banks submitted to the association show the number of newly approved consumer loans reduced from 10,816 in September and 13,484 in October to 5,566 in November, 5,009 in December and 6,277 in January.

40% Fall in Housing Loans, 60% in Consumer Loans, After Slovenia Tightened Credit Rules

The number of housing loans dropped from 1,154 in September, 1,701 in October, 1,160 in November, 984 in December and 1,019 in January.

The association did not offer year-on-year comparisons which would eliminate seasonal changes in trends.

The central bank has recently assessed that the implementation of its decision on macro-prudential restrictions on retail lending has partly affected lending trends.

However, Banka Slovenije also said it would be 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.

Central bank data show that housing loans increased by EUR 105 million and consumer loans rose by EUR 14 million in the final quarter of 2019, which compares to EUR 64 million and EUR 69 million, respectively in 2018.

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

Bank Calls for Review of New Loan Restrictions After Dramatic Fall in Mortgages, Consumer Lending

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, the central bank said.

Banka Slovenije imposed lending restrictions to curb excessive consumer lending and cut loan maturity. It expects the lending level to be stabilised to better match other economic parameters and that consumer loans will be directed with respect to their purpose into housing loans even though they are less profitable for banks.

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

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