Business

05 Dec 2019, 15:47 PM

STA, 4 December 2019 - Wind power facilities in the EU satisfied 14% of energy needs last year, up 2 percentage points compared to 2017. Slovenia lags significantly behind in unlocking the potential of wind energy. Despite available grants and investors showing interest, problems arise in particular when a location for a new wind farm must be found.

There are only two operating wind turbines in Slovenia - a 2.3-megawatt and 0.9-megawatt installation, both in the south-west near the Karst plateau Nanos, and investors of both had faced resistance by certain local communities while obtaining permits and putting the turbines in place.

Some locals were concerned over potential health issues caused by low frequency noise emitted by wind turbines. They were also bothered by wind farms changing the landscape.

Last year, the output of the two wind turbines was equivalent to just 0.04% of Slovenia's energy consumption, Energy Agency director Duška Godina has told the STA. They generated six gigawatt hours of electricity, a tenth of one percent of total renewables production in the country.

The statistics show Slovenia ranks near the EU's very bottom in exploiting wind power resources, only Malta and Slovakia are worse.

On the other hand, countries excelling at tapping this potential are Denmark (41% of energy consumption), Ireland (28%) and Portugal (24%).

Slovenia's wind energy potential not ideal

Even though Slovenia seems to be far from a perfect destination for capitalising on wind energy - the country lies in central Europe, far from the wind-swept Atlantic Ocean and not close enough to the vast Pannonian Plain - research shows it is still windy enough to effectively implement wind power technology, according to the Wind Energy Association.

The Infrastructure Ministry agrees that the wind energy potential in Slovenia is not ideal or comparable to other countries', but the potential is there and if tapped, could be economically beneficial.

It has told the STA that "this has been proved by wind measurements and the investment programmes which have already been created by potential investors so far", adding that Slovenia has "a lot of opportunities for tapping the wind energy potential".

Interest in building wind farms exists

There are currently eight national spatial plans for wind farms in the process of development at the Environment Ministry, of which three wind farms are planned in western Slovenia and five in the east.

All the projects are in the preparation phase; however, some local communities are already up in arms, making obtaining permits more difficult.

Renewable energy resource projects also also supported by the Energy Agency's existing feed-in tariff scheme. A total of 166 projects have been selected in four open calls published so far, of which 62 are wind farm projects totalling 215 megawatt.

Permits, wind farm location main stumbling blocks

According to Godina, the wind turbine siting stage is when things get complicated. During the last open call for new renewable projects for the feed-in tariff scheme, building permits were added as a condition for applying to ensure that the submitted projects were more viable.

The move resulted in applications for major wind projects drying up, said Godina.

She urged the state to promote a broad social consensus on the siting of renewable energy infrastructure and adopt measures that would ease and speed up administrative procedures.

According to the Infrastructure Ministry, the National Energy and Climate Plan, which is in the making, will back such initiatives. "If only one wind farm comes to fruition, it would prove it is possible to do it in Slovenia and serve as a great encouragement for future investors."

05 Dec 2019, 11:36 AM

STA, 4 December 2019 - Economist Velimir Bole has assessed that the Slovenian economy is much more resistant to new shocks than it was before the last economic crisis, but that the price for that is a somewhat lower growth. On the other hand, challenges remain when it comes to competitiveness related to a development breakthrough.

At Wednesday's presentation of Outlook 2020, a publication released by the Manager Association, Bole noted that companies and financial institutions had reduced their debt significantly. Households remain among the least indebted in Europe, and the state is under the eurozone average despite a high debt growth.

Overall, Slovenia is almost three times less indebted than the eurozone on average and is less indebted than the economic superpower Germany, he added at the event at the Ljubljana Faculty of Economics, hosted by the newspaper Delo.

According to Bole, indicators in public finances, balance of payments and price competitiveness have improved after the crisis significantly more than in the eurozone as a whole. Macroeconomic stability is much higher than before the crisis and is approximately at the level of Germany.

The resistance of the economy is thus significantly higher, but this does not come without opportunity costs, he said, adding that two of these were slower growth and a higher saving rate.

If there is no major global shock, which cannot be excluded, Bole believes that growth could accelerate again in the third quarter of next year, but one of the main questions is to what extent domestic consumption will be reduced in 2020 due to the slow-down in the manufacturing sector.

Arturo Bris, the director of the International Institute for Management Development (IMD), meanwhile said that despite the higher resistance of the Slovenian economy to a potential crisis, there were challenges regarding competitiveness.

The Lausanne-based institute manages an internationally-recognised economic competitiveness list, on which Slovenia places 37th in overall competitiveness, 32nd in digital competitiveness and 31st in terms of talent.

Bris pointed to what he believes are Slovenia's two major problems - the (in)ability to attract foreign direct investments, with the reason being unfavourable tax policy, and the rigid and restrictive regulation.

Slovenia's rating in both factors is very low, while it is very high in terms of social cohesion and security, he added.

While Slovenia is in a very good position in terms of digital competitiveness, there are two weaknesses - inadequate regulation for development of digital economy and companies not being as ready to introduce technological novelties as citizens.

When it comes to the availability of qualified workforce, Slovenia's problems are the inability to attract foreign talent despite good conditions and high quality of life, and educated and talented young people leaving the country.

According to Bris, the problem in Slovenia is not the framework for competitiveness or fairness of the system, but inefficiencies in the system. One of the problems is businesses distrusting the state, he said, adding that businesses should cooperate with the public sector, as this was the only way for major changes.

He admitted that the observations of Slovenian business executives participating in IMD surveys did not necessarily always reflect the reality. This is a problem and this gap needs to be closed, otherwise the country's reputation will be worse than it actually should be, he added.

04 Dec 2019, 14:01 PM

STA, 3 December 2019 - Turkish builder Cengiz has announced it has won the contract to build the Slovenian section of the second tube of the Karavanke motorway tunnel, as the motorway company concluded talks with three bidders.

"We won," Mohamed Cengiz, the main negotiator for the Turkish company, told reporters after the end of the talks, adding they were waiting to start working with Slovenian subcontractors as soon as possible.

Unofficially, the talks ended after the first round on Tuesday, but DARS is yet to announce its final decision, when it will also reveal the latest offers made by the three bidders.

Apart from Cengiz, DARS also invited to talks a consortium of Slovenian companies Kolektor CGP and Riko and their Turkish partner Yapi Merkezi, and a consortium including Implenia Österreich, Implenia Schweiz and CGP Novo Mesto.

According to information after the second call for bids, Cengiz offered to build the eight-kilometre border tunnel with Austria for EUR 99.6 million, while the other two bidders made estimates of EUR 121 million and EUR 121.5 million.

Once the selection has been endorsed by the DARS's management and supervisory board, the decision will be handed to the bidders, who have eight work days to file potential complaints, the last possible in the long bidding process.

Under the best-case scenario, the decision could become final by the end of the year and DARS could sign a contract with the selected builder after the New Year's. A complaint would protract the process for about a month.

Nevertheless, Cengiz expects to be able to sign the contract as early as this year. "I think we can sign by the end of the month," said Mohamed Cengiz, son of the Cengiz owner, who is responsible for foreign markets.

Rudolf Knopf, executive director of Implenia Österreich, commented on the talks by saying that they had tried their best with the Slovenian partner. "But we didn't succeed because there is no chance you can beat the Turkish company".

Representatives of Kolektor CGP, Riko and Yapi Merkezi would not make comments after the talks.

Nor would Cengiz and Knopf reveal what their latest offers were, with Cengiz saying that this would not be right before DARS announced its decision.

Unofficial information indicates that Cengiz lowered its bid by a million euro in the talks to just above EUR 94 million. The opening price at the negotiations is said to have been lower than the last offered because it did not include certain items.

Kolektor CGP, Riko and Yapi Merkezi reduced their estimate by about EUR 17 million, and Implenia Avstrija and the partners by EUR 6 million, according to unofficial information obtained by Delo.

DARS first published a public call to pick a contractor for the project in December 2017, but the process has been delayed by continuous appeals.

04 Dec 2019, 09:30 AM

STA, 3 December 2019 - The central bank has warned that there are "substantial downside risks" in budgetary plans for 2020 and 2021 that the National Assembly confirmed in a revote this week.

The risks "stem from a possible acceleration of the slowing of economic growth," Banka Slovenije said in a report on macroeconomic trends released on Tuesday. "There are few signs of faster growth towards the end of the year."

For 2020 budget expenditure is capped at EUR 10.36 billion and revenue at EUR 10.77 billion, making for a surplus of EUR 415 million. In 2021 expenditure will rise to EUR 10.45 billion and revenue is projected to climb to EUR 11.1 billion, with the surplus swelling to EUR 657 million.

While the budgets were slightly corrected after the government's forecaster, IMAD, revised its growth projections downward, they still project the highest outlays the government has ever had at its disposal, as revenue in recent years has been buoyed by brisk economic activity and employment growth.

But much like the Fiscal Council, the fiscal policy watchdog, the central bank warns that export growth is slowing due to uncertainty over global trade, while construction, another engine of growth, is weakening.

At the same time, business and consumer sentiment are deteriorating, and even though employment growth remains robust, underpinning strong domestic spending, figures from the construction sector indicate employment growth may be stalling.

02 Dec 2019, 15:55 PM

STA, 2 December 2019 - The General Court of the European Union will start with oral hearings Tuesday related to Slovenia's legal action against the European Commission for granting Croatia a derogation enabling it to use Teran, the name of a red wine protected by Slovenia.

Hearings at the General Court are similar to those at the European Court of Justice. Each side presents their views and then judges ask questions.

The hearings will be similar to the July oral hearing in a case that Slovenia has brought against Croatia due to Croatia's failure to implement the 2017 border arbitration award.

However, judges of the General Court usually ask more questions and the questions are more detailed, and there is also no advocate general.

A ruling is expected a few months after the hearings, the court has said.

The hearings will be open for the public but may not be recorded. A panel of five judges will be ruling in the case, and their identity will be revealed on Tuesday.

EU institutions and member states can express their support to either of the parties involved but other than Croatia no other countries are expected to present their views on the matter.

Slovenia brought the legal action on 15 September 2017, protesting against the Commission's decision to enable Croatia to use the name Teran for a grape variety for the designated Hrvatska Istra (Croatian Istra) wine label under certain terms.

Slovenia, which will be represented by the State Attorney's Office and German lawyer Roland Knaak, argues that the derogation is unlawful and that it would cause economic damage to Slovenian producers of Teran.

Slovenia will argue that the delegated act on Teran, which took effect on 21 July 2017, is null and void because it runs contrary to the principles of EU law, according to the Ministry of Agriculture, Forestry and Food.

The ministry claims that the EU-proposed condition that the name Hrvatska Istra on the wine label is bigger than the Teran name is misleading for consumers, because they can wrongfully assume that this is the protected Slovenian Teran wine.

During the procedure to adopt the delegated act, Slovenia had been presenting numerous remarks related to the procedure and had been arguing that Croatia should have raised the Teran issue during its EU accession talks, before joining the EU.

In a response to Slovenia's action, the Commission reiterated that the delegated act in no way affected the status of the Slovenian protected wine and that the labelling conditions had made sure that consumers would not be misled.

The dispute over Teran broke out in April 2013 at a meeting of EU agriculture ministers in Luxembourg. After Slovenia removed Croatian wine that was sold under the name of Teran from store shelves, Croatia protested and called for a joint cross-border protection of Teran.

The European Commission said at the time that Slovenia had protected Teran as a Slovenian wine on the EU market, so no Croatian wine can be sold under that name, and that Croatia had not opposed to Slovenia's move.

But as the Commission's leadership changed in 2014, rumours started that the Commission was planning to adopt a delegated act on Teran in line with an agreement made during Croatia's accession talks, which Slovenia knew nothing about.

In December 2016, the Commission decided to grant Croatia a "limited exception" in the case of Teran, meaning that the country would be allowed to use the name for wines justifying existing labelling practices.

Subsequently, Slovenia has brought legal action against the Commission. After the General Court delivers its ruling, both parties will have the right to appeal to the Court of Justice of the European Union.

02 Dec 2019, 08:22 AM

STA, 29 November 2019 - The Velenje-based household appliances maker Gorenje, owned by the Chinese conglomerate Hisense, will finish 2019 in the red but hopes to return to profit next year. According to chief executive Lan Lin, this will require a change of mindset, and it will determine whether a TV production facility will be built in Velenje.

Gorenje last year posted a group net loss of EUR 37.7 million, and chief managing director Lin, who is also the chairman of Hisense International, expects it to be in the red at the end of this year as well.

While refusing to reveal any figures, he said Gorenje's business was worst at the beginning of the year but was improving recently due to measures to improve efficiency.

"The first quarter was very bad. In March, things started changing, and a turnaround occurred in May, then July and August were worse because of collective leave, and we were profitable again in September and October," he said.

According to Lin, Gorenje is doing well in Eastern Europe, while in western Europe, especially in Germany, it is considered a low-end brand. "We wish to change that next year. We must raise quality, and our key goal is to raise the prices Gorenje is getting on the market by at least 10%."

Revenue is expected to rise by 5.5% this year and by at least 10% next year.

Western Europe will be crucial, and Gorenje will also start selling in its network Hisense's products such as TV sets, smartphones, air conditioning and refrigerators on European markets and the Commonwealth of Independent States.

Meanwhile, Hisense will start marketing Gorenje and its Asko brand in the Hisense's sales network across Europe and overseas.

A major boost to the group's revenue is expected to be provided by the Chinese market, where Gorenje and Asko are well received. The premium brands Asko and Atag are on sale in more than 200 partner stores.

Lin expects the group to return to profit next year. "We are counting on some EUR 15 million in profit," he said, adding that the group's problems had been detected and would be tackled "step by step".

One of the measures will be to rejig the workforce, with Lin noting that "every 100 production workers support 40 people in sales, marketing, legal and finance ... while the average in our industry is 20."

According to Lin, Gorenje's profitability is crucial for all future investments. Next year some EUR 45 million should be invested in the development of new products, tools and production lines. "If we don't do that, our products will no longer be competitive in five or ten years."

The group's efficiency is also to be boosted through the separation of production in Velenje from administration, which is to relocate to Ljubljana as Hisense Gorenje Europe. "We must become leaner and integrate into Hisense."

Lin thinks Ljubljana will be a better location for attracting talent from all over Europe and is also more appropriate for meetings.

Gorenje also to plans to build a new TV manufacturing plant in Velenje that would employ 1,000 workers but this will depend on the business results, Lin warned.

The plans for the factory are ready but shareholders have put the project on hold because they want efficiency improvements first, he explained. "If all goes according to plan we will definitely realise this project."

Lin thinks the government will provide a financial incentive for the project but said it would not be substantial and noted that companies should not rely too much on government support.

He also revealed that through Asko, talks were under way for the takeover of German TV manufacturer Loewe and that the outcome of the talks should be known in the next few days.

If the takeover is carried out, the TVs would be produced in Velenje.

Asked why Gorenje is reducing its labour force if a new factory is planned, Lin said they were laying off people whom they did not need at the moment.

He would like the work for 100 people to be conducted by 80 people in the future, and they would receive extra pay for the extra workload, while the rest would work at the TV factory.

The Gorenje management is also in regular contact with trade unions, he said, adding that it had proposed a new round of talks only a few days ago. The open issues include a pay raise and the payment of a Christmas bonus.

The group plans to continue selling non-core assets, including some profitable companies, he said.

Hisense remains one of the main UEFA sponsors and next year Gorenje will be promoted at the European Football Championship in what will be its first promotion at such a level, Lin said.

All our stories on Gorenje are here

29 Nov 2019, 10:50 AM

STA, 27 November 2019 - Abanka, Slovenia's third largest bank which was privatised in June, generated a net profit of EUR 42.5 million in the first nine months of 2019, a 20% year-on-year decrease. In the low interest rate environment, net interest income totalled EUR 45 million, which is on a par with last year's nine-month result.

Net interest income edged up 0.3% and interest income increased by 1.0%, while interest expenses grew by 7.3% or EUR 0.4 million nominally, show the business results released on Wednesday.

Net fee and commission income for the bank, which has been sold to the US fund Apollo, amounted to EUR 30.3 million, while operating expenses amounted to EUR 50.4 million.

On 30 September 2019, Abanka's total assets amounted to EUR 3,769.8 million, while its market share in terms of total assets stood at 9.3%.

"The bank has high liquidity and a strong capital base," the report says. On the reporting date, Abanka's total capital ratio stood at 23.5%.

Loans to non-bank customers totalled EUR 2.03 million at the end of September, up 4.7% or EUR 91.1 million compared to the end of 2018.

Loans increased as a result of loans to corporate customers and sole proprietors rising by 4.4% or EUR 46.3 million and those to retail customers by 4.1% or EUR 36.8 million, the bank wrote.

Deposits from non-bank customers amounted to EUR 3.02 million, an increase of 2.9% or EUR 85.9 million. Deposits from retail customers increased by 4.6% or EUR 95.6 million nominally and deposits from corporate customers and sole proprietors went down by 1.1% or EUR 9.7 million.

The Abanka group continued to actively reduce non-performing loans. These decreased by EUR 25.8 million, while the share of non-performing loans was down 1.0 percentage point to 3.6%.

Net impairment and provisions cancelled amounted to EUR 14.9 million, while in the same period of 2018 the figure stood at EUR 15.6 million. In the reporting period, the bank cancelled provisions amounting to EUR 11.1 million and impairment of EUR 3.8 million.

"The bank will continue with the optimisation of its operations, the accelerated development of digital channels and the digital work environment, while ensuring safe, stable and profitable operations," the report says.

Abanka, one of the banks bailed out in 2013 and 2014, was sold in June by the state to the Maribor-based NKBM bank, which had also been in state ownership before being sold to Apollo. The transaction, which entails the merger of the second and third largest banks in the country, is expected to be completed by the end of the year.

29 Nov 2019, 09:44 AM

STA, 26 November 2019 - The SPIRIT investment promotion agency honoured top foreign investors in the country Tuesday evening, presenting awards to electricity meter maker Iskraemeco, ventilation company Systemair and maker of LED traffic displays Swarco Lea.

FDI Award Slovenia was given out in three categories. Iskraemeco was named the best among big companies, Sytemair won the award in the long-term presence category, and Swarco Lea got the smart products and services development award.

Established in 1954, Iskraemeco was taken over by Egyptian group Elsewedy Electric in 2007. The company was in the red at the time of the takeover, while last year it generated EUR 126 million net sales and EUR 8.8 million in net profit.

The Kranj-based firm employs more than 700 people, generating value added of EUR 48,000 per employee, SPIRIT said in its reasoning.

Sytemair, based in Maribor, is a subsidiary of Swedish Systemair AB group, a global leader in ventilation with 50 subsidiaries around the world.

The company in Slovenia employs more than 100 people, making smoke extract fans and explosion proof fans, as well as AC modules. Its net profit reached nearly EUR 1.4 million, while its value added per employee is at EUR 54,000.

The Lesce-based Swarco Lea, is one of the fastest growing subsidiaries of Austrian group Swarco. It specialises in LED traffic panels and generated EUR 7.7 million in revenue last year and EUR 1.1 million in net profit.

It employs 31 people, reaching a value added of EUR 75,000 per employee.

28 Nov 2019, 12:30 PM

STA, 27 November 2019 - The Association of Slovenian Brewers (Združenje slovenskih pivovarn), featuring the country's largest brewer Pivovarna Laško Union, 20 microbrewers and the Slovenian Institute of Hop Research and Brewing, has joined the Chamber of Commerce and Industry (Gospodarska zbornica Slovenije, GZS).

The association, active since 1997, will be part of the Chamber of Agricultural and Food Enterprises at the GZS.

Its members confirmed the membership in the GZS in August and met on Wednesday for the first formal session as members of the national chamber of commerce, electing Jernej Smolnikar of Pivovarna Laško Union as its chair.

Smolnikar said that the association would continue to support initiatives which strengthen the role of brewers in the field of food safety, awareness-raising about responsible drinking of beer, and self-regulation.

Since he believes that the future in beer brewing is in pursuing sustainable development guidelines, the association will promote the development of good practices in this field.

Andrej Sluga of Reservoir Dogs, who was also elected in the governing board along with Albin Hozjan of Over Mura, said that the move provided small brewers with a new dimension in terms of cooperation.

The association added in a press release that it would be looking for the best partners for cooperation in development and healthy attitude towards society and the environment.

All our stories on craft beer are here

28 Nov 2019, 10:14 AM

STA, 27 November 2019 - While the government has not decided yet whether to establish an airline in full or partial state ownership two months into the receivership of the former flag carrier Adria Airways, civil aviation analyst Alen Šćuric has assessed that it would be a strategic move by the state and that the time is running out.

While many in Slovenia are opposed to the idea, the Croatian analyst told the STA on Wednesday it was in strategic interest of the state.

It was the government who mentioned the possibility to establish a new airline, either in full state ownership or in cooperation with a strategic partner, as a way to secure connectivity between Slovenia and the rest of the world.

After the German-owned Adria Airways went bust in early October, the finance and economy ministries are still waiting for the Bank Assets Management Company (BAMC) to present calculations on the feasibility of establishing such a company.

According to unofficial information, Economy Minister Zdravko Počivalšek is practically the only one to promote the idea to establish such an airline, as the aviation circles have expressed doubt about the possibility to implement such a plan.

Asked to comment on what is going on with the plans, Prime Minister Marjan Šarec said that a decision was yet to be made, as experts were still "examining the matters". "If a company is to established in any form, it would not be possible without an external partner," he added.

Šarec also noted that the potential new airline would initially operate with a loss by default. "When final numbers are known, we will have to take a look and see whether we are prepared for going into it or not," he said, adding that airline business was very risky.

What is being questioned by experts is the ability of a Slovenian air carrier to compete with the established airlines which fly to Ljubljana's airport, with Adria's flights and connections being already almost fully replaced.

As the number is expected only to increase with the summer schedule, Šćuric is inclined to the idea to establish a national carrier, noting this is in Slovenia's strategic interest.

The needed financial investment is huge, but he believes that the matter should not be looked at from a short-term perspective, as airline transport services all the other sectors of the economy and brings benefits not only to tourism and the hospitality sector.

As an example, Šćuric pointed to business guests who could be distracted from coming to Slovenia by the expected longer times of travel and higher costs related to the use of other airports.

He is surprised that the Slovenian government had "no action plan", although it had been clear that Adria would end up in receivership, and he believes that the government should have established a "new company the day after the receivership".

All our stories on Adria are here

27 Nov 2019, 17:02 PM

STA, 27 November 2019 - The Slovenian retail group Mercator posted EUR 6.21 million in net profit in the first nine months of the year, down 30.3% year on year. The parent company's net profit was meanwhile up 7.6% to over EUR 15 million, the company announced on Wednesday.

Mercator explained in a press release that the group results for this and last year were not fully comparable because of a change in accounting standards and last year's sale of a hopping centre and land in Serbia.

The effect of the extraordinary effects excluded, the group's net profit would be higher by EUR 9.56 million.

The Mercator group increased its sales revenue by 1.6% to EUR 1.64 billion, and the parent company by 5.6% to EUR 929 million.

The group's net financial debt was down compared to the end of the third quarter last year by 18.1% or EUR 139.4 million to EUR 629.2 million.

Most of the decrease is accounted for by Mercator selling in February the premises of ten of its shopping centres to Supernova, which it now leases from the Austrian shopping centre operator.

The EUR 116.6 million from the sale was intended for settling financial obligations, the company said, adding that it would continue to sell non-core investments on all of its markets.

In addition to deleveraging, the group employing 19,800 people continues with its largest investment in history, a new logistics and distribution centre in Ljubljana.

"A clear strategy, new commercial platforms and new, innovative concepts increase Mercator's competitiveness and apparently produce good operating results," chairman Tomislav Čizmić said in the release.

The group's most important markets are Slovenia and Serbia, where it generated 57.3% and 31.1% of its sales, respectively. Sales in Montenegro accounted for 5.6% of total sales, and in Bosnia-Herzegovina for 5.1%.

Sales revenue in the retail segment was up by 1.4% to EUR 1.24 billion. In Slovenia alone, sales in this segment were up by 4.7% to EUR 691.4 million.

With a 69.57% stake, the Croatian conglomerate Agrokor is Mercator's largest owner, followed by Russia's Sberbank (18.54%), Hungary's OTP Bank (6.74%) and Austria's Addiko Bank (2.84%).

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