Business

06 Jun 2019, 17:25 PM

STA, 6 June - DRI, a state-owned consulting and engineering company specialised in infrastructure projects, will take over the management of Maribor airport as a stop-gap solution after the current operator's lease terminates on 15 July, the government decided on Thursday.

The decision comes after the Chinese-backed airport operator Aerodrom Maribor announced in January it was invoking a six-month notice and terminating the 15-year lease agreement it signed in 2017 due to delays in a planned expansion of the airport's runway.

The transfer of the lease to DRI, which the government said follows the "unsuccessful story with the Chinese lessees", will help the state avoid the return of almost EUR 6 million in EU funds it received to build a new passenger terminal in Maribor.

In accordance with the commitments accompanying the EU funds, the airport must stay open at least until mid-November 2021.

Infrastructure Minister Alenka Bratušek, who wondered how "such a bad partner" had been chosen to operate the airport in the first place, said the government had no other choice but to transfer the management onto DRI, whose bylaws were changed today so that it can act as manager of infrastructure.

This is because the current operator made continued cooperation conditional on the state paying them to manage the airport rather than it paying the EUR 100,000 monthly lease, while transferring the lease to a private company would require a new tender.

Bratušek said this was just a stop-gap solution as the state had no intention of managing the airport in the long term. The long-term options are finding a new lessee or selling the airport. Bratušek finds the first option more likely.

The local community welcomed the government decision to save the airport, while Aerodrom Maribor said it would shortly take decisions in the company's interest.

Unofficial information indicates Aerodrom Maribor will not take any drastic measures for the time being.

The company, owned by SHS Aviation, said the solutions it had presented to the government were the most favourable in terms of finances and the stability of air services.

Hoče Mayor Marko Soršak hopes DRI manages to get the operating licence so that the airport remains open. Similarly, the Maribor municipality pointed to the airport's role for the Štajerska region's development.

Both Hoče and Maribor believe the state should continue with changes to the national zoning plan for the airport, which they see as a prerequisite for its development.

Maribor would also like a rail track to be integrated into the national zoning plan to make the airport more attractive to potential new customers.

The Štajerska Chamber of Commerce is aware today's decision is but a stop-gape measure buying the government time before it takes the final decision on the airport's future.

Chamber director Aleksandra Podgornik said the region's businesses considered the airport an important infrastructure which should bring both the region and the state a competitive advantage.

She said "the region does not demand any special treatment for the airport, into which a lot of effort and money has been invested".

But we "demand the same conditions that apply to Aerodrom Portorož and Ljubljana airport, which is profitable and in foreign hands but still receives support".

05 Jun 2019, 13:15 PM

STA, 5 June 2019 - Slovenia ranks ninth among 22 EU member states that have statutory minimum wages in terms of the gross minimum wage rate. This year's increase of the country's figure to EUR 886.63 was among the modest ones, says the annual report on minimum wages in the EU and Norway, published by Eurofound on Monday.

The highest rate was registered in Luxembourg (EUR 2071.10), while Bulgaria has the lowest (EUR 286.33).

The report of the EU Agency for the improvement of living and working conditions placed Slovenia among the countries with the lowest share of minimum wage earners - 4.1%. The country ranked sixth in this category, with Czechia (2%) ranking the lowest and Poland ranking the highest (13.7%).

The survey registered big differences among all participating countries in this category, noting that in 2016 the average share of minimum wage earners in the EU was 7.2%.

Eurofund also pointed at considerable differences between the gross and net rates, saying that in Slovenia a share of 24.77% of the total minimum wage value is contributed to the social security system, including taxes and contributions. The country's share is among the higher ones in that respect.

The survey said that almost all countries, excluding Latvia, had increased the minimum wage rate since January 2018, with Slovenia raising it by 5.2% in nominal terms. The increase was quite modest, listing the country as third in the group of six countries with mid-level minimum wage rates - Slovenia ranked behind Malta (1.93%) and Portugal (3.45%).

The issue of minimum wage rate has been in the spotlight recently. The National Assembly adopted the Left's proposal for the minimum wage act in December 2018 despite employers' opposition, thus raising the rate.

The act stipulates that all allowances will be excluded from the statutory rates as of 2020 and will thus have to be paid on top. It also regulates the rate's lower and upper limit, setting the bar at at least 20% and top 40% above calculated minimum living expenses.

Employers argue that the adoption was rash and will have a detrimental effect on the whole society, while trade unions are willing to protect the act by any means necessary. Meanwhile, the government keeps insisting that the risks are manageable.

05 Jun 2019, 12:00 PM

STA, 4 June 2019 - The shareholders of the chemical company Cinkarna Celje agreed at Tuesday's general annual meeting to allocate nearly the entire distributable profit for dividends at EUR 28.27 gross per share, or a total payout of EUR 22.8 million, the company's CEO Tomaž Benčina told the STA.

The shareholders also authorised the board to buy treasury shares in the total amount of up to 10% of the group's share capital, with the authorisation valid for a year. The buyback price was set between EUR 170 and EUR 270.

The shareholders had already authorised the management board to start implementing its buyback strategy last year, setting the price between EUR 250 and EUR 300 as proposed by the biggest shareholder, insurer Modra Zavarovalnica.

The insurer owns 20% of the group's shares, followed by the Bank Assets Management Company (12.83%) and Slovenian Sovereign Holding (11.41%). All of them agreed to amend the group's statute following last year's decrease in share capital.

The shareholders also took note of the resignation of supervisor Urška Podpečan, effective as of 1 April. She will be replaced by lawyer Luka Gaberščik from Ljubljana. The supervisory and management boards were granted a discharge of liability for the past business year.

Cinkarna Celje generated EUR 45.5 million in net sales revenue in the first quarter of 2019, a 13% decrease compared to the same period last year. Its net profit dropped by 64% to EUR 4.6 million. Despite the declines, both figures exceeded the group's expectations.

04 Jun 2019, 16:10 PM

STA, 4 June 2019 - Business cooperation between Slovenia and Switzerland has been gaining momentum for years, with trade exceeding EUR 2 billion for the first time last year. Ambassador Marta Kos told the STA that there was still a lot of potential, something Slovenia seems to be set to take advantage of with three high-level political trips planned this year.

President Borut Pahor has an official visit to Switzerland planned in September, with the trip geared toward boosting cooperation in science, Kos told the STA in a correspondence interview.

Moreover, Kos said that either Slovenia's Economic Development and Technology Minister Zdravko Počivalšek would visit Switzerland this year or his Swiss counterpart will come to Slovenia.

Interestingly, no Slovenian economy minister has been to Switzerland or a Swiss counterpart in Slovenia since the latter gained independence in early 1990s.

Slovenia's Infrastructure Minister Alenka Bratušek is also set to visit Switzerland this year. Only recently, the country's railways operator Slovenske Železnice signed the second half of a EUR 320 million deal with Swiss train maker Stadler.

In what is termed the biggest public transportation investment in Slovenia, Stadler is to deliver more than 50 new passenger trains by the end of 2021.

Kos said she had visited Stadler in May, learning that the company was looking for a business partner in Slovenia, focusing above all on companies involved in digital solutions for traffic signalisation.

Switzerland ranks third among foreign direct investors in Slovenia. By the end of 2017, foreign direct investments (FDI) from Switzerland reached EUR 1.425 billion in total, thanks in large part to the acquisition of the drug maker Lek by Novartis in 2003.

Since the takeover, Novartis's investments in Lek have already exceeded the total FDI figure, reaching EUR 2.3 billion. Its most recent investment is a EUR 38 million plant producing biologic active substances, which is soon to be launched in Mengeš.

Kos expressed satisfaction that Novartis is opening this new facility in Slovenia while undergoing a comprehensive reorganisation, as this means that the multinational is strengthening its presence in the country despite making big changes.

She noted, however, that the reorganisation halted a EUR 105 million investment in Prevalje, a plant whose purpose the drug maker is now reconsidering. "We are all in suspense and keeping our fingers crossed that Novartis will go on with the investment."

Meanwhile, the Swiss-based Lonstroff, a company of the Japanese Sumitomo Rubber group, is close to completing its new plant in Logatec, with Kos saying that this investment could lead to additional Lonstroff investments.

"At least that is the experience with Swiss investors: They are demanding, they do not make their decisions overnight but once they do, then good results are followed by new investments," said Kos.

This holds true for another Swiss investment in Slovenia. Lek and Novartis will soon store and distribute their products throughout the region from a logistics centre built by Swiss logistics holding Kuehne + Nagel near the Ljubljana airport.

The EU being Switzerland's biggest trade partner, Slovenia could attract even more Swiss investments, the ambassador believes. "Each day of the week, trade between Switzerland and the EU reaches EUR 1 billion," she said.

She warned, however, that doing business in Switzerland is not easy. "The Swiss let us know often that they are different. Also because they are not in the EU."

Slovenians doing business in Switzerland say that the only way to succeed is to adapt as soon as possible to the Swiss business culture and tradition, said Kos, adding that another thing to keep in mind was that Switzerland is not a single market.

The country with 26 cantons has just as many different economic and fiscal systems, Kos said, adding that Slovenian exporters who succeeded in Switzerland had to work hard for it.

Those dealing in food stuffs and wine need to rely on a Swiss-based intermediary, as their products are subjected to various quotas and tax rates because Switzerland is not an EU member, she noted.

But despite the challenges, trade is growing exponentially. Switzerland is currently Slovenia's 11th biggest trade partner and last year, trade in goods reached EUR 1.5 billion, a 50% increase over 2017.

Slovenia's exports to Switzerland accounted for EUR 727 million last year, while imports from Switzerland reached EUR 761 million.

"But we cannot ignore the fact that the goods trade is driven above all by an increase in chemical and pharmaceutical products of a single company," Kos noted.

04 Jun 2019, 09:57 AM

STA, 3 June 2019 - Economy Minister Zdravko Počivalšek and Bavarian Minister of Economic Affairs, Regional Development and Energy and Hubert Aiwanger highlighted industry 4.0 and digitalisation as potential fields of closer future cooperation as Počivalšek started a two-day visit to Germany on Monday.

Počivalšek also pointed to the continuing cooperation in the auto industry and the need for the EU to become the leader in autonomous vehicles using AI, saying Slovenian companies can provide the know-how, experience and technology in this field too.

He and Aiwanger agreed Slovenia and Bavaria should strengthen cooperation when it comes to vehicles powered by alternative energy sources as well.

Počivalšek highlighted Slovenia's advantages as an investment destination and Aiwanger proposed a visit by Bavarian delegation to focus on digitalisation, high tech, transport and logistics.

Tourism as a potential field of cooperation through investment was noted too, while Počivalšek also pointed to the possibility of conference and other business events in Slovenia and invited German tourism companies to attend Conventa, the exhibition for convention tourism in SE Europe, and the Natour Alpe-Adria tourism and leisure fair.

On Tuesday, Počivalšek will take part in the biennial Transport Logistic fair. In 2017, more than 2,100 exhibitors from 62 countries and regions took part in the fair, attracting over 60,000 visitors from 123 countries and regions. The 2017 exhibition hall covered an area of 115,000 m2.

The number of exhibitors from China is expected to double to 64 at this year's fair.

According to the Economy Ministry, 19 Slovenian companies will present themselves at the trade fair under the auspices of the investment promotion agency Spirit, including the intermodal operator Adria Kombi, logistics company Intereuropa and port operator Luka Koper.

Germany is Slovenia's most important economic partner - the countries recorded a EUR 13.5 billion trade exchange in 2018. Slovenia's exports exceeded imports by more than EUR 1 billion. Germany is also one of the leading investors in Slovenia.

Bavaria is particularly important as a trade partner since it is listed as the third among all German federal states in terms of the trade exchange with Slovenia - Slovenia's exchange with Bavaria amounts to 19% of all the exchange between Slovenia and Germany.

02 Jun 2019, 23:35 PM

STA, 31 May 2019 - An internal audit of the controversial sale of land by the state-owned bad bank to Swiss Lonstroff for an elastomer plant in Logatec has found that the bad bank had not suffered financial damage in the deal, while some employees did commit several violations.

The Bank Asset Management Company (BAMC), whose management has been overhauled in the meantime, announced in a press release on Friday that its commission for legal evaluation of responsibility had found that BAMC had not suffered damage in the deal, which was first reported on by the media in September 2018.

The bad bank added that "in different phases of the deal, BAMC employees did commit several violations of their working obligations, as they failed to respect internal BAMC acts, but these did not affect the result of the sale".

The media reported at the time that BAMC had sold a 51,000 m2 plot in Logatec, on which Lonstroff, the Swiss subsidiary of the Japanese multinational Sumitomo Rubber Industries, was building its plant, to realtor Svet Re for about EUR 40 per square metre.

Just days later, Svet Re sold a 33,000 m2 plot to Lonstroff for EUR 90 per m2, making EUR 1m in net profit in the process, and using the proceeds to pay BAMC. The bad bank sold the remainder of the plot just months later to logistics company Hoedelmayr at EUR 40 per m2.

Regarding the damage liability of the employees, the commission said that their acts related to the price of the land plot and the sale procedure had been carried out in line with the internal rules of BAMC.

The entire plot was sold to the companies Svet Re and Hoedlmayr at EUR 40 per square metre, which was a price higher than estimated in an internal appraisal, the bad bank added.

"Even if the employees in question had carried out the sale procedure completely in line with the binding rules, it is not possible to conclude that the property would have been either appraised or sold at a higher price."

BAMC added that penalties against the employees could only be carried out if there were signs of a criminal act, which had not been established in the case.

In the audit, the commission took into account the recommendations and forensic audit made by the consultancy Ernest & Young, interviews with employees and several legal opinions.

BAMC said that the procedure had resulted in "changes to acts regulating internal processes in BAMC which will help prevent similar violations from happening. A majority of the changes are already being implemented".

The media reports were soon followed by a visit by criminal police officers at the BAMC headquarters, while the Ljubljana police conducted several house searches a month ago.

The newspaper Delo reported at the time that Lonstroff Slovenia boss Peter Weber was being suspected of defrauding his company of EUR 1.7m in relation to the deal.

BAMC noted today that the president of the management board and all three executive directors had been replaced in the meantime. "BAMC will continue to cooperate with the authorities investigating the case," the release adds.

02 Jun 2019, 23:35 PM

STA, 31 May 2019 - The group around the Zreče-based tool maker Unior posted a new profit of EUR 6.8 million in the first quarter of the year, up 18.4% over the same period in 2018. Its revenue increased by 8% to EUR 68.2 million.

 

Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 14% to EUR 11.3 million.

Meanwhile, the group's operating profit (EBIT) reached EUR 7.4 million, up 13.8%, according to the unaudited first-quarter report released on Friday.

The group's investments in infrastructure and equipment totalled EUR 5 million in the three-month period.

At the end of March, the group had a workforce of 3,160, a drop of 0.5 over a year ago, and the parent company had 1,820 employees.

Revenue of the parent company increased by 5.5% to EUR 44.3 million, with net profit reaching EUR 1.6 million, a rise of 46.8%.

The parent company's operating profit (EBIT) rose by 33.6% to EUR 2.3 million.

The supervisory board discussed the results on Thursday, assessing them in line with plans. The group also reduced its debt to banks by EUR 2.9 million from a year ago.

Related: Unior Forged Metals & Toolmaker Marks 100 Yrs of Work (Feature)

01 Jun 2019, 14:13 PM

STA, 31 May - Mercator, Slovenia's largest retailer, posted a group net loss of EUR 3.7 million for the first quarter of 2019 compared to a net profit of EUR 1.9 million for the same period last year, as sales declined by 3.1% to just under EUR 500 million, according to preliminary results released on Friday.

Group operating profit (EBIT) rose 5.6% to EUR 9.6 million, with normalised profit before interest, tax, depreciation and amortisation (EBITDA) up 75% to EUR 39.7 million.

The core Slovenian company saw net profit rising marginally to EUR 4.8 million on sales that topped EUR 281 million, an increase of less than a million euro from the same period last year.

How to Get a Mercator Pika Card

Mercator said the year-on-year results were not entirely comparable as a new international accounting standard came into effect on 1 January affecting how rents are booked.

The sales decline is also partially attributed to the Easter shopping season falling into March last year and April this year, and stiffer competition in Serbia, which accounts for about a third of overall sales.

The release comes a day after Mercator revealed it had signed an EUR 80 million agreement with VTB bank of Russia to refinance its super senior loan facility, seen as paving the way for the next phase of financial restructuring.

Owned by bankrupt Croatian conglomerate Agrokor, Mercator is officially still part of the Agrokor group but is slated for transfer to Fortenova Grupa onto which healthy Agrokor assets have been shifted.

The company said today that the transfer is conditional on approval by Mercator's creditor banks, approval by competent anti-trust institutions, and successfully completed takeover bid for the shares of the core company Poslovni sistem Mercator.

Net financial expenditure almost doubled to EUR 11.55 million at the level of the group, increasing by 15.7% to EUR 4.95 million at the core company.

The group's debt-to-equity ratio as of December 2018 stood at 1:2.08. The report notes that through financial restructuring in recent years the group improved the composition of financial liabilities by maturity.

Slovenia remains the most important market, while the strongest growth in revenue was posted in Bosnia-Herzegovina, mainly as a result of stabilisation and establishment of partner relationships with the suppliers, and transfer of best practice from Mercator's other markets.

Mercator finalised the sale of ten shopping centres in Slovenia and some other smaller divestments, divesting a total of EUR 122.8 million in the first quarter of the year. Most went toward meeting financial liabilities.

Nearly EUR 3.5 million was reinvested in fixed assets. In all markets, a total of five new retail units were leased, comprising 3,000 gross square metres of new store space.

Mercator has also launched a process to collect bids for project documentation development for the construction of a new logistics and distribution hub in Ljubljana. The building designer is to be chosen by the end of June.

The new logistics and distribution centre is expected to reduce the costs of logistics, and improve efficiency, profitability and business processes.

The group employed 20,242 people at the end of March, 1.9% fewer than a year ago.

Keep up with business news in Slovenia here, and follow the daily headlines here

31 May 2019, 15:22 PM

STA, 31 May 2019 - Slovenia's economy continues strong with the latest data showing that the GDP expanded at an annual rate of 3.2% in real terms in the first quarter of the year and by as much as 3.7% when adjusted for season and working days.

Although growth in real terms slowed down from the 4.1% recorded in the previous quarter, seasonally adjusted rate of growth ran slightly above the 3.6% recorded in the final quarter of 2018.

Seasonally adjusted quarter-on-quarter growth was 0.8%, data from the Statistics Office (SURS) show.

Contrary to expectations by analysts, the slowdown was not provoked by external demand as the growth of exports gathered pace compared to the previous two quarters, but rather by a slowdown in domestic expenditure.

Domestic expenditure grew by 1.8% year-on-year in the first quarter, the lowest rate of growth in at least three years, with the biggest impact coming from a 1.3% decline in gross capital formation, SURS official Romana Korenič told reporters in Ljubljana on Friday.

Changes in inventories had a markedly negative impact on GDP growth, as much as 2.1 percentage points.

Gross fixed capital formation increased by 9.3%, which is on a par with the previous quarters. Construction investment expanded by as much as 18.1% but investment in machinery and equipment slowed down to 4%.

Businesses reduced inventories by 2.1%, the reason for which is not clear yet. Korenič said a potential reason could be a drop in orders, although business sentiment data or export growth do not suggest that.

Domestic expenditure was thus fuelled only by final consumption expenditure, which grew by 2.9%, a somewhat higher rate than in the previous three quarters.

Driven mainly by an increase in public sector pay at the beginning of the year, government final consumption rose by 3.6%, whereas household consumption increased by 2.6%, however Korenič said that the latter contributed more to the final consumption growth than government spending.

The statisticians noted a slowdown in household expenditure for durable goods, in particular cars. However, daily purchases of goods such as food, beverages, fuel and some types of services increased.

After a somewhat lower growth of exports in the third and fourth quarters of last year (5.4% and 6.8%), exports expanded by 7.6% year-on-year in the first quarter.

Imports increased at a slower pace (6.4%), which resulted in high external trade surplus. This time it contributed 1.6 percentage points to GDP growth.

Employment keeps increasing but with signs of a moderation. The number of people in work in the first quarter rose by 2.6% year-on-year to 1,026,547.

Half of the new jobs were created in manufacturing and construction, with livelier hiring also observed in transport, trade, and professional, scientific and technical activities.

Running at 3.2%, growth in real terms was the slowest since the final quarter of 2016 when it ran at 3%.

31 May 2019, 10:40 AM

STA, 30 May 2019 - The government has taken a key step towards the creation of a state-owned tourism holding by confirming on Thursday an investment document facilitating the transfer of several tourism companies onto a special company.

The confirmed investment document allows the Bank Assets Management Company (BAMC) to incorporate a special purpose vehicle onto which shares of Istrabenz Turizem, owner of six coastal hotels, will be transferred.

This company will form the basis of the State Hospitality Fund, which is "key to the continued consolidation of Slovenian tourism," the government said.

The State Hospitality Fund will be created to pool together the assets of several partially or wholly state-owned tourism firms that are individually weak but will have significantly better investment potential when merged.

Once the firms are consolidated, they will be sold in what Economy Minister Zdravko Počivalšek has described as "reasonable privatisation".

The State Hospitality Fund will feature assets of Istrabenz Tourizem, Sava Turizem, Hoteli Bernardin, Adria Turistično podjetje, Hit, Thermana, Unitour and Terme Olimia spanning hotels, spas, campsites and ski resorts.

30 May 2019, 16:04 PM

Ascent Resources recently signed a contract to by a mobile compressor unit for use at its Petišovci gas field, reports the website Oil Field Technology, with the unit set to be installed in the fourth quarter of this year. The technology will enable the British company to restimulate at least two of its wells, thus increasing production, with it’s use at other well in the field also a possibility.

Other stories about Ascent Resources can be found here.

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