STA, 25 March 2019 - Household appliance maker Gorenje, which was taken over by China's Hisense last year, reported EUR 1.184bn in group sales revenue for 2018, a 1.7% decrease. After ending 2017 in the black, Gorenje recorded a EUR 37.3m net loss in 2018, or EUR 111.2m when factoring in one-off and extraordinary events.

Earnings before interest, taxes, depreciation and amortization (EBITDA) fell by 53.5% to EUR 29.6m. Earnings before interest and taxes (EBIT) were EUR 28.2m in the negative after a EUR 12.1m plus had still been recorded in 2017.

"In the first half of the year, performance was consistent with the budgeted dynamics; in the second half, however, it was adversely affected by uncertainty among our partners with regard to the outcome of the strategic process, and it worsened as a result," Gorenje wrote, referring to the sale to Hisense.

The largest decline was seen in industrial (OEM) deals, "as customers trod very warily when doing business with Gorenje, for reasons referred to above".

Without the decline of OEM deals, revenue in Gorenje's core activity would have grown relative to the year before, said the company which employs slightly over 11,000 people.

As to the different net loss figures, Gorenje pointed out that assumptions and methodologies of accounting estimates changed considerably, with the "adjustment upon integration into Hisense having had many one-off and extraordinary effects on Gorenje results".

Gorenje generated 91% of its revenue in its core activity of domestic appliances. It primarily grew in eastern Europe, in particular in Hungary, Ukraine, Bulgaria, and the Czech Republic where it is marketing products under the Asko brand.

Revenue on the other hand decreased in western Europe, where the company felt the effect of strong competition and labour cost pressures.

"As sales decreased, results from operations were negatively impacted by the unchanged amount of fixed costs that were impossible to adjust to the lower-than-planned sales in such a short period of time," Gorenje wrote.

The company said it continued to invest in development, earmarking 2.5% of total revenue or EUR 30m for this purpose. The same amount was invested last year into marketing.

The core company increased sales revenue by 2.2% to EUR 819.3m but recorded a EUR 126.8m net loss after being EUR 470,000 in the black in 2017.

All our stories on Gorenje can be found here

STA, 22 March 2019 - Slovenia's sole seaport in Koper is not concerned about the prospect of Chinese investments in the port of Trieste, its biggest rival among north Adriatic ports. It says there is plenty of scope for growth of all ports in the region.

"We've always emphasised our support for development projects of all ports in the region," port operator Luka Koper told the STA, noting that investments were the only way north Adriatic ports can compete with ports in North Europe.

The company quoted a study commissioned by the North Adriatic Port Association showing that ports from Ravenna to Rijeka have a combined potential to transship six million container units per year; in 2018 they handled 2.8 million units.

It is precisely in container transshipments that Trieste poses the biggest threat to Koper with the help of state-sponsored Chinese investors.

Koper handled 988,000 container units last year to Trieste's 725,000, but Trieste's volume was up almost a fifth over the year before while Koper registered only 8% growth in container shipments.

Overall, Trieste and the adjacent Monfalcone handled 67 million tonnes of cargo while Koper handled 24 million tonnes, both figures records for the respective ports.

Not only is it unfazed by the prospect of even stronger competition from Trieste, Luka Koper notes that all ports in the region have the same problem: poor rail connections inland.

Koper has a single track connecting it to the national rail network, Trieste faces bottlenecks within the port itself, and in Croatia's Rijeka the tracks still cut through the city.

"Rather than being concerned about what neighbouring ports are doing, it is important that Koper and Slovenia realize plans that we have adopted," the company said about the coming construction of a new track connecting the port with the inland hub Divača.

Construction of the EUR 1bn-plus track covering a distance of 27 kilometres has already started - contractors are currently building 20 kilometres of access roads - but the project is expected to take many years due to the difficult karst terrain.

Concern about Chinese plans have been raised in Slovenian media after it was announced that during Chinese President Xi Jinping's ongoing visit to Italy a memorandum of understanding on Chinese infrastructure investments would be signed.

According to plans, one of the pillar of the investment plan would be to strengthen Trieste's rail connections inland, which some see as a serious threat to Koper's competitive position.

Elen Tvrdy, the dean of the Koper Faculty of Maritime Studies and Transport, told the STA Trieste's plans required not only that the new Koper-Divača was built, but also that the port itself Koper continued investing.

"We must always be concerned about loss of market or partners. Koper must continue with investments, this is the only way it will remain competitive, regardless of whether or not the Chinese come to Trieste.

She noted that the Chinese were looking for a foothold in north Adriatic because of short transport routes to Central Europe. North Adriatic has geographic advantages, but good rail connections are critical, she said.

All our stories on logistics in Slovenia are here

STA, 22 March 2017 – NKBM (Nova Kreditna Banka Maribor), Slovenia's second largest bank, posted a group net profit of EUR 72.5m for 2018, a year-on-year increase of 50%, shows the audited annual report released on Friday.

The bank recorded a substantial increase in net interest revenue, which was up 32% to EUR 109.6m, whereas non-interest revenue declined marginally to EUR 59.3m.

NKBM also booked substantial revenue, EUR 16.5m, from the cancellation of write-downs and provisions, an indication of an improving credit portfolio.

The share of non-performing loans declined by over four percentage points at group level, the bank said in a press release.

The bank remains well capitalised, with the common equity tier 1 capital ratio, a key benchmark of capital adequacy, remaining roughly level at 20.13%.

Total assets rose marginally to just under EUR 5bn.

Keep up with all the business news in Slovenia here

STA, 22 March 2019 - The government macroeconomic think-thank has estimated that the direct impact of a no-deal Brexit on Slovenia would be small, while the indirect impact through the countries with which Slovenia does most of its trade would be greater but also harder to measure.

The Institute of Macroeconomic Analysis and Development (IMAD – Urad RS za makroekonomske analize in razvoj) has found based on various studies that the long-term effect of a no-deal Brexit on Slovenia would be between -0.2% and 1% of gross domestic product (GDP).

Meanwhile, the impact of an orderly exit of the UK from the EU would be smaller, estimated at between -0.1% and -0.25% of the country's GDP.

This would hold true in the case of the confirmation of the current Brexit agreement, which envisages the UK remaining part of the customs union, IMAD said in its latest publication on macroeconomic trends.

"Introduction of customs duties would decrease the volume of bilateral trade between Slovenia and the United Kingdom, with the electrical, automotive, pharmaceutical and metal industries suffering the largest negative effect."

According to the think-tank, also to be somewhat affected would be exports of services, in particular tourism and transport.

Since the direct connection of the Slovenian and British economies is relatively small (Slovenia generates 1.9% of its exports in the UK), the direct negative effect on exports and GDP would be small.

An indirect effect would be somewhat bigger due to Slovenia's trade connections with Germany and France, which are major trade partners of the UK.

All our stories about Brexit are here

STA, 21 March 2019 - IMAD, the government's macroeconomic forecaster, has downgraded Slovenia's economic growth forecast for this year by 0.3 points in real terms to a still robust 3.4%, citing weaker export demand. Growth is projected to slow further next year, to 3.1%, IMAD said on Thursday.

The forecast marks a significant slowdown from the 4.5% growth rate that Slovenia recorded last year according to preliminary estimates, but it remains strong and is still well above the projections for the eurozone as a whole, which is expected to grow by well under 2% this year.

The revised budget for 2019 that the National Assembly passed in a re-vote yesterday assumes growth will stand at 3.7% this year.

IMAD forecasts that export growth will slow by over two points compared to last year to 5.1%, before ticking up slightly to 5.3% in 2020. As a result, the net contribution of foreign trade will be close to zero.

Private as well as government spending are expected to offset the weak exports, the forecast suggests.

Household spending growth is projected to remain strong and above last year's level (2.9% this year and 2.4% in 2020), with government spending expected to grow at a slightly slower pace of 2.2% and 1.9% respectively.

Investment spending will weaken substantially, on the other hand, with growth projected to slow to 7.7% this year and 7% in 2020 compared to low double-digit rates recorded in the last two years.

Job creation will continue, albeit at a slower pace: having hovered around 3% in the previous years, employment growth is projected to slow to 2% this year and 1% in 2020.

IMAD says job gains will be affected by the continued decline of the working-age population as the population as a whole ages.

Inflation will remain moderate and below 2%, the forecast suggests.

IMAD lists several risks that could affect its projections, among them a disorderly Brexit, US protectionism, and slowing growth in China.

The Chamber of Commerce and Industry (GZS) also revised its economic outlook for the economy downwards today. It now projects a 2.9% growth for this year, a deterioration of 0.6 percentage points on its previous forecast. The growth is to slow down to 2.2% next year.

The GZS attributed the downgrade to a slowdown in export markets. "Private consumption growth remains high, as does investment growth," it said.

The growth of merchandise exports is expected to decelerate to 4% in 2019 and to just 2% in 2020. "The projection is guided by rather weak confidence in manufacturing and a major restraint when it comes to new orders."

Household consumption is expected to grow at 2.4% this year. "We expect consumption of non-durable goods (cars, household appliances, home equipment) to slow down somewhat and the savings rate to slightly increase."

Nevertheless, the chamber upgraded the domestic spending forecast for 2020 to 2.1% due to cuts in tax on pay announced by the government.

The GZS's outlook is based on the presumption that the risks of trade wars, China's hard landing or a no-deal Brexit would not materialise.

All our stories about the Slovenian economy are here

STA, 13 March 2019 - The association Counselling Office for Workers said on Wednesday that some Slovenian companies, including several large ones, were blackmailing workers from abroad. Most often they demand that the worker reimburse the company for the costs of obtaining their working permit if they leave the company earlier than agreed.

Such a demand is usually included in the worker's employment contract or a special agreement.

Goran Lukić and Goran Zrnić of the Counselling Office for Workers named two companies making such demands, the builder CPG VG and the elastomers and thermoplastics company Siliko.

A contract with CPG VG says that the employer covers the costs of obtaining a working permit for the worker and the costs of their national professional qualification. But if the worker quits their job in less than three years, they must pay EUR 1,500 to cover these costs.

Similarly, Siliko makes a special agreement with its workers stating that the cost to the company for obtaining the working permit for the worker is EUR 500. If the worker quits their job, they must reimburse the company for the sum and any other possible costs, the agreement reads.

The Employment Service responded by saying that under an agreement on the employment of Bosnian citizens in Slovenia these costs must be covered by the employer, so such agreements were "inappropriate or in fact a violation of Article 9 of the agreement".

Lukić also pointed to a ruling by the Koper Labour Court in a similar case involving the company Retrans which says that such deals run contrary to the constitutional right of workers to pick their employer freely and are as such null and void.

All out stories on employment in Slovenia are here

STA, 12 March 2019 - The UK-based company Ascent Resources has announced it will appeal against the Slovenian Environment Agency's decision that it will have to seek an environmental impact assessment (EIA) for its gas extraction project in the far north-east of the country.

"The partners plan to appeal the decision within the prescribed 15-day period," the UK company has said as quoted by Your Oil and Gas News portal.

The key ground for appeal will be that all six expert government agencies which the agency is required to consult as part of the screening assessment process concluded that no EIA should be required on the basis that the project to re-stimulate two currently producing wells was not likely to have significant effects on the environment.

The Slovenian Environment Agency (ARSO) failed to follow the findings even though bound to so, having not undertaken any independent assessment of the likely impacts of the environment, Ascent Resources said in the post.

Ascent Resources has been extracting and selling untreated natural gas from the Petišovci field in cooperation with its Slovenian partner Geoenergo, but the partners have been unable to get permits for hydraulic fracturing and for a new gas processing plant due to repeated appeals by environmentalists.

The company said that the partners had applied for the screening assessment in May 2017, so they also plan to challenge ARSO's latest decision for not being issued within the two-month period prescribed by Slovenian law. "The failure to comply with other provisions of Slovenian law as well as breaches of EU law will be detailed in the appeal."

Related: Ascent Resources CEO - Company May Sue Slovenian Government Over Fracking Permits (Video Interview)

Meanwhile, Ascent Resources welcomed ARSO acknowledging that the proposed project cannot be regarded as "fracking" as defined by the European Commission in its recommendation in 2014.

Ascent Resources has been working with legal experts in Slovenia and London to prepare claims for damages as "a result of the numerous and continued failures and delays by ARSO and the ministry to comply with Slovenian and EU law".

It said that "any potential claim for damages will take into account the amount invested by Ascent in the project, currently in excess of EUR 50m, and future expected profits from the development of the field which is estimated to be a multiple of the existing investment".

Related: PM Surprised By Hunt Lobbying for UK Fracking Company: “In Slovenia We Operate in Line with the Law”

STA, 11 March 2019 - Slovenian companies have started to feel the impact of a downturn in car sales which has followed on the heels of several years of growth. Moreover, cars have become more expensive last year, as the industry had to adapt to new environmental standards that took effect in September.

In general, the number of new cars sold in the EU last year was still higher than in 2017. It went up by 0.1% to 15.14 million new cars.

However, the sales have been dropping since September. Volkswagen, the biggest car maker in Europe, saw its sales drop by 6.5% in January, while Audi saw a decline of 17% and BMW's sales went down by 2.7%.

In Slovenia, car sales went up by 2.7% in 2018 over 2017. However, the number of new cars registered in January was 4.6% lower than a year earlier. Moreover, prices went up by an average of 5% last year, the business newspaper Finance reported recently.

Experts believe that the decline in Europe was caused by a change in emissions testing brought about by new environmental standards in September. The month before, car sales went up by nearly 33% as buyers were offered considerable discounts.

In China as well, sales are going down. The country saw a 3.5% drop last year, which was the biggest decline in new car sales since 1990.

The situation still seems a bit more optimistic in the US, where sales have gone up due to economic growth and low oil prices. However, analysts expect the trend to reverse this year.

Buyers have also started to opt against diesel engines. In the EU, diesel engines made up only 34.1% of all newly registered vehicles in the final quarter of 2018, 7.1 percentage points less year-on-year.

On the other hand, the share of new petrol engines increased by 4.9 percentage points to 57.2%

The number of electric cars and plug-in hybrids has also been on the rise. Last year 2.1 million new alternative-fuel cars were sold globally in 2018, exceeding the two million mark for the first time.

Global downturn of car sales is likely to continue also due to urban ride services providers such as Uber and the increasingly popular concept of car sharing, which is especially popular in cities.

In Slovenia, Avnt2Go is the biggest car sharing service provider. Its services are available in Ljubljana, Maribor, Kranj, Murska Sobota and the Jože Pučnik Airport Ljubljana, the country's biggest airport.

It has a fleet of 200 cars, which it intends to expand by another 100 by the end of the year.

The downturn in car sales is already being felt by Slovenian car parts makers, such as Boxmark, a company sewing car seat covers for several European car makers.

"Last year already brought a slight drop. We expect this to continue and become more pronounced in the second half of the year," Boxmark boss Marjan Trobiš has told the STA.

The company is prepared for the downturn, according to Trobiš. It has expanded its assortment of products so as to branch out into aviation. Among other things, it signed a six-year contract with the Emirates airline.

Currently, the company is taking in enough orders but if the pessimistic forecasts come true, this will affect the company's work force, according to Trobiš.

Dani AFC, a Slovenj Gradec-based leather company servicing the car industry, has meanwhile abolished a third shift, creating 100 redundancies.

All our stories on business and Slovenia are here