Summary of economic news released on Monday, July 17
Slovakia‘s Harmonized Inflation Down to 4.5 Percent in June
In June, the year-on-year inflation rate in Slovakia measured by the European Union's harmonized index of consumer prices (HICP) reached 4.5 percent. Compared with May, inflation decelerated by 0.3 percentage points. Measured by EU methodology consumer prices in Slovakia in June increased by 0.1 percent from the previous month, while they increased by 0.5 percent in May compared to the April level, reported the Slovak Statistics Office on Monday. Slovak methodology shows inflation rate of 4.6 percent in June.
Midyear Excise Tax Collection Lags Behind Projected Figures
Customs and tax offices collected SKK 24.396 billion in excise taxes in the first half of this year. Collection of these taxes lags behind the Finance Ministry's projection for the end of June by 3 percent. Out of total excise tax revenues, customs offices collected SKK 24.37 billion of the total revenues. Tax offices only collected about SKK 26.3 million in this indirect tax. As of May 2004, only customs offices collect and administer excise taxes while tax offices only accept running payments.
PPA Energo Posted Sales of SKK 799.1 Mln. in 2005
PPA Energo, s.r.o., which produces electrical, pressure, and gas devices, posted sales of own products and services of SKK 799.1 million in 2005, which is up by 71 percent y/y. Production costs rose by 73 percent y/y to SKK 597.6 million. The firm generated added value of SKK 200.7 million, which is up by SKK 58.4 million. The company ended last year with a taxed profit of SKK 24.4 million, which is up 11.7 million. The operating profit grew by SKK 10.7 million to nearly SKK 27.7 million. The profit from financial operations reached SKK 2 million.
Coop Jednota Senica Posts Last Year's Sales SKK 972.8 mln.
Local consumer cooperative Coop Jednota Senica, s.d. sold goods for SKK 972.8 mln last year, 6.2 percent down compared with 2004. Cost of sales dropped by 6.4 percent in year-to-year terms and stood at SKK 807.7 mln. The cooperative's trade margin in 2005 decreased by 5.4 percent in year-to-year comparison and amounted to SKK 165 mln. Sales of its own products and services reached SKK 29.6 mln. Coop Jednota Senica published its annual results in the Commercial Bulletin.
Small Entrepreneurs Call for Lower Income Tax and VAT
The Slovak Association of Small Enterprises (SAMP) will ask the new government to cut both income tax and value added tax (VAT) to at least 15 percent, stated association chairman Vladimir Sirotka at a press conference on Monday. Meanwhile the flat tax rate should be maintained for both taxes, said Mr. Sirotka. Businesspersons further oppose introducing additional VAT rates. The only change to value added tax rates the association would welcome is extending the zero VAT rate on medicaments and basic foodstuffs, said the SAMP chairman.
Telefonica Confirms Participation in Tender for Third Mobile Operator
Telefonica O2 Czech Republic, a subsidiary of Spanish company Telefonica, is the third company participating in a public tender for the third mobile operator on the Slovak market. Telefonica O2 Czech Republic submitted its bid to Slovak market regulator the Telecommunications Office within the prescribed deadline, confirmed company spokesman Martin Zabka. Mr. Zabka however refused to specify the sum offered by the company for the one-off settlement for frequency assignment. According to the tender's terms set by the Telecommunications Office issued on May 31, 2006, participants must offer at least SKK 100 million.
Petrol Prices Increased 29 Hallers on Average by July 10
The average consumer price of 91-octane petrol and 95-octane petrol reached SKK 42.44 per liter as of July 10, announced the Statistics Office on Monday. In comparison with July 3, 2006 the average consumer price of 91-percent octane petrol grew by SKK 0.31 per liter and the average consumer price of 95-octane petrol rose by SKK 0.29 per liter. A liter of 98-octane petrol cost SKK 45.01 on average, up by SKK 0.26 per liter in comparison with July 3. The price of motor diesel increased by 0.29 percent, while reaching SKK 41.65 per liter as of July 10. The average retail price of LPG was SKK 21.75, down by SKK 0.08.
Bratislava Airport Earns SKK 39.7 Mln. H1 Taxed Profit
The largest airport in Slovakia, M.R. Stefanik Airport in Bratislava posted a taxed profit of SKK 39.7 million in the first six months of the year, while the airport posted a loss of SKK 29.2 million in the same period of the previous year. The airport expected a profit after taxation at SKK 28.8 million in the monitored period. Total revenues amounted to SKK 457.6 million, which is up 37.2 percent y/y. Total costs grew by 10.5 percent to SKK 408.6 million.
CSOB Stavebna Sporitelna Closed H1 with Contracts Worth SKK 793 Mln.
CSOB Stavebna Sporitelna, a.s. made 5,800 new housing construction saving contracts with target sums totaling SKK 793 million during the first half of 2006. During the first six months of 2005 the bank signed more than 9,000 contracts with an aggregate target sum of SKK 1.11 billion. Clients kept total savings of SKK 5.61 billion on their accounts in late June 2006, meaning a year-on-year increase by 18.3 percent. CSOB Stavebna Sporitelna administers a total of 120,065 housing construction saving contracts with an aggregate target sum of SKK 25.6 billion.
Wizzair Plans to Fly to 13 Destinations from Bratislava Next Year
Hungarian low-cost airlines Wizzair may join the group of air companies operating from Bratislava airport next year. “We are holding very intensive negotiations with this company. Wizzair is planning to fly to 13 destinations from Bratislava,” Bratislava airport executive director Milan Kajan told the press on Monday. These should also include destinations to which no air company currently runs flights from Bratislava, for example Stockholm, Malmo, Glasgow, Liverpool or Dortmund. But it also wants to operate flights to destinations already served from Bratislava, for example London, Paris, Barcelona, Athens, Rome and Brussels.
U.S. Steel Kosice Plans Same Growth as Last Year
U.S. Steel Kosice, s.r.o. (USSK) expects 2006 growth in sales of products at last year's level. In 2005 the company improved revenues from sales of its own products and services by 10 percent to SKK 80.44 billion. Last year's positive operating result increased by approximately 22 percent to SKK 15.69 billion compared to 2004. Mainly growth in product exercise prices positively influenced the improved 2005 operating result, which compensated for the negative impact of input base material price development, media manager Lubomira Soltesova told SITA.
The launch of the new plant's galvanizing hall construction worth USD 160 million is one of the company's most important investments in 2005. “Hall construction also continues this year and the production launch is planned for the beginning of 2007," added Ms. Soltesova.
ZSSK Cargo Challenges SKK 75 Mln. Fine Imposed by Antitrust Office
Railway cargo company Zeleznicna Spolocnost Cargo Slovakia, a.s. (ZSSK Cargo) will file an appeal against the Antitrust Office (MPU) decision imposing an SKK 75 million fine on the company for abusing its dominant position. Ladislav Jandosek from ZSSK Cargo's communications department said that the decision to appeal against the Antitrust Offices’ verdict was adopted by the company's board on Monday. ZSSK Cargo disagrees with the Antitrust Office decision said Mr. Jandosek. The decision, which has not yet entered into effect, was delivered to the company on July 4, 2006 and ZSSK Cargo has 15 days to file an appeal.
MONEY MARKET: Deposit Prices Slightly Drop at Beginning of Week
The interbank market opened this week’s trading in a deep liquidity deficit resulting from Friday's outflow of funds from direct interventions by the National Bank of Slovakia (NBS). ING Bank dealer Martin Koska stated that commercial banks deposited SKK 10.319 billion in their reserve accounts in the central bank on Monday meeting the minimum requirement for July on a cumulative basis at 138.94 percent. Banks borrowed SKK 57.871 billion on a one-day basis in the NBS. Deposit prices reported a moderate drop at the beginning of the week. Prices thus reduced rash growth at the end of last week, which was influenced by FOREX market development.
STOCK MARKET: Two VUB Bank Shares Push Up SAX Index 0.32 Points
Two VUB bank shares pushed up the official SAX share index on Monday. The value of the SAX index slightly improved by 0.09 percent or 0.32 points to 374.68 points after trading these shares. Turnover on the Bratislava Stock Exchange (BCPB) dropped from SKK 2.227 billion on Friday to SKK 342.261 million on Monday with SKK 796,500 in share trading.
Tender for Third Mobile Operator could be Completed in Two Weeks
Market regulator the Telecommunications Office chairman Milan Luknar anticipates completion of the tender for the third mobile operator and announcement of the winner in two weeks. “Originally the tender terms were prepared to evaluate twelve to fourteen bids. Therefore I suppose evaluation and announcement of the winner shouldn't take more than fourteen days,” stated Mr. Luknar. The Telecommunications Office received three bids for the allocation of GSM, UMTS and FS frequencies. By law the office still has another four weeks to issue licenses after completing the tender. Telefonica O2 Czech Republic, a subsidiary of Spanish company Telefonica, Austrian Mobilkom Austria and Czech company Radiokomunikace, submitting the bid together with Czech and Slovak investment company Penta, confirmed their interest and bids to SITA in the aforementioned tender.
FOREX MARKET: Crown Fluctuates in Both Directions on Monday
The exchange rate of the Slovak crown against its referential currency the euro fluctuated in both directions at the beginning of the week. Tatra Banka dealer Boris Somorovsky stated that the local currency opened at 38.680/38.720 SKK/EUR and efforts to sell the Slovak currency arose on the market in the very morning. The exchange rate thus landed at 38.700/38.740 SKK/EUR. Later on the situation changed when market players started buying the local currency, strengthening the exchange rate to 38.530/38.560 SKK/EUR. At this level the market situation changed once again and the exchange rate stood at 38.610/38.650 SKK/EUR before the close of trading, said the dealer.
Housing Construction Banks Signed Over 96,000 New Contracts in H1
Three housing construction saving banks operating on the Slovak market provided funds for housing purposes of over SKK 9.2 billion in the first half of 2006. Thereof nearly 80 percent was provided by the largest of the banks, i.e. Prva Stavebna Sporitelna (PSS). Wustenrot Stavebna Sporitelna (WSS) approached the SKK 2 billion limit, providing SKK 1.623 billion in H1. The youngest housing construction savings bank CSOB Stavebna Sporitelna provided almost SKK 382 million to its clients for housing purposes.
The companies registered together over 96,000 new contracts in H1 with an aggregate volume of target sums at almost SKK 18.9 billion. Compared with H1 2005 the number of new contracts decreased by 20 percent and the volume of target sums went down by 25 percent.
Kosice Airport Reports 30% Passenger Increase in H1
Letisko Kosice-Airport Kosice, a.s. served 136,893 passengers during the first half of the year, translating into more than 30-percent growth y/y. Of this departures accounted for 71,851 passengers and arrivals made up 65,042 passengers. International transport dominated with 57.3 percent of the total number of transported passengers. The aggregate number of takeoffs and landings shrank by 18 percent y/y to 4,759.
PMU Approves Agrofert’s Subsidiary Acquisition of Three Bakeries
After a group of poultry companies, whose concentration within Czech Agrofert Holding the Antitrust Office (PMU) approved in early 2006, this Czech food producing, agricultural and chemical group continues to buy Slovak food companies. The PMU also confirmed for Agrofert the acquisition of a majority in the bakeries Pekaren Novohrad, a.s., Lucenec, Danipek, s.r.o., and PMD-Union, a.s., Bratislava via its subsidiary Penam, a.s., Brno. PMU spokesman Miroslav Jurkovic stated that the PMU approved the concentration of these companies on July 14. Penam Brno obtained the majority in three Slovak bakeries via its Slovak arm Penam Slovakia, a.s.
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