Summary of economic news released on Wednesday, August 23
Reding a.s. Construction Firm Doubled H1 Profit to SKK 65.4 Mln.
Bratislava-based construction company Reding, a.s. almost doubled its profit over six months of this year to SKK 65.4 million. In the January-June period it reported revenues of SKK 408.1 million, down 36 percent from a year. The slower y/y growth in revenues was caused by completing large-scale turnover orders with higher added value, explained the company. Costs dropped by 43.7 percent y/y to SK 342.7 million.
Martico, a.s. Reports 2005 Sales of SKK 340.2 Mln.
The Martin-seated company Martico, a.s. that produces and distributes heat closed last year with sales of SKK 340.2 million. Compared with the previous year it represents an increase of 2 percent. Company's production consumption amounted to SKK 278.6 million last year, down 4 percent. The firm generated added value of SKK 61.8 million in the monitored period. It is a y/y increase by SKK 4.3 million, informed the company.
Forwarder M-Expres Sped Boosts Sales and Decreases Profit in 2005
Forwarding company M-Expres Sped, s.r.o. Trnava raised its sales by 46 percent to SKK 276 million in 2005. Production costs grew by 42.6 percent to SKK 236.5 million. The firm generated added value of SKK 39.5 million, up 70 percent y/y. Operating profit amounted to SKK 7.4 million and loss from financial operations reached SKK 5.6 million. The firm closed last year with a profit of SKK 1.1 million, down by 37 percent y/y.
Turkey Grower Branko, a.s. Reports Slight Decrease in H1 Profit
The Nitra-based farm company Branko a.s. involved in turkey farming reported revenues for its own products and services sold at SKK 67.8 million for the first half of this year. This represents a moderate 2.3 percent y/y decrease. However the company's output increased by 5.5 percent from a year ago to SKK 66.9 million. But production consumption surged 27 percent to SKK 46.1 million.
Added value dropped by 23.5 percent to SKK 20.8 million over six months, announced the company. At the end of June Branko reported a profit of SKK 813,000 while a year ago it netted SKK 3.87 million.
Leasing Companies Report H1 2006 Contracts for SKK 33.337 Bln.
The Leasing Companies Association (ALS) in Slovakia reported on Wednesday that the total volume of leasing contracts for movable and immovable assets at acquisition prices without the value-added tax (VAT) represented SKK 33.337 billion over the first six months of this year, up almost 30 percent y/y. This result exceeded last year's 23 percent growth.
LG Electronics Has No Plans to Invest in Nitra
South Korean company LG Electronics does not intend to invest in Slovakia, Annegees van Linge from LG Electronics Europe informed SITA news agency on Wednesday. She thus dismissed media information that the company plans to construct a new plant near the town of Nitra. "We have no investment plans in Slovakia in the near future. Currently we are focusing on our investment in Wroclaw, Poland," she said.
MERO Production Plant to be Established in Leopoldov
Representatives of Slovak crude oil refiner Slovnaft, a.s. and Envien a.s. signed on Wednesday a contract to construct a plant in Leopoldov to convert a bio-additive into diesel, methylester of rapeseed oil (MERO). The joint venture Meroco, a.s., in which Slovnaft will control a 25-percent stake, will have an annual capacity of 100,000 tons of MERO, of which 60,000 to 70,000 tons will be supplied directly to Slovnaft. Total costs in this "brown-field investment" represent around EUR 30 million. Over thirty direct jobs will be created in the new plant.
Minister wants to Retain Bratislava Airport in State Hands
Bratislava airport will probably remain in state hands. At a press conference on Wednesday Transport Minister Lubomir Vazny (SMER) thus confirmed the government's decision to back out of the privatization contract with the TwoOne consortium that won the airport tender. The minister said that a proposal on the airport's future that the ministry is charged to submit to cabinet together with the Economy Ministry and the FNM government privatization agency focuses just on this solution. The deadline to fulfill the assignment is the end of October. According to the proposal the airport should remain in the hands of the government which will be its 100 percent holder. Mr. Vazny does not think the state is a bad owner and wants to develop the airport business project with capable management. The proposal will further feature a business plan according to which about SKK 3 billion to SKK 4 billion should be invested in the airport by 2010 with a new terminal a priority. The money should be secured from state coffers and EU co-funding. Mr. Vazny specified they will make efforts to plan the funds necessary for the airport's development in the National Strategic Referential Framework.
Chamber of Commerce and Industry Head Welcomes Saving Measures
Slovak Chamber of Commerce and Industry (SOPK) chairman Peter Mihok welcomes the saving plans concerning the government itself. "It is good the government wants to save in this manner, since if it wants to introduce measures that will hit the business sphere, it is always best to set an example of how to do so within its own competencies," stated Mr. Mihok at a press conference on Wednesday. He was commenting on the planned cuts in ministerial expenditures by ten percent. He added that it is important for the saving measures not to concern strategic development plans, drawing EU funds or the development of infrastructure and the business environment. He does not fear that the planned measures will threaten the implementation of priorities set in the period by the end of this year. However, he is afraid of the adverse effect the plans may have on elaborating next year's state budget.
Tatrachema 2005 Sales at SKK 238.8 Mln.
Chemical producer Tatrachema Trnava reported sales of its own products and services at SKK 238.8 million in 2005, down 0.7 percent y/y. Production consumption dropped as well going down 0.5 percent over last year to SKK 177.1 million. The company generated added value of SKK 75.4 million last year while in 2004 it was SKK 89.1 million.
Leasing SLSP Turnover Up over SKK 1 Bln.
Leasing Slovenskej Sporitelne (SLSP) reported financial leasing turnover over SKK 1.8 billion in the first half of this year, representing an over SKK 1 billion increase compared to the same period in 2005. The company further stated that clients used leasing mainly to purchase trucks in H1 2006. Leasing SLSP made such contracts of almost SKK 825 million, approximately three-fold compared to H1 2005. In the machines and industrial equipment category the company registered new acquisition contracts at SKK 730 million. From the beginning of the year clients used leasing to purchase passenger and utility cars at SKK 273 million.
Orange Slovensko Launches HSDPA Commercial Operation
Mobile operator Orange Slovensko will launch the commercial operation of mobile broadband internet access via the third generation network (3G) UMTS with HSDPA upgrade system for its corporate and residential customers on August 24. "Orange will cover all Slovak cities of over 20,000 people with this technology, which represents about 43 percent of the Slovak population. Our customers will also be able to use broadband internet via selected roaming partners in five countries," Orange Slovensko director general Pavol Lancaric reported at a press conference. The HSDPA data network will support a 3.6 Mbit/s transmission speed, however currently available mobile equipment only supports a maximum transmission speed of 1.8 Mbit/s. According to Mr. Lancaric devices supporting the 3.6 Mbit/s transmission speed will be introduced on the market by the end of this year.
NCHZ Reports 10 Percent Boost in H1 Exports to SKK 2.321 Bln.
Novacke Chemicke Zavody (NCHZ) a.s. Novaky, one of the major chemical producers in Slovakia, exported SKK 2.321 billion in goods during the first half of 2006. Compared with the previous year's period this means an increase of 10.2 percent. Export sales accounted for 78.2 percent of total sales, announced company director general Lubos Beno.
Slovanet Internet Service Provider with SKK 254 Mln. Sales in H1 2006
Alternative internet and telecommunications services provider Slovanet a.s. reported preliminary sales of goods and services of SKK 254 million for the first half of 2006. Compared with the previous year's period this means an almost 34 percent growth. "Voice and broadband service clients were most behind the growth of the company. Within the technological segment it is necessary to mention that big investments, which the company carried out in the past, finally started to reflect positively on results," said executive director Peter Macaj.
Market Analysts Say Central Bank will Hold Off Interest Rate Rise
The National Bank of Slovakia (NBS) will probably take time-out in August and keep key interest rates unchanged after a 50-basis point rise in July, claim market analysts. Slovenska Sporitelna analyst Maria Valachyova said the central bank would probably await more specific economic data, i.e. the structure of the Q2 gross domestic product (GDP) growth. Strengthening of the Slovak crown since the last NBS Bank Board session might also support keeping key interest rates unchanged, she assumes.
Minister Says TwoOne Could Also Lose Kosice Airport
The TwoOne consortium, clustering Flughafen Wien, Reiffeisen ZentralBank and Slovak private equity group Penta might also lose the opportunity to acquire shares in the Kosice airport. According to Slovak Transport Minister Lubomir Vazny the consortium failed to meet one of the contract's deferral conditions to get Antitrust Office (PMU) clearance for the concentration within the August 15 deadline. Penta spokesman Martin Danko said they are concerned as the ministry is preventing the privatization contract from being fulfilled. He underscored that such state conduct is bad news. The minister however argues that the ministry has until next Wednesday to appeal against the Antitrust Office decision. "So far I say neither "yes" nor "no." We have until next Wednesday. Mr. Vazny said the problem that occurred in the sale of the Kosice airport is administrative, unlike with the Bratislava airport where the concentration itself poses a problem.
National Strategic Reference Framework Draft on EU Funds Ready
The draft version of the updated National Strategic Reference Framework document outlining drawing EU funds for the 2007-2013 programming period has been released. The document divides funding resources into seven operational programs, namely the Regional Operational Program, Environment, Transport and Information Society; Research, Development and Innovation; Employment and Social Inclusion; and Education and Technical Assistance. The Construction Ministry submitted the draft version of the National Strategic Reference Framework for interdepartmental review. Compared to the version approved by the previous Mikulas Dzurinda government the new draft has reduced the number of operational programs by two. Construction Ministry spokesman Miroslav Batovsky stated that the new version has also taken account of technical comments by the European Commission as well as of those submitted by individual departments.
Heat Producers Want Higher Heat Prices Due to Growing Gas Prices
Heat producers have started submit demands to the Regulatory Office for Network Industries (URSO) to increase heat prices for the next heating season. Chairman of the board of directors of the Slovak Association of Heat Producers (SZVT) Miroslav Obsivany told SITA that heat producers require an average price increase between 5 and 10 percent as of October 1. "We know that our members are working on filling in applications for a heat price increase and that they are gradually handing them to the regulatory office. But for now we are unable to say how many heat producers have already delivered the requests to the URSO," said Mr. Obsivany.
STOCK MARKET: OTP Banka Slovensko Shares Help SAX Index Strengthen
The Bratislava Stock Exchange (BCPB) registered a slight improvement midweek. The official SAX share index strengthened by 0.19 percent or 0.76 points to 402.42 points owing to shares of OTP Banka Slovensko. Turnover on the Bratislava Stock Exchange (BCPB) increased from SKK 414.341 million on Tuesday to SKK 617.762 million on Wednesday with SKK 8.084 million in share trading.
MONEY MARKET Remains in Liquidity Surplus Midweek
The interbank market even remained in a liquidity surplus after settlement of the sterilization repo deals of the National Bank of Slovakia (NBS) midweek. The maturing two-week repo tender of SKK 165.401 billion was almost identically settled by accepted bank bids in the repo tender on Tuesday, representing SKK 165.698 billion. OTP Banka dealer Juraj Mitosinka stated that commercial banks deposited SKK 31.731 billion in their reserve accounts in the National Bank of Slovakia (NBS) on Wednesday meeting the minimum requirement for August on a cumulative basis at 107.08 percent. An additional SKK 1.16 billion ended in overnights in the central bank.
FinMin Announces Final Draft of Above-Standard Income Tax Regime
The Finance Ministry has prepared the final draft of the Income Tax Law revision planning to increase taxation for people with higher than standard incomes as stipulated in the government's program statement. Compared to the original draft version of the revision, the income limit to apply any non-taxable portion of the income tax base has gone up by approximately SKK 200,000, thus only employees with pre-tax annual salaries exceeding SKK 1.06 million, approximately SKK 88,500 per month, will be exempt from application of the non-taxable portion of the income tax base. According to information Finance Ministry adviser Richard Sulik gave SITA, the cabinet should have the draft tabled in the second half of September and the revision should take effect starting next January.
FOREX MARKET: Slovak Crown Fluctuates in Narrow Band Midweek
Trading in the Slovak currency was very calm on Wednesday, while the crown's exchange rate against its referential currency the euro fluctuated in a narrow band over the day. CSOB dealer Richard Brza stated that the local currency opened at 37.630/37.650 SKK/EUR and strengthened to 37.570 SKK/EUR in the very morning. "The exchange rate got back to the opening level in the afternoon, representing 37.615/37.635 SKK/EUR before the close of trading," commented the dealer. The US dollar was traded against the euro at 1.2842 USD/EUR (middle) on Wednesday. The Slovak crown was thus quoted at 29.280/29.300 SKK/USD. The cross exchange rate of the Slovak and Czech crowns was 1.3370/1.3385 SKK/CZK.
Mobilkom Austria Demands Repeat of Third Mobile Operator Tender
Austrian mobile operator Mobilkom Austria asked the Slovak Telecommunications Office not to issue a decision on the allocation of the GSM, UMTS and FS frequencies to Telefonica O2 Slovakia and to repeat the tender for the third mobile operator. "In our opinion the tender was not in accordance with the electronic communications law. It was not transparent and in line with norms common at such tenders," the company's international operations department chief Erich Gnad told SITA news agency. The consortium will use all available options in Slovak legal order to protect its interests, reads the stance by the company Eco-Invest a.s., mobilkom's partner in the aforementioned tender.