Economic news released by SITA on Tuesday, January 23
Bost SK Earned a Profit of SKK 7.4 Mln. Last Year
Engineering company Bost SK, a.s., posted a profit of SKK 7.4 million last year. The company posted sales at SKK 161.6 million, which is up by 13.5 percent y/y. The fact that mechanical engineering industry is booming currently influenced results of the company for last year, explained director general Vladimir Bielik. Revenues from sale of metalwork machines amounted to SKK 104.7 million, which constitutes 64.8 percent of total sales. The company expects revenues from sale of metalwork machines to go up by 25 percent this year. The company exports its products to EU countries, chiefly to Great Britian, Ireland, France, Czech Republic, and to Switzerland.
Slovakia's Eleven-Month Tourism FOREX Revenues at SKK 40.093 Bln.
Preliminary data from the National Bank of Slovakia shows foreign exchange (FOREX) revenues of the Slovak Republic from tourism were SKK 40.093 billion in the period from January to November of last year, which is up 18.4 percent y/y. FOREX expenditures of Slovak citizens traveling abroad surged by 20.4 percent y/y to SKK 28.961 billion. The balance shows an SKK 11.132 billion surplus: up 13.5 percent y/y, informed the Economy Ministry's Tourism Section.
Insurers are Concerned by Planned Sacking of Supervision Office Chief
The Association of Health Insurance Companies (ZZP) expressed its concern over the situation that may arise after the planned sacking of the current head of the Healthcare Supervision Office (UDZS). ZZP chairman Igor Dorcak pointed out that UDZS head would be recalled on the basis of a law that was amended with the purpose to recall the current UDZS head. ZZP director general Eduard Kovac thinks that private health insurance companies would get under increased pressure and control under the new UDZS management. He did not rule out that health insurers could be stripped of their licenses.
Multifoto Network Operates Under Brand Name Fotolab from 2007
From the beginning of this year, CeWe Color, a.s. retail chain involved in reproduction and processing of photographs, started to operate under the single brand name Fotolab, previously known as Multifoto. "Fotolab is a traditional brand name and customers have been encountering it already for eleven years," stated the director general of CeWe Color, a.s., Maik Horbas. In 2005, Fotolab Slovakia, currently working under the name CeWe Color, a.s., reported turnover of SKK 208.8 million. CeWe Color produces in its laboratories photographs for Slovakia, Austria, Slovenia and Hungary. The firm runs in Slovakia 23 own retail outlets and cooperates with more than 1,000 contractual partners. CeWe Color, a.s. Bratislava, a member of German concern CeWe Color, is exclusively held by Fotolab Praha.
Convoi Branch in Slovakia Should be Fully Functioning by End of 2007
The Dutch company Convoi, involved in industrial relocation, is has been building its branch in Bratislava since last September. The company relocates plants, production lines, warehouses, archives, and over-sized equipment. Apart from the Netherlands, it operates also in Belgium and Germany. Its youngest representation is situated in China. As the company's executive director Leon Spronken told a news conference on Tuesday, the Bratislava branch should be fully functioning by the end of this year. The holding company currently employs about 500 people, 60 of them from Slovakia. The holding company Convoi originated in 1997 by merger of companies Dabekusen, Geytenbeek, and Marcon Nederland. Its turnover was EUR 60 million last year. It expects turnover of about EUR 2 million in Slovakia this year.
Pension Funds Oppose Plans for Changes in the Second Pillar
The Association of Pension Fund Management Companies (ADSS) is concerned that possible changes to the capitalization pillar of the pension scheme prepared by the government might contradict the philosophy of this system. ADSS chairperson Zuzana Adamova informed that such measures could threaten the stability of the second pillar and could harm interests of more than 1.5 million savers. She thinks that instead of allowing savers to leave the second pillar, a better solution would be to make the entry into the system voluntary. She informed that ADSS agreed upon such solution with the Labor Ministry. The ministry wants to enable the current participants, who consider saving for their pensions in personal accounts of private pension fund management companies unfavorable for them, to leave the system. However, ADSS wants the Ministry to clearly define this group of people.
Kosice Airport Served 344,000 Passengers in 2006
Letisko Kosice-Airport Kosice, a.s. served 348,000 passengers last year, which is up by nearly 27 percent y/y. In international transport, the airport provided services to 221,000 passengers. The remaining 117,900 passengers traveled on domestic flights. The airport reported 258,400 passengers on regular flights to Bratislava, Prague and Vienna. Kosice is the second largest city in Slovakia with about 250,000 inhabitants. At the end of October, a 66-percent stake in the Kosice Airport was transferred to the TwoOne consortium clustering the private-equity group Penta, the Vienna airport operator, and the Austrian Raiffeisen Zentralbank.
NBS Believes Slovakia Would Meet Maastricht Inflation Criterion
The National Bank of Slovakia (NBS) continues to see positively the prospects of Slovakia to meet the Maastricht criteria for joining the Eurozone. NBS governor Ivan Sramko said on Tuesday at a macroeconomic seminar of the Slovak Chamber of Commerce that Slovakia should also manage to keep inflation under control. Last year's rate of inflation in Slovakia was a negative surprise when it ended 1.2 percentage points above the 2.5-percent inflation target of the central bank. The NBS estimates the reference value of the inflation criterion at 2.8 percent while it expects the average 12-month inflation rate in Slovakia in the spring 2008 at 2.5 percent. Slovakia should not have difficulties with meeting the other criteria necessary for euro adoption. The central bank predicts that Slovakia will meet the interest rate criterion with a reserve of 1.8 percentage points when it expects rates to be at 4.4 percent in the spring of 2008. Slovakia's public finance deficit is expected to account for 31.8 percent of the gross domestic product, which is only a bit more than half of the reference level of 60 percent.
Coal Mine Bana Zahorie Reports Q1-Q3 2006 Loss of SKK 255 Mln.
The former brown-coal mine Bana Zahorie, a.s. in liquidation reported a loss of SKK 255.1 million for the first nine months in 2006. The company attributes the loss to its extraordinary operations, which brought it a shortfall of SKK 211.7 million. Extraordinary revenues amounted to SKK 63.4 million on extraordinary costs of SKK 275.1 million. The operating loss amounted to SKK 44.2 million. Sales of its own goods and services were SKK 1.8 million. Sales of long-term assets neared SKK 53 million when their depreciated value was SKK 68.3 million. Total assets of Bana Zahorie of SKK 621,000 were fully covered by the company's shareholders' equity in late September 2006. According to available information, a collapse of a shaft was behind the liquidation of the company. After the collapse the Mining Bureau banned mining in Bana Zahorie. The company did not have money for reconstruction and did not resume mining.
Rejecting Bids in Repo Tenders is Interim Solution, Says NBS Head
Ivan Sramko, the Governor of the National Bank of Slovakia (NBS) says that partial rejection of banks' bids in repo tenders resulting in leaving excess liquidity on the money market motivated by efforts to prevent the firming of the Slovak currency is only a temporary support for the central bank's market intervention in December. He admitted that it is not a standard instrument to influence the amount of funds on the market. "It is a temporary measure that should prevent easy trading of speculative capital. Of course, interest rates are a standard instrument," said Mr. Sramko. Already for the fourth week the central bank has been making efforts to support its interventions in December against the too steeply firming currency by rejecting a portion of bids in two-week repo tenders. Mr. Sramko explained that the Slovak crown deflected from all realistic indicators at the end of the year and forced the central bank to act. The development of the Slovak crown's exchange rate exceeded all expectations, said the governor. Positive local news and good news from the region also supported the crown strengthening, he said.
Vienna Insurance Group with 14.3% Growth in Written Premiums Here
The Vienna Insurance Group, which clusters also the Slovak insurers Kooperativa, Kontinuita, and Komunalna Poistovna, reported preliminary written premiums of EUR 6.119 billion for last year, up 17 percent y/y. The share of central and eastern European countries was EUR 2.307 billion, up almost 41 percent y/y. The Slovak members of the group reported a y/y growth in written premiums of 14.3 percent, said Director General of the Austrian company Wiener Stadtische Versicherung AG Vienna Insurance Group, Gunter Geyer. Mr. Geyer said that the Slovak group Kooperativa is, after the Czech one, the most important in the whole concern. He evaluates the development of its written premiums and yields positively. If results in Austria are omitted, Mr. Geyer estimates Slovakia's contribution to the total volume of written premiums at 30 percent. Austria contributed EUR 3.574 billion.
EC: Slovakia is on the Way to Correct Excessive Deficit
Slovakia is on the way to correct its excessive deficit by 2007. However, the structural adjustment should be strengthened to ensure correction in 2007 by a larger margin and speed up the progress towards the medium-term objective, reads the latest report by the European Commission (EC). "Slovakia's immediate challenge is to ensure correction of its excessive deficit by 2007 by a larger margin and strengthen its structural budgetary adjustment in the following years to be able to face possible challenges in less positive periods of the economic cycle", said Economic and Monetary Affairs Commissioner Joaquín Almunia. The European Commission evaluated Slovakia's updated convergence program for 2006-2009. In line with the program, the general government deficit of Slovakia (including cost of the pension reform) should decrease to 2.9 percent of GDP this year from 3.7 percent of GDP in 2006. In the following years the deficit should gradually go down to 2.4 percent of GDP in 2008 and 1.9 percent of GDP in 2009. This should help Slovakia to adhere to the scheduled date of joining the euro zone as of January 1, 2009.
Health Facilities Owed SKK 960 Mln. to Socialna Poistovna in November
Claims of the social security provider Socialna Poistovna against healthcare facilities totaled SKK 960.2 million in late November 2006. The social security provider's spokesperson, Vladimira Pobisova, informed that principal makes up over SKK 919.3 million of the claims and the rest are penalties. "Claims against state healthcare facilities amounted to almost SKK 459.5 million," informed Ms. Pobisova.
MONEY MARKET: NBS again Rejects Part of Bids in Tuesday's Repo
The National Bank of Slovakia (NBS) continues rejecting a portion of banks' bids in its sterilization repo tenders. Banks' bids in the two-week sterilization repo tender on Tuesday represented SKK 202.556 billion, but the central bank accepted only SKK 100 million. The minimum yield was 3.84 percent p.a., the average was 3.97 percent p.a., and the maximum yield was 4.0 percent p.a. On Tuesday, one-day and one-week funds were quoted at 3.2/3.5 percent p.a., two-week money was traded at 3.4/3.8 percent p.a., and one-month deposits were at 3.7/4.1 percent p.a. The price of two- and three-month funds was 3.9/4.2 percent p.a., and six- to twelve-month money was quoted at 4.0/4.2 percent p.a.
INVESTING: Assets in Pension Funds Exceeded SKK 29 Bln. Last Week
The net value of policyholders' assets in licensed pension fund management companies in Slovakia (DSS) reached almost SKK 29.05 billion as of January 19. The value of assets in pension funds went up SKK 580.7 million compared with January 12. Over SKK 19.12 billion was in growth funds, SKK 8.74 billion was in balanced funds, and almost SKK 1.18 billion was in conservative funds as of last Friday.
Over 10,000 Cars Rolled off Kia Production Lines in Slovakia
Korean carmaker Kia put out more than 10,000 cee'd models in its first European production plant in Teplicka nad Vahom near Zilina in northern Slovakia since the launch of a serial production last December. The company exported to European markets more than 7,000 cee'd cars produced in the Slovak plant. In Slovakia almost 100 cars from the Kia's Slovak plant were sold, said Kia Motors Slovakia spokesman Dusan Dvorak. Kia plans to produce 150,000 cars in Zilina this year. Kia currently employs over 1,700 people in its Teplicka nad Vahom plant. It is now recruiting people for the second shift that should be launched this March. Kia Motors Slovakia should produce 225,000 cars in 2008, and in 2009, it should work at full capacity meaning 300,000 cars produced annually.
STOCK MARKET: SAX Index Weakens on Tuesday
As on Monday, the Bratislava Stock Exchange (BCPB) again weakened moderately on Tuesday. Slovakia's official SAX share index lost 0.2 percent or 0.83 points to 413.56 points. Turnover on the Bratislava Stock Exchange (BCPB) dropped from SKK 10.096 billion on Monday to SKK 3.993 billion on Tuesday with SKK 1.936 million in share trading.
FOREX MARKET: Crown Weakens as Market had Expected
The Slovak crown weakened against the euro during trading on Tuesday just as the market had expected. The crown already started losing on Monday evening, and it opened trading on Tuesday at 34.600/34.630 SKK/EUR and stood at 34.760/34.780 SKK/EUR before the close of trading. The U.S. dollar was traded against the euro at 1.3037 USD/EUR on Tuesday, while in the morning in was 1.2980 USD/EUR. The Slovak crown was quoted at 26.65/26.68 SKK/USD before the close of trading. The cross rate of the Slovak and Czech crowns was 1.244/1.245 SKK/CZK.
Tesco Will Not Take Over Carrefour's Outlets in Slovakia
The supermarket retail chain Tesco Stores will not take over the outlets of the French company Carrefour in Slovakia. The spokeswoman of the Slovak Antitrust Office (PMU), Alexandra Bernathova, informed that Tesco did not appeal against the PMU decision not to allow the concentration of the aforementioned supermarket chains within the set deadline. Thus, the ban of the merger between Tesco and the Carrefour outlets in Slovakia officially took effect on January 17, 2007.
Minister Jahnatek Gives up Plan to Regulate Basic Electricity Prices
Economy Minister Lubomir Jahnatek no longer insists on regulation of basic electricity prices originally incorporated in the amendment to the law on regulation of network industries. After the parliamentary committee for economy discussed the regulatory amendment on Tuesday, the minister announced that regulation of basic electricity price is not explicitly stated in the draft revision. The committee recommended that parliament approve the new version of the amendment. Mr. Jahnatek explained that the regulatory office will be able to regulate prices of this commodity if it finds it necessary. He specified that prices could be regulated in cases when interests of the citizens are endangered or when the market is not sufficiently open or in a state of emergency. The minister says that exclusively the regulatory office will have the power to decide on the regulation of basic electricity prices.
INVESTING: Over SKK 1 Bln. Flows into Mutual Funds Last Week
Open-end mutual funds that members of the Slovak Association of Asset Management Companies (SASS) manage, reported influx of finances of more than SKK 1 billion last week. Mainly secured and guaranteed funds were behind these net sales, in which investors deposited SKK 707.1 million. Money market funds also continue to attract the interest of investors, reporting net sales of SKK 343.5 million. As much as SKK 219.3 million flew in equity funds. Other fund groups registered outflows of money. A total of SKK 167.8 million left bond funds, investors withdrew SKK 37.4 million from mixed funds, and master funds registered an outflow of SKK 33.8 million.