Economic News SUMMARY, October 3

04.10.2006, 06:49

Economic news released by SITA on Tuesday, October 3

H1 Capital Expenditures of ZSSK Slovensko at SKK 720 Mln.
Capital expenditures of railway transport company Zeleznicna Spolocnost Slovensko, a.s. (ZSSK Slovensko) should total SKK 1.464 billion this year. According to the company's 2006 investment plan approved by the board of directors, SKK 1.061 billion should be invested in passenger railway cars and almost SKK 150 million in engines. Intangibles should swallow over SKK 142 million and the remaining portion should be invested in constructions, technologies, information technologies and machinery not included in the budget. "Investments are covered from the company's own and external sources, particularly from the European Company for the Financing of Railroad Rolling Stock (EUROFIMA).

Health Insurance Companies See 548,770 Switching Policyholders
The Healthcare Supervision Office (UDZS) has registered 548,770 applications to change health insurance companies. UDZS spokesperson Radoslava Miklasova informed SITA that the biggest number of policyholders quit Vseobecna Zdravotna Poistovna (VsZP). Preliminary data show that the number of its policyholders should decrease by 329,783, which represents almost 9.7 percent of its current 3,405,318 policyholders. Despite this, VsZP should remain the health insurer with the highest number of policyholders next year.

Slovakia's Jobless Rate Down to 13.1 Pct. in August, Reports Eurostat
A survey by Eurostat, the European Union's Statistical Office, shows the seasonally adjusted unemployment rate in Slovakia at 13.1 percent in August, down 0.1 percentage points from July. However, Slovakia still reports the second highest jobless rate among EU countries. Only Poland had worse results with a 15-percent unemployment rate.

I.D.C. Holding Group Shows H1 Profit of SKK 122 Mln.
Slovak cookie and confectioner producer I.D.C. Holding, a.s., Bratislava, closed H1 2006 with consolidated profits of SKK 122.1 million. The holding more than doubled its profit from SKK 60.3 million H1 2005. The group had an operating profit of SKK 162.2 million, which was reduced by losses from financial operations of SKK 40.1 million. The information stems from the H1 consolidated results of the holding, calculated according to the international financial reporting standards (IFRS). The figures were published by the Bratislava Stock Exchange (BCPB).

Taxed Profit of SLKB Shipyards Up 26% y/y in 2005
Shipyard Slovenske Lodenice Komarno, a.s., Bratislava, (SLKB), improved performance last year when taxed profit grew 26 percent y/y to SKK 32.8 million. The improvement chiefly can be ascribed to a 42.6-percent growth in operating profit to SKK 55.5 million that was reduced by losses from financial operations of SKK 23.2 million. The company deepened these losses over 10 million y/y. SLKB increased sales of its own products and services 12 percent y/y to SKK 1.597 billion on a 10-percent increase in cost of production to SKK 1.278 billion.

Ness Group Plans 2006 Sales of USD 21 Mln. in Slovakia
The company Ness Slovensko has become a successful member of the Ness Technologies holding, a global supplier of IT services and comprehensive solutions. The company was established as the result of the acquisition of Delta Electronics Services and its subsidiaries. Ness Europe president Ivan Hruska said that they fulfilled the acquisition goals and that new orders from Bratislava County or the Statistics Office are a proof.

Health Sector's H1 2006 Debt Climbed to SKK 5.523 Bln.
The health sector's total debt reached SKK 5.523 billion as of June 30 of this year. Of this total, health utilities' debt was SKK 5.244 billion, and health insurers' debt was SKK 279 million. This information stems from a report by the Health Ministry mapping the development of the health sector's debt. The report will be soon on the cabinet's table.

Roughly Half of Insurance Claims Fraudulent
Fraudulent insurance claims increase year by year, stated representatives of the Slovak Insurance Companies Association (SAP). The secretary of the Insurance Fraud Fight Section, Milan Daras, told a news conference on Tuesday that the number of fraudulent claims under insurers' internal investigation reached 2,238 last year, of which 264 were advanced to law-enforcement authorities. The volume of all insurance claims last year was EUR 10.43 million, and insurance companies saved EUR 5.396 million, i.e., about half of that total by proving insurance fraud.

Tesco Stores SR with H1 Turnover of SKK 12.4 Bln.
One of the major retail market players in Slovakia, Tesco Stores SR, a.s., reported H1 turnover of SKK 12.4 billion including value added tax, a 22-percent increase y/y. An SKK-125-million investment into reducing prices of goods was a factor in the turnover increase. In client numbers, the retail chain reported an annual increase of about 200,000 every week. Thus, Tesco stores' total attendance currently amounts to 1.6 million clients, said the company.

SkyEurope Airline With Almost 5 Mln. Passengers From Sept 2001
Slovakia's low-cost airline SkyEurope Airlines, a.s., has transported almost 5 million passengers during its existence. The company has been on the Slovak market since September 2001. SkyEurope currently operates from five bases in Bratislava, Prague, Budapest, Warsaw, and Krakow. The number of passengers exceeded 3 million last December.

FNM Cancels Sale of Six Heating Plants
On Tuesday, the presidium and the executive committee of the government privatization agency the National Property Fund (FNM) canceled definitively the privatization of six major central heating plants in Bratislava, Kosice, Trnava, Zilina, Martin, and Zvolen. FNM representative Tatjana Lesajova informed SITA that the FNM also canceled the sale of a 99.85-percent stake of DMD Group, a.s., Trencin.

Employers Claim Minimum-Wage Increase May Endanger 10,000 Jobs
The minimum-wage increase to SKK 7,600 may endanger about 10,000 jobs in small businesses. "With the minimum wage, we push companies in the worst economic conditions to increase their wage costs regardless of their situation," Juraj Borgula, a representative of the National Employers' Association (RUZ), said at a round-table discussion on the minimum wage in Bratislava on Tuesday. Small companies with a labor force up to 20 people, which increase will affect the most, provide jobs for about 900,000 people. The association says that the minimum wage in its current form should be canceled.

Slovakia With Third Highest Inflation among OECD Countries in August
In August 2006, OECD consumer price index was 5.1 percent y/y in Slovakia. Thus, Slovakia ranked third worst amongst OECD countries. Only Turkey and Iceland reported higher CPI increases in August y/y. In particular, energy prices, which jumped in August 14.1 percent y/y were behind the accelerated inflation in Slovakia. Food prices increased 1.9 percent y/y in August.

MONEY MARKET: Banks Deposit SKK 116.236 Bln. in Repo Tender
A liquidity deficit will persist on the interbank market after the settlement of the National Bank of Slovakia's (NBS) repo tenders on Wednesday. Tatra Banka dealer Jozef Bozek stated that bank bids in the central bank's repo tender on Tuesday were SKK 116.236 billion. The NBS accepted them all at a single yield of 4.75 percent p.a. On Wednesday, SKK 122.104 billion from a maturing repo tender will return to the sector. Furthermore, SKK 600 million from a government-bond auction on Monday also will leave the market.

INVESTING: Assets in Pension Funds Exceeded SKK 21.48 Bln. Last Week
The net value of policyholders' assets in licensed pension-fund-management companies in Slovakia (DSS) exceeded SKK 21.48 billion as of September 29. The value of assets in pension funds managed by six DSS companies rose SKK 296.9 million compared with September 22. More than SKK 14.12 billion was in growth funds, almost SKK 6.48 billion was in balanced funds, and nearly SKK 880.7 million was in conservative funds as of Friday, September 29.

Holcim Opens New Concrete Mixing Plant
In late September, cement and other construction-material producer, Holcim (Slovensko), a.s., opened a new concrete mixing plant in Levice. The average capacity of the new plant is 70 cubic meters of cement per hour. "The new plant secures the production and supplies of a wide assortment of concrete and services, for example, transport, pumping and technological service for clients in the Levice district," the company announced. Road concrete will belong among the main products of the new plant. The plant opening confirms the growth strategy of Holcim in Slovakia, said the company.

STOCK MARKET: VUB Shares Push up SAX Index on Tuesday
The firming of VUB banking house's shares pushed the official SAX share index up 0.05 percent or 0.19 points to 407.25 points on Tuesday. Turnover on the BCPB dropped from SKK 269.67 million at the beginning of the week to SKK 148.688 million on Tuesday, with a mere SKK 730,800 in share trading.

Investors Withdrew SKK 281.9 Mln. From Mutual Funds Last Week
The net sales of open-end mutual funds that members of the Slovak Asset Management Companies (SASS) returned to the red after a one-week break. Last week, investors withdrew SKK 281.9 million from mutual funds. Bond funds registered the biggest outflow of money. The value of their returned items exceeded the sum of sold items up to SKK 435.8 million. Furthermore, SKK 76.2 million left master funds, and mixed funds had outflows of SKK 23.4 million.

FOREX MARKET: Crown Surprisingly Breaks 37.300 SKK/EUR
The Slovak crown strengthened significantly towards the euro during Tuesday's trading. Tatra Banka dealer Boris Somorovsky said that the crown opened at 37.330/37.370 SKK/EUR. "Two foreign banks have been buying the Slovak crown in large volumes since the morning, which moved the crown's exchange rate to the strongest point of the day, i.e., 37.180/37.220 SKK/EUR," he commented. The crown stood at 37.200/37.240 SKK/EUR before the close of trading. Thus, the crown's exchange rate was around thirty hallers from its historical maximum of 36.920 SKK/EUR in spring 2006.

Power Engineering Firm SES Tlmace's H1 Sales SKK 1.309 Bln.
Power engineering company, Slovenske Energeticke Strojarne, a.s., (SES), Tlmace had H1 2006 sales of its own products and services of SKK 1.309 billion, according to preliminary consolidated results calculated in line with IFRS. The group closed H1 operations with a profit of almost SKK 40.7 million, according to data released by the Bratislava Stock Exchange (BCPB).

Central Bank Without Deputy Governor for More Than Six Months
The National Bank of Slovakia (NBS) has been without a deputy governor for monetary policy for more than six months. Finance Ministry representative Miroslav Smal said that proposals of new candidates for the post are afoot.

Smer-SD Wants to Make Cabinet Able to Oust UDZS Head
Parliamentary deputies for the strongest ruling party Smer-Social Democracy (Smer-SD) want to make the cabinet able to withdraw the chair of the Healthcare Supervision Office (UDZS) when proposed by the health minister. This stems from a draft revision to the law on health insurance companies and healthcare supervision, which deputies Jozef Valocky and Jan Zvonar have submitted to parliament.

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