Summary of economic news released on Monday, August 28
Industrial Producer Prices in Slovakia Up 1.3 Pct. over July
Industrial producer prices in Slovakia increased by 1.3 percent over July. Prices of products of industrial producers for the local market rose 0.6 percent in a month. Their development was influenced by a 2.4-percent increase in prices of mineral raw materials, 0.8-percent growth in prices of products of industrial manufacturing and a 0.3-percent rise of prices of electricity, gas, steam, and heated water, the Slovak Statistics Office informed SITA on Monday. In July prices of farm products posted a year-on-year growth for the first time this year. Compared with July 2005 they rose 1 percent. Since the beginning of the year prices of farm products went up 0.9 percent y/y. Prices of construction works in July increased 0.3 percent from June, and by 3.8 percent compared to July 2005. On average since the beginning of this year they also rose 3.8 percent y/y.
Gas Utility SPP Reports SKK 87 Bln. Consolidated Revenues for 2005
Consolidated revenues of gas utility Slovensky Plynarensky Priemysel, a.s. (SPP) totaled SKK 87.029 billion last year, which is an increase of 14.6 percent y/y. Of this, revenues from distribution and sale of natural gas accounted for SKK 59.09 billion, which is about SKK 10 billion more than in 2004. Operating costs amounted to SKK 60.177 billion: up 22.5 percent y/y. Of this the company spent SKK 44.953 billion on purchase of natural gas, which represents an increase of almost 26 percent y/y. SPP closed last year with a consolidated profit of SKK 21.879 billion, which is about SKK 2 billion less than in 2004, according to data disclosed by the company. The government owns 51 percent in the gas utility through its privatization agency the National Property Fund (FNM), while executing shareholder rights is the Ministry of Economy.
Union Poistovna Insurer Reports H1 Written Premiums of SKK 470.4 Mln.
Universal insurance company Union Poistovna, a.s. reported gross written premiums of SKK 470.4 million in the first half of this year, which is an increase of 13 percent y/y. Amounting to SKK 297.1 million, non-life insurance constituted a better portion of the H1 written premiums. Midyear revenues of Union Poistovna totaled SKK 436.6 million on total costs of SKK 401.5 million. The company thus made an H1 pretax profit of over SKK 35 million, compared with SKK 15.3 million in the same period of 2005, according to midyear figures disclosed by Union Poistovna.
Dopravoprojekt H1 Profit Rose by 18 Percent
Transport infrastructure construction project design company Dopravoprojekt Bratislava reported revenues of SKK 188.2 million over the first half of this year, representing a 15-percent growth y/y. Costs rose by 14 percent to SKK 135.9 million in the same period. The company thus managed to boost its profit by 18 percent y/y to SKK 52.3 million, according to results disclosed by the company. Dopravoprojekt's H1 performance was influenced by continued rationalization measures and structure of orders.
Confidence Indicator in Industry Continues Rising in August
Just like in the previous two months the confidence indicator in industry grew also in August when it gained one point over July and amounted to 10.7 points. Its growth was influenced mainly by optimistic expected development of production in the next three months, shows the August economic outlook survey in industry by the Slovak Statistics Office. After an increase in July, evaluation of the industrial production development trend over the next three months has a downward trend. Particularly respondents from non-classified branches and metal and metal products makers expect a decline.
Annual Per Capita Paper Consumption in Slovakia up to 84.9 Kg in 2005
Last year's development in Slovakia has confirmed a long-term growth tendency in paper consumption. Secretary general of the Slovak Pulp and Paper Industry Association (ZCPP) Juraj Dlhopolcek said that while in 2004, specific paper consumption increased by 1.7 kilograms to 82 kilograms per capita, last year annual consumption climbed to 84.9 kilograms. This confirmed the increasing purchasing power of the population and that Slovakia is getting closer to developed countries in paper consumption. Graphic papers made up 52.3 percent of paper assortment in Slovakia when 44.4 kilos per capita of them were sold. Packaging and wrapping papers followed with annual per capita consumption of 32.1 kilograms and hygienic papers with 8.4 kilogram consumption per capita.
GE Money Signed Leasing Contracts for over SKK 563 Mln. in H1 2006
GE Money Auto offering financial products to purchase and lease new and used passenger cars made 2,476 leasing contracts worth SKK 563 million in acquisition prices excluding value added tax (VAT) in the first half of this year. Compared with the same period of last year it represents an 18-percent increase. The number of clients rose by 23 percent from a year ago. The company informed that almost 99 percent of contracts made were for used cars while two-thirds of contracts were concluded for five or fewer years.
Slovakia's Midyear Current Account Deficit was SKK 64 Bln.
According to preliminary data of the National Bank of Slovakia (NBS), the deficit on the current account of the balance of payments was SKK 64 billion at the end of June 2006. The c/a deficit thus widened by SKK 13.5 billion compared with the same period of last year. In June alone the c/a deficit was SKK 8.7 billion, while in June 2005 the current account of the balance of payments reported an SKK 13 billion deficit. Behind this result was in particular the deficit of the trade balance and the balance of receipts. On the other hand the balance of services and the balance of current transfers showed a moderate surplus, the NBS informed SITA on Monday.
NDZ Zilina Transport Company Posts SKK 247 Mln. 2005 Sales
Transport company NDZ, s.r.o. Zilina registered sales total reaching nearly SKK 247 million last year. Sales of its products and services made up 63 percent of that and stood at SKK 156.2 million, 4.8 percent up in year-on-year terms. The company's production costs amounted to SKK 99.9 million and grew 2.7 percent to 2004. NDZ closed last year with a taxed profit of SKK 9.2 million, 14 percent down to 2004. The company published this information in the commercial bulletin.
Central Bank's FOREX Reserves Down to USD 13.14 Bln. in July
Aggregate FOREX reserves of the National Bank of Slovakia (NBS) reached USD 13.14 billion at the end of this July, representing a monthly decrease of USD 2.9889 billion. This monthly drop results from an outflow of funds from NBS interventions on the interbank FOREX market of USD 3.1387 billion. This value also includes interventions held in June that were settled in early July, said the central bank. The NBS reserves at the end of July equaled 3.6 times the average monthly import of goods and services to the Slovak Republic in the first six months of the year. At the end of June, FOREX reserves were 4.4 fold this indicator.
ArvinMeritor Will Produce Components for Kia Motors in Slovakia
US producer of car components ArvinMeritor will assemble in Slovakia door modules for the local production plant of South-Korean car maker Kia. As the company informs on its web page, its Light Vehicle Systems (LVS) business group has formed a joint venture with Pyeong Hwa Automotive (PHA) for the final assembly of fully integrated door modules delivered just-in-time and sequenced for Kia Motors Corporation's new plant in Slovakia. The new plant should be located just 20 kilometers from Kia's plant in Teplicka nad Vahom close to Zilina. ArvinMeritor has not disclosed more details.
PSA Investment May Require Additional Stimuli of SKK 153.3 Mln.
Investments of French automaker PSA Peugeot Citroen in Trnava, western Slovakia, will probably require an increase in investment incentives by SKK 153.3 million. The Economy Ministry writes this a proposal for allocation of funds to secure financial coverage of additional support of the state in connection with this major investment of PSA Peugeot-Citroen. The proposal is undergoing interdepartmental review. The French automaker's investment enjoys the status of a significant investment in Slovakia and thus it is entitled for state assistance.
Galanta Mayor Confirms Samsung's Interest in Building a New Plant
Slovak government negotiated last week with representatives of the Korean company Samsung Electronics Slovakia on an over SKK 15 billion investment in a new plant in Slovakia that would create 1,500 new jobs. Mayor of the south-western Slovak town of Galanta, Alexander Mezes informed of the talks at the ceremonial opening of a new logistics center that the company Samsung Electronics Slovakia recently completed there. Samsung is planning to invest approximately EUR 400 million equal to about SKK 15.2 billion in Slovakia before 2010, according to information that SITA obtained from a source close to the cabinet's office.
Taxes Made Up 56.4 Pct. of Slovak Retail Petrol Prices in 2005
A tax burden of the average retail petrol price in Slovakia last year made up as much as 56.4 percent. This represents SKK 21.60 from the last year's average retail petrol price of SKK 33.80 per liter. Of this sum, excise tax per liter constituted SKK 15.50 and value-added tax (VAT) SKK 6.10. In a year-on-year comparison VAT grew from SKK 5.60 also as a result of growth in the average retail price from SKK 35.20. Tax burden on the average retail diesel price of SKK 30.80 last year reached SKK 20.70. This represents over 53 percent of the retail price of diesel.
Samsung Electronics Slovakia Opens a Logistics Center in Galanta
Samsung Electronics Slovakia officially opened on Monday its new logistics and distribution center for central and western Europe in Galanta, western Slovakia. The South-Korean company invested SKK 750 million to build the center where three hundred people will find a job. "This is exactly the kind of investment that the new government wants to support in the future, i.e., an investment with higher added value," Prime Minister Robert Fico said at the opening ceremony. The President of Digital Media Business of Samsung company, GeeSung Choi said that the main goal of the logistics center's opening is to increase efficiency and speed up distribution of Samsung products on the European Union (EU) market and the central and eastern European markets.
INVESTING: Assets in Pension Fund Companies Reach SKK 20.36 bln
Six Slovak pension fund management companies administered assets in net value of SKK 20.36 billion as of August 24, 2006. Value of funds thus went up by SKK 457.2 million last week. Savers held over SKK 13.34 billion in growth funds, nearly SKK 6.18 billion in balanced funds and SKK 843.84 million conservative funds.
Construction Ministry Proposes Second Change in SFRB Budget
The Ministry of Construction and Regional Development plans to change the budget of the State Housing Development Fund (SFRB) for the second time this year. This time the ministry proposes to increase the budget by SKK 65.89 million and simultaneously to change allocation of funds for individual programs of housing support. In total the SFRB's budget should increase from SKK 4.693 billion to SKK 4.758 billion. This stems from a material, which the ministry has submitted for interdepartmental review.
Health Ministry Tells Patients to Stop Paying SKK 20 Fees to Doctors
The Health Ministry calls on citizens not to pay marginal fees to doctors, which the cabinet had decreased to zero as of September 1. These include the SKK 20 fee for an appointment with a doctor and the SKK 50 fee for a stay in a hospital per day. If doctors require from patients these payments, the patients should turn to the Healthcare Supervision Office (UDZS). On August 27, the association of doctors-specialists unveiled their plan to continue collecting the SKK 20 fees from patients. They argue that this fee is for providing services only linked with health care and thus health insurance companies cannot refund them to doctors from public health insurance funds.
Slovak Prime Minister is Silent about a New Samsung Investment
Prime Minister Robert Fico refused to reveal details from last week's negotiations with representatives of the Korean company Samsung Electronics Slovakia, s.r.o., on potential new investment in Slovakia worth about SKK 15 billion. "I would like to comment on matters when they are complete. I will not follow the pattern of the previous government, which made from it a race, when political parties competed which of them will announce a new investment project earlier. Thus let's wait for a tangible result and afterwards you will get all the information," said Mr. Fico after the new logistics center of the Korean company in Galanta was ceremonially opened on Monday. The prime minister even did not want to specify which tows are in the game for the potential investment of Samsung. "I have already answered your question," responded Mr. Fico.
FOREX MARKET: Trading Was Flat on Monday
Trading of the Slovakia's foreign exchange market was calm on Monday due to the bank holiday in London. The Slovak currency opened at 37.720/37.740 SKK/EUR and it firmed to 37.695 SKK/EUR during the day. Later the situation changed and the Slovak crown weakened back to the opening level. The US dollar was traded against the euro at 1.2809/1.2810 USD/EUR on Monday. The Slovak crown was thus quoted at 29.460/29.490 SKK/USD. The cross rate of the Slovak and Czech crowns was 1.3380/1.3390 SKK/CZK.
Tatra Banka Reports SKK 1.47 Bln. Consolidated Midyear Profit
Tatra banka, a.s., the third largest bank house in Slovakia, posted a consolidated midyear net profit of SKK 1.47 billion according to International Financial Reporting Standards (IFRS), 25.6 percent up in year-on-year terms. Net interest income stood at SKK 4.05 billion as of June 30 while paid interest amounted to SKK 1.47 billion. The bank thus posted consolidated net interest income of SKK 2.58 billion during the first six months of this year, 4 percent up year-on-year. The information was released by the Bratislava Stock Exchange (BCPB).
STOCK MARKET: Trading Week Opens Without Price-Making Trades
Trading on Monday on the Bratislava Stock Exchange (BCPB) was calm after the weekend and prior to the state holiday on Tuesday, August 29. None of the share issues affecting the official SAX share index were traded on Monday leaving the SAX unchanged at Friday's level of 407.69 points. Only transfers of government bonds exceeding a volume of SKK 45 billion enlivened the trading. Thanks to them, turnover on the Bratislava Stock Exchange (BCPB) rose from SKK 969.573 million on Friday to SKK 45.516 billion with SKK 17.907 million in share trading.
MONEY MARKET: Bank Bids in Repo Tender Approach SKK 120 Bln.
Bank bids totaled SKK 119.963 billion in a regular two-week repo tender of the National Bank of Slovakia (NBS) exceptionally held on Monday due to a public holiday in Slovakia on Tuesday. The central bank accepted all bids at a single yield of 4.5 percent p.a. Banks deposited SKK 19.383 billion in their reserve accounts in the central bank on Monday, thus meeting the minimum reserve requirements at 104.03 percent. Additional SKK 13.98 billion ended in overnight sterilization in the NBS. Overnights were quoted at 3.0/3.2 percent p.a., One-month funds were quoted at 4.4/4.6 percent p.a. and the price of twelve-month funds reached 5.2/5.4 percent p.a. at the beginning of the new week.