Books on Slovakia
% of GDP
Update No: 089 - (30/09/04)
The Slovak economy is doing well. GDP grew by 4.2% in 2003 and is growing by
4.4% in 2004.
It has begun to attract massive foreign investment, particularly into its car
industry. FDI now amounts to $9bn, impressive for a nation of only 5.4 million.
Peugeot of France is the largest investor.
World Bank gives its approval
Slovakia has earned the distinction of showing the greatest progress in business
reforms in the world in 2003. So says the World Bank, whose superlative
endorsement reached the government of Mikuláš Dzurinda in the trickiest of
times: just when it is about to reform the country's healthcare system. The
Slovak Spectator were naturally jubilant about this, as reported by staff
journalist, Beata Balogová.
Roger Grawe, the World Bank's Country Director for Central Europe and the
Baltics said that Slovakia ranked highest among twenty leading world economies
in creating the most beneficial conditions for doing business. In its analysis
"Doing Business in 2005," which evaluates laws and reforms of 145
countries, the World Bank concluded that Slovakia's ambitious reforms in the tax
system, labour market and social system are responsible for its success.
The time needed to establish a business in Slovakia has dropped from 89 days in
2001 to 52 days in 2003. Small-sized businesses and entrepreneurs are carrying a
greater share of employment, climbing from 56 to 66 percent. According to the
bank, cutting layoff expenses was the single most important factor in
maintaining the health of a robust business environment.
"This result reflects the political stability that has gradually emerged
since 1998, and radical reforms which we stepped up after the general election
in 2002," Prime Minister Mikulás Dzurinda told news wire TASR.
Slovakia has also improved business conditions for creditors. However, the World
Bank report suggests that there is room for improvement in bankruptcy
According to Grawe, Slovakia will keep its ranking next year, when the World
Bank expands its assessment to include taxation of companies, business licensing
and foreign trade.
Slovakia also ranks among countries providing the highest protection to
investors. Slovak Finance Minister Ivan Mikloš said it is crucial to sustain
the headway the country has made and continue in its efforts to improve the
Of the ten new European Union members, only Lithuania and Slovakia have managed
to rub elbows with the best-performing countries in terms of business
In late May, the International Monetary Fund praised Slovakia's reforms and
economic performance. Although the general Slovak public appears reform-weary
and polls rarely reflect the enthusiasm of international institutions, Slovakia
remains attractive to foreign direct investment. The country continues to
perform well in competition with other central and eastern European countries
for investors' money.
One weakness the Slovak government needs to address is its failure to
communicate and explain reforms to the general public, who remain largely
hostile to new reforms. The World Bank has approved a grant worth Sk11.6 million
(€291,303) that will be used to improve public relations.
A counterweight to Bratislava needed
Dzurinda, has suggested that Kosice, Slovakia's second largest city, should
become a counterweight to Bratislava, which is at the southernmost extremity of
the country. Dzurinda made the remarks after a meeting with Kosice mayor Zdenko
Kosice should be connected to an international highway, and be promoted as the
centre of Eastern Slovakia, said Dzurinda. The Premier also cited the need to
build an industrial park in the borough of Peres in an effort to combat the
city's declining revenues.
Kia says it won't move Slovak plant: report
South Korea's Kia Motors rejected on August 13th a Slovak government plan to
find a new site for the automaker's US$1bn assembly plant, the Sita news agency
said recently, cited by Deutsche Presse-Agentur (dpa). The report came a day
after Minister of Economics Pavol Rusko said the government was shopping for a
site to replace the designated tract near Zilina, where land-price disputes have
slowed the project. Some owners of the 7,000 land plots chosen for the plant
have refused to sell because they think the government's price offers are too
Rusko threatened to move the plant to Nitra, Banska Bystrica or Zlate Moravce.
He discussed the proposal with Nitra Officials. But Sita, quoting an unnamed Kia
source, said the automaker will not move because ground preparations have
already begun at the Zilina site.
Kia started the project in April and wants to start building 300,000 cars a year
by late 2006. The factory, a huge foreign investment for Slovakia, would employ
SLSP earnings climb 14% in H1
Slovakia's largest bank, Slovenska sporitelna (SLSP), an arm of Austria's Erste
Bank, saw its first-half year consolidated net earnings climb 14% year-on-year
to 1.6bn Slovak crowns by international accounting standards (IAS), New Europe
reported recently. The bank said it maintained a positive trend for all key
indicators. SLSP's operating profit fell almost 30% to 2.4bn crowns. Total
assets rose 12% year-on-year to 226bn crowns.
Banks get positive outlook
Moody's Investors Service granted a positive rating outlook for Slovakia's
banking system, New Europe reported recently.
In its latest report, Moody's writes that the outlook is underpinned by the
sector's growth potential and the foreign ownership of most of the country's
banks. However, there are challenges associated with improvement of risk
management, and asset-liability management remains a weakness, Moody's Investors
Service said. The four rated banks in Slovakia are: Slovenska Sporitelna,
Vseobecna uverova banka, UniBanka and EXIM Bank.
Slovnaft records huge profit growth in H1
Slovnaft, Slovakia's biggest oil processor and fuel distributor, posted a
net profit of 4.15bn Slovak crowns in international financial reporting
standards (IFRS) in the first 6 months of 2004, up from 1.64bn crowns in the
same period a year earlier, according to figures recently released by the
company, New Europe reported.
The company's sales were up 9% year-on-year to 35.76bn crowns in the monitored
period. The firm attributes the improved results to good management, a long-term
focus on increasing efficiency and synergies resulting from integrated
operations within the Hungarian oil and gas concern MOL, which owns Slovnaft.
Restructuring at the firm and higher mark-ups have also contributed to the
gains. Slovnaft's operating profit reached 4.95bn crowns at the end June, up
from 1.79bn crowns a year earlier. The firm's EBITDA (earnings before interest,
taxes, depreciation and amortisation) rose 83% to 6.58bn crowns in the first
Sales of refined products added over 10% to 25.4bn crowns. Petrochemical sales
were up nearly 20% year-on-year to 6.05bn crowns. The growth was driven
primarily by higher demand on the Czech market in light of the planned closure
of domestic refineries in Litinov and Kralupy, along with rising demand for low-sulphur
diesel oil in Germany, Poland and Austria, according to Slovnaft.
The firm processed 2.79m tn of oil in the first 6 months, an increase of 4.5%
year-on-year. Slovnaft invested 3.65bn crowns in January-June, or 1.8bn crowns
more than in the first half of 2003, with most of that going to the construction
of a new diesel oil desulphurisation unit and a polypropylene production centre.
Slovnaft operates some 300 filling stations in Slovakia and 40 in the Czech
Republic. Hungarian oil and gas concern MOL holds a 98.4% stake in Slovnaft.
Rusko: No changes to SE's contracts before privatisation
Slovakia's dominant power producer, Slovenske elektrarne (SE), will not make any
changes to its current contracts before the state sells its 66% stake in the
firm, Economy Minister, Pavol Rusko, announced on August 25th, New Europe
In its binding bid, the Italian energy giant Enel, which was short-listed for
the state's stake, asked the Slovak government to cancel some of SE's contracts
which it considered disadvantageous.
"They will have to adjust their bid to the option given at the beginning of
the tender," Rusko said. The three bidders - Enel, the Czech power firm CEZ
and Russia's RAO UES International - can only request that the government
separate out some segments such as outdated nuclear plants, according to Rusko.
Enel's offer of 40bn Slovak crowns was conditioned on the cancellation of some
CEZ offered 31bn crowns for SE without its nuclear power facilities, while RAO
UES offered 19bn crowns for SE with all of its holdings.
The privatisation adviser said, however, that the original binding bids were not
comparable and asked the parties to submit amended bids by September 3rd. Rusko
said that ideally a winner should be selected by the end of September, with the
contract signed before the end of the year. SE accounts for over 85% of
Slovakia's power production.
The firm operates three nuclear plants, two thermal power stations and 34
Slovanet sales rise to 160m crowns in H1
Slovak Internet and communication service provider Slovanet saw its sales
rise 11% year-on-year in the first 6 months of 2004 to 163m Slovak crowns,
according to figures released by the firm recently, New Europe reported.
The firm's EBITDA (earnings before interest, tax, depreciation and amortisation),
however, slid nearly 44% in the monitored period to 11.7m crowns. The firm
attributed its record turnover to major orders from the business sector as well
as the launch of new services for households and small businesses. The firm
invested over 45m crowns in new technologies in the first half of 2004.
The firm is preparing to offer voice services and wants to begin offering
clients cheaper calling prices by the end of this year. Slovanet is one of
Slovakia's biggest providers of corporate communications services. The firm is
part of an international holding company which also includes the Czech firm
EuroTel Bratislava catching up with Orange
Slovakia's second largest mobile network operator EuroTel Bratislava is catching
up with the market leader Orange, the comparison of their first-half performance
statistics revealed, New Europe reported recently. The total number of clients
of EuroTel grew by 27% to 1,740,082, while it was only 19% with Orange, to
2,208,000 although it is unclear how many new people the market can embrace and
thus major changes can be expected only as a result of new developments.
Regarding the growth of total revenues, EuroTel again beat Orange. EuroTel
increased sales of goods and services by 21.7% to 6.26bn Slovak crowns
(€156.5m), while Orange (formerly Globtel) grew by 18% to 9.1bn crowns.
Net profits of EuroTel grew by 69% to 1.12bn crowns, while Orange posted 1.9bn
crowns for a 47% growth.
On the other hand, Orange was faster in its EBIDTA (30%) growth while "the
blue" increased its EBIDTA by only 23%.
On average, EuroTel makes 567 crowns on a single client per month (Orange 670).
The difference is the result of the higher percentage of EuroTel pre-paid phone
card holders, while more Orange clients go for pre-paid programmes.
Both companies were also active in seeking corporate clients: Orange managed to
"sign" carmaker PSA Peugeot Citroen, Heineken Slovensko brewery,
Telenor Networks telecoms company and Transpetrol oil shipper; while EuroTel
attracted carmaker Kia-Hyundai, Continental-Matador tyre producer, ERGO insurer
and ZSNP aluminium producer, the report said.
Makyta Puchov records 40% sales surge in H1
Makyta Puchov, Slovakia's biggest textiles producer, posted sales of 530m Slovak
crowns in the first six months of 2004, an increase of nearly 42% over the same
period a year earlier, the firm's Miroslav Macek told the CTK news agency
recently. The firm did not release profit figures for the first half.
Macek attributes the improvement in sales to rising exports, which were up 53%
year-on-year in the monitored period. Exports accounted for 90% of the firm's
total sales in the first half. The firm's biggest export markets are Austria,
Germany, Italy, the Czech Republic, the Netherlands, Switzerland, Russia and
Japan. On the Slovak market, Makyta sells some 80% of its products through its
own retail network which includes 48 branches and department stores. Makyta also
produces car upholstery with Austria's Eybl Krems for Audi, Volkswagen, Honda
and Peugeot. The firm is currently working on plans to expand upholstery
production for Peugeot which would create some 200 new jobs. Makyta showed a
profit of 8.2m crowns on sales of 1.01bn crowns in 2003.
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