"buffer zone" in northern Iraq
June 14, 2007 This is bne's southeast Europe daily newsletter, a list of the top stories from the region. You can receive the list as a plain text or html email or as a pdf file. Manage your delivery options here: http://businessneweurope.eu/users/subs.php TOP STORIES 1. Turkey said to establish "buffer zone" in northern Iraq 2. Raiffeisen's Bulgarian unit says assets top €4bn end-March 3. Turkey promises no more delays for Petkim privatization SOUTHEAST EUROPE NEWS 4. EU reopens talks with Serbia 5. Turkish energy minister meets Turkmen president on energy 6. Clothing store Gap to expand in Turkey STORIES FROM WEBSITE 7. IEA warns Russian oil output will plateau around 2010 8. France says it's not EU business as usual with Turkey 9. EBRD provides $42m loans to Efes Kazakhstan 10. Kazakh banks expand their geographic exposure 11. Turkey central bank seen keeping rates steady BULGARIA 12. Bank of Piraeus Bulgaria buys leasing firm Dirent Bulgaria 13. EU said to weigh withholding some Bulgaria aid BALKANS 14. Erste raises target on Slovenia generic drugmaker Krka to €1030 15. Raiffeisen says 2006 results of Croatia's Podravka make "poor impression" 16. Kosovo solution requires both sides' approval, says Russia's Lavrov 17. World Bank to lend Montenegro $100m for economic growth 18. EU warns Slovenia again over sustainability of its finances
TOP STORIES 1. Turkey said to establish "buffer zone" in northern Iraq bne June 14, 2007
Daily newspapers and CNBC-e reported that army generals and government officials discussed to establish a ìbuffer zoneî in northern Iraq, 15 kilometers away from Turkey's border to northern Iraq. In order to do that Turkey will employ its troops (around 2,000) in northern Iraq and some reinforcements. However, US Administration and Iraqi authorities should be convinced first. Meanwhile, the Government pledged to spend YTL200 mn (US$150 mn) for the security of the borders. "We do not think that the government will be able to convince US Administration easily, since Turkish troops could engage local militia and US soldiers, if it establishes a buffer zone in northern Iraq," Raymond James said.
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2. Raiffeisen's Bulgarian unit says assets top €4bn end-March bne June 14, 2007
The assets of Raiffeisenbank Bulgaria amounted to BGN 4.028 billion as at March 31, 2007, a 38.76% increase compared to the year-ago period, Pari daily reported. The credit portfolio of the bank rose by 56.79% to BGN 2.138 billion.
3. Turkey promises no more delays for Petkim privatization Oyak Securities June 14, 2007
Chairman of the Privatization Administration Metin Kilci stated that there would be no further delay in the privatization of petrochemical maker Petkim. As might be remembered, deadline to submit tender offers for Petkim was postponed to 25 June from 15 June due to some technical problems. Kilci also said they would consider floating a part of state's 45% stake in Turk Telekom in an IPO in late 2007 or beginning of 2008.
SOUTHEAST EUROPE NEWS 4. EU reopens talks with Serbia bne June 14, 2007
The EU resumed talks on closer ties with Serbia after Belgrade increased cooperation with the UN war crimes tribunal, even though Ratko Mladic, wanted for the 1995 Srebrenica massacre, is still at large, The Independent reported. The EU halted talks a year ago after PM Vojislav Kostunica broke an undertaking to arrest the wartime Bosnian Serb leader. But Brussels agreed last week to restart talks after Serbia arrested Zdravko Tolimir, who is also charged with genocide.
5. Turkish energy minister meets Turkmen president on energy
bne June 14, 2007
Turkish Energy Minister Hilmi Gulermet with new Turkmen President Gurbanguly Berdymukhammedov in an effort to increase energy co-operation between the two states, according to news reports. Guler and Berdymukhammedov discussed potential increased supplies of Turkmen power exports to Turkey via Iran, which began in 2003, as well as potential new projects in the oil and gas sphere. Mete Gurel, the head of Turkey's state-owned oil company TPAO, accompanied Guler in the talks. COMMENT: Global Insight says, "Guler will travel to Kazakhstan today, hoping to build support there for the potential trans-Caspian gas pipeline, which could supply gas to Turkey and onward to Europe via the proposed Nabucco pipeline. TPAO is also interested in increasing co-operation with Kazakhstan's Kazmunaigaz, with whom TPAO has already formed a joint venture, Turk-Moray, to explore for oil and gas in Kazakhstan. Turkey's efforts to secure support for the trans-Caspian gas pipeline from Turkmenistan and Kazakhstan have been made more difficult after the two
businessneweurope.eu
Central Asian states agreed last month with Russia to build a north-south "Caspian shore" pipeline as the main route for their gas exports, although Turkmenistan says that both pipelines could be feasible."
6. Clothing store Gap to expand in Turkey bne June 14, 2007
Clothing retailer Gapsaid Wednesday it had struck a deal with two franchisees to open 90 Gap stores and 20 Banana Republic stores in Saudi Arabia and Turkey over the next five years. Gap's franchise partner is Fiba Holding A.S. in Turkey, Gap said in a statement. The first Gap stores will open in each country by the end of this year, with the first Banana Republic stores opening by next spring.
STORIES FROM WEBSITE 7. IEA warns Russian oil output will plateau around 2010 bne June 14, 2007
The International Energy Agency continued its gloomy assessment of Russia's oil industry, warning that the country's oil output could start to level off from 2010 to 2012 and growth will stall until at least the middle of the decade. In its monthly Oil Market Report, the IEA predicts that oil production will reach around 10.6m barrels per day (b/d) by 2010, up from an actual 9.9m b/d in the first quarter of 2007. However, this level then dips to 10.5m b/d by 2012. The energy security watchdog for the OECD reiterated its perennial complaint of a lack of transparency in Russia's oil industry, specifically there being no publicly available field-specific data. "It is not possible to perform an in-depth, field-by-field analysis for Russia," the IEA said. "Our approach, therefore, combines a simplified key field overview, with an examination of company growth plans, government and industry forecasts and an assessment of likely pipeline capacity availability.= It said the range of industry forecasts shows Russia's production in 2010 will be anywhere from 10.0m b/d to 11.1m b/d, with traditionally conservative government forecasts showing a level of 10.2m b/d that year. Although higher than this, the IEA's forecast is well below the levels implied by the published growth targets for producers like Rosneft, Lukoil and TNK-BP. Explaining the conservative tilt to its forecast, the IEA said that although it assumes the 20 biggest development projects scheduled to come on stream in Russia over the next five years 2012 will actually do so, it warned that start-ups could face problems, which might affect company production targets. "An uncertain Russian investment climate and tight drilling/service capacity justify caution on new project start-up," it said. While remaining a key driver for non-OPEC supply, Russia won't be able to prevent production growth from such producers falling below the psychologically important
businessneweurope.eu
1.0m b/d for the whole of 2007. This, combined with increasing world demand, has prompted the IEA to predict a sharp rise in the price of oil in the second half of 2007 unless the truculent OPEC increases production. The IEA raised its forecast for crude demand this year by about 0.2m b/d, bringing its year-on-year demand growth up 2% to 86.13m b/d this year, against the 1.8% rise it foresaw in last month's report. At the same time as this demand is rising, the IEA lowered its expectation of non-OPEC supplies by 0.1m b/d, to 50.2m b/d, giving annual growth of 0.9m b/d. "The 1.0m b/d growth seen in the last three quarters eases to 0.7-0.9m b/d for the rest of 2007 due to maintenance, seasonal shut-ins, project slippage and mature field decline," the IEA said. The organisation appealed to OPEC to increase production, though the producers' organisation has so far resisted frequent calls from the IEA to open the taps in order to reduce pressure on prices. "We would very much hope that OPEC production is at its seasonal low at the moment," David Fyfe, analyst at the IEA, was quoted by Reuters as saying. "We definitely do need more crude oil." There had been hopes that inventories, which are abnormally low for this time of year, would build ahead of the peak driving season. However, these were dashed Wednesday as a US government report showed that gasoline inventories rose just 3,000 barrels to 201.5m in the week ended June 8, rather than the gain of 1.5m barrels that the market had been expecting. This pushed the oil price above $69 a barrel. Without a production increase from OPEC, analysts are now predicting that crude prices could easily get to $80 later this year.
8. France says it's not EU business as usual with Turkey bne June 14, 2007
France said on Wednesday that it would not allow the EU to simply carry on with business as usual in Turkey's accession negotiations. EU diplomats said that France had indicated in preparatory discussions in Brussels that it had a particular concern about allowing Turkey to open the negotiating chapter on economic and monetary policy. The EU Summit will be held next week and related decision will be taken there. However, EU officials stated that the EU is ready to open three chapters to negotiations with Turkey. "A further setback to Turkey's EU membership talks would be very negative, since Turkey's IMF anchor is already in jeopardy because of general elections," Raymond James said.
9. EBRD provides $42m loans to Efes Kazakhstan bne June 14, 2007 EBRD will provide USD42mn of loans to Efes Kazakhstan, a wholly owned subsidiary of EBI, Oyak Securities said.. The loan will be used to increase capacity to 2.1mn hl from 1.3mn hl and improve marketing and distribution systems in Kazakhstan. Anadolu Efes owns 70% of EBI.
businessneweurope.eu
10. Kazakh banks expand their geographic exposure Aton June 13, 2007
Kazkommertsbank reported on Friday that it is bidding for Turkish Oyak Bank, while Seimar Investment Group, which controls Alliance Bank, announced it has acquired a small Russian bank, Starbank. Headquartered in Noyabrsk, Starbank has seven branches, $4mn of equity, and 2005 earnings of $910,000. The bank was established in 1990 as the legal successor to ICB (Promstroibank). Seimar plans to increase Starbank's capital to $57.6mn. Banking penetration in Kazakhstan exceeds that of Eastern European countries, due to the unprecedented growth over the past several years. We believe Kazakh bankers are wary of a possible slowdown in the industry and are trying to diversify geographically to ensure further expansion.
11. Turkey central bank seen keeping rates steady bne June 14, 2007
At the MPC meeting to be held today, rates are expected to remain unchanged. Its decision will be announced after the market closes. The market consensus is for the CBT to keep O/N borrowing rates on hold at 17.5% and 22.5% (simple). "We do not expect the CBT to change its wording either," saus Deutsche Bank.
BULGARIA 12. Bank of Piraeus Bulgaria buys leasing firm Dirent Bulgaria bne June 14, 2007
Greece's Bank of Piraeus said that its Bulgarian arm signed a deal to purchase 100% of operating leasing specialist Dirent Bulgaria, newswires reported. Dirent Bulgaria has €5m in assets and services 120 customers boosting Piraeus Bank Bulgaria's position in the Bulgarian operating leasing market, the company said.
13. EU said to weigh withholding some Bulgaria aid bne June 14, 2007
The European Commission is considering recommending that some financial aid be withheld from new member state Bulgaria because of worries over corruption and maladministration, Reuters quoted a senior EU source as saying. The European Union executive is due to issue a monitoring report on June 27 on Bulgaria and Romania, which could trigger sanctions against one or both of the
businessneweurope.eu
Balkan newcomers. A Commission spokesman said the report would cover only the benchmarks on justice and home affairs, not agricultural or structural funds for regional development. Another EU official said a decision on farm payments was likely in the autumn. Romania is due to receive EU aid worth €11.5bn in 2007-09 and Bulgaria €4.6bn.
BALKANS 14. Erste raises target on Slovenia generic drugmaker Krka to €1030 bne June 14, 2007 Reflecting Krka's superior profitability growth, Erste Bank raised its 12-month target price to EUR 1,030 per share "With its top line fueled by exports, profitability improvements beating its peers', Krka reassured us that it deserves to be traded at premium; we stick to Accumulate. 1Q2007 delivered solid top line growth (+12.8% y/y), evidencing competitive strength of Krka's branded generics portfolio; benefiting from lower provisioning, favorable sales structure, efficient cost control, EBIT jumped 20.5% y/y," Erste said. Meanwhile, Krka has opened a new 80-million-euro (US$106.8-million) production plant, Sinteza 4, in Novo Mesto, Slovenia, STA reports. The plant is expected to produce 60% of Krka's active principles and cut company production costs. "We are very satisfied whenever we manage to cut costs by few per cent", Krka's CEO Joze Colaric told STA. He stressed that he was confident that the company would reach its 2007 forecast of 130-million-euro group net profit of, up from 112.1 million euro last year. Global Insight says, "The new plant will focus production and supply ingredients for the company's plants in Slovenia, Croatia, Poland and Russia, making Krka stronger in its defence against possible chemical-synthesis related lawsuits, an issue which has dogged the company. While strengthening its domestic base, Krka is already eyeing takeover targets in Europe and Central Asia."
15. Raiffeisen says 2006 results of Croatia's Podravka make "poor impression" Raiffeisen June 14, 2007 Podravka's 2006 results made a rather poor impression. Instead of the announced HRK 100 mn of net profit, Podravka realized only HRK 60.4 mn, which is 3.6% lower yoy. Podravka explained that high restructuring expenses were the main reason for this low profit. The group's sales increased by a low 0.8%. Reasons for such a performance can be found in the discontinued distribution of Nestle in the markets of SEE and restrictive measures imposed by the Croatian Institute for Health Insurance which affected Belupo (the pharmaceuticals segment). In Q1 the overall sales revenue fell by 5.5% for which again the discontinued Nestle distribution is to blame, whereas net profit decreased by 8% in Q1. In order to set the target price for Podravka RCB analysts have used two valuation models: a DCF and a peer analysis. Based on the DCF valuation they set their 12-
businessneweurope.eu
month price target at HRK 664 (HRK 643 at the beginning of 2008e). In the peer valuation RCB analysts have separately compared Podravka's F&B segment with WE peer companies and the Pharmaceuticals segment with EE peer companies. Based on the multiples EV/Sales and EV/EBITDA they have derived a price of HRK 493 per share. By averaging the two valuation methods, RCB analysts set their single price target at HRK 579 (recommendation: HOLD).
16. Kosovo solution requires both sides' approval, says Russia's Lavrov bne June 14, 2007 Russian Foreign Minister Sergei Lavrov warned Wednesday that any lasting solution on the status of Kosovo had to take into account the best interests of both sides, Kosovo and Serbia, AFP reported. "We believe that any resolution, any solution of this issue which is not based on a balanced outcome of the negotiations, an outcome which is acceptable for both parties, would not be sustainable," he told reporters in Stockholm following talks with his Swedish counterpart Carl Bildt. A solution that did not have both sides' approval "could be very risky for the Balkans, for other parts of Europe," he said. On Tuesday, the countries of the Contact Group on Kosovo met without Russia -Britain, France, Germany, Italy and the United States -- and renewed their backing for a UN plan that would give de facto independence to the Serbian province.
17. World Bank to lend Montenegro $100m for economic growth bne June 14, 2007 The World Bank will lend up to $100 million (75 million euro) to Montenegro by 2010 to support the country's economic growth according to a four-year partnership strategy, the bank said on Wednesday, SeeNews reported. The global lender will provide up to $90 million by 2010 to help Montenegro meet European standards, the World Bank said in a statement. The money will be used to improve the business environment, further strengthen social service delivery, energy projects and road infrastructure investments.
18. EU warns Slovenia again over sustainability of its finances bne June 14, 2007
The European Commission has issued another warning to Slovenia over the sustainability of its public finances. In an annual report on the finances of the eurozone countries, the Commission says the structure of Slovenia's finances is expected to weaken in the future. Slovenia is not among the ten countries in the
businessneweurope.eu
report that the Commission expects to achieve their mid-term goals in the field in 2008.
businessneweurope.eu
TOP STORIES 1. Turkey said to establish "buffer zone" in northern Iraq bne June 14, 2007
Daily newspapers and CNBC-e reported that army generals and government officials discussed to establish a ìbuffer zoneî in northern Iraq, 15 kilometers away from Turkey's border to northern Iraq. In order to do that Turkey will employ its troops (around 2,000) in northern Iraq and some reinforcements. However, US Administration and Iraqi authorities should be convinced first. Meanwhile, the Government pledged to spend YTL200 mn (US$150 mn) for the security of the borders. "We do not think that the government will be able to convince US Administration easily, since Turkish troops could engage local militia and US soldiers, if it establishes a buffer zone in northern Iraq," Raymond James said.
businessneweurope.eu
2. Raiffeisen's Bulgarian unit says assets top €4bn end-March bne June 14, 2007
The assets of Raiffeisenbank Bulgaria amounted to BGN 4.028 billion as at March 31, 2007, a 38.76% increase compared to the year-ago period, Pari daily reported. The credit portfolio of the bank rose by 56.79% to BGN 2.138 billion.
3. Turkey promises no more delays for Petkim privatization Oyak Securities June 14, 2007
Chairman of the Privatization Administration Metin Kilci stated that there would be no further delay in the privatization of petrochemical maker Petkim. As might be remembered, deadline to submit tender offers for Petkim was postponed to 25 June from 15 June due to some technical problems. Kilci also said they would consider floating a part of state's 45% stake in Turk Telekom in an IPO in late 2007 or beginning of 2008.
SOUTHEAST EUROPE NEWS 4. EU reopens talks with Serbia bne June 14, 2007
The EU resumed talks on closer ties with Serbia after Belgrade increased cooperation with the UN war crimes tribunal, even though Ratko Mladic, wanted for the 1995 Srebrenica massacre, is still at large, The Independent reported. The EU halted talks a year ago after PM Vojislav Kostunica broke an undertaking to arrest the wartime Bosnian Serb leader. But Brussels agreed last week to restart talks after Serbia arrested Zdravko Tolimir, who is also charged with genocide.
5. Turkish energy minister meets Turkmen president on energy
bne June 14, 2007
Turkish Energy Minister Hilmi Gulermet with new Turkmen President Gurbanguly Berdymukhammedov in an effort to increase energy co-operation between the two states, according to news reports. Guler and Berdymukhammedov discussed potential increased supplies of Turkmen power exports to Turkey via Iran, which began in 2003, as well as potential new projects in the oil and gas sphere. Mete Gurel, the head of Turkey's state-owned oil company TPAO, accompanied Guler in the talks. COMMENT: Global Insight says, "Guler will travel to Kazakhstan today, hoping to build support there for the potential trans-Caspian gas pipeline, which could supply gas to Turkey and onward to Europe via the proposed Nabucco pipeline. TPAO is also interested in increasing co-operation with Kazakhstan's Kazmunaigaz, with whom TPAO has already formed a joint venture, Turk-Moray, to explore for oil and gas in Kazakhstan. Turkey's efforts to secure support for the trans-Caspian gas pipeline from Turkmenistan and Kazakhstan have been made more difficult after the two
businessneweurope.eu
Central Asian states agreed last month with Russia to build a north-south "Caspian shore" pipeline as the main route for their gas exports, although Turkmenistan says that both pipelines could be feasible."
6. Clothing store Gap to expand in Turkey bne June 14, 2007
Clothing retailer Gapsaid Wednesday it had struck a deal with two franchisees to open 90 Gap stores and 20 Banana Republic stores in Saudi Arabia and Turkey over the next five years. Gap's franchise partner is Fiba Holding A.S. in Turkey, Gap said in a statement. The first Gap stores will open in each country by the end of this year, with the first Banana Republic stores opening by next spring.
STORIES FROM WEBSITE 7. IEA warns Russian oil output will plateau around 2010 bne June 14, 2007
The International Energy Agency continued its gloomy assessment of Russia's oil industry, warning that the country's oil output could start to level off from 2010 to 2012 and growth will stall until at least the middle of the decade. In its monthly Oil Market Report, the IEA predicts that oil production will reach around 10.6m barrels per day (b/d) by 2010, up from an actual 9.9m b/d in the first quarter of 2007. However, this level then dips to 10.5m b/d by 2012. The energy security watchdog for the OECD reiterated its perennial complaint of a lack of transparency in Russia's oil industry, specifically there being no publicly available field-specific data. "It is not possible to perform an in-depth, field-by-field analysis for Russia," the IEA said. "Our approach, therefore, combines a simplified key field overview, with an examination of company growth plans, government and industry forecasts and an assessment of likely pipeline capacity availability.= It said the range of industry forecasts shows Russia's production in 2010 will be anywhere from 10.0m b/d to 11.1m b/d, with traditionally conservative government forecasts showing a level of 10.2m b/d that year. Although higher than this, the IEA's forecast is well below the levels implied by the published growth targets for producers like Rosneft, Lukoil and TNK-BP. Explaining the conservative tilt to its forecast, the IEA said that although it assumes the 20 biggest development projects scheduled to come on stream in Russia over the next five years 2012 will actually do so, it warned that start-ups could face problems, which might affect company production targets. "An uncertain Russian investment climate and tight drilling/service capacity justify caution on new project start-up," it said. While remaining a key driver for non-OPEC supply, Russia won't be able to prevent production growth from such producers falling below the psychologically important
businessneweurope.eu
1.0m b/d for the whole of 2007. This, combined with increasing world demand, has prompted the IEA to predict a sharp rise in the price of oil in the second half of 2007 unless the truculent OPEC increases production. The IEA raised its forecast for crude demand this year by about 0.2m b/d, bringing its year-on-year demand growth up 2% to 86.13m b/d this year, against the 1.8% rise it foresaw in last month's report. At the same time as this demand is rising, the IEA lowered its expectation of non-OPEC supplies by 0.1m b/d, to 50.2m b/d, giving annual growth of 0.9m b/d. "The 1.0m b/d growth seen in the last three quarters eases to 0.7-0.9m b/d for the rest of 2007 due to maintenance, seasonal shut-ins, project slippage and mature field decline," the IEA said. The organisation appealed to OPEC to increase production, though the producers' organisation has so far resisted frequent calls from the IEA to open the taps in order to reduce pressure on prices. "We would very much hope that OPEC production is at its seasonal low at the moment," David Fyfe, analyst at the IEA, was quoted by Reuters as saying. "We definitely do need more crude oil." There had been hopes that inventories, which are abnormally low for this time of year, would build ahead of the peak driving season. However, these were dashed Wednesday as a US government report showed that gasoline inventories rose just 3,000 barrels to 201.5m in the week ended June 8, rather than the gain of 1.5m barrels that the market had been expecting. This pushed the oil price above $69 a barrel. Without a production increase from OPEC, analysts are now predicting that crude prices could easily get to $80 later this year.
8. France says it's not EU business as usual with Turkey bne June 14, 2007
France said on Wednesday that it would not allow the EU to simply carry on with business as usual in Turkey's accession negotiations. EU diplomats said that France had indicated in preparatory discussions in Brussels that it had a particular concern about allowing Turkey to open the negotiating chapter on economic and monetary policy. The EU Summit will be held next week and related decision will be taken there. However, EU officials stated that the EU is ready to open three chapters to negotiations with Turkey. "A further setback to Turkey's EU membership talks would be very negative, since Turkey's IMF anchor is already in jeopardy because of general elections," Raymond James said.
9. EBRD provides $42m loans to Efes Kazakhstan bne June 14, 2007 EBRD will provide USD42mn of loans to Efes Kazakhstan, a wholly owned subsidiary of EBI, Oyak Securities said.. The loan will be used to increase capacity to 2.1mn hl from 1.3mn hl and improve marketing and distribution systems in Kazakhstan. Anadolu Efes owns 70% of EBI.
businessneweurope.eu
10. Kazakh banks expand their geographic exposure Aton June 13, 2007
Kazkommertsbank reported on Friday that it is bidding for Turkish Oyak Bank, while Seimar Investment Group, which controls Alliance Bank, announced it has acquired a small Russian bank, Starbank. Headquartered in Noyabrsk, Starbank has seven branches, $4mn of equity, and 2005 earnings of $910,000. The bank was established in 1990 as the legal successor to ICB (Promstroibank). Seimar plans to increase Starbank's capital to $57.6mn. Banking penetration in Kazakhstan exceeds that of Eastern European countries, due to the unprecedented growth over the past several years. We believe Kazakh bankers are wary of a possible slowdown in the industry and are trying to diversify geographically to ensure further expansion.
11. Turkey central bank seen keeping rates steady bne June 14, 2007
At the MPC meeting to be held today, rates are expected to remain unchanged. Its decision will be announced after the market closes. The market consensus is for the CBT to keep O/N borrowing rates on hold at 17.5% and 22.5% (simple). "We do not expect the CBT to change its wording either," saus Deutsche Bank.
BULGARIA 12. Bank of Piraeus Bulgaria buys leasing firm Dirent Bulgaria bne June 14, 2007
Greece's Bank of Piraeus said that its Bulgarian arm signed a deal to purchase 100% of operating leasing specialist Dirent Bulgaria, newswires reported. Dirent Bulgaria has €5m in assets and services 120 customers boosting Piraeus Bank Bulgaria's position in the Bulgarian operating leasing market, the company said.
13. EU said to weigh withholding some Bulgaria aid bne June 14, 2007
The European Commission is considering recommending that some financial aid be withheld from new member state Bulgaria because of worries over corruption and maladministration, Reuters quoted a senior EU source as saying. The European Union executive is due to issue a monitoring report on June 27 on Bulgaria and Romania, which could trigger sanctions against one or both of the
businessneweurope.eu
Balkan newcomers. A Commission spokesman said the report would cover only the benchmarks on justice and home affairs, not agricultural or structural funds for regional development. Another EU official said a decision on farm payments was likely in the autumn. Romania is due to receive EU aid worth €11.5bn in 2007-09 and Bulgaria €4.6bn.
BALKANS 14. Erste raises target on Slovenia generic drugmaker Krka to €1030 bne June 14, 2007 Reflecting Krka's superior profitability growth, Erste Bank raised its 12-month target price to EUR 1,030 per share "With its top line fueled by exports, profitability improvements beating its peers', Krka reassured us that it deserves to be traded at premium; we stick to Accumulate. 1Q2007 delivered solid top line growth (+12.8% y/y), evidencing competitive strength of Krka's branded generics portfolio; benefiting from lower provisioning, favorable sales structure, efficient cost control, EBIT jumped 20.5% y/y," Erste said. Meanwhile, Krka has opened a new 80-million-euro (US$106.8-million) production plant, Sinteza 4, in Novo Mesto, Slovenia, STA reports. The plant is expected to produce 60% of Krka's active principles and cut company production costs. "We are very satisfied whenever we manage to cut costs by few per cent", Krka's CEO Joze Colaric told STA. He stressed that he was confident that the company would reach its 2007 forecast of 130-million-euro group net profit of, up from 112.1 million euro last year. Global Insight says, "The new plant will focus production and supply ingredients for the company's plants in Slovenia, Croatia, Poland and Russia, making Krka stronger in its defence against possible chemical-synthesis related lawsuits, an issue which has dogged the company. While strengthening its domestic base, Krka is already eyeing takeover targets in Europe and Central Asia."
15. Raiffeisen says 2006 results of Croatia's Podravka make "poor impression" Raiffeisen June 14, 2007 Podravka's 2006 results made a rather poor impression. Instead of the announced HRK 100 mn of net profit, Podravka realized only HRK 60.4 mn, which is 3.6% lower yoy. Podravka explained that high restructuring expenses were the main reason for this low profit. The group's sales increased by a low 0.8%. Reasons for such a performance can be found in the discontinued distribution of Nestle in the markets of SEE and restrictive measures imposed by the Croatian Institute for Health Insurance which affected Belupo (the pharmaceuticals segment). In Q1 the overall sales revenue fell by 5.5% for which again the discontinued Nestle distribution is to blame, whereas net profit decreased by 8% in Q1. In order to set the target price for Podravka RCB analysts have used two valuation models: a DCF and a peer analysis. Based on the DCF valuation they set their 12-
businessneweurope.eu
month price target at HRK 664 (HRK 643 at the beginning of 2008e). In the peer valuation RCB analysts have separately compared Podravka's F&B segment with WE peer companies and the Pharmaceuticals segment with EE peer companies. Based on the multiples EV/Sales and EV/EBITDA they have derived a price of HRK 493 per share. By averaging the two valuation methods, RCB analysts set their single price target at HRK 579 (recommendation: HOLD).
16. Kosovo solution requires both sides' approval, says Russia's Lavrov bne June 14, 2007 Russian Foreign Minister Sergei Lavrov warned Wednesday that any lasting solution on the status of Kosovo had to take into account the best interests of both sides, Kosovo and Serbia, AFP reported. "We believe that any resolution, any solution of this issue which is not based on a balanced outcome of the negotiations, an outcome which is acceptable for both parties, would not be sustainable," he told reporters in Stockholm following talks with his Swedish counterpart Carl Bildt. A solution that did not have both sides' approval "could be very risky for the Balkans, for other parts of Europe," he said. On Tuesday, the countries of the Contact Group on Kosovo met without Russia -Britain, France, Germany, Italy and the United States -- and renewed their backing for a UN plan that would give de facto independence to the Serbian province.
17. World Bank to lend Montenegro $100m for economic growth bne June 14, 2007 The World Bank will lend up to $100 million (75 million euro) to Montenegro by 2010 to support the country's economic growth according to a four-year partnership strategy, the bank said on Wednesday, SeeNews reported. The global lender will provide up to $90 million by 2010 to help Montenegro meet European standards, the World Bank said in a statement. The money will be used to improve the business environment, further strengthen social service delivery, energy projects and road infrastructure investments.
18. EU warns Slovenia again over sustainability of its finances bne June 14, 2007
The European Commission has issued another warning to Slovenia over the sustainability of its public finances. In an annual report on the finances of the eurozone countries, the Commission says the structure of Slovenia's finances is expected to weaken in the future. Slovenia is not among the ten countries in the
businessneweurope.eu
report that the Commission expects to achieve their mid-term goals in the field in 2008.
businessneweurope.eu
