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Richter expects 5% decline in revenue

Hungarian drugmaker Gedeon Richter foresees a 5% drop in its revenue this year, calculated in euros, CEO Erik Bogsch said on February 9 at a press conference during which the company presented its Q4 earnings report. According to Bogsch, the company projects a decline in sales in Ukraine and other CIS countries, as well as in Eastern Europe and the United States, however, he expects higher turnover in Western Europe, China and Latin America, according to Hungarian news agency MTI. Calculated in rubles, Richter’s revenue in Russia could edge up, despite the weakening of the currency, which is expected to have a significant impact on Richter’s results, Bogsch said. He added that last year’s results were excellent, helped by higher turnover, lower costs, narrower financial losses and a low base.

IKEA sales up 14.6% in Hungary in 2015

Sales at the Hungarian unit of Swedish furniture giant IKEA were up 14.6% in its financial year ending August 31, as compared to the previous period, IKEA Lakberendezési managing director Marek Feltl said on February 4, according to Hungarian news agency MTI. During the period IKEA had revenue of HUF 47 billion, Feltl said, adding that sales grew at approximately the same pace as in the preceding period. IKEA is targeting growth exceeding 10% in the following period, he added. The managing director noted that IKEA is building its third store in the country, through an investment of HUF 16.8 bln. The 34,000 sqm store in the south of the capital is expected to open in the spring of 2017, MTI said.

Zwack profit slips on health tax, base effect

After-tax profit of Zwack Unicum, Hungary’s best known spirits maker, fell 12% to HUF 2 billion in Q1-Q3 of its business year ending March 31, an earnings report released on February 3 shows. Profits fell year-on-year following the introduction of a public health product tax and a decline in revenue. Gross sales dropped 6% to HUF 18.3 bln, but Zwack noted that sales spiked in the base period as trading partners rushed to stock inventories before the introduction of the public health product tax. The last quarter of the 2015/2016 business year “promises to be better than the same period last year”, Zwack said in the report. Zwack paid a little more than HUF 1 bln on the public health product tax in Q1-Q3. Sales net of taxes dropped almost 8% to HUF 10.7 bln. Material cost of goods dropped 11% to HUF 4.5 bln. The gross margin came to HUF 6.2 bln, down 5%. Zwack said domestic sales fell almost 8% to HUF 9.6 bln. Export sales dropped 7% to HUF 1.1 bln. Zwack had total assets of HUF 11.9 bln at the end of 2015, down 16% from a year earlier. Non-current liabilities came to just under HUF 400 million.

European Commission OKs Hungarian state aid for Audi

Following an in-depth investigation, the European Commission said on February 1 that €133 million in support from the Hungarian government for Audi Hungaria Motor Kft. to expand its plant in Győr was in line with European Union rules, Hungarian news agency MTI reported. The EC said that Audi Hungaria invested a total of €1.2 billion in a fully integrated production plant for passenger cars at its existing facility, and this expansion is expected to create 2,100 new jobs at the plant, which is located in a disadvantaged region of Hungary where the GDP per capita is far below the EU average, MTI reported. The EC determined that the area is entitled to benefit from aid to encourage investments under the Hungarian regional aid map applicable at the time of granting the aid, MTI said. According to the commission’s decision, the state aid was necessary for the project in Győr to proceed, as the aid merely compensated the company for additional investment costs incurred from the project, MTI reported. “The positive effects of the project on regional development clearly outweigh any distortion of competition created by the aid,” the EC said.

Fairfax Financial Holdings unit takes over QBE branch in Hungary

Colonnade Insurance, a member of Canada’s Fairfax Financial Holdings, has opened a branch in Hungary and taken over the local business of QBE Insurance, Hungarian news agency MTI reported on February 3. QBE’s local branch said late in 2014 that its Australian owners had signed an agreement to sell the business to Fairfax. QBE entered the Hungarian market in 1998, when it acquired travel insurer Atlasz. Colonnade sells asset and accident insurance, reinsurance and investment products at branches in Czech Republic, Slovakia and Ukraine, in addition to Hungary.

OTP inks purchase of AXA’s Hungarian unit

Hungarian OTP Bank said on the official website of the Budapest Stock Exchange that it had signed an agreement with AXA Bank Europe SA to purchase the business unit of AXA Bank Hungary, Hungarian news agency MTI reported on February 3. Under the agreement, the Hungarian bank will take over the corporate portfolio of the bank, as well as employees, credits and savings, MTI reported. OTP expects its mortgage portfolio to increase by approximately 25% with the purchase, according to the statement. After receiving all supervisory approval, the company expects the takeover to be wound up by the end of the year, MTI reported. OTP did not disclose the purchase price in the statement. Retail-focused AXA Bank has been present in Hungary since 2009, MTI said.

MOL to focus on assets not acquisitions in light of oil slump

Hungarian oil and gas company MOL Nyrt. will reduce investments abroad and instead focus on assets closer to home in order to ride out the significant drop in oil prices, Berislav Gaso, the head of the upstream division at MOL told Bloomberg in an interview on February 3. In light of the drop in oil prices, MOL is remaining conservative and leaning towards assets and lowering spending in Hungary and Croatia, which account for 80% of the group’s portfolio, Gaso told Bloomberg. “Our priorities for this year are focusing on what we have, extracting value from the assets,” Bloomberg quoted Gaso as saying, adding: “I like barrels but I like dollars even more and in a $30 environment it is all about dollars when you operate in upstream.” In the past two years, MOL, which is present in 40 countries, has expanded its operations into low risk areas such as the U.K.’s North Sea basin and in Norway where it won four new licenses last month, in addition to operations in Pakistan and Iraq. Details on MOL’s output and investment targets including details of the write-down on its North Sea and Kurdistan assets will be published in its financial report to be released on February 24. Oil prices are at their lowest in more than a decade and this slump is forcing many industry players to rethink their global investment strategies.

Two ibis Styles hotels to open in Hungary

The Orbis Hotel Group, which has taken over the AccorHotels brand in Central and Eastern Europe, including 17 hotels in Hungary, is set to open two ibis Styles hotels in Budapest in April, according to a press release issued by the company on February 4. Mercure Budapest Metropol will be completely renovated to become ibis Styles Budapest Center, with 130 rooms featuring retro computer games, street art and contemporary installations, according to the release. The Mercure Budapest Duna Hotel will also be renovated and transformed into ibis Styles Budapest City, centered around a bike theme, the statement said. “Hungary is a very promising market with great potential, one of the key markets in the region and an important element of our development strategy. With the arrival in Hungary of ibis Styles, a dynamic and well-known international hotel brand, we are aiming to bring innovation and a new hotel experience to guests, offering a unique design and atmosphere, relaxed, friendly service and welcome, where guests can feel the conviviality and the local touch of the city,” said Gilles Clavie, president and CEO of Orbis Hotel Group. The ibis Styles hotels are being marketed as an affordable brand with all-inclusive packages. The hotels are located in city centers around the region, and each has its own design. The brand’s network boasts 283 hotels in 25 countries.

State funds Bosch expansion

Minister of Foreign Affairs and Trade Péter Szijjártó, right, shakes hands with Javier González Pareja, CEO of Bosch Group’s Hungarian unit, on February 10. The two were at a press conference in Budapest to announce that Germanowned automotive industry supplier Bosch Group is expected to invest HUF 19 billion at its Hungarian plant in Hatvan, eastern Hungary, with a HUF 4.7 bln nonrefundable grant from the state. Szijjártó said that the investment is expected to create about 600 workplaces and that it will allow Bosch in Hungary to launch the production of high-tech products, such as central control units for newgeneration electric and hybrid cars, new types of mid- and long-range radar and different types of sensors.