Pakterminal’s value in 2008 transaction was 39 mEUR

The value of the Estonian oil transit company AS Pakterminal and its parent firm in the 2008 share swap transaction by which the companies went into the hands of Vopak E.O.S. was 616 million kroons (EUR 39.36 mln), it appears from the annual report of Vopak E.O.S.
Vopak E.O.S. issued new shares for the acquisition of Pakterminal and swapped them for shares in OU Dipping held by the Dutch Royal Vopak group.
OU Dipping is the sole owner of Pakterminal.
With the transaction Royal Vopak became the owner of 50% of Vopak E.O.S. The other half of the shares are controlled by the Russian N-Trans group.
With the acquisition of Pakterminal the value of goodwill in the balance sheet of Vopak E.O.S. grew by 208 million kroons, as the fair value of Pakterminal’s net assets was estimated at close to 408 million kroons.
Material fixed assets acquired in the transaction were valued at 748 million kroons, beneficial contracts at 121 million kroons and cash at 81 million kroons. Also taken over were loans in the amount of 547 million kroons.
Vopak E.O.S., which operates fuel terminals in Maardu and Muuga to the east of Tallinn, earned a net profit of 212 million kroons last year. Its profit was reduced by an exchange rate related accounting loss in the amount of 126 million kroons.
The company’s profit in 2007 was 505 million kroons.
Revenues climbed from 1.19 billion kroons in 2007 to 1.73 billion kroons last year.
Vopak E.O.S. reloaded 15.7 million tons of oil during 2008, compared with 13.6 million tons in the year before.
Assets of Vopak E.O.S. at the end of the year stood at 4.12 billion kroons and owner’s equity at 1.97 billion kroons.

Source: Estonian Review

980 passengers use Tallinn-Stockholm air route first season

The seasonal Pärnu-Stockholm air route launched by Estonian Air in collaboration with Pärnu spas carried 980 passengers while in operation from 30 April to 23 August.
Estonian Air spokesperson Ilona Eskelinen told BNS on Monday that without collaboration with the Tervis sanatorium and the Strand spa and conference hotel launch of the air route and its operation would not have been possible.
She added that the airline was satisfied with the result so far.
“Plans for next year depend to a large degree on the wishes and readiness of co-operation partners, as well as on the fate of the Pärnu airport,” Eskelinen said when asked about plans for next season.
During the first months of operation flights took place twice weekly on Thursdays and Sundays, and from 2 July onwards on Sundays only, like had been planned, she said.
The route targeted mainly Scandinavian tourists and was operated with a 33-seat Saab 340 aircraft.

Source: Estonian Review

Estonia pianos among top ten in the world

Estonia pianos constructed in Tallinn have risen to among the top ten pianos in the world thanks to their technical attributes and quality, reports America’s authoritative ranking of pianos, Larry Fine’s “Piano Book”.
Piano technician and consultant Fine, in his most recent publication, ranks Estonia in the same position as Steinway pianos made in New York. In addition to Steinway and eight pianos built in Germany, one other American piano and a Japanese piano round out the top ten.
The owner of the Estonia piano factory, pianist Indrek Laul, recalls that 16 years ago Fine’s “Piano Book” stated that Estonia was one of the lowest-quality pianos available on the American market. Eight years ago Estonia’s grand piano ranked right in the middle, or 23rd place out of 44 pianos.

Source: Estonian Review

Estonia concluded visa representation agreement with Austria

Estonian Foreign Minister Urmas Paet and Austrian Foreign Minister Michael Spindelegger signed a visa agreement in Tallinn today according to which Austria will begin to represent Estonia in Saudi Arabia and Qatar. Foreign Minister Urmas Paet stated that Austria’s help in issuing visas is very important because it is an indicator of the European Union’s common foreign policy. Austria is the ninth nation that Estonia has concluded a visa representation agreement with. Together these agreements cover 57 countries.
The Austrian foreign minister expressed support for Estonia as the potential location for the European Union IT agency. “Estonia feels it is important that information technology be used more efficiently than previously for European Union interior security, and for this it is necessary to create a separate IT agency,” Paet noted. The Austrian foreign minister expressed the opinion that since Estonia’s IT sector is very highly developed, Estonia possesses all the qualifications to be a good location for the agency.
During his meeting with the Estonian foreign minister today, the Austrian foreign minister expressed interest in the Baltic Sea Region Strategy, and the foreign ministers acknowledged that the Baltic strategy has motivated the nations of the Danube region to come up with a similar strategy. Foreign Minister Paet told his colleague that the Baltic Sea Region Strategy sets the stage to make the area around the Baltic Sea a forward-looking and competitive region. “A significant goal of the strategy is to remove bureaucratic obstacles to developing the region—this includes the true realisation of the free movement of goods, services and people and the intensification of co-operation in the Baltic Sea region,” Paet explained.
During their meeting, the foreign ministers also discussed issues related to Iceland’s application to join the European Union.
The Estonian and Austrian foreign ministers agreed that European Union enlargement Foreign Minister Paet noted that after meeting with the Icelandic foreign minister it is clear that Iceland wishes to move forward as quickly as possible with the accession process.
The foreign ministers also addressed the global financial and economic crisis and Estonia’s accession to the Euro-zone. Foreign Minister Urmas Paet stated that Estonia feels a strong and stable Euro-zone is important, based upon the cornerstone of the Maastricht criteria and following the Stability and Growth Packet. “Upon fulfilling all the requirements, Estonia would like to join the Euro-zone at the earliest opportunity in order to ensure the good well-being of the economy in the long run,” said Paet.
Another topic at the meeting was energy policy and security. The foreign ministers confirmed that in order to ensure the energy security of Europe it is necessary to diversify suppliers, create additional energy connections among member states, and establish a functioning energy market. Foreign Minister Urmas Paet noted that a significant development for the Baltic Sea region is the approval of the Baltic Energy Market Interconnection Plan (BEMIP). The foreign minister also emphasised that the gas crises of the past years have clearly demonstrated the necessity of alternative suppliers and supply channels, like Nabucco and the Southern Corridor.
The Estonian and Austrian foreign ministers also talked about issues in the Western Balkans and Eastern Partnership. Foreign Minister Urmas Paet stated that Estonia supports visa freedom for all of the Western Balkan states with the European Union, which would help the region become more strongly connected to Europe and would also function as a significant measure to ensure peace and stability. In talking about Eastern Partnership, the foreign ministers felt that it is extremely important that the Eastern Partnership becomes a concrete and comprehensive policy that is an effective tool for bringing the target countries closer to the European Union.
Paet and Spindelegger also concluded an agreement on the exchange and mutual protection of classified information.
Foreign Minister Spindelegger also met with President Toomas Hendrik Ilves.
At their meeting, the future of Europe and the Treaty of Lisbon were discussed at length. “The Treaty of Lisbon is extremely important for the future of the European Union and all of Europe; luckily I am more optimistic regarding its passage than I was a year ago,” the Estonian head of state said.
President Ilves and Foreign Minister Spindelegger also spoke about energy security as one of the key issues for the political and economic security of countries, as well as the relations between the European Union and Russia.
The global economic crisis was also discussed at the meeting, in which regard the Estonian head of state stressed the need for decisiveness on part of all countries affected by the recession and the rejection of incomplete solutions in order to overcome the crisis.

Source: Estonian Review

Bigbank earns 2.86 MEUR profit in Q2

Bigbank earned a net profit of 44.8 million kroons (EUR 2.86 mln) in the second quarter of this year, a 10.6% improvement on the corresponding period a year ago.
Profit before impairment allowances and one-off revenues from the premature termination of bonds and prepaid income tax assets totalled 80.2 million kroons, compared with 59.8 million kroons in the first quarter of the year, Bigbank told the stock exchange.
Interest income amounted to 151.3 million kroons in the second quarter, decreasing by 15.5 million kroons from the same period in 2008. The reduction in interest income was related to the decrease in the size of the loan portfolio.
Impairment allowance costs totalled 54.4 million kroons in the three-month period from April to June. As of June 30, the total volume of impairment allowances was 343.3 million kroons.
The volume of loans with payment delays of more than 90 days in the consolidation group decreased in the second quarter, the rate of change by country being different as a result of the countries being in different stages of the economic cycle, the release said.
In Estonia the amount of such loans as of the end of the second quarter decreased compared to both the first quarter of 2009 and the final quarter of 2008. In Latvia the volume of non-performing loans was at the same level as it was at the end of the first quarter but the rapid increase in such loans of the beginning of the year had slowed down to a minimal growth of 4-5% year on year. In Lithuania the rate of growth of loans with payment delays of more than 90 days had halved.
As of the end of the second quarter of 2009, owners’ equity of Bigbank totaled 637.7 million kroons, up from 579.4 million kroons at the end of 2008, equalling 23.0% of total assets.
As of June 30, 2009 the group had 28 offices in the Baltic countries, of them 11 in Estonia, seven in Latvia and 10 in Lithuania. There were 361 employees working in the group, including 166 in Estonia, 125 in Latvia and 70 in Lithuania.

Source: Estonian review

Rimi Eesti Food makes 3.8 MEUR profit

Rimi Eesti Food, owner of the Rimi and Säästumarket chains, made a net profit of 59.8 million kroons in 2008, nearly 13% more than the year before.
The sales proceeds of Rimi Eesti Food grew by nearly 8 percent last year to 6.12 billion kroons.
Rimi Eesti Food notes in its annual report that the market share of the company was 22% last year.
The company invested 144 million kroons last year and provided jobs to an average of 2 599 people, and paid out 280 million kroons in salaries plus social tax.
Rimi Eesti Food will pay no dividends this year. The retained profit of the company is 65 million kroons.
Rimi Eesti Food belongs to the Swedish ICA AB group.

Source: Estonian Review

Estonian Air to raise number of flights to Vilnius

Estonian Air will increase the weekly number of operations between Tallinn and Vilnius to eight starting on 31 August by adding evening flights on Tuesdays, Wednesdays and Thursdays.
At present Estonian Air flies between the Estonian and Lithuanian capitals five times a week in the morning, or on Mondays, Tuesdays, Wednesdays, Thursdays and Fridays.
“The route between Tallinn and Vilnius is used mainly by customers valuing the convenience and speed of direct flights. There is a clear demand for additional evening flights and we hope that the improved flight schedule will increase the number of customers on that route even more,” said Rauno Parras, acting Vice President Commercial of Estonian Air.
The flights are operated with 33-seater SAAB 340 aircraft with one onboard service class.
All flights using SAAB 340 aircraft are operated by Estonian Air Regional, a 100% subsidiary of Estonian Air.

Source: Estonian Review

Cargo handling equipment maker opens 19 MEUR plant

Cargotec Estonia AS, Estonian subsidiary of the cargo handling equipment manufacturer Cargotec, opened a 300 million kroon (EUR 19 mln) plant and office building in this north-eastern Estonian border city on Thursday.
The builder was YIT Ehitus AS.
Cargotec manufactures cargo handling equipment for ports, ships, storage terminals and industry. The company listed on the Helsinki stock exchange is active in 160 countries.
Cargotec Estonia exports all of its output.

Source:  Estonian Review

Household savings increased in July

Activity and demand in the credit market are low, which is in line with Estonia’s current economic development characterised by modest investment demand and private consumption. In July, the corporate and household loan and leasing stock declined by 1.8 billion kroons, i.e., 0.7%. The loan and leasing stock stood at 259 billion kroons at the end of July, being 3.5% down on a year earlier. The volume of the loan and leasing portfolio has dropped to the level recorded at the end of the first quarter of 2008.

Across sectors, the portfolio volume decreased the most for real estate and trading companies. However, the volume of consumer credit to households is declining the most rapidly. For instance, compared to the start of 2009, the stock of household car leasing is down by 516 million kroons, i.e., 7%.

The volume of Estonia’s household and corporate savings went up by 94 million kroons in July, amounting to 106 billion kroons, which is fairly in the same magnitude as a year ago. The 152-million-kroon increase in household savings offset the 58-million-kroon decrease in corporate savings. The most preferred saving type by households was time deposits, which held some 62% of the total savings.

Overdue loans continued to grow at a rate comparable to earlier months. The share of loans overdue by more than 60 days in the loan portfolio increased from 5.8% in June to 6.2% in July. Growth in the volume of loans with shorter defaults as well as the current economic outlooks suggest that the quality of loans will not improve in the next months.

The loan quality is above the average in the housing loans portfolio, where the share of loans overdue by more than 60 days amounted to 4.1% at the end of July. Problems with paying back loans keep intensifying in the construction sector, where the share of problem loans makes up 20.2% of the stock of loans issued to the sector.

Nevertheless, the capitalisation of the banking sector continues to be high. Additional loan write-downs by banks caused the aggregate capital adequacy ratio to decline by 0.6 pp in July to 21.2%, which still exceeds the compulsory 10% by a sufficient margin.

Though Euribor decreased by 0.2 pp in July, the interest rates on both housing and corporate loans remained unchanged compared to June. In July, the average interest rates on housing loans and long-term corporate loans were 3.8% and 4.3%, respectively.

See graphs here

The financial sector statistics and publication calendar are available on the web site of Eesti Pank at www.bankofestonia.info/pub/en/dokumendid/statistika/pangandusstatistika/tabelid/.

Author: Siret Vildo, Financial Sector Policy Division of Eesti Pank, Specialist

Source: Bank of Estonia

Economic policy statement of Eesti Pank

The Estonian economy has quickly adjusted to new circumstances brought about by the global crisis that hit the world last autumn and various indicators characterising the vulnerability of the economy have improved. If Estonia is able to meet all the Maastricht criteria to adopt the euro in 2011, a good foundation will be laid for a new growth cycle.

Economic contraction in Estonia started to ease in the second quarter and economic developments in the first half of the year were broadly in line with Eesti Pank’s spring forecast. Demand in Europe and also in the rest of the world remained somewhat weaker in the first half-year than anticipated when the central bank’s spring forecast was being prepared. Recent months have, however, displayed more and more signs of an economic recovery. Estonia’s export indicators have also improved to some extent in recent months, giving reason to expect the country’s exports will also start increasing along with the revival of the external demand. The base scenario of Eesti Pank’s spring forecast will hold if the economic environment improves somewhat with the help of external demand in the second half of the year. At the same time, the risk scenario cannot be ruled out either, should demand in external markets and the confidence of investors not improve.

All the main economic indicators suggest that the Estonian economy has quickly adjusted to the new circumstances. Consumer prices have been on a declining trend since end-2008 and the consumer basket was 0.3% cheaper in the second quarter compared to a year ago. Major changes have taken place also in the labour market, where adjustment occurs through both employment and wages, helping enterprises keep costs under control. Current account was in surplus in the first half-year, amounting to 2% of the GDP in the same period. This indicates that risks are diminishing.

In the banking sector, growth in the volume of overdue loans has slowed in recent months. Similarly to the first half of the year, the banking sector as a whole will post a loss in the second half-year as well. In the light of the interest rates and risk assessments in international money markets and of the current economic situation in Estonia, such outcome could be anticipated. Nevertheless, banks operating in Estonia are able to rely on the large capital and liquidity buffers accumulated in good times, as well as on their belonging to strong European financial groups.

Estonia will have to ensure long-term fiscal sustainability and to restore the confidence of investors as soon as possible. Thus, the government’s justified aim is to keep the consolidated budget deficit below 3% of GDP in both 2009 and 2010. The general government’s budget deficit has been unusually large for Estonia for the past three quarters in a row. The utilisation of the reserves accumulated earlier has, on the one hand, cushioned the impact of the recession, but in order to reignite economic growth it is necessary to decrease fiscal deficit.

Although the government has taken several steps to improve the fiscal balance, additional measures must be implemented to keep the general government fiscal deficit from exceeding 3% of GDP. According to the spring forecast of Eesti Pank and the flash estimate produced after the second corrective budget, the fiscal position needed additional consolidation in the amount of 1.5 billion kroons. However, the threat that the expenditures related to local governments, other units outside the central government and unemployment will be larger than anticipated and that non-tax revenue will be below expectations has become more serious in recent months. These factors may augment the general government deficit by an additional 1-1.5 billion kroons.

Source: Bank of Estonia

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