7

Let's look at the less positive results first since, predictably, there is currently more bad news to cover than good. Despite growth in all key areas, logistics group Intereuropa posted a EUR 300,000 net loss in the first six months of 2011. Sales revenues were up, however, by 20 percent compared to the same period last year to EUR 109.6m. The group recorded a rise in all three key areas; in land transport by 21 percent, in intercontinental transport by 19 percent and in logistics solutions by 18 percent. It also surpassed its half-year plans by 14 percent in overall sales.

Not so smooth sailing

Although Luka Koper's half-year profit is on the right side of zero, it is lower compared to the same period last year. The port operator generated EUR 71.7m in operating revenues in the first half of 2011, which is 15 percent more than in the same period last year. Operating profit was up 74 percent year-on-year to EUR 13.2m, while net profit was down 37 percent to EUR 3.4m.
The operator of Slovenia's sole seaport is however satisfied with the result. Luka Koper chief executive Gregor Veselko says that, excluding the write-off of the financial investment in logistics company Intereuropa, net profit stands at EUR 9.1m. And there are big plans ahead, too. The port plans to increase its cargo transshipment to 21.4 million tonnes by 2015, compared to 15.4 million tonnes in 2010. While the port is to keep handling different kinds of cargo, its strategic development will focus on cars and containers. Veselko adds that Luka Koper aims to become the leading port system for global logistics solution in Central and Eastern Europe.

Switching tracks too often

The saga around Slovenian Railways, on whose efficiency Luka Koper largely depends, continues in much the same manner it has in the last few years. Bad results still haunt the troubled company. Half year figures show a net loss of EUR 5.6m, according to an earnings report from the company published in late August. For the first six months of this year, the company transported eight million passengers - 4.5 percent less than planned.
The company's debts and continuous bad financial results are being blamed on the government, which is responsible for the frequent changes in the management of Slovenian Railways. Daily newspaper Žurnal24 has argued that the boss of the railways is much more likely to be axed for political reasons than for bad operating results. The paper suggests that when eleven people change place at the helm of a company in a decade with only one of them completing the term, something must obviously be wrong.
The criticism comes amid yet another change in the management of the company, with Ervin Pfeifer replacing Goran Brankovič who had been in charge for two years. Pfeifer, who is the twelfth manager the company has had since independence, has taken over at a time of change for the firm. Slovenian Railways has started functioning as a holding with three affiliated companies: infrastructure, passenger transport and cargo transport, to be joined by the existing subsidiaries. With such significant changes happening concurrently, it is anyone's guess as to whether this will further impact the fortunes of the troubled state-owned company.

Flying low

National flag carrier, Adria Airways, has similarly been trying to climb out of the red but its financial worries persist. The carrier generated a net loss of EUR 63.07m in 2010, compared to a EUR 14m net loss the year before. Excluding the depreciation of the airline's planes, last year's net loss would stand at EUR 25m, according to the annual results published last month.
The debt-ridden firm is awaiting a capital injection, envisaging a conversion of EUR 38.4m of creditor banks' claims into ownership stakes and a EUR 50m state bailout. But there is a stalemate: the government has made the state bailout conditional on the participation of creditor banks but the banks have not yet reached an agreement on the amount of claims to be converted. To convert the loans, the banks are demanding that the company renegotiate a collective bargaining agreement. The airline says negotiations with the in-house trade unions are ongoing. But time is running out - the company needs a capital injection by the end of September (at the time this magazine was going to print), when creditors expect their loans to be repaid.

Firm on the ground

Ljubljana airport's chief executive Zmago Skobir, who was recently endorsed for another four-year term, is confident that Adria Airways will manage to obtain the necessary agreements to keep its planes in the air. The operator has big investment plans, including the construction of a second passenger terminal, a cargo apron and cargo terminal, but the management will wait to see what happens with Adria before embarking on those investments.
"We hope the bailout plan succeeds and if we also successfully complete tenders, we could start building the second terminal next year," Skobir says, adding that the construction of a cargo apron is also slated to start in 2012, to be followed by a cargo terminal in the next phase.
However, a potential receivership at Adria would require certain short-term crisis management at the airport operator, Skobir warns: "We'd need roughly six to twelve months to restore 70 percent of the turnover, but then we'd be back to normal operations."
"Adria's biggest asset is the Balkans and the destinations Adria has been connecting via Ljubljana since independence and earlier. We'd lose that, but we'd definitely substitute major destinations in the West. The fact is that we'd be in a tight spot for a year."
Despite the financial troubles of its main customer, Ljubljana airport is registering extremely good financial results. The airport made an operating profit of EUR 2.1m in the first half of the year, which is up 77.8 percent on the same period last year. Net profit rose by 53.3 percent to EUR 2.3m, an unaudited report shows. The relatively positive results came as a result of growth in the foreign carriers segment and cargo as well as cost managing measures.
In a sector that has generated much media and political storm during the term of the now outgoing government, it is difficult to predict how the future will map out. While some companies are looking ahead and making strategic plans, others seem to be stuck in one place with no clear solutions. It is time for Slovenia's logistics firms to travel forward.