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Helios Boss Worried about Recovery of Slovenian Economy (interview)

Domzale, 25 January (STA) - To avert a sharp fall in sales in 2009, paints and coatings group Helios is trying to adjust to changes on the market by investing in products with higher value-added while discontinuing non-profitable divisions. However, it is also considering expansion, its CEO Uros Slavinec said.

After the crisis year 2009, when Helios's sales plummeted by 25%, the group employing 2,600 people in over 30 companies in 17 countries increased sales by 14% in 2010, Slavinec said in an interview with the STA.

The hardest hit were companies making car coatings because of their dependence on the car industry, Slavinec explained, noting that Helios was also largely dependent on sectors hit by recession.

The problems of hardware retailer Merkur strongly affected the group, as did the bankruptcy of Croatia's hardware retailer Pevec. "We have secured our claims to Merkur relatively well a while ago, but if the debt restructuring plan is confirmed, we'll still lose about half a million euros."

Given that business with Merkur stood at EUR 9m in the good days, its bankruptcy or a foreign takeover would be a significant blow to Helios. A foreign owner would open up to foreign suppliers, so there would probably not be many Helios products on the shelves, he said.

"This year we're worried about the fate of construction companies, because we're also connected to them, even though not as deeply and profoundly."

The harsh conditions forced Helios to cut its overall costs in 2010. "We've put our investments on hold, controlled the wages and also lowered them."

In metal coatings, Helios managed to retain its leading position on the Slovenian market. In paints, however, Jub holds the biggest market share, because it is a paints specialist, noted Slavinec, who will begin a new five-year term at the helm of the company in July.

Helios is targeting three big regional markets: the EU, Eastern Europe and all former Yugoslav republics, including Slovenia.

"We sense demand increasing on the European market and a revival of the economy... However, Slovenia and a good part of the former Yugoslavia remain problematic."

Slavinec is therefore concerned about the group's ambitious plan of raising sales by 10% year-on-year in 2011. Another problem is the rising demand for raw materials in China and India, which is pushing the prices sky-high.

Helios, headquartered in the town of Domzale near Ljubljana, is tackling this by investing in products with higher value-added and cutting down on non-profitable product ranges.

After carrying out several acquisitions in the past, the group is now axing non-profitable divisions. "But on the other hand, we have set up a new company in Turkey."

While noting that no new acquisitions were planned for now, Slavinec said Helios was nevertheless looking for a specific specialised company at a reasonable price.

Turning to staffing, he said the number of employees would probably decrease, partly due to the reform of the pension system. "We want to lead a soft dialogue with the employees and trade unions, but we'll be looking for young experts and engineers as well."

Asked what the state should do to help businesses, Slavinec said the government should draw up the necessary structural reforms and make sure that they were being implemented.

"But in general I would say the state should create good general conditions for the functioning of companies and then leave us alone to do our job."

The latest available data show that the group made over EUR 237m in net sales revenues in the first nine months of 2010, a 12% rise over the same period in 2009, and posted a net profit of EUR 9.4m, up 4%.

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