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Brexit may hit Hungary hard While analysts say the fallout from the U.K. vote will hurt all CEE economies, they warn of especially rough times for Hungary. Predictions include looser monetary policy and a delay in our credit upgrade. 3

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Suzuki still sets the pace after 25 years With the largest production of any carmaker in the country last year, and booming sales of its Vitara and other makes, the OEM seems happy to have its third-largest plant in this country. 22

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Moscow-based IFI says it can help Although their international bank may be smaller than Western institutions, IIB officials visiting Budapest boasted that they have more flexibility than traditional financial sources. 6

Hungary’s automotive sector is competitive because it is sophisticated, not because wages are lower, says PwC’s Armin Krug. 18 SOCIALITE

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Picasso, Modigliani reunited here

Sziget dominates the festival market

Local funds make big property deals

The pair were friends in Paris, and shared some of the same inspirations, but their lives and work took different paths. Both are showing in exhibitions at the National Gallery.

26

While there are plenty of imitators, organizers of Hungary’s biggest music event are well ahead of the competition. With their own pay system and seven festivals, Sziget & Co. seem hard to catch. 13

Diófa Fund Management scooped up retail properties and OTP Real Estate Investment Fund acquired 35,000 sqm of logistics space, as Hungarian investors took part in a busy market in June. 10

2016. 06. 29. 21:20

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Mihály Varga Economics Minister he inspects a as wears a safety vest factory in the Sicta Group turbocharger at sector is a big driver Hungary. The auto in this country. of exports and growth

BUSINESS JOURNAL BUDAPEST

VOL. 24. NUMBER 13

JULY 1, 2016 – JULY 14, 2016

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

HUF 1,250 | €5 | $6 | £3.5

Value sets us apart

NEWS

Brexit may hit Hungary hard While analysts say the fallout from the U.K. vote will hurt all CEE economies, they warn of especially rough times for Hungary. Predictions include looser monetary policy and a delay in our credit upgrade. 3

Suzuki still sets the pace after 25 years

NEWS

Photo: Mátyás Pödőr

Moscow-based IFI says it can help Although their international bank may be smaller than Western institutions, IIB officials visiting Budapest boasted that they have more flexibility than traditional financial sources. 6

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With the largest production of any carmaker in the country last year, and booming sales of its Vitara and other makes, the OEM seems happy to have its third-largest plant in this country. 22

Hungary’s automotive sector is competitive because it is sophisticated, not because wages are lower, says PwC’s Armin Krug. 18

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BUSINESS

Picasso, Modigliani reunited here

Sziget dominates the festival market

Local funds make big property deals

The pair were friends in Paris, and shared some of the same inspirations, but their lives and work took different paths. Both are showing in exhibitions at the National Gallery. 26

While there are plenty of imitators, organizers of Hungary’s biggest music event are well ahead of the competition. With their own pay system and seven festivals, Sziget & Co. seem hard to catch. 13

Diófa Fund Management scooped up retail properties and OTP Real Estate Investment Fund acquired 35,000 sqm of logistics space, as Hungarian investors took part in a busy market in June. 10

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THE EDITOR SAYS

A lesson in the risks of referendums As Hungary prepares its own referendum designed to show displeasure with Brussels, the government might do well to learn from what just happened in the U.K. Immediately after the U.K. narrowly voted to leave the European Union, it sounds as if the electorate has awoken from a wild party with a hangover, and now polls show that at least one million voters regret their decision. Furthermore, it is becoming clear that even pro-Brexit politicians had no plans for a successful “leave” vote. They have created a monster they do not know how to control.

In Hungary, members of this government are saying the lesson of the U.K. vote is that Brussels needs to change – to listen to the people and understand that we do not want asylum seekers. But a more important lesson is that Hungary should appreciate what we have. We do not need the referendum planned for this fall, which has the sole purpose of saying Hungary is opposed to an EU plan that would see us sheltering a certain quota of asylum seekers.

Like the Brexit vote, the Hungarian referendum was conceived for political reasons and is not legally binding.

There is no clear course of action if the electorate votes “no” in a referendum that makes a “yes” vote seem weak by asking: “Do you want the European Union to prescribe the settlement of non-Hungarian citizens into Hungary without the approval of the Hungarian Parliament?” A majority of “no” votes to this petulant question mostly allows the government to claim it has the support of the people in opposing refugees.

The government has suggested that it will use the referendum result to justify fighting a refugee quota in the European court system. But the real reason the government wants to hold the referendum in the fall is to keep the topic of asylum seekers in the media and in public discourse for a more important vote: the general election, which is set for early next year.

Until the refugee problem exploded across Europe about a year ago, the popularity of Hungary’s ruling Fidesz Party

was flagging. By taking the low road – encouraging fear of Muslims and refusing to help people in need – Prime Minister Viktor Orbán and his government have improved in the polls. They cannot fix the country’s failing health care and education systems, and they cannot hide the signs of rampant corruption in their government, but Fidesz can whip up Islamophobia. It clearly wants to keep doing that until election day.

As Orbán rightly notes, many people in the U.K. said they supported the Brexit referendum because they oppose migrants. But the migrants they oppose include several hundred thousand Hungarians who have used EU membership to find better jobs in the U.K. than they can find here.

Since Hungary joined the EU in 2004, the country has been enjoying massive improvements in its economy, infrastructure and overall quality of life. This government acknowledges that efficient and timely use of EU funds helped produce impressive figures in GDP growth last year.

There is no question that Hungary is a net beneficiary from its EU membership.

Yet this government flirts with Euroskepticism and constantly criticizes Brussels when it wants to distract attention from its own shortcomings. At a time when the EU needs unity, this government is joining the far right around Europe in seeking to weaken the Union.

The EU has helped to ensure peace and prosperity in Europe, while creating the world’s largest single economy.

Not only Hungarians, but roughly a half billion EU citizens in all have benefited immensely from this arrangement. The Union may be an easy target for sniping populists, but they do not really have any alternatives.

As many floundering leaders in the U.K. have discovered, expressing Euroskeptic opinions can have political benefits but acting on those opinions is political suicide. If our leaders refuse to acknowledge the futility of demonizing the EU, we hope they have at least learned that it can be bad for their careers.

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Then and now

At left, the Hungarian national water polo team trains at the open air Hajós Alfréd swimming pool on Margitsziget, in preparation for the Rio 2016 Olympic Games. The swimming pool, named after a famous Hungarian swimmer and architect, is an important sporting center in the capital. Above, a Hungarian water polo team trains at the same pool in 1949.

2016. 06. 29. 21:20

1 News BBJ

macroscope

NEWS

Russian bank, U.S. group offer help

6

NEWS

Protestors fight park development

5

Brexit bodes ill for economic outlook All CEE countries are expected to feel a heavy impact, and Hungary is deemed especially vulnerable.

ZSÓFIA CZIFRA

Although Hungary successfully weathered the first wave of shock generated by Great Britain voting to leave the European Union, mediumand longer-term indirect effects are still threatening.

Hungary and Poland “have the most at stake from this decision” among emerging markets, Morgan Stanley wrote in a note before the vote, as both countries are dependent on trade with the U.K. and Europe and also receive financial support from the EU. Without the billions that the U.K. contributes to the EU budget annually, the amount of funding Hungary and Poland receive is likely to be reduced. According to estimates by Morgan Stanley, Brexit could hit Poland’s economic growth by 0.5 of a percentage point next year, while Hungary might suffer an even bigger setback. The bank forecast some 0.9 percentage point fallback in its economic growth in 2017, so the country’s GDP growth will be around 2% next year, not even close to the 3% the Hungarian government expects.

Morgan Stanley also mentioned the much-awaited upgrade from Moody’s Investors Services, noting that although it is still very likely the ratings agency will upgrade Hungary to the investment category in November, more challenging fiscal numbers could derail the upward rating momentum.

As for Hungary’s monetary policy, Morgan Stanley wrote that although the National Bank of Hungary (MNB) had just announced the end of its latest easing cycle, if economic growth slows down, it does not rule out that another cut will take place this year yet.

JP Morgan basically has the same worries about the region’s open economies as the other bank, but in addition to Hungary, it highlights Czech Republic as one of the countries most affected by Brexit. However, JP Morgan thinks that the MNB will keep its current 0.9% base rate on hold until the end of 2017, but it says that the central bank will implement monetary easing in the form of BUBOR (Budapest Inter-Bank Offered Rate) intervention quantitative easingtype measures.

The London-based investment bank’s latest forecast downgrades Hungary’s expected economic growth in 2016 to 2.4% from the previous 3%, seeing the government’s 3.1% target as increasingly unlikely.

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Prime Minister Viktor Orbán, seated next to press aide Bertalan Havasi, speaks during a press conference in Brussels on June 29, held during a break in discussions at a summit to address the crisis caused by the Brexit vote. Orbán said he will seek to address concerns of Hungarians working in the U.K. (MTI Photo: Balázs Szecsődi)

Hungary’s GKI Economic Research Institute has also lowered its GDP growth forecast for this year from 2.3% to 2%, but as it writes in its latest forecast, even a lower growth rate is feasible. The fall of investments may be deeper than predicted earlier, and might reach about 8%, the research institute added.

companies seeking to leave the U.K. and relocate to a EU member state. He mentioned car makers and finance firms among possible companies to move.

The MNB also reacted to the vote in a note, saying that “uncertainty around the future relationship between the United Kingdom and the European Union has led to turbulence in money and capital markets.

Rises in risk indices have caused volatility in Hungarian asset prices as well; however, the magnitude of this is not considered excessive in international comparison.”

The MNB emphasized that Hungary’s vulnerability had decreased in recent years, significantly reducing the risks associated with the country’s economy,

No need to change budget

Cumulative shock

National Economy Minister Mihály Varga said prior to the vote that the exit of Great Britain from the European Union could slow the speed of Hungarian GDP growth by 0.3-0.4 of a percentage point. In an interview with business daily Világgazdaság after the vote, Varga was quick to note that no amendment will be required to this or next year’s budget due to the Brexit, and said that the Brits leaving the EU will have no short-term impact on Hungary’s economy. He added, however, that the Hungarian budget will be affected by the fact that the U.K. will no longer contribute to the common EU budget. Currently Hungary is paying HUF 310 billion a year to the EU and has access to funds of about HUF 2 trillion.

Varga also said that the ministry is working on a new incentive package for

Morgan Stanley estimates that the Central and Eastern European region would be disproportionately affected by Brexit via the trade channel. The cumulative hit to CEE GDP from a trade shock could be around 0.5 of a percentage point of GDP by end-2017 in a medium stress scenario, and almost three times as large in a high stress scenario, Morgan Stanley said.

This translates to 0.6 of a percentage point less GDP growth this year and 2.5 percentage points less next year should the worst case scenario come to pass.

As for the EU as a whole, a few days after the vote, when shockwaves started to fade, European Central Bank (ECB) president Mario Draghi said that Brexit’s impact on European economies might be smaller than first thought. Based on calculations by EU financial institutions,

JP Morgan downgraded the country’s expected economic growth this year to 2.4% from the previous 3%.

negative effects will count to 0.30.5% of the EU’s GDP, and ECB vice president Vitor Constancio explicitly said that there would be no recession in the eurozone. In the U.K., however, significantly slower growth, possibly even a recession, is expected.

No more commuting doctors?

For longer term impacts, the future of the several hundreds of thousands of Hungarians working in the United Kingdom becomes questionable too. While U.K. Prime Minister David Cameron said after the vote that foreigners already working in the country would have the same status as long as he remained in office, he also announced his resignation as of October of this year. So now it seems that the legal status of foreign workers will not change in the coming months, but there is little to know about what comes from this fall. Cameron has stated in the House of Commons that the rights of EU citizens living in the U.K. (and U.K. citizens living in Europe) will be protected as long as Britain remains in the Union.

Most experts say the process of leaving will take two years from the moment Britain invokes Article 50 of the Lisbon Treaty, and Cameron has said he will leave that to his immediate successor. In theory, at least, this implies that EU citizens’ rights are safeguarded for a couple of years.

Calculations on how many Hungarians work in the U.K. vary, from the Economics Ministry’s figure of 300,000 in 2014, to the Central Statistical Office estimate of 75,000 in the beginning of 2014.

2016. 06. 29. 21:20

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Budapest Business Journal | July 1 – July 14, 2016

NEWS IN BRIEF Varga says Hungary hopes to attract firms fleeing U.K. The Hungarian government is considering ways to make the country attractive to companies that are looking to leave the United Kingdom following the Brexit referendum, Hungary’s National Economy Minister Mihály Varga said on June 27. Varga said he can see the Hungarian government offering special incentives to firms that are currently operating in the U.K. and may soon want to relocate to Hungary, in an interview published in Hungarian daily Világgazdaság. He added that details are under discussion. Varga noted that approximately 770-780 British companies currently have their operations in Hungary. He told the daily that these companies are satisfied with the country, and they could serve as good references for others considering operating here.

Varga firmly rejected speculation that Hungary would be planning to exit the European Union. Hungary has “no such intentions, plans, scenarios, ideas or concepts”, the minister said. He firmly rejected speculation that the governing Fidesz party, which has frequently been critical of Brussels, would follow the path of the U.K. The economics minister added that negotiations on the U.K. leaving the EU are expected to take at least two years.

Though the U.K.’s leaving will eventually impact the Union’s budget, the funding for Hungary might not be affected in this funding period, he said.

KSH: Hungary’s jobless rate drops to 5.5% in March-May Hungary’s unemployment rate fell by 1.6 percentage points to 5.5% in the period of March to May, compared to the same period a year earlier, Hungary’s Central Statistical Office (KSH) announced on June 28. The unemployment rate for 15-74 year-old men fell by 1.7 percentage points to 5.4%, while the unemployment rate of women fell by 1.5 percentage points to 5.6%, KSH reported. The average duration of unemployment was 18.2 months, and 47.5% of unemployed individuals have been searching for a job for one year or more, KSH said.

Szijjártó: Hungary to help remove Azerbaijan visa requirements Hungary hopes to assist Azerbaijan in removing visa requirements for EU countries as part of an effort to develop economic ties with the country, Minister of Foreign Affairs and Trade Péter Szijjártó said at the sixth meeting of the Azerbaijan-Hungary Intergovernmental

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Commission on Economic Cooperation in Baku on June 28, Azeri news portal news.az reported. Szijjártó said Hungary is interested in developing stronger ties between Azerbaijan and the EU. Specifically, Hungary’s strength in agriculture should be leveraged in building greater agricultural ties with Azerbaijan, he noted. Hungary is also considering the allocation of a loan to build a 160 kilometer road connecting Azerbaijan with Iran, Szijjártó said.

Hungarian Eximbank has set aside €200 million for small- and mediumsized entrepreneurial ventures in Azerbaijan, and is preparing to grant €5 mln to the Azerbaijan-based PASHA bank, he continued. “We have strategic partnerships. One of these documents was about abolishment of double taxation and joint protection and promotion of investments,” Azerbaijan’s Minister of Economy and co-chair of the commission, Shahin Mustafayev told the Associated Press regarding the meeting.

Six companies from Hungary currently operate in Azerbaijan, and trade turnover between the two countries increased by 63% year-on-year, Mustafayev continued.

Hungary’s Competition Office clears MNB foundation deals The Competition Office of Hungary (GVH) gave the go-ahead for the purchase of four new real estate properties by the National Bank of Hungary’s (MNB) controversial Pallas Athéné foundations (PADA), according to an update on the PADA website on June 27, Hungarian News Agency MTI reported. The acquisitions were announced in midJune, and consist of three properties in Budapest and one in Debrecen, to be used as offices for PADA. Zoltán Fekete, the CEO of investment company Pallas Athéné Optima Befektetési, said that the acquisitions amounted to less than 1% of the Budapest market and would have no impact on competition, which was supported by GVH’s resolution regarding the purchases, MTI reported.

The application to the GVH was submitted because MNB and PADA are viewed as one entity under Hungarian competition law, the website’s statement said. The foundations will continue to move funds out of government securities, which will “gradually be exchanged for yield-producing real estate, in line with the stand of the European Central Bank,” PADA stated. The funds were initially made up of HUF 197.3 billion in Hungarian government securities, HUF 37.7 bln in equity, HUF 24.5 bln in real estate, and HUF 7.8 bln in bank deposits. The total assets of the six MNB

Hungarians celebrate their football team Crowds pack Heroes Square on June 27 to welcome home the Hungarian national football team upon their return from the European Championship.

Although they were eliminated, the team made it to the final 16 in the tournament, and this was the first time Hungary qualified for the European Championship in 44 years. (Photo: MTI/Ruzsa István) foundations were reported at HUF 267.2 bln in March, up by HUF 800 million over their original investiture. The PADA foundations’ activities have drawn substantial criticism. The European Central Bank noted in its annual report published in April that it is continuing to monitor MNB programs, “which were not related to monetary policy and which could be perceived as being potentially in conflict with the monetary financing prohibition”.

Constitutional court greenlights quota referendum Hungary’s Constitutional Court (AB) rejected all initiatives opposing the referendum on the European Commission’s refugee quota plan, as such the referendum initiated by the Hungarian government on the matter can be held this year, according to reports. The court rejected four initiatives against the referendum, three of which questioned the government decree ordering the referendum to be held, while another raised concerns about the question in the referendum, according to reports. Hungary’s President János Áder is expected to set the date for the referendum, in 15 days at the latest after the constitutional court’s decision. A referendum can be set 70-90 days after a decision, therefore it is likely to take place in September or October.

Investigation opens in refugee drowning in Hungary Hungarian prosecutors have launched an investigation into whether police can be held criminally accountable for negligence resulting in the death of a 22-year-old Syrian man in early June, as reported by Reuters on June 22. A group of refugees was pushed back into the Tisza River at the border on June 1, allegedly resulting in the drowning death of a Syrian man, according to criticisms leveled against the Hungarian government by the United Nations High

Commissioner for Refugees (UNHCR).

Hungarian police were forced to intercede and retrieve an Iraqi mother and her children from the water during the ensuing struggle, according to the UNHCR. During the chaos, a Syrian man was lost in the current, and the Hungarian police announced that they had found the 22-year-old’s body in the river at the Hungarian town of Szeged on June 3, according to reports. The UNHCR has since made further criticism against the Hungarian government, saying Hungary’s plan to shut down refugee reception centers will make it significantly more challenging for those granted asylum to integrate. Montserrat Feixas Vihe, the UNHCR representative in Central Europe, noted that conditions in countries from which refugees are leaving have not changed, but it has become more difficult for them to find safety and security in Europe. “The need for them to flee is just as bad as last year,” Feixas Vihe told the Associated Press.

“They need to seek protection and they are not able to get it here. That is a major problem.”

Budapest mayor reiterates ultimatum on M3 buses Budapest will use its funds to purchase replacement buses for the M3 metro line during its renovation if the government of Hungary does not guarantee that it will cover additional costs to contract bus services rather than purchase buses, Mayor of Budapest István Tarlós reiterated on June 29 on commercial television channel TV2. “The government has time until midnight on July 5, if there is no decision made, then a smaller volume of buses will be bought using our own funds, in line with the original plan,” Tarlós commented on the broadcast, insisting on the ultimatum the city council delivered in early June. BKV, the Budapest transport company, would supplement newly purchased buses with older buses, he continued. “Playtime is over, the renovation of the M3 metro

2016. 06. 29. 21:20

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Budapest Business Journal | July 1 – July 14, 2016

Police seek to clear away park protesters A police officer talks to a demonstrator who climbed to the roof of the Museum of Transportation in Budapest’s Városliget (City Park) on June 28 as police sought to clear away protestors opposed to plans to develop a museum quarter in the park. Police arrested some environmental activists and “took harsh action” against others protesting development plans that activists say would destroy the park, according to a press release issued on June 28 by the Ligetvédők - Occupy City Park Facebook page. Environmental activists supported by the local community have stationed themselves in Varosliget for nearly three months in protest of the Hungarian government’s project to build a museum quarter in the park. Protesters claim the construction “threatens” one of the first public parks in Europe, adding that the government’s plans for the park involve oversized museums as well as “plenty of restaurants and events facilities that gentrify the public space”.

According to an opinion survey by Ipsos, 75% of the population of Budapest is against the construction project, the press release said. (Photo: MTI/Zoltán Balogh)

line must start,” Tarlós added, saying the project is 15 years overdue. Tarlós believes the renovation can be completed by the end of 2019. Some 150 buses are expected to be necessary to temporarily replace metro services during the renovations, valued at approximately HUF 140 billion and expected to begin in November. A public discussion on the national bus strategy and issues regarding public transportation in Budapest was held on June 20. István Tarlós and National Economy Minister Mihály Varga were in attendance. If the city of Budapest moves forward on the purchases, it will buy Polish-made Solaris buses.

Commerzbank: MNB could cut base rate further by end-2017 Although the National Bank of Hungary (MNB) might not cut its base rate this year, the central bank could continue its easing cycle by the end of 2017, Tatha Ghose, Commerzbank director and senior EMEA economist, said during a June 22 press briefing. Commerzbank expects inflation to revise downwards after a brief acceleration, which might cause

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the Monetary Policy Council (MPC) to further lower the central bank’s base rate by the end of next year, Ghose said.

The central bank held the rate yesterday during a rate-setting meeting, which did not surprise analysts, as the MNB announced it had finished its easing cycle in May. Due to the base effect from utility cuts, Commerzbank expects Hungarian headline inflation to accelerate from its current near-zero to higher than 1% by the end of the year. Commerzbank noted that the central bank lowered its headline inflation forecast from 1.7% to 0.3% this year, and core inflation from 2.4% to 1.7%. The MNB expects core inflation to accelerate to 2.4% by the end of next year, which Commerzbank doubts. “We are skeptical that inflation will accelerate this much,” the bank said.

EU funding to drive Hungarian highways overhaul The Hungarian government is planning over 19 transport related projects as part of an overarching program to improve the country’s transportation network, as reported by World Highways on June

28. European Union funding amounting to as much as €795 million is being earmarked for the program as part of the EU’s Connecting Europe Facility (CEF).

The M70 and M15 divided highways will be widened and upgraded to highway classification as part of the program.

KSH: Hungary’s retail sales up 5% in April Hungary’s volume of sales in retail shops increased by 5% according to raw data, compared to the same period of the previous year, Hungary’s Central Statistical Office (KSH) said on June 24 in a second estimate of data. Adjusted for calendar effects, the volume of sales rose by 3.9% in specialized and nonspecialized food shops, by 11.3% in non-food retail shops and by 3.5% in automotive fuel retailing, KSH added.

Sales in the national retail trade network as well as in mail order and internet retailing were HUF 781,000 at current prices, KSH reported. KSH data show that food, drinks and tobacco stores accounted for 47% of all retail sales, while the relevant figures for non-food

retail shops and the network of petrol stations were 38% and 15% respectively.

In January–April 2016, the volume of sales – also according to calendar adjusted data – was 4.9% higher than in the corresponding period of the previous year, according to KSH. The volume of sales rose by 2.3% in food, drinks and tobacco shops, by 8.2% in non-food retail trade and by 5.3% in automotive fuel retailing, KSH added.

Lenders register to sell more than HUF 300 bln of bad assets to MARK Twenty-three financial institutions registered to sell the Hungarian Reorganisation and Receivables Management Company (MARK) bad assets with a gross value of more than HUF 300 billion by the deadline of June 21, the National Bank of Hungary (MNB) said on June 22, according to Hungarian news agency MTI. MARK will buy the distressed assets for HUF 90-125 bln, the MNB said. The MNB established MARK to buy bad commercial real estate loans and properties from banks, improving portfolio quality and boosting business.

2016. 06. 29. 21:20

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Budapest Business Journal | July 1 – July 14, 2016

As the EU struggles, IIB promises help A Russian-based IFI says it can help promote investment in Hungary during a meeting in Budapest.

MAXIM LEFLEUR

It was an ambitious claim, but the timing could not have been better.

As the world awoke to the shock of the Brexit vote on June 24, a Russian-backed international financial institution (IFI) was in Budapest promoting itself as an alternative to Western bodies – one that is ready to offer greater stability than that of the European Union.

At the 105th council meeting of the Moscow-based International Investment Bank (IIB) held in Budapest from June 22-24, the organization’s s board members highlighted new cooperation agreements and future plans, and presented the IIB as an attractive alternative to other international groupings.

“The potential of economic growth in the European Union and eurozone is problematic as the region has been almost stagnating since 2008,” Jozef Kollár, deputy chairman of the board at IIB told the Budapest Business Journal.

A former Member of Parliament of the Slovak Republic, Kollár explained that multilateral development banks such as IIB could stimulate Hungary and the region’s economy and “support the internationalization” of small- and medium-sized enterprises (SMEs) in Central Europe.

As a “niche bank” focused on regional development with current assets “over €800 million”, IIB can take greater risks than commercial banks, according to Kollár. He explained that IIB’s new business model up to 2022 would continue to emphasize support of SMEs, as well as some bigger projects.

Hungarian Economy Minister Mihály Varga, left, shakes hands with International Investment Bank Chairman Nyikolaj Kosov during a meeting of the bank in Budapest on June 23.

Radically restructured Established in 1970 as a competitor to Western IFIs, the IIB has many countries allied to the old Soviet Union as members, including Bulgaria, Cuba, Czech Republic, Hungary, Mongolia, Romania, Russia, Slovakia, and Vietnam.

The bank “promotes social and economic development, prosperity, and economic cooperation between its member states”, according to the IIB website. Hungary left the bank in 2000, citing insufficiently efficient and transparent operations, the Ministry of National Economy has said.

But the country rejoined last year, at which time the ministry said the bank had been radically restructured As a regional development bank, the role of IIB is to “cover the gap left by weak public investment… as a consequence of the lasting public debt crisis in the European Union,” Kollár said, adding that the bank is ready to fund collaborative projects between

Hungary and Russia. “Commercial banks do not have a big risk appetite” following the financial crisis, which creates another opportunity for the IIB, he explained.

In one such project, the construction of a medical center in the Russian region of Novosibirsk with the participation of a Hungarian contractor, will be financed

by IIB, the bank announced in a June 22 press release. The project will mark the first significant investment involving a Hungarian company since the country rejoined the bank.

Russia is IIB’s primary shareholder, with 47.92% of the bank’s paid-in capital, followed by Bulgaria with 13.48%.

Hungary bought its way back in at €40 million for a 12.78% stake, making it IIB’s third largest shareholder.

Russia’s GDP contracted by 3.7% and the Russian ruble decreased in value by around 127% last year due to a combination of ongoing international

Jozef Kollár, deputy chairman of the board at the International Investment Bank. sanctions against Russia as well as the falling price of oil in international markets, according to thediplomat.com.

While IIB was exempted from the EU’s sanctions in 2014, Russian business and monetary connections link the bank to the country’s economy. Despite Russia’s fiscal troubles, Kollár insisted that IIB as a supranational entity is not affected by sanctions.

At the end of the conference, IIB announced several cooperation agreements, including one with Hungary’s OTP Bank that “will allow both parties to bring their resources together for a greater impact”.

IIB also announced a deal to finance an infrastructure project at the Budapest University of Technology and Economics, in which the bank will provide a future credit line and guarantee worth €1.455 mln to Hungarian property management company H2Q.

New American group promotes bilateral trade The USHBC promised to work with AmCham and others to ensure that the U.S. government knows what the priorities are for American firms investing in Hungary.

ROBIN MARSHALL

The recently formed U.S.-Hungary Business Council, a group based in the American capital, introduced itself to its Hungarian patners in the American Chamber of Commerce in Hungary on June 23, promising to work with AmCham to increase trade between this country and the United States.

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“We are in Washington, AmCham is here; we work in tandem,” Eric Stewart, president of the USHBC, told delegates at an AmCham luncheon during his organizationʼs inaugural mission to Budapest. “What we do is receive Hungarian officials when they come to the United States.”

He said the council works with the U.S. State Department, the Department of Commerce, Congress and other such bodies “to ensure our government knows what the priorities are from our perspective”. With similar business councils already covering Lithuania, Poland and Romania, the drive to create the USHBC had come from the founding businesses, Stewart said. “I did not create the council, the companies did, it was their idea, and the reason they wanted to do so is to become better organized; better organized in Washington as we

work on the bilateral relationship with Hungary.”

Key to the work of the USHBC will be its contacts with the Hungarian Investment Promotion Agency (HIPA), and Stewart paid tribute to the agency and its president, Róbert Ésik, describing HIPA as a “multiplier”, praising “the ombudsman approach you take to working with companies” and especially in encouraging reinvestment from existing sources of FDI. During its three-day mission to Hungary, the business council met with Economy Minister Mihály Varga, Minister of Foreign Affairs and Trade Péter Szijjártó, and Prime Minister Viktor Orbán. Representatives from Bell Helicopter Textron, BorgWarner, CocaCola Company, Guardian Industries, Hungrana, Lilly, MetLife and OwensIllinois accompanied the delegation.

Officially launched on February 16, the USHBC had 11 founding companies: BorgWarner, Citi, Coca-Cola, Johnson & Johnson, Lilly, Met Life, OwensIllinois, Parsons, Pfizer, Philip Morris International, and Warburg Pincus.

The organization has announced that it is open to any U.S.-based corporation with an interest in the bilateral relationship between America and Hungary.

The official USHBC website (ushungarybc.org) describes the council as “a private, non-profit organization aimed at facilitating and maintaining dialogue on the U.S.-Hungary commercial relationship. We provide a space for the American business community to engage with the United States and Hungary governments on issues affecting trade and investment between the two countries.”

2016. 06. 29. 21:20

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Microsoft Hungary names new leaders

“Microsoft aims to make its users more productive… which is an exciting way to proceed, and that makes me happy to join the team,” Szabó said.

Lakatos Köves & Partners appoints new partner

& finance head Szabolcs Mestyán said.

“It is great to be going back to Budapest.

I began my legal career in Budapest, and have spent much of my time since then working in Central Europe, both on the ground in Budapest and Bucharest but also managing transactions across the CEE region from London… I am excited by the challenge of helping the LKT team to offer first class advice to investors and institutions in Hungary and across the region,” Fenemore said.

LKT is a six partner, 29 lawyer full service commercial law firm based in Budapest, with a predominantly international client base.

Dentons names partner for Budapest, Prague offices

a law degree from UEA in the U.K., having also studied at University of British Columbia, Canada and Nottingham Trent University, in the U.K. “With his proven transaction experience along with sector insights, Chris will help further develop our Corporate and M&A practice and bring even more value to our clients,” said Ladislav Štorek, Czech Republic and Slovakia managing partner. “Dentons has advised on many of the most important M&A and private equity transactions in the CEE region over the last year, so we are pleased to welcome another talented partner to the team to support the growing client demand,” Rob Irving, cohead of the Europe private equity group, added.

Wizz Air welcomes commercial director

Gabriella Bábel is being promoted to lead Microsoft Hungary’s corporate segment as of July 1, and her previous position – leader of the residential segment – will be filled by Péter Szabó as of July 15, according to an announcement from the firm on June 22. Bábel joined the company in 2001, worked as a leader of the corporate telecommunication segment since 2007, was transferred to the team responsible for the residential segment five years ago and became its leader in 2013. Szabó, who has 17 years of FMCG experience, comes to Microsoft by way of Unilever.

During his tenure there, he worked as a manager in Croatia, Slovenia and Bosnia Herzegovina. “Microsoft sees the world as cloud-based and mobile friendly… therefore we refer to these two trends together, as inseparable,” Bábel said.

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John Fenemore, a senior banking and finance lawyer from Clifford Chance’s London office, is joining the Hungarian law firm Lakatos Köves & Partners (LKT) as a partner, LKT announced on June 14. Fenemore is responsible for advising lenders and borrowers on trade finance and growth market transactions. He joins LKT as a partner in the Banking & Finance practice, working alongside Szabolcs Mestyán, partner and practice area head. He began his legal career in Budapest with the predecessor of LKT, and then moved to London where he has been based since 2002, save for a five year period in Bucharest. “We are very pleased to welcome John back to Budapest. With our predominantly international client-base it is important for us to have lawyers in our team with extensive experience in the London market. With Johnʼs arrival we also maintain and develop our English law resource. In addition, John has the further advantage of fluent Hungarian and Romanian,” managing partner Péter Lakatos said. “I have worked with John over many years and I am very pleased he has agreed to join our team here. With his London-based emerging markets experience, and long track record of working with banks focused on Central Europe, he will be a great addition to our banking & finance practice, which serves banks operating mainly out of London, Frankfurt and Vienna,” banking

Chris Watkinson joined Dentons as a partner and will be active in the firm’s M&A and private equity practices in CEE, splitting his time between the Budapest and Prague offices, the company announced on June 23. In his practice, Watkinson focuses on crossborder mergers and acquisitions, private equity transactions and joint ventures.

He has experience in the technology, media and telecommunications industries as well as the energy and renewables sector. He also has experience in CEE/CIS – advising on major cross-border deals and providing English law advice to clients based in the region. Watkinson joins Dentons from BBH, where he was head of the English law desk in Prague. Prior to that he worked for Squire Patton Boggs in London, where he focused on M&A transactions in Russia and the CEE/CIS region. He is a Solicitor of the Senior Courts of England and Wales and holds

George Michalopoulos will be promoted to the position of Commercial Director at Hungary’s low-fare airline Wizz Air, the firm announced on June 20. Effective September 1, Michalopoulos is to take over the position from György Abrán, who is leaving the firm after 12 years, Wizz Air said. In his new position, Michalopoulos, who joined the company in 2010, will report to CEO József Váradi, according to the press release. Before joining Wizz Air, Michalopoulos worked at Flybaboo and Blu-Express, gaining experience in the field of commerce and revenue management, the release said. “I am happy that today’s announcement is once again about the promotion of a serious talent from our team,” Váradi said. “In the past six years, George has shown how committed he is and how strong his leading competences are.”

2016. 06. 29. 21:24

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08 2Business

Budapest Business Journal | July 1 – July 14, 2016

COMPANY NEWS

Magyar Telekom’s outdoor 4G coverage exceeds 98% Magyar Telekom has already spent billions of forints on developing its mobile network this year, raising the outdoor coverage of its 4G network to more than 98% for retail mobile phone users, the company told Hungarian news agency MTI on June 28. Magyar Telekom launched its 4G+ mobile internet service in 14 cities in Hungary starting in December. The number of 4G+ base stations has reached 100 and is set to continue growing by hundreds by the end of this year, the company added.

Magyar Telekom is also working on increasing its indoor network coverage, which has now exceeded 84% across the country. The company has more than 1.1 million subscribers to its 4G service.

Telenor Hungary eyes HUF 9 bln in network development

Telenor Magyarország plans to spend HUF 9 billion on network development this year, compared with HUF 7 bln in 2015, chief technology officer Zsolt Sepsi told Hungarian news agency MTI on June 24. The investments will mainly serve to improve indoor coverage for private users and expand the 4G+ (LTE Advanced) network, he said. Sepsi said Telenorʼs 4G network was among the best within the Telenor group, and that it features nationwide outdoor coverage of more than 97%, compared with 50% in 2014. Telenor is also developing its 3G network and will spend substantial amounts on improving indoor coverage of the 4G network this year, he added.

UPS expands $2 mln logistics base near Budapest’s airport

U.S.-based delivery firm UPS has begun building a $2 million expansion at its logistic base near Budapest’s Liszt Ferenc International Airport, the Hungarian subsidiary of UPS announced on June 20, according to news agency MTI. The company expects the 5,200 sqm unit to triple the size of UPS’s existing base near the airport. The scheduled launch of operations is January. UPS employs more than 350 people at seven facilities in Hungary and operates a fleet of almost 80 vehicles, MTI noted.

Hewlett-Packard partners with Hungarian IVM The international management of Hewlett-Packard (HP) signed a partnership agreement with Hungarian IVM Zrt. on June 14, under which the Hungarian company will provide HP with vending machines for its products. HP is planning to install vending machines in its offices and office buildings, from which employees will directly be able to access IT equipment, such as keyboards,

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mice and cables, with the help of their business identification cards, according to a press release issued on June 21.

HP expects this logistics solution to simplify supplying and keeping stock of such equipment. HP foresees the new service entering the world market soon but perceives challenges associated with exploring this new segment. IVM, which is 100% Hungarian-owned, has been manufacturing vending machines since 2010, and has won many awards for its solutions, the press release said.

The company’s vending machines are currently being used across Europe in a number of sectors.

MVM office opened in Brussels The Hungarian Electricity Works (MVM) opened a representative office in Brussels, according to a report published by Hungarian news agency MTI on June 22. State-owned MVM said that it intends to build stronger relationships with European Union policy-makers and representatives of the more than 100 major energy companies located in the city, MTI reported. MVM plans to play a more important role in Central and Eastern Europe, the EU and other markets. The organization is also interested in participating in EU-level policy-making, particularly on electricity market reforms and environmental policy.

Mid Europa Partners to buy out retiring Waberer’s founder

The founder of Waberer’s International will be bought out by private equity fund, Mid Europa Partners, as he is retiring from the Hungarian haulage company, according to a press release issued by Mid Europa Partners on June 22. The fund increased its stake from 56.8% to 97.1% in the company. The Hungarian competition authority must approve the deal prior to its completion.

György Waberer, is set to retire from the business he founded and resign from his position within the company.

Prime Minister Viktor Orbán appointed him last year as commissioner for developments in the road haulage and logistics sector. Waberer is to be replaced by deputy-CEO, Ferenc Lajkó, as top executive. A day after the buyout was announced, Waberer’s International’s majority owner initiated a vote by shareholders to convert the firm from a public into a private company, excluding the listing of its shares on the Budapest Stock Exchange (BSE). A disclosure on the request was posted on the BSE’s website after the markets were closed on the day the buyout was announced.

Wabererʼs had first-quarter revenue of €136.7 million, up 3.6% from the same period a year earlier. At the beginning of March, Waberer’s announced that it had launched operations at its new German

Invitel separates residential and corporate branches The corporate and wholesale branch of Invitel Hungary is breaking away from the firm and will operate independently as of July under the name of Invitech Megoldások Zrt. (Invitech Solutions), continuously serving its more than 6,000 clients across the country. According to a press release issued on June 28, the management and ownership of the companies will remain the same under the new hierarchy, however, residential and wholesale branches will be separated. ’IT and telecommunication are becoming a more important part of our lives, as private users at home, as professional users in our jobs, or as business leaders… but as infocommunication technologies differ from each other in the case of bigger organizations, we decided to separate Invitech Solutions from Invitel,’ David Blunck (pictured), Invitel CEO, said at a press conference announcing the changes. ’The time has come for setting off as a separate firm… with an integrated and tightly cooperating hierarchy,’ Áron Jávorniczky, leader of the corporate and wholesale branch, said. subsidiary. Shareholders of the company decided in January to postpone a decision on an initial public offering (IPO) of its shares during a general meeting.

ULT could halt processing operations in Hungary

U.S.-owned Universal Leaf Tobacco (ULT) is considering terminating its processing operations in Hungary this year, the company said on June 23, according to reports. The move would eliminate “a significant number of permanent and seasonal workplaces”, Hungarian news agency MTI cited the company’s announcement. The company plans to concentrate its processing and pulling out of Hungary is part of a larger plan to improve the firm’s efficiency in Europe. ULT believes the pull out could make Hungarian tobacco more competitive on global markets, MTI reported. ULT currently operates a plant in Nyíregyháza, in eastern Hungary.

Gedeon Richter expands Hungarian plant with ABB

Hungarian drugmaker Gedeon Richter is expanding its plant’s technology and production hall in Dorog, using an automation and process management system developed by ABB, according

to a press release issued on June 27.

Costs for the project were not disclosed.

The current automation system at the plant was installed by ABB, and it has been modernized many times in the past 15 years, the press statement noted. Richter said it saw benefits in continuing to partner with ABB in its latest development. “As the current ABB system expansion makes it possible to use the present application software, the whole project with the entire validation will last a year only,” Jenő Fodor, project director of Richter at the Dorog plant, said. The press statement noted that Richter and ABB have been in cooperation for years, carrying out several projects together.

Gov’t decree could initiate HUF 150-200 bln in developments near airport

The Hungarian government could declare a project to develop properties valued between HUF 150-200 billion near the capital’s Liszt Ferenc International Airport of “elevated importance”, paving the way for the sale of land, daily Magyar Idők reported on June 24. The developments would include a rail line to connect Liszt Ferenc Airport with the nearby train line, as well as a hotel and logistics base, the paper said. The draft

2016. 06. 29. 21:24

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2 Business

Budapest Business Journal | July 1 – July 14, 2016

decree, posted on the government’s website, refers to 26 parcels of land and in the event that the project is deemed of elevated importance it will enable the compulsory sale of these parcels, the Deputy Mayor of Vecsés, Ferenc Tabori told the paper. Each parcel has at least one owner, and in some cases several owners that until now were unable to reach an agreement on the sale of their land, the paper added.

State, EBRD buy 15% stakes in Erste Bank Hungary The Hungarian state and the European Bank for Reconstruction and Development (EBRD) finalized the acquisition of 15% stakes each in the local unit of Austrian banking group Erste, as per an agreement made in February 2015, Hungarian news agency MTI reported on June 20. Hungary reportedly paid HUF 38.9 billion for its 15% stake. Hungary acquired its stake in Erste Hungary through a firm called Corvinus Zrt., National Economy Minister Mihály Varga said, according to MTI. The minister said the purchase price was determined by independent experts and a market evaluation. When the deal was first announced more than a year ago, it was said to be contingent on the Hungarian governmentʼs promise to reduce the extraordinary bank levy. “If there is a change in the framework for the financial sector, we will invite both parties to invest in our local entity,” Erste Group spokesperson Michael Mauritz said when the deal was first mentioned last year. Hungary cut the bank levy this year, and will cut it further in next yearʼs budget package. Varga said banks will save HUF 80 bln because of the reductions the government made in in the bank levy. The board of directors of EBRD approved the purchase of a 15% stake in Erste Bank Hungary in May. The purchase today was in line with predictions saying that the deal could be wound up by the end of the second quarter.

OTP shares purchased by Csányi Fund

Some 300,000 OTP Bank shares were purchased by a fund operated

by Sándor Csányi’s Singapore-based CSAM Asset Management, the lending group announced on June 28, as reported by Hungarian news agency MTI. Csányi is the current owner of OTP bank. The Sertorius Global Opportunities Fund, controlled by CSAM Asset Management, purchased the shares for an average cost of HUF 6,200 on the Budapest Stock Exchange (BSE). CSAM Asset Management acts under the qualified influence of Csányi. Following the acquisition, the Sertorius Global Opportunities Fund’s OTP stake was raised to 0.44%.

Csányi’s direct stake in OTP remained the same, OTP commented.

Gyermelyi opens HUF 1.6 bln center for crop cultivation

Hungarian pasta company Gyermelyi opened a new crop cultivation center in Szomor today with an investment of HUF 1.6 billion, on June 16 Hungarian

BBJ_2413_biz.indd 9

News Agency MTI reported. The new center combined three existing Gyermelyi cultivation halls within a larger, 8,800 hectare farming facility, CEO Bela Toth told MTI. The company has also added a new crop dryer capable of processing 25 tons an hour, as well as a 6,600-ton granary, he continued. Gyermelyi expects to sell 33,000 tons of pasta this year, as well as produce 140 million eggs. The company produces an estimated 140,000 tons of grain per year. Gyermelyi has been involved in a number of large development projects in the last five years, valued at over HUF 12 bln, MTI reported.

The company built a HUF 1 bln grain clearing and storage facility in March of 2014.

Moodyʼs considers downgrade of embattled FHB bank

FHB mortgage bank is under review for a downgrade by Moody’s Investors Service, according to a press release from the ratings agency on June 21.

Moody’s cited negative publicity as well as government actions against FHB bank. Observers have said the bank is being targeted because its chairman owns media outlets that criticize the government. Moody’s said it is considering changes to FHB’s baseline credit assessment, long-term deposit ratings, and longterm Counterparty Risk Assessments, but will not make changes to the bank’s short-term Not-Prime deposit ratings and Not-Prime Counterparty Risk Assessment, according to the press release. Moody’s cites the greater risks to the bank’s solvency and overall business prospects after “continued sizable losses during Q1 2016”, along with actions taken by the Hungarian government against the bank, including a police investigation and fines levied against FHB by the Hungarian National Bank (MNB) for alleged market misconduct, as the reasons for reevaluating FHB’s ratings. Moody’s also noted its concern regarding “the effects of negative publicity on the bank’s franchise”. FHB Chairman Zoltán Spéder is the owner of Central European Media & Publishing Zrt. (CEMP), which publishes index.hu, portfolio.hu, napi.hu and also owns InfoRádió. The media outlets are often seen as critical of the Hungarian government, despite their generally politically neutral coverage. Gergely Dudás, editor-in-chief of index.hu, a leading news portal owned by Spéder, addressed claims that the Hungarian authorities are launching cases against FHB as a means of targeting Spéder’s media holdings, in an opinion piece published on June 12. Dudás wrote that it was possible that the case against FHB is intended to pressure Spéder’s media company, or even make him give it up. MNB recently fined FHB HUF 105 million for charges of violating the rules prohibiting illegal market manipulation. MNB alleges that FHB published misleading information regarding the subscription of euro bond issues in December 2012 and May 2013. FHB said it planned to appeal the fine on Friday, June 10.

09

CEU BUSINESS SCHOOL

Chicken paprika or Caesar salad: Does financial reporting matter?

Laura Ipacs Senior finance lecturer CEU BUSINESS SCHOOL

Hungary could better compete for global investment if it adopted international reporting standards, but the skills needed to establish these standards may be lacking.

Hungary has been competing for global investment for more than 25 years now, yet the country seems to be permanently behind its potential in the eyes of many beholders. What is stopping Hungary from attracting more capital into its enterprises?

The transition needs huge investments in training, in systems, and in ways of operating. IFRS puts heavy reliance on preparers’ judgment in deciding how the information should be structured or items valued. requirements in this respect. In the near future, any company will be free to adopt IFRS, and all large groups will be required to do so.

What are the benefits for a company of adopting IFRS? Credibility, international exposure, and access to global capital are the buzzwords, and in addition partnerships, customers, and brand image. A case in point, Wizz Air, now successful on the London Stock Exchange, has prepared IFRS reports since its inception. It has been wildly successful in attracting global investment.

Preference for local solutions

So why don’t we all just adopt IFRS? Well, most countries appear addicted to national recipes and traditions. There is still limited national appetite for international formulas such as IFRS. More importantly, there is limited expertise in preparing such reports.

The transition needs huge investments in training, in systems, and in ways of operating. IFRS puts heavy reliance on Accountants in the 21st century speak preparers’ judgment in deciding how one language: quality financial reporting, the information should be structured knows as IFRS (for International or items valued. Many accountants and Financial Reporting Standards). These managers are not ready to for this with represent a globally understood recipe, little tangible benefit in sight. something like a uniform Caesar salad.

Will Hungary ever fully adopt?

Transparency and comparability: That Companies with deeper pockets and with is what investors look for in financial significant international relationships are candidates for adoption. However, information, and they get it from IFRS. skill gaps are likely to remain a Hungary has been rather slow in formidable obstacle. This is a limitation adopting these standards. What are not unique to Hungary, as mentioned in the reasons? a recent conference on IFRS adoption in Hungary organized by ACCA, the Tax reports are required by national largest international accountancy body, legislation and thus they get priority and PwC, a major accounting firm. in corporate reporting. Reports are Hungary may run the risk of concocting expected to follow a country-specific something that looks like a Caesar salad format: They may resemble a chicken – an IFRS statement – but has a paprika paprika in Hungary but a chicken tikka flavor. Whether international investors in India. will enjoy tasting that remains to be seen.

The reasons are manifold, but there is a focus on one specific aspect at the moment. Corporations around the globe are expected to regularly prepare financial reports for public use. These are aimed primarily at the investment community, whose members consider reports a tool to help them decide whether they wish to part with their money.

Traditionally, companies in the postSoviet region have only produced tax reports. With public corporations a rare species, and underdeveloped stock markets, there has been a limited audience for public financial reports.

Hungary has recently been trying to catch up with international

Laura Ipacs, FCCA, MBA, is a senior finance lecturer at the Central European University Business School and a former CFO. This column is part of a continuing series of opinion pieces from experts at the CEU Business School in Budapest. The opinions stated here do not necessarily reflect those of the Budapest Business Journal.

2016. 06. 29. 21:24

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2 Business

Budapest Business Journal | July 1 – July 14, 2016

Hungarian funds close major investments

Diófa Fund Management purchased a shopping center and a number of strip malls, and OTP Real Estate Investment Fund acquired logistics space, according to announcements made in late June.

REAL ESTATE NEWS

Property developer Wing Group lists bonds on Budapest bourse

GARY J. MORRELL

While German, Austrian, American and Middle Eastern investors are all considering the property market in Hungary, local backers are continuing to play a significant role. The leading Hungarian investment funds, Diófa Fund Management and OTP Real Estate Investment Fund, both announced the conclusion of acquisitions in Hungary at the end of June.

Overall, investment volume in Hungary’s commercial real estate sector is expected to surpass the €1 billion mark, with deals being concluded at all levels and in all sectors of the market.

Diófa undertakes retail purchases Diófa Fund Management announced on June 23 that it has completed the purchase of the 26,000 sqm Europark shopping center in Kispest from the retail specialist investor and developer Unibail Rodamco.

The Europark acquisition is the result of a yearlong negotiation and was entirely funded by Diófa’s own capital. The first generation center has a more than 90% occupancy rate, despite increased retail competition. The new owner intends to introduce fresh brands and redevelop the center. Jalsovszky law firm represented Diófa Fund Management on the deal.

Diófa has also purchased the 14,000 sqm Zala Retail Park in western Hungary, from Resideal Zrt., and on June 28 announced it had purchased ten strip malls in provincial cities including Pécs, Dunaújváros, Székesfehérvár and Szombathely. This reflects the growing confidence in the sector, in that regional retail is also attracting investors.

“Retail has been historically popular on the investment market and has been responsible for one-quarter of the total investment volume in the past few years,” said László Vas, property investment director at Diófa Fund Management.

“Due to continuously decreasing yields and the market shift towards landlords, this segment is currently one of the most attractive targets for investors.”

Diófa Fund Management has been actively investing in real estate over the past three years on behalf of institutional and private investors in one open-ended and three closed-ended funds. All the retail schemes were added to the Magyar Posta Takarék Real Estate Fund; total

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JLL says Eiffel Square sale was biggest such deal this year

The Europark shopping center in Kispest. retail stock in that fund – which earlier in the year completed the forward purchase of the 12,700 sqm V17 office building from Wing for an undisclosed fee – now stands at 57,000 sqm.

OTP fund acquires logistics facility In the biggest OTP Real Estate Investment Fund deal to date, it announced in late June that it had purchased a 35,000 sqm warehouse complex located within the Gyál Business Park, just beyond the southern border of Budapest. The complex is 100% let to long-term tenants. Further deals

by OTP Real Estate Investment Fund are expected this year.

“In the past five years, the logistics map of Budapest has shifted. More and more tenants are choosing the South Pest region, because of the proximity of the motorway, the airport and several multinational companies; with the acquisition of the property in Gyál, we wanted to exploit the investment possibilities of this trend,” said Balázs Tóth, deputy CEO of OTP Real Estate Investment Fund Management. “There is a continuously growing demand for Hungarian logistics properties, thus well-situated Category “A” logistics properties have the ability to generate a stable revenue stream in the long-term,” he added.

OTP Real Estate Investment is 100% owned by OTP Bank Nyrt. The openended real estate investment fund has been active for more than 13 years, its wealth mainly consisting of real estate assets that are leased out. “In the past months a record amount of capital has been invested in the Real Estate Investment Fund, which we would like to invest in properties with similar qualities in the future. As part of our portfolio development, we are currently working on a transaction of a similar size, by which we aim to increase the profitability of the fund,” concluded Tóth.

“If the investor intends to resell the real properties one by one for a profit, in addition to the package discount the expected appreciation will also contribute to a higher profit,” said Tibor Nagy, Otthon Centrum’s head of business development. Nagy stressed that, though the experts at Otthon Centrum anticipated a slowdown in Budapest real estate price growth in the coming period, a near 10% increase could still be expected over a one-year period.

“Based on an increase in demand on the real estate market, a low-yield environment and a pick-up in the mortgage loan market, we expect to successfully sell the package on offer in a short time,” said CIB’s senior expert, Rudolf Nemes. He added that the CIB Group had selected the properties for the package based on their purpose, location and value. “We know that in many parts of the country there are only very few properties available for rent or lease, and this creates opportunities for investors,” Nemes said.

Hungarian property developer Wing Group launched a €40 million corporate bond package, listing the bonds on the Budapest Stock Exchange, according to a press release issued on June 27.

In the first phase of the package, Wing Group listed 18,381 of the bonds, with a nominal value of €1,000, according to the press release. The company said the three-year bonds pay a fixed annual interest of 4%, with their listing price being 99.3675% of nominal value.

“The present listing opens a new chapter in the life of the organization, as this has been our first occasion of entering the bourse,” said Wing Group CEO Noah Steinberg (pictured). “The outstanding interest towards our bonds shows that dynamic growth is expected in Hungarian real estate development.”

CIB Group selling 29 Hungarian properties as one package The CIB Group announced that it is selling a bundle of Hungarian real estate, consisting of 29 mostly residential properties. The bank will give a good discount for the complete package of properties, according to a press release issued on June 20.

Acting on behalf of CIB Group, Otthon Centrum Solutions Kft. is offering the properties at an average discount price of HUF 94,000 per square meter, the statement said.

The bank group decided to sell the properties in the form of a package deal in response to a pick-up in property market demand, and it expects to launch similar special offers in the future, the group said in the press statement.

The portfolio – including 11 buildings in Budapest and 18 situated in five counties in northern Hungary – only consists of properties that are free and clear of all liens, claims and encumbrances, with clear title, and in the possession of the bank group, the statement said.

JLL announced on June 16 that it was the advisor for German asset and investment manager KGAL when it purchased Budapest’s Eiffel Square office building in a transaction that was reported on June 14. Although the price of the transaction has not been published, JLL said this is the largest transaction of its of its kind in Hungary this year.

The Eiffel Square building completed in 2010 through a development jointventure between Europa Capital, ConvergenCE and DVM, consists of 17,600 sqm of office space complemented by some 5,000 sqm of retail amenities on the lower levels including restaurants, cafés, a medical center and a supermarket, the press statement noted.

The asset is one of the leading office properties in Budapest and received the CIJ’s Best Office Development Award and the FIABCI Prix d´Excellence runner up for Office Development Award worldwide in 2010.

Tenants of the building include Cetelem Bank (BNP Paribas Group), Dealogic, Medicover, Givaudan, Grundfos and AXN (Sony Group).

“The acquisition by KGAL of the Eiffel Square asset marks the return of core buyers to Budapest and we are proud of our instrumental involvement in this development. Similar to our sale of the AEW portfolio back in 2015, the transaction signals a change of gear for international investors’ interest in the Budapest commercial real estate investment market,” said Benjamin Perez-Ellischewitz, head of Capital Markets, JLL Hungary.

Hungary was one of the countries worst-hit by the financial crisis in 2008, and has struggled to regain momentum in the years that followed, but the market picked up in 2014 and 2015 with transaction volumes reaching some €800 million, JLL said.

JLL anticipates a dramatic increase of activity in 2016 with transaction figures expected to reach more than €1.2 billion.

2016. 06. 29. 21:24

GRUPPO T.F.M. KFT. 1068 Budapest, Király u. 102.

1ST DISTRICT

3RD DISTRICT

5TH DISTRICT

10TH DISTRICT

13TH DISTRICT

14TH DISTRICT

94 SQM – 3 ROOMS, SZÉNA SQUARE

50 SQM – 2 ROOMS, HOLLÓS KORVIN LAJOS STR.

72 SQM – 2 ROOMS, SZALAY STREET

132 SQM – 7 ROOMS, ÁLLOMÁS STREET

44 SQM – 2 ROOMS, ÚJLIPÓTVÁROS

53 SQM – 2 ROOMS, TÖRÖKŐR STREET

Beautiful view over the Széll Kálmán Square, this completely renovated, high floor apartment has separate rooms, 2 bathrooms, within a renovated building with elevator.

This park facing apartment, in good condition, has separate rooms, dining room, kitchen with window, within a building with elevator.

Very nice apartment with a nice view from the balcony, on the top floor of a period building with elevator, near the Parliament. Price includes furniture.

This completely renovated, duplex apartment benefits of 2 kitchens, 2 bathrooms, private gas heating, air conditioning system and alarm system.

Nice view over the city, this high floor, very sunny apartment has separate rooms and it is located very close to the Lehel Market Hall.

Good connection to public transport.

In a green area, in a building with nice common garden, this completely renovated, sunny apartment has nice view over the nearby gardens, air conditioning system and balcony.

45.900.000 HUF

15.900.000 HUF

52.900.000 HUF

29.990.000 HUF

17.500.000 HUF

22.900.000 HUF

+36.1.201.0403

2ND DISTRICT

+36.1.379.0506

3RD DISTRICT

+36.70.3156.116

5TH DISTRICT

+36.70.646.6818

10TH DISTRICT

+36.70.701.2348

13TH DISTRICT

+36.1.612.5475

14TH DISTRICT

114 SQM – 4 ROOMS, FRANKEL LEÓ STREET

57 SQM – 3 ROOMS, GYŰRŰ STREET

90 SQM - 3 ROOMS, VERES PÁLNÉ STREET

300 SQM – 4 ROOMS, LADÁNYI STREET

104 SQM – 5 ROOMS, ÚJPESTI QUAY

50 SQM – 3 ROOMS, RÓNA STREET

In a pedestrian street, this very spacious and bright, completely renovated, street facing apartment benefits of separate rooms, within a period building with elevator.

This very well divided, street facing, bright apartment has separate rooms, kitchen with window and it is situated in a completely renovated building with elevator.

The building is elegant and completely renovated with elevator. This very nice apartment has 2 bathrooms and the fully fitted kitchen is included in the price.

This two storey family house in good condition built on 450 sqm of lot, has air conditioning system, 10 sqm of terrace and a garden pond in the well kept garden.

16.290.000 HUF

52.900.000 HUF

This completely renovated, bright, well divided apartment has living room with open kitchen, 2 separate bedrooms, balcony and private gas heating.

44.900.000 HUF

61.000.000 HUF

On the Danube Bank, this duplex apartment has beautiful panorama over the Danube, 2 bathrooms, terrace, private gas heating and it is situated in a nice building with elevator.

84.990.000 HUF

25.900.000 HUF

+36.1.201.0403

2ND DISTRICT

+36.1.379.0506

3RD DISTRICT

+36.70.3156.116

6TH DISTRICT

+36.70.646.6818

+36.70.701.2348

11TH DISTRICT

+36.1.612.5475

15TH DISTRICT

77 SQM – 3 ROOMS, EZREDES STREET

40 SQM – 2 ROOMS, GYENES STREET

76 SQM – 2 ROOMS, TERÉZ CIRCUIT

72 SQM – 2 ROOMS, BARTÓK BÉLA STREET

222 SQM – 7 ROOMS, PESTÚJHELY

This completely renovated, garden facing apartment has living room with fully fitted open kitchen, air conditioning system, balcony, within a well maintained building with elevator.

This park facing, very bright, quiet apartment in good condition is situated in a well maintained building with elevator.

Next to Oktogon Square. Sunny apartment within a nice period building. Ideal for anybody seeking a renovation project in perfect location.

This high floor apartment in good condition has 2 balconies and it is situated in a well maintained building with elevator.

In a family house are, in a quiet side street, this two storey family house built on 548 sqm of lot, has air conditioning system, 2 bathrooms, wardrobe room, laundry room, 33 sqm of terrace, well kept garden and garage.

55.000.000 HUF

17.900.000 HUF

32.900.000 HUF

36.000.000 HUF

67.850.000 HUF

+36.1.336.1706

2ND DISTRICT

+36.1.430.1403

3RD DISTRICT

+36.70.3156.087

6TH DISTRICT

+36.1.720.2433

11TH DISTRICT

+36.70.398.8754

DUNAKESZI

DUNAKESZI

134 SQM – 4 ROOMS, VÖLGY STREET

37 SQM – 1 ROOM + HALL, KOLOSY SQUARE

98 SQM – 3 ROOMS, JÓKAI STREET

127 SQM – 4 ROOMS, KALOTASZEG STREET

106 SQM – 4 ROOMS, DUNAKESZI

120 SQM – 4 ROOMS, DUNAKESZI

This duplex, very sunny apartment has living room with open kitchen, 3 separate bedrooms, 2 bathrooms, balcony, two car garage and private garden.

This renovated, sunny, street facing apartment has open kitchen and it is situated in a condominium with elevator. Good connection to public transport.

This bright apartment is situated within a period building close to public transports, Opera House, theatres and the tree-lined Andrássy Boulevard are in walking distance.

In a new building, this completely renovated, well divided, sunny apartment benefits of separate rooms, sauna, terrace and garage.

This new built semi-detached house has 420 sqm of lot, living room with open kitchen, 3 bedrooms, 2 bathrooms, terrace and nice garden.

In a quiet area, this family house in good condition built on 591 sqm of lot, has 1 living room and 3 bedrooms, well kept front garden and garage.

95.000.000 HUF

18.900.000 HUF

39.000.000 HUF

67.000.000 HUF

36.500.000 HUF

42.000.000 HUF

+36.1.376.6080

2ND DISTRICT

+36.1.430.1403

4TH DISTRICT

+36.70.3156.087

7TH DISTRICT

+36.1.720.2433

47 SQM – 2 ROOMS, ÚJPEST CENTRE

100 SQM – 4 ROOMS, BETHLEN GÁBOR STREET

126 SQM – 4 ROOMS, IGNOTUS STREET

Panorama over the Buda Hills, this very spacious, four storey semi-detached house has 400 sqm of wellness on the ground floor with indoor swimming pool, jacuzzi and sauna.

In a new built condominium with elevator, this quiet, street facing apartment has living room with open kitchen, separate bedroom and balcony.

This very spacious and sunny apartment that needs renovation, has private gas heating and balcony. It is situated in a building with renovated facade, close to the City Park.

This very spacious and sunny apartment has private gas heating and nice view over the Városmajor Park. It is situated in a building that will be completely renovated this year.

23.500.000 HUF

33.500.000 HUF

57.000.000 HUF

+36.1.376.6080

2ND DISTRICT

+36.1.782.72.75

+36.1.351.0446

+36.1.789.2846

4TH DISTRICT

8TH DISTRICT

12TH DISTRICT

213 SQM – 5 ROOMS, HERMAN OTTÓ STREET

65 SQM – 3 ROOMS, CSÍKSOMLYÓ STREET

85 SQM – 4 ROOMS, CSEPREGHY STREET

104 SQM – 4 ROOMS, ISTENHEGYI STREET

In a renovated house with nice common garden, renovated apartment with terrace, 2 bathrooms and parking space.

In a new built subdivision with elevator, this very sunny, high floor apartment has living room with fully fitted open kitchen, 2 balconies and parking space in the courtyard.

This spacious, duplex apartment has fully fitted kitchen, sleeping gallery, 2 bathrooms, air conditioning system and roof terrace. It is located close to the József Circuit.

This renovated, three storey terraced house has 2 bathrooms, 2 terraces and a parking space in the courtyard. Good connection to public transport.

29.900.000 HUF

42.900.000 HUF

58.000.000 HUF

180.000.000 HUF

+36.1.336.1706

+36.1.782.72.75

+36.70.399.0399

12TH DISTRICT

659 SQM – 4 ROOMS, KONDOR STREET

168.000.000 HUF

+36.70.399.0399

+36.1.351.0446

+36.1.789.2846

WELCOME

ARE YOU SEARCHING FOR APARTMENT?

WWW.TECNOCASA.HU CONTACT US: INFO@TECNOCASA.HU

EACH AGENCY INDEPENDENTLY OWNED AND OPERATED. • THESE OFFERS ARE VALID, TILL THE APARTMENTS ARE SOLD. • THESE INFORMATION DO NOT CONSTITUTE A CONTRACTUAL ELEMENT.

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2016. 06. 29. 21:24

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Budapest Business Journal | July 1 – July 14, 2016

ADVERTISEMENT

VeszprémFest brings the city’s castle and surroundings to life

Smaller music events vie for fans

Not as big as the Sziget, these festivals are still doing well enough to come back every summer.

ANIKO FENYVESI

Although Sziget is by far the largest festival in Hungary, there are plenty of smaller, less commercial events that may not have a massive international lineup but are still making enough to keep going.

These range from medium-sized regional festivals, to electronic music events and Goa trance parties, many organized by Sziget Cultural Management. Some of the more established events include the following: FISHING ON ORFŰ June 22-25, Pásztó With a focus on Hungarian alternative music acts, this festival is geared towards a slightly older crowd. It was founded

by András Lovasi of the much-loved Hungarian rock band Kispál és a Borz many years ago as an alternative to the country’s bigger festivals, and takes place in the peaceful lakeside town of Orfű.

Targeting a more mature crowd with its eclectic mix of music, from pop to jazz to world music and electronic beats, the 13th VeszprémFest is being organized this year from July 13-17 to offer sophisticated entertainment for musiclovers and festival-goers.

As the competition in the sector is increasing, the most important asset a festival can have is a lineup with the best-quality entertainment possible, says Festival Director Zoltán Mészáros.

“Practically speaking, our philosophy and approach towards organizing the festival has not changed: we are luring world star performers to Hungary, for their first appearance in the country if possible,” Mészáros says.

Already in its second decade, VeszprémFest is a dynamically developing, large-scale cultural event, creating true value for lovers of art and quality music from Veszprém and around the country, organizers of the event claim. For several days every summer the event offers the most accomplished, world-class performers from various musical genres, be it classical music, world music, opera, jazz or pop.

This year Rosé, Rizling and Jazz Days, a mini festival, is going to accompany the main event, from July 8-17. That event is expected to welcome up to 25,000 people, and offer them free entertainment. With its main events from July 13-17, VeszprémFest is expected to attract a more exclusive group of up to 13,000 paying festival-goers, who will enjoy top-quality entertainment.

Vintners from the Balaton region will make sure that guests quench their thirst for quality Hungarian wine. “As a new venue added to the festival, the square in front of the town hall will be turned into a true chillout place, with

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Zoltán Mészáros. beanbags, offering those who are seeking rest to enjoy relaxing music, and socialize,” Mészáros added.

The unique festival brings the castle district of the city of Veszprém to life, and highlights the stunning Baroque building of the Archbishop’s Palace in Veszprém Castle. However, over the years it has augmented its selection of outdoor venues as well. Organizers believe the venue, far from the hustle and bustle of the big city, greatly contributes to creating a unique, intimate and friendly atmosphere for visitors.

The list of performers on the big stage include Thievery Corporation, who are considered to be among the standardbearers of electronic music, and among the most adventurous and compelling artists in the genre; Grammy- and Golden Globe-awarded jazz artist Jamie Cullum; soulful vocalist and timeless dance-pop singer Lisa Stansfield performing her greatest hits; American jazz-singer Gregory Porter, who is visiting Hungary for the first time; and Omara Portundo and Diego el Cigala, merging Cuban music with sweet flamenco tunes.

To learn more about the festival or purchase tickets visit: www.veszpremfest.hu

TELEKOM VOLT FESTIVAL June 29-July 2, Sopron This is western Hungary’s answer to the Sziget festival, though on a much smaller scale, and tends to attract a mostly Hungarian crowd. The lineup reflects this attendance with many of the top players in Hungary’s underground music scene, as well as a handful of international acts including Iron Maiden, Slayer, The Prodigy and Paul Kalkenbrenner.

MASTERCARD BALATON SOUND July 6-10, Zamárdi A favorite among Hungarian fans of electronic music, Balaton Sound has the added advantage of being located on the shore of one of Europe’s largest freshwater lakes. For four days every year, the peaceful resort town of Zamárdi is overrun by more than 100,000 festival goers, who this year will have the pleasure of catching top electronic music acts including Armin Van Buuren, Paul Van Dyk, Booka Shade, Peter Kruder and Steve Aoki.

VESZPRÉMFEST July 13-17, Veszprém The VeszprémFest targets a more mature crowd with its eclectic mix of everything from rock to jazz, to underground and electronic beats, with most of the performances taking place in the city’s castle district. Also a regular feature at the festival is the Rosé, Riesling and Jazz Days, which begins a week before, and runs throughout the festival.

BÁNKITÓ FESTIVAL July 14-16, Bánkitó The Bánkitó is about as grassroots as it gets. Festival themes often revolve around topical ideas such as racial tolerance and environmental issues. What you’ll find at Bánkitó, apart from a feeling of well-

Gregory Porter and Lisa Stansfield will play at VeszprémFest. being and respect for your fellow man/ woman, is a solid lineup of underground musicians and DJs from the Budapest scene including jazz, funk, hip hop and rock.

OZORA August 1-7, Ozora People travel from all over the world to attend this five-day Goa-trance party – a hippy festival for the 21st century.

Pulsating, electronic beats resonate across beautiful vistas from afternoon until well past sunrise. Named after the nearby town of Ozora, the festival features DJ sets, live acts and chill-out parties brought to life by psychedelic visual projections and colorful canopies sculpted from cloth.

B.MY.LAKE August 24-27, Zamárdi This is the alternative little brother to the Balaton Sound festival and takes place in the same small town on the southern shore of Lake Balaton. Touted by festival organizers as a “boutique festival”, B.my. lake is considerably smaller than Balaton Sound and this year features great acts from the alternative electronic music scene across Europe and North America including Richie Hawtin, Carl Cox, Dubfire, Moudaber and Solomun.

2016. 06. 29. 21:24

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2 Business

Budapest Business Journal | July 1 – July 14, 2016

13

Sziget empire dominates local festival scene

There are a lot of festivals in Hungary, but the most financially successful are the seven events organized by the Sziget group. The Budapest Business Journal spoke with Sziget Cultural Management CFO Tamás Kádár about what keeps this well-oiled engine at the front of the pack.

ANIKO FENYVESI

Hungarians take their festival season very seriously and with a number of new events cropping up every year here and elsewhere on the Continent, it would seem that the market is very much saturated. That said, the company behind the Sziget Festival has managed to spread its net wide over the past two decades by creating seven successful events in Hungary. Six of these take place between June and August while the granddaddy of them all, Sziget, faces competition only from the very largest festivals in Europe.

The hub of the operation is the Sziget management office, whose predecessor was established during the first Sziget – then a small, independent festival – in the early ’90s. In recent years, attendance at the Sziget has been beating all records with nearly half a million coming out for 2015’s seven-day event. Interestingly, however, festival organizers insist it is not the headliners that draw the big crowds but the atmosphere of the island, the very diverse program – everything from music, to theater, to dance, to visual arts, to gastronomy – as well as Budapest’s increasing, if intangible, “hipness” factor.

“We introduced the ‘art of freedom’ concept a few years ago and this motivates how we decorate the island.

This atmosphere makes it very different from any other festival in Europe,” says Sziget Cultural Management CFO Tamás Kádár. “Because of its central location in Europe, we can market it as a festival holiday that also includes a holiday in Budapest.” As a result, many that attend the festival come from abroad; as many as 50% of all festival goers are from outof-country, with Western European nations topping the list.

Turnout at the Sziget is impressive given the competition in the region and across Western Europe. With visitors no longer basing their decisions on who is playing at a given festival, many of the same performers appearing at a number of festivals during the summer season, and the cost of airfares down, there is very little difference between attending

BBJ_2413_biz.indd 13

a festival in England or Budapest, says Kádár. “On the Hungarian market, however, with Hungarian audiences, we have very good coverage with our festivals,” he adds.

Promotion is key Towards the end of the ’90s, the Sziget festival began using the “man-on-theground” concept to sell its festivals by employing foreigners across Europe to promote the festival in a way that was most effective in their own markets, while liaising with the creative team here in Hungary. The first such promoter appeared in the Netherlands, and nowadays the Sziget festival is as well known in Holland as it is in Hungary, explains Kádár. To broaden its scope, Sziget Cultural Management has focused its efforts on boosting promotion budgets in the United Kingdom, Germany, France and other European countries.

This year Sziget organizers will spend about €10 million on programming, which is about 50% of the festival’s overall budget, says Kádár. Once all other costs are allotted, such as infrastructure and security, about 5% will remain for marketing, which is still a healthy sum to get the ball rolling.

Corporate sponsorship has also played a key role in spreading Sziget’s renown across Europe, with the first sponsor Pepsi – after which the island festival was once named – backing the event to a level that allowed it to book its first international acts. Pepsi has since left the Sziget, but other sponsorship contracts currently make up about 12% of the company’s total festival budget.

Increases in sponsorship as well as a dramatic increase in advance ticket sales certainly help support this ambitious endeavor but, as Kádár explains, every penny counts when the cost of booking acts is growing exponentially. “Young people are becoming increasingly open

“Bands don’t earn money through record sales and have become increasingly dependent on live appearances, and the cost of the lineup has been rising.” to music festivals and are less inclined to buy music than they were five years ago. What this means is that bands don’t earn money through record sales and have become increasingly dependent on live appearances, and the cost of the lineup has been rising very rapidly as a result, upwards of 20-30% each year,” Kádár says.

Festipay: A solid source of income Sziget’s payment system, Festipay, was introduced four years ago and essentially eliminated cash from the island and all of the company’s festivals. It is a secure and speedy system that operates like a top-up credit card and allows festivalgoers to make purchases by tapping a console at checkout. And unlike cash, if you lose your card, you can deactivate it via a text message. But what is most compelling about the system is that it allows festival organizers to monitor sales from each concession and since vendors are charged a fee of 3.5% of of sales, there is little risk involved, says Kádár. Additionally, vendors cover the costs of employing the Festipay system, so it’s an ideal source of income largely contingent on festival attendance.

In the family As stated earlier, Sziget Cultural Management operates an additional six

Sziget Cultural Management CFO Tamás Kádár. festivals across Hungary, with Balaton Sound being the most popular after Sziget, attracting as many as 145,000 fans of mainstream electronic music, 70% of them from Hungary, during its five-day run. The Volt Festival, near Hungary’s border with Austria, has an average attendance of 120-135,000 visitors per year and is like a small Sziget, says Kádár, but attracts almost exclusively Hungarians (as many as 97%). B.my.lake, which was launched three years ago, caters to followers of underground music and is referred to as a “boutique festival”, attracting about onethird of the numbers that visit Balaton Sound. Meanwhile, the Strand festival is the group’s “entry level” festival aimed at Hungarians aged 16 to 22. Also in the family is the Gyerek Sziget geared towards kids and families, while the Gourmet Festival, which takes place in May, has an entirely food focus.

2016. 06. 29. 21:24

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2 Business

Budapest Business Journal | July 1 – July 14, 2016

Get your honey weighed from a distance

The internet of things is all over Hungary these days; even beekeeping and building maintenance are now part of the game.

LEVENTE HÖRÖMPÖLI-TÓTH

TecoWorks Kft. is among those Hungarian Internet of Things (IoT) developers that dares to think big and has global ambitions in mind. As managing director László Bencsik says, it regards Hungary only as a “pilot market”, one that serves as the perfect terrain in which to bring its products and related support services up to the right level. Step two can’t be anything less than targeting foreign markets.

“Our most promising solution is made up of a small-budget hardware unit and cloud-based software; with the help of these, electricians and other building engineering professionals get a device to control customized systems without needing any in-depth software developer knowledge,” Bencsik explains.

The data collection function allows for conducting follow-up analyses and optimizing operations and energy consumption. The alert mode provides information on any default before the user would even notice. “This way the service level of engineering systems can be elevated. Heating systems for canteen kitchens or big apartment buildings can be monitored and maintenance could start even before there is no more hot water.”

Even professional beekeeping can benefit from online apps, courtesy of Smarthives.

Track down your stolen hive A completely different area is targeted

by Smarthives. A special online app is connected to sensors placed in hives that provide valuable data for beekeepers.

Thanks to the anti-theft function, alerts are sent out anytime there is an indication that the hives are moved. “This is one of our hottest items since protecting bees poses a huge problem nowadays.

A built-in GPS tracker enables owners to follow their stolen property,” György Fülöp, mastermind behind the concept tells the Budapest Business Journal. “Our number two hit is the online hive scale that shows the beekeeper remotely when it is time to collect honey.”

In order to better appeal to customers’ needs, Smarthives tours fairs and exhibitions extensively and

has unleashed a massive marketing campaign. Surveys have been given out and assessed on a large scale. As a result, there are a number of additional functions that are now available, such as interior temperature and humidity measurement, or bee sound analysis.

Everyone in the business knows that offering tailor-made services is the real deal when it comes to IoT solutions. So it is no wonder that TecoWorks’ business strategy is built on exactly that, focusing on selling cloud-based technology as a service. As Bencsik says, it builds a background service for operators that they can incorporate into their own portfolio, and thus step up the level and quality of their stand-by availability. Smarthives, in turn, is counting on gradual progress based on the little-by-little principle.

INNOVATION

“A symbolic amount of HUF 150 is charged for the software per bee family.

We hope though that our service will become wide-spread soon,” Fülöp notes.

The bigger chunk of income now comes from selling the hardware. “This is not for hobby beekeepers, only those that do beekeeping for a living can afford it.”

Local professional explains appeal of live streaming

With real time marketing becoming more widespread, live streaming is about to become the ultimate tool for online brand promotion, according to a local marketing expert.

LEVENTE HÖRÖMPÖLI-TÓTH

The Ravens were leading against the San Francisco 49ers in the third-quarter of Super Bowl XLVII in 2013 when all of a sudden the power was gone and the game could resume only 34 minutes later. The event, known ever since as the Blackout Bowl, will be remembered

BBJ_2413_biz.indd 14

not only because of that embarrassing power outage though. Cookie brand Oreo’s PR team rode the wave of inactivity on the football field and set social media on fire with a single tweet that showed a starkly lit Oreo with the caption “Power out? No problem, you can still dunk in the dark!”.

This type of newsjacking, where companies jump on headline stories to use them to their own benefit, is nothing new. However, as Gábor Varga, head of advertising agency Digital Café Next, says real time marketing (RTM) is about a lot more than that. “Newsjacking is way too short-term and produces no ROI. You need to add strategy and find relevance to make it sustainable and use it for targeted brand building.”

On top of planning, RTM requires a strong team made up of a bunch of professionals such as script writers, graphic designers, brand managers and even lawyers that ensure proficiency, Varga explains.

“Continuous communication is key and so is the

capability to spot what will make great news.” Only this will have, in cyber age lingo, thumb stopping power.

However, for certain brands, waging real time campaigns may still not be the preferred type of warfare. “In such cases you can be responsive, monitor and identify what users get hooked up on, and then have your say in a more carefully crafted way,” Varga suggests.

Behold the age of live stream!

Since Twitter and real time have always been natural-born allies, the platform took this relationship to the next level by promoting live streaming heavily. In fact, Twitter brought to life two live streaming apps, Periscope and Meerkat, which now have a user base of ten million and two million, respectively.

“Brands must forge real relationships with fans. This can be interactive and should preferably have emotional relevance. Improvised content helps a lot, but pre-produced videos posted at

the right moment are equally crucial.

Live streaming perfectly fits into this set of requirements,” Varga says.

No wonder Facebook doesn’t want to lag behind here. Its relevant solution, Facebook Live was made available to all users as of December 2015, so now it’s no longer a privilege of verified users – meaning big brands, media outlets and celebrities.

Live streaming is a powerful tool, but certain rules must be observed for maximum efficiency. “If your brand plans to launch a live stream, you need to notify users well in advance so that they can enter the date in their calendars. Summarize what to expect and once the event is on, don’t forget to keep the conversation going. Twoway communication is a must,” Varga warns. “Live streams also need to last long enough to allow people to join. And last, but not least: make sure network reception and your Wi-Fi connection work fine to provide a seamless streaming experience.”

2016. 06. 29. 21:24

3Special Report BBJ

Vehicle production

Adding value key to sustainability

 18

Sophisticated parts makers expand here

 20

Creating growth

Economics Minister Mihály Varga wears a safety vest as he inspects a turbocharger at the Sicta Group factory in Hungary. The auto sector is a big driver of exports and growth in this country.

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2016. 06. 29. 21:29

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Budapest Business Journal | July 1 – July 14, 2016

Auto sector cruising along A vital pillar of Hungary’s economy, vehicle production is enjoying healthy growth.

DIANA SEFTON

An essential component of Hungary’s production, exports and GDP, the vehicle production sector has been expanding, fueled by a global rise in auto sales.

The local original equipment manufacturers (OEMs) – Daimler, Audi, Suzuki and Opel – have shown strong growth, as have the hundreds of firms that supply them.

According to data from the Hungarian Automotive Industry Association (MAGE), last year there were 525,000 cars produced in Hungary. Csaba Kilian, CEO of MAGE notes that “the Vitara model is selling well for Suzuki. There were 185,000 in production in 2015 and a waiting list for new orders.” According to the same source, Audi produces more than two million engines and 160,206 cars here, its largest production site. MercedesBenz Manufacturing Hungary Kft. also produced 180,000 cars in 2015.

Some recent investments are set to bolster this growth. In April, Mercedes announced a HUF 185 billion investment to expand its operations here, with room for still further investment at its location in Kecskemet. ThyssenKrupp Presta broke ground for a HUF 30 bln investment in a new production facility in Jászfényszaru in 2016. Meanwhile, Apollo Tyres has a HUF 190 bln investment under construction and Bridgestone also recently expanded its local operations. Tier 1 and Tier 2 suppliers are also still growing. MAGE estimates its members have invested around €2 bln in Hungary, “and there is still growth potential here” notes Kilian.

The Hungarian market is seen as attractive and competitive due to the high level of quality production, not only from the OEMs but also suppliers.

Kilian maintains that the country has a competitive taxation situation, good infrastructure and logistics based on its central location in Europe.

Hungary often competes with other central European countries for auto investments and Kilian admits that there are not big differences between these countries.

Czech Republic, Poland and Slovakia are all capable of relatively high levels of quality production, and all enjoy government support for the industries – though labor costs are somewhat lower in Hungary than in some neighboring markets. A decision made last year by Jaguar Land Rover Limited exemplified the similarities between these markets.

The OEM had been evaluating Hungary for investment but ended up in Slovakia.

“Who knows why Hungary lost the bid. They said the decision was based on logistical reasons,” says Kilian “Slovakia, however, has a low unemployment rate, so the company is actually now looking for people in northeastern Hungary to fill its labor requirements”.

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The Daimler plant in Kecskemét. (Photo: MTI/ Sándor Ujvári) Inset: MAGE CEO Csaba Kilian.

“There are still EU funds available for R&D initiatives and activities over the next two years. I hope we can use the funds efficiently.”

a digitalization of the industry. This will lead to growth in production, sales and jobs in the sector,” says Kilian.

Another area where Hungarians are doing a lot of research is in driverless cars – the so-called autonomous driving vehicle. Hungary has strong research and development of this technology with world leaders including Bosch, ThyssenKrupp and Continental involved here.

Research is key

Assistance for the industry

In addition to manufacturing, research and development is an important component of Hungary’s automotive industry. Bosch, ThyssenKrupp and Continental all have between 500 and 1,500 engineers here.

“The OEMs are bringing more R&D to Hungary. Small- and medium-sized companies are able to develop along with the Tier 1 and Tier 2 companies,” explains Kilian. In this way, OEM investment in R&D trickles down through the industry, benefitting suppliers as well.

One of the main areas of research is in alternative fuels and energy. The field of alternative energy and new technology is expected to have important impacts on the market, on production, investment, infrastructure and regulations in upcoming years. Electric technology is growing fast and there have been important developments with the traditional engine to dramatically reduce the fuel consumption and extend battery life. “There are many competing technologies and solutions in this field and we don’t know the winner yet, maybe it will be more than one or a combination of many. Two-to-three years ago, research and development was more focused on traditional engines. Now we see a focus on alternative solutions and

An initiative expected to help forward the development of autonomous driving is the government’s recent announcement that it will fund construction of a test track in Zalaegerszeg. According to Killian, more such support is expected.

“There are still EU funds available for R&D initiatives and activities over the next two years. I hope we can use the funds efficiently and give opportunities to many companies, new producers and investors,” he says.

MAGE also supports R&D and the value-added activities of the OEMs. The association works together with the Hungarian Investment Promotion Agency (HIPA) to identify suppliers who need training and professionals who can provide it, according to Killian. This year their programs included 80 suppliers.

“The key issue is how we can move up the value chain and increase high value research and development. We have to focus on technological development and bringing small- and mediumsized companies up. Education system involvement and long-term cooperation with companies are some of the ways of doing this,” says Kilian.

Dual education, in which companies and universities work together to provide

training and work experience for students, was started around six years ago in Hungary by OEMs such as Mercedes and Audi. Ever more companies and schools are participating and MAGE aims to widen this further. The first students of these programs are now entering into the job market, armed with valuable knowledge and practical industry experience. More students are expected to participate in these programs over the next two to three years. One of the main challenges that the industry faces in some areas is a shortage of labor, especially in the northern and western regions. There are hopes that increased student participation in dual education programs will help to alleviate this. “Mercedes and Audi investments were made around the same time, which led to growth in Tier 1 and Tier 2 companies and created pressure on the labor market,” Kilian explains, “This will balance out over time.”

MAGE is also working on the issue of labor mobility, to help workers get from areas with lower employment to areas where factories are located. Tax incentives were recently introduced to provide more support for employee travelling expenses and for building dorms for workers, according to Killian. There is also increasing government support available for training facilities, with a focus on midto long-term programs.

In addition to increased investment from existing players in production and R&D, as well as growth in training programs, Kilian also hopes there will be new companies entering Hungary over the next couple of years. “There are still a few global players without a presence in the region,” he notes, adding that the Asian market, including China and India could be important future market players.

2016. 06. 29. 21:29

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2014

2015

4 cylinder gas and deisel engines

1,476,078

1,538,933

5 cylinder gas and deisel engines

2,853

7,711

6 cylinder engines

452,770

435,636

8,10,12 cylinder engines

42,033

40,240

Total engines:

1,973,734

2,022,520

A3 cabriolet

19,408

16,862

A3 limousine

98,170

107,834

TT Coupe

14,963

28,093

TT Roadster

2,691

7,417

Total autos:

135,232

160,206

Swift

48,007

53,000

Splash

21,822

-

S-Cross

60,249

42,827

SX4

16,402

-

Vitara

-

89,706

Total autos:

146,480

185,533

Audi Hungária Motor Kft.

Magyar Suzuki Zrt.

Mercedes-Benz Manufacturing Hungary Kft. 150,000

180,000

Opel Szentgotthárd Kft. (engines) Family 1.6-1.8L gasoline engine

274,943

Mid-Size 1.6L diesel

76,295

Mid-Size 1.6L gasoline

15,817

Small Gasoline Engine, 1.0L

9,837

214,641

Flex factory gasoline

77,957

Flex factory deisel

217,785

SOURCE: Hungarian Automotive Industry Association (MAGE).

CEE light vehicle production

2015 SOURCE: PwC Autofacts

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2016 Forecast

2019 Forecast

EXPERT OPINION

SENIOR EXECUTIVE LIABILITY Dr. Ágnes Tompa Senior Attorney Head of Corporate / M&A Department

Noerr & Partners Law Office Under the current amendment of the new Civil Code (“Amendment”) coming into force on July 1, 2016, the current liability regime pertaining to senior executives will be eased a bit.

LIABILITY TO THIRD PARTIES Since 2014, a third party can make a claim directly against the senior executive. Under these provisions, if a senior executive causes harm to a third party in connection with his/ her position, the senior executive and the company are jointly and severally liable towards such a third party. It was actively debated in the judicial literature which scope of application this provision is intended to have and also, who is at all eligible to claim such damages (persons with whom the company is not in any contractual relationship or even contractual partners).

on intention, it is yet to be seen how the judicial practice will work out the details of that matter and what type of damaging conduct would qualify as intentional.

LIABILITY TOWARDS THE COMPANY According to the new Civil Code, senior executives remain liable towards the company they represent for damage caused in the course of the performance of their duties, but the extent of such liability will be significantly increased.

If a senior executive causes damage for his/her company, he/she can only be released from liability if he/ she is able to demonstrate (i) that the circumstance resulting in the damage arose outside his/her scope of responsibility (e.g. as a result of force majeure or due to a change in legislation, etc.), (ii) the circumstance resulting in the damage was not foreseeable for the senior executive when accepting the appointment; and (iii) he/she could not be expected to avoid the circumstance resulting in the damage or avert such damage.

A senior executive must demonstrate all of the above circumstances together to be released from liability. We draw particular attention to the fact that a senior executive can cause damage not only through action but also by omission, for example, by failing to exercise appropriate supervision or to avert harmful events.

As this regulation and its interpretation caused so much trouble for the companies, executives and legal practitioners, one of the purposes of the Amendment was to eliminate this uncertainty. From July 1 2016, under It is important to note that senior the Amendment senior executives and executives are also liable if they do the company have joint and several not actually perform any managerial liability for any damage caused to third activities but merely act as ‘token’ parties when acting in their capacity as executives registered in company a senior executive only if the damage registration records. is caused by them on purpose. Also, the Amendment extended the liability The effect of the stricter rules is for damages to not only the non- somewhat mitigated by the fact that contractual damages (tort law), but to under the new Civil Code, senior contractual damages as well. executives are only liable to their companies for harm or damage which This clarification at least eliminates the company is able to demonstrate to the unsettling idea that a senior have been foreseeable at the time of executive is liable directly against all the senior executive’s appointment. The contractual partners of the company Amendment does not change that type for every negligent act or omission of liability. jointly and severally with the company.

An often cited example was, that the senior executive forgets to forward an e-mail with a term for supply of spareparts and he becomes personally liable for the contractual penalty for late performance. However, as the Civil Code does not give a definition www.noerr.com

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

Production at Hungarian OEMS (2014-2015)

Total autos:

17

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Budapest Business Journal | July 1 – July 14, 2016

2016. 06. 29. 21:29

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Budapest Business Journal | July 1 – July 14, 2016

Car industry grows in sophistication

Armin Krug, PwCʼs top specialist in the region’s automotive industry, explains how Hungary’s work in the areas of R&D and innovation promises sustainable increases in production, exports and GDP. The Hungarian auto industry has plenty of room to grow – in the number of vehicles produced, but even more so in sophistication, according to one of the foremost experts on the sector.

“The movement will go in the direction of innovation to increase the value chain,” believes Armin Krug, a partner and specialist in the automotive industry with PwC Magyarország, the local unit of the top global consulting company.

For Krug, the key to staying competitive is not a matter of being the cheapest carmaker in the region. Instead, he said, Hungary will do best by focusing on its existing strengths as a center for research and development and innovation – areas that are less about cutting costs and more about raising value. Krug believes the Hungarian car industry has already been steering in this direction, and the trend bodes well for the future.

The automotive industry is the fastest growing sector in the Hungarian economy, producing roughly a quarter of the country’s manufacturing output and more than a fifth of its exports. In May, when Hungary announced its first quarter-on-quarter drop in GDP in four years, there were concerns about the country’s dependency of automotive production, which slowed slightly during the quarter. In fact, much of the problem was probably due to the smaller amount of European Union funding available as compared with 2015.

“Production as such was not on hold.

I’m not aware of any problems with the OEMs,” said Krug. He maintained that Hungary’s original equipment manufacturers (OEMs) – Audi, Daimler, Opel and Suzuki – and their suppliers were still working at a steady clip during the first quarter. Already, production figures have improved since May. While he acknowledged that the future impact of Brexit is hard to determine, and added that other external shocks could impact the market, Krug said that demand is still strong enough to fuel continued growth in Hungary’s automotive production sector for some time.

“We are at pre-crisis car sales in Western Europe. No one really predicted that sales would come back so quickly,” he said.

Wages, demand for labor grow The increase in demand has naturally been putting pressure on the components

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Photo: Mátyás Pödőr

BBJ STAFF

Armin Krug, partner and automotive industry specialist at PwC Magyarország.

“When Daimler decided to come to Central Europe, it was making one of the riskier decisions in the more than 100 years of the company’s history, but it has paid off.” of supply, including labor. As OEMs add production shifts at their factories, and the number of smaller firms supplying the OEMs grows, the pool of capable workers is shrinking, driving wages upward.

“Wages are kind of low, but over the last four months real wages grew rapidly, and that trend will probably continue,” said Krug. The Hungarian Central Statistical Office announced on June 21 that the average net wage in Hungary was up by 7.8% year-on-year in the period of January-April – the biggest rise in more than 12 years.

Although Hungary’s lower wages have traditionally been one reason why carmakers would come here, Krug said market-based increases in compensation for labor due to growing competition is a good thing, because it attracts workers to the sector.

In fact, he said, the bigger concern is that there are not enough capable workers available, due to growing employment levels in Hungary and increasing competition for workers from other European Union countries.

“They need to open the pipeline to new people and to raise efficiency,” Krug said.

Unfortunately, it would be hard to raise efficiency at Hungary’s OEMs much, as the factories here are all pretty much state-of-the-art, and Hungarian workers in those factories are already at the same productivity levels as workers in German automotive factories, according to Krug.

As for bringing in potential new workers, Krug noted that there are a variety of effective training programs in local universities and high schools that are already helping. Another answer could involve building factories in places where there is less competition for workers.

“Although big automotive companies in the western part of the country are now seeking commutes of as much as 100 kilometers, Hungarian workers are generally very immobile,” he said. “That’s why clients are looking into the eastern parts of the country,” which is also close enough to the border with Ukraine to attract workers from that country.

Krug said there is a chance that another OEM could locate in this country. He pointed out that, of all the German premium carmakers BMW is the only one without a factory here. Even though BMW chose to pass up Hungary before ultimately deciding to build in Mexico in 2014, the reasons for coming here are still strong, he said.

“When Daimler decided to come to Central Europe, it was making one of the riskier decisions in the more than 100 years of the company’s history, but it has paid off,” said Krug.

Innovation and value added If a new OEM like BMW were to open in Hungary, it would probably not be to build traditional models but rather to

produce the next generation of vehicles, such as cars with electric power trains, according to Krug. He explained that most stakeholders in the sector realize that Hungary’s real strength involves adding value through innovation and research and development.

As an example, he noted that Daimler owns a vast amount of unused land around its plant in Kecskemet, and could easily build more production halls, but it does not appear to be planning such expansions right now. Instead, Krug said, it seems more likely that it will develop new R&D facilities there and may produce electrical and alternative power trains.

While a new OEM might be nice, Krug maintained that most of the growth in the sector is likely to be a move toward greater sophistication. Instead of competing by offering the lowest wages, Hungary will compete with innovation through firms that employ a lot of engineers – often smaller, more nimble companies. He said this direction promises “sustainable growth” for the long-term future of the sector.

“From a strategic point of view the government understands this,” Krug said.

“The government looked at the market and saw we needed to support SMEs.” He explained that those small, innovative companies that have the ideas and brain power to be leaders in transportation engineering often have insufficient knowledge of management and marketing – as well as insufficient capital.

Recognizing this, the government is making an effort to steer state and EU funds toward these SMEs, instead of simply supporting more production halls.

The government has also announced plans to build a new test-driving track in Zalaegerszeg, and there is hope that this could be the place where driverless cars become a reality. Krug noted that firms like Bosch, ThyssenKrupp and Knorr Bremse are already working on assisted driving technologies, which can eventually lead to autonomous driving.

These firms seem to be bullish on their future here: Knorr Bremse announced on June 21 that it is expanding its plant in Hungary through a €17 million investment, and ThyssenKrupp on April 20 broke ground on a €95 mln plant in Jászfényszaru, where 500 workers are to be employed in the manufacture of camshafts and steering systems.

Other advances that are being investigated by Hungarian firms are electric power trains, like the ones that locally owned Evopro is working on for buses. And there are also advances being made in areas like “smart city” development – including transport without vehicles, using moving platforms – by firms like Bosch, a company that employs more than 1,000 engineers in the country.

By developing the kind of R&D facilities that can push forward such cutting-edge advances, Hungary can help guarantee that the vehicle production sector contributes to the GDP for a long time. According to Krug, “This is the kind of growth that is sustainable.”

2016. 06. 29. 21:29

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Budapest Business Journal | July 1 – July 14, 2016

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19

PROMOTION

Magyar Suzuki: Outstanding Results, Promising Future

25-year-old Magyar Suzuki Corporation accounts for an increasingly large share of global Suzuki Motor Corporation’s excellent production performance. The new, partly Hungarian-developed Vitara is exported from Hungary to over 100 countries worldwide, including Japan. Other models are a great success too; no wonder the company started to dream big.

“The Suzuki Group will be celebrating the 100th anniversary of its foundation in 2020, while Magyar Suzuki joined the Suzuki Group 25 years ago and has been able to contribute to Suzuki Group’s Growth” said CEO of Magyar Suzuki Naoyuki Takeuchi at the press conference dedicated to the special anniversary last month. The contribution these days is indeed substantial, as the Hungarian plant achieved a nearly EUR 2 billion profit last year and due to growing sales figures, revenues are expected to exceed 2 billion in 2016.

Last year’s growth rate was impressive: as opposed to the 150 thousand ownproduction cars sold the year before, Magyar Suzuki sold more than 181,000 cars worldwide in 2015, while sales of the massively successful Vitara only began in April. Further increasing the chances for achieving better results than last year are those nearly 207,000 own-production cars Magyar Suzuki sold in the fiscal year that ended in March.

“As a member of Suzuki Group, we are constantly finding ways to increase our know-how and improve our experience in production and production technology; in this, the Japanese factory provides guidance through its standards of quality,” CEO Takeuchi pointed out. Not many people are aware that one of the great novelties in the production of the Vitara was that practically the entire production

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planning happened in Hungary, which means that the Hungarian plant now also has its share in development. As regards production, the company’s top priority is quality. The popularity of the Vitara is partly attributed to the fact that Suzuki managed to build by far the lightest car in the category, which has its positive impact on mileage as well as fuel consumption.

of the Vitara, the Hungarian plant will be commissioned with the production of an entirely new model.

In order to support increased sales volumes, Magyar Suzuki produced 89,263 cars in the first five months of the year, which were exported to over 100 countries. Besides the Vitara, the Swift and the S-CROSS, also made in Hungary, performed well too.

Within the 100-year-old Suzuki Motor Corporation the Hungarian plant is, of “Magyar Suzuki’s 25 years of history course, just a link in the chain. The global mirrors the Hungarian and global corporation plans to introduce a new events of the past quarter of a century: model to the market each year: this is Hungary’s revival after the change of the reason the new Baleno, already very the political and economic systems as popular among critics, was brought to well as the halt of the global automobile Hungary recently from Maruti Suzuki India industry after 2008 and then its recovery,” and is already available at dealerships Head of Communication Viktória Ruska for purchase. Magyar Suzuki Corp. is of Magyar Suzuki pointed out. “We hope not involved in Baleno production but that the next 25 years will be a period chances are that following the success of stable and unwavering production,

years that will witness further spreading of pioneering innovative solutions and, as has always been the case at Suzuki, years marked by the presence of loyal and committed colleagues,” said Ruska.

2016. 06. 29. 21:29

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Budapest Business Journal | July 1 – July 14, 2016

EXPERT OPINION

HIRING POSES GREATEST CHALLENGE TO AUTOMOTIVE INDUSTRY Sándor Bodnár Senior Recruitment Consultant

HAYS HUNGARY

In the past few years we have experienced a significant growth in the Hungarian Automotive sector. Today we see further potential but can the labour market keep up with the immense expansion?

The popular question to ask today is: how much further can the Hungarian automotive industry grow without disturbing the labour market balances and creating difficulties to existing businesses?

The vehicle industry is booming in most of Central European economies, investments in the last two decades are unparalleled in the history of Europe. The EU is a giant market available for the manufacturers for exports, most notably Germany, the absolute European leader in car manufacturing.

Today the Czech Republic is the leading car manufacturer in the region (excluding Germany) with an annual output of 1.2 million vehicles. Slovakia follows with an astonishing 980,000+ cars a year; what makes the Slovaks the world’s largest producer of cars per capita. In Slovakia the automotive industry accounts for 12% of total GDP, 41% of industrial output and 26% of total export.

In comparison, the Hungarian automotive sector accounts for 10% of the GDP, 19,4% of industrial output and 20% of total export.

The volume of the Czech- and the relative size of the Slovak automotive industry shows us that there is potential for growth.

So much potential that a Jaguar Land Rover plant will open in Nyitra, Slovakia in 2018.

Seeing this and the fact that we hear about OEM’s negotiating new site openings in the region every other month leads us to believe that further growth is not only possible, but probable.

Hiring is already challenging for the automotive companies as they have industry specific standards and processes. They also have high demand for English and German speaking colleagues, as they work closest with foreign professionals. Research and development is usually supported or driven by the mother company and as exporters these companies have foreign customers.

This makes the integration of nonautomotive professionals’ time consuming

BBJ_2413_spec_report.indd 20

and expensive, thus sourcing directly from competitors is beneficial.

The high demand for skilled professionals created an atmosphere, where the qualified engineers can choose between several offers when looking for a new job. Their final decision and long term loyalty is not based only on salary or prestige but perspective.

As the company offers guidance and – most importantly - flexibility in career advancement planning, the employee’s loyalty increases as he is invested in the conjoined career.

Dual Education and Management programs are such solutions that can successfully increase employee engagement. While the first gives the employee valuable on-thejob training before graduation and setting up an expert career, the second selects a new generation of management. These measures are shielding junior experts from high fluctuation as they offer perspective and mutual investment.

It is not possible to include all white collar employees in such programs, but clear career advancement options, face-to-face performance assessment discussions and employee-driven training should be available for most of them. These can ensure that skilled employees have influence over their professional development. For senior colleagues these options and international opportunities are generally motivating.

Due to the potential further growth of the automotive sector HR will have to be considered as a main strategy forming force in the organisation. For that to happen colleagues will have to change their mind set and act as strategic partners and decision makers in the organisation - rather than following trends, they should be the creators of change.

The Engineering Division of Hays Hungary can help you face recruitment challenges.

Our consultants are passionate about what they do and they can cater for all your requirements, ensuring job seekers and employers find a perfect fit. Dealing exclusively in engineering and manufacturing jobs across Hungary, they have an in-depth understanding of their specialism and market, keep up-to-date with all the latest trends and industry developments and have a wide range of industry contacts. We’re proud of the long-lasting relationships we’ve built with all of our clients since first launching in Hungary in 2007.

www.hays.hu

Uniting research and production in Hungary

With a €110 million investment, ThyssenKrupp has begun construction of a plant to produce steering systems here in Hungary. The firm was already pleased with the engineering talent it had found here.

DIANA SEFTON

After years of headquartering some of its most advanced research and development in Budapest, ThyssenKrupp, a leading global Tier 1 auto parts supplier, has now decided to bring its production here in a big way.

The firm laid the cornerstone for a production plant in Jaszfényszaru, 70 km from Budapest on April 20. The company says the project represents a €110 million investment and that it will employ roughly 500 people. Production of shafts and steering systems is expected to begin next year.

Marc de Bastos Eckstein, general manager of ThyssenKrupp Presta Hungary, says the decision about where to locate the new production facility was a lengthy and complex process involving many factors and criteria. The company considered labor costs, logistic costs, proximity to current and potential future clients, among many other factors during the site-selection process. Eckstein notes that ThyssenKrupp’s existing development center here in Budapest was a factor that the company took in to consideration, but it was not the only deciding factor that led to the decision.

Expansion of ThyssenKrupp’s production capacity is due to some large volume contracts that the company received last year for its innovative steering systems. Work on its now renowned electronic steering system began at its development center here in Budapest, which was started with just three Hungarian PhD students 16 years ago. From there, the company saw potential in Hungary and began to build up the center. ThyssenKrupp sources the hardware and software for its electronic steering system directly from Hungary to production plants around the world.

“We are very proud of this accomplishment in innovation here,” says Eckstein. Compared to a hydraulic system, which relies on a constant supply of energy, the electronic steering system uses fuel only when in use, saving on average three deciliters of fuel per 100 kilometers.

ThyssenKrupp’s clients for this system include Daimler and BMW, among others. There are systems produced all over the world using the technology developed locally in Hungary.

Knorr-Bremse invests €17 mln in Hungary Knorr-Bremse Rail Systems Budapest, developer and producer of braking systems for a range of rail vehicles from trams in Budapest to highspeed trains in Japan, is expanding its plant in Hungary through a €17 million investment, according to a press release issued June 21.

The Munich-based company is expanding its Budapest-located factory, inaugurated in 2010, by 11,000 sqm to 46,000 sqm. The expanded facility will host operations for the development and production of complete brake control systems and air supply product families.

The company expects the investment to create nearly 300 jobs, expanding the number of employees at the company to more than 1,500.

The company also anticipates the investment will create hundreds of additional jobs through the company’s stable local supplier network, the statement added.

The company exports its products to 17 countries around the world. The share of Hungarian suppliers is over 60%. The company partners with more than 600 Hungarian businesses.

“This development center is unique to Budapest within ThyssenKrupp,” adds László Naszádos, department leader at ThyssenKrupp Presta Hungary.

What is unusual about ThyssenKrupp’s recently-announced plan to set up production of the steering systems near Budapest is the dynamic that the company is creating by pairing a future production facility with its current development center. “This arrangement [having software and hardware development in the same place] is unique inside of ThyssenKrupp,” says Eckstein.

Hungary is also unique in that it fits ThyssenKrupp’s criteria for the production facility as well as the company’s separate criteria for its development center many years ago. In this case, Hungary satisfies the company’s requirements for comparatively low cost production, while at the same time offering highly educated and skilled engineers required for the development center. And, it should be noted that Hungary satisfied these two sets of criteria independently, one did not have a heavy influence on the decision of the other. ThyssenKrupp expects the synergy from this arrangement to lead to innovations in its steering system that will benefit both production and development; both the company and Hungary.

2016. 06. 29. 21:29

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EXPERT OPINION

Can Consumers still trust their cars? – managing data protection issues in connected cars Martin Wodraschke Partner, Head of CMS CEE Automotive Team

CMS BUDAPEST We are already at the point where various control units in cars collect, process and store various kinds of data, which in the case of a connected car is transferred to the vehicle manufacturer. According to a current study of the German Automotive Club (ADAC), the data originating from a car may enable the manufacturer to identify the technical status of the car – and may also reveal specific aspects of the driver’s habits, behavior and preferences in a way that is likely to have data protection implications. The current study shows that information is already collected in cars today through various control devices. For instance the engine’s electric device collects data regarding the amount of time spent on motorways and on small streets.

Marc de Bastos Eckstein, general manager of ThyssenKrupp Presta Hungary.

Naszádos notes that development time is a major consideration in the process.

In the auto-parts industry the time from the start of development to the start of production is constantly reducing; the development cycle is getting shorter.

“If you can be quick, it is an asset,” he says. ThyssenKrupp hopes to take full advantage of the human interaction, communication and feedback loops between development and production, to reduce the development time here in Hungary.

In addition to decreased development timeframes, one of the industry’s most significant upcoming challenges is the continued development of an autonomous or “driverless” car.

ThyussenKrupp is currently working to identify challenges that this may present in the steering systems that it develops.

Naszádos recognizes that the company needs to understand the needs of the customer, the needs of traditional OEMs and also the needs of newcomers such as IT companies who are influencing this market. “New competitors will challenge the traditional OEMs. We are looking to define our role in autonomous driving in the future.

We look forward to working with both traditional OEMs and newcomers.

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This requires us to understand the needs of each,” says Naszádos. He also recognizes that innovations in steering systems are changing each year. The systems are becoming more reliable, safer, more precise and they are taking into account more intelligence from the system. For example, where there used to be a steering column, there are now what are known as “drive by wire” or “steer by wire” systems that use electronic signals to steer the car.

This cuts down on the weight and space that steering takes up in the car. “There are different approaches to the steering system design, and much of it is based on what customers will accept. The market is also very price sensitive,” notes Naszádos.

ThyssenKrupp is looking forward to the increased synergy between development and production in order to address these challenges. The company expects the close cooperation to lead to innovations on the development side as well as the production side. Eckstein notes that the company’s production facilities in China, Mexico, Germany, France and others will benefit from the feedback loops here. “This is an exciting stage for us, people here are proud of this,” says Naszádos.

European data protection authorities are mainly concerned with information asymmetry among the connected car users and manufacturers. The scope of data may not be adequately reviewable by the customer; moreover, the individuals may not be aware of data collection or the communication between connected cars at all. As a result, it will become very difficult for them to control the data flow and the subsequent use of the data, as required by EU data protection laws.

In this context, distinguishing between personal and non-personal data is essential. In particular, it is important to understand if the data collected is personal data at all, when and how it is aggregated and pseudonymised, and how likely it is to be linked to identifiable individuals. If data collected in the car can be used to create any kind of user profiles with personal preferences, the data should be treated as personal data and can only be processed with the consent of the individual.

Currently there are no express requirements regarding connected cars, but Hungary’s Data Protection Authority (NAIH) recently issued general guidance on the necessary content of privacy notices that requires companies to provide detailed privacy information to their customers before collecting their data. For example, privacy notices in Hungary should contain detailed information on data transfers, data retention periods and the people who may have access to the data.

According to the latest legislative plans of the German government, all personal data collected by cars can be processed only with the consent of the person concerned and in a pseudonymous form. The buyer of a car must be fully and comprehensibly informed when buying the car regarding all kinds of data collection, including what data is transferred on which channel, and for what purpose. According to this plan, the owner of a car can decide who has access to their personal data, and all access and every transfer of personal data needs the owner’s prior consent.

However, in practice it is challenging to obtain informed consent and to provide sufficient privacy notices during the dayto-day use of a car. The possibility to refuse certain services or features may not be a viable alternative in practice either. In addition, while the user was comfortable with sharing the original information for one specific purpose, such as the provision of a service pertaining to the connected car, they may not want to share it for secondary purposes, such as analysis of driving habits by an insurance provider.

As regards the cooperation of the stakeholders themselves, the contracting background of connected car services involves multiple parties (receiving data from or sharing data with third parties), which requires the precise allocation of legal responsibilities. More importantly, all actors who process connected car data should carry out Privacy Impact Assessments, implement Privacy by Design and Privacy by Default solutions, and share the relevant results with each other. Further, it is of primary importance to consider new ways of obtaining the users’ valid data privacy consent.

The lawful collection and secure transfer, as well as storage, of car data will be important issues for the future relationship between the manufacturer and the customer. In the past, the customer trusted mainly in the technical aspects of their car, but today manufacturers can establish a good customer relationship only if the customer trusts in the security of their personal data and in protection against any risks posed by third parties.

cms.law

2016. 06. 29. 21:29

22 3

www.bbj.hu

Budapest Business Journal | July 1 – July 14, 2016

After 25 years, Suzuki still a leader

Q

The Esztergom plant of Magyar Suzuki has produced more vehicles than the other OEMs here, and local sales are also on a tear. Executive General Manager Róbert Krisztián talks about current successes and future plans.

Is the Vitara the main product you make in Hungary? Are there many other factories making Vitara in the world?

A: Our plant is the only one producing Vitara globally. At Suzuki there is a policy that each plant produces a certain model for the global market. However, some big countries have the permission to produce other models for the domestic market, as well. So Vitara has also been produced in China, but only for the local market.

Q

What other models are being produced at the Suzuki plant? What about motorcycles and boat motors? Are those produced here or only sold here?

A: Practically speaking, we have been producing three models: Vitara, S-Cross and Swift. Volume-wise, the main model is Vitara. Regarding motorcycles and boat motors, Magyar Suzuki only plays a role as a distributer, importing them from other plants.

ZSUZSA SZABÓ

Operating in Hungary for 25 years, the Magyar Suzuki plant is the third largest worldwide for the Suzuki group, and with 185,000 vehicles rolling out of the plant, it was the leader in production here. The factory in Esztergom is also the only one producing the Vitara for global sales.

Launched last year, the Vitara is one of Suzuki’s premium models.

Along with experiencing healthy growth in production, the Hungarian unit of Suzuki is also a leader in automotive sales in this country, capturing close to 10% of the market last year and already grabbing a share of nearly 12% this year.

We interviewed Róbert Krisztián, executive general manager of Magyar Suzuki Zrt., about the benefits and challenges of making and selling vehicles in Hungary.

Q

What are the advantages on locating production here in Hungary?

A: At the end of the 1980s, Suzuki was at the stage of establishing a global footprint.

In the framework of this program, it was decided that a factory here in Europe was needed. Several locations were studied within Europe, but the final decision was to set up in Esztergom in Hungary.

The main reasons for choosing Esztergom were because it had very well-trained manpower, Hungary’s infrastructure was one of the most developed among EasternEuropean countries at that time and the attitude of the then-Hungarian government and the delegation negotiating with Suzuki Japan made a very good impression on our colleagues.

Q

Times have changed since Suzuki first came to Hungary.

Do you still see special advantages in the labor force here?

A: Nowadays we have workers with a wide range of experience and knowledge, providing a very high quality of work.

With our current workforce, we can work much more efficiently, and they are very open to Japanese practices like “kaizen” (continuous improvement). Our current workers are more productive than the ones we used to have at the beginning.

I think this greater productivity partially balances the salary increase that we had in Hungary, but the current salaries are still much lower than those in Western Europea. I think the current

BBJ_2413_spec_report.indd 22

Magyar Suzuki Executive General Manager Róbert Krisztián. issue is not the size of the salary but rather the limited available workforce. In the near future, our greatest challenge is to find enough proper workers.

Q

What are some of the ways your factory helps Esztergom?

A: We have always had very good cooperation with the actual leaders of the city. Our interest is to maintain a good, working relationship with the municipality. Magyar Suzuki actively participates in CSR activities. There is a policy at the company that our sponsorship activities should prioritize Esztergom and its surroundings.

The company supports different cultural events, like “Bridge Running,” from Esztergom to Sturovo via Maria Valeria bridge attracting thousands people.

Basically all the local summer events in Esztergom are sponsored by us. We also sponsor sport associations, including the local rugby team. Besides these, the company provides cars for public institutions like Esztergom Hospital, to be able to arrange the blood transportation between Budapest and our city.

Q

How big is the Hungarian Suzuki factory compared to others around the world? Is it still in the top three?

A: Yes, it still is. Besides the main Asian plants (Japanese and Indian), Magyar Suzuki is one of the main plants of Suzuki, and in the future strategy, the Hungarian plant is still expected to produce for Europe and globally, as always.

Q

How much work was involved in retooling the factory to start making the Vitara last year?

A: Vitara was a very special project for us. We started a modernization, which

“Vitara was a very special project for us.... The factory has implemented robots that are able to build the Vitara. We expect to finish the modernization by the beginning of next year.” is still an ongoing project in the factory.

The modernization has had several stages, including installation of new machinery lines and restructuring of the old and sub assembly lines in order to make the production even more efficient and parallel to that ease job stations.

The factory has implemented robots that are able to build the Vitara. We expect to finish the modernization by the beginning of next year.

Vitara has been exported to five continents, and more than 100 countries already. Magyar Suzuki has become an ambassador of Suzuki products worldwide. That means we not only have to meet the expectations of the European customers but also the American, African, Asian and Australian customers. But probably among the most exigent customers are the Japanese. We have quite large exports to Japan.

On the one hand, it is a great challenge to fulfil all these expectations; on the other, Vitara’s success has gone even beyond our expectations. This is actually causing headaches for our plant. We have carried out many improvements to increase our capacity, but I must admit that, even today, we cannot fully fulfill the market demand.

Q

How have sales of the Vitara been going worldwide, and how does this impact the rate of production at your plant?

A: Over 185,000 Suzuki cars were produced at our plant last year, and out of these, almost 90,000 were the Vitara. The production of the new model only started from the second quarter, but its production rate was already over 50% in 2015. This year we expect that Vitara’s production rate will exceed last year’s, to 60%.

Q

How have sales of the Vitara and other Suzuki models been going in Hungary?

A: In Hungary sales have been going even better than globally. Last year, 7,500 new Suzuki cars were registered here. Magyar Suzuki was able to achieve a 9.75% market share in 2015. Compared to the previous year, that means a 58% increase. I would say that’s quite a steep rise. The tendency is continuing this year. By June 20, some 4,848 new Suzuki cars were registered in Hungary, giving the brand 11.7% market share in the country. We have a good chance of reaching 5,000 in the first half year.

Besides Vitara, all other models are doing well. Swift is the market leader in the “B” segment, S-Cross is in fifth place in the “C” segment; Celerio is second in the “A” segment. We have just started selling Baleno. I believe that it will be a success story.

Q

What are some of the future developments you expect at the plant?

A: Magyar Suzuki will continue to be a global supplier and the Hungarian plant will be considered a main pillar for Europe at the Japanese car manufacturer.

In the future, the main challenge for the Hungarian factory will be to react very flexibly to market demand, handling tasks such as producing much more of one model than the other. We are working on this challenge continuously.

The other big challenge, as I already mentioned, will be the workforce.

2016. 06. 29. 21:29

www.bbj.hu

3

Budapest Business Journal | July 1 – July 14, 2016

23

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Investment Plan for Europe

The iiwa R820 robots at the Audi factory in Győr. (Photo: MTI/ Csaba Krizsán)

Getting Europe to invest for jobs and growth.

Let’s #investEU

Audi starts HUF 32 bln expansion The Hungarian subsidiary of German car manufacturer Audi launched the construction of a 80,000 sqm car body plant in Győr, the firm’s Hungarian base, communications officer Mónika Czechmeister told Hungarian news agency MTI on June 27.

Once the plant is built, the Hungarian base will start manufacturing Audi’s Q3 model, according to a statment from the company.

Audi Hungaria has a 75,000 sqm car plant making bodies for several models.

The Győr vehicle plant reportedly has capacity to produce 160,000 cars a year.

On June 1, Audi announced that the factory had installed two new iiwa R820 robots made by KUKA. The robots help workers to measure parts in hard-toreach places, thereby assisting assembly.

Audi Hungaria Motor reported revenue of €7.91 bln in 2015.

Sicta group opens new €4 mln facility The Sicta group, a supplier for the following the expansion of production automotive industry, opened a €4 million areas and increase in staff over the last office and warehouse building at its nine years, d’Ales said, according to MTI. Felsőzsolca facility on June 21, according An investor-friendly policy and tax to Hungarian News Agency MTI. environment, a highly educated labor Another €12 mln will be invested in the force, and government support programs facility in the upcoming four years, said attracted the Sicta group to Hungary Sicta group Chairman Andre d’Ales, who in the mid-2000s, d’Ales added. The added that 50 additional employees will facility was constructed near the Miskolc be recruited by the end of the year. He University, he noted. went on to praise developments in the Felsőzsolca offers businesses a fair Hungarian automotive industry. economic environment to develop through Sicta produces turbochargers for partnerships with local educational partners such as Mercedes, BMW, Audi institutions as well as government and Porsche. The Felsőzsolca facility is support, said National Economy Minister now the Sicta group’s most important, Mihály Varga, according to MTI.

Mercedes Hungary launches new models The Hungarian unit of Germany’s portfolio is another acknowledgment of Mercedes-Benz has launched the the facility’s competence in the area of production of its CLA and CLA Shooting compact cars.

Brake models in Kecskemét, with the Mercedes-Benz Manufacturing Hungary support of the firm’s sister plant in Rastatt, Kft. employs a staff of approximately 4,000 Germany, according to a press release. in the country. Last year the plant turned The models are exclusively out more than 180,000 compact cars. manufactured in Kecskemét for the global The firm reported on May 24 that market, Christian Wolff, Mercedes-Benz output at its Kecskemét plant rose by 20% Manufacturing Hungary Kft. CEO, said. last year, compared to the preceding year, He added that the addition to the plant’s to over 180,000 vehicles.

Valeo Hungary to invest HUF 10 billion The Hungarian subsidiary of Frenchowned vehicle parts manufacturer Valeo is planning to expand its base in Veszprém through an investment of HUF 10 billion, according to a June 27 report from Hungarian news agency MTI. The investment of Valeo will be supported with a grant of HUF 1 bln from

the Hungarian government, Ministry of Foreign Affairs and Trade State Secretary László Szabó said on June 27, according to MTI. The plant in Veszprém employs a staff of approximately 1,900, out of whom 500 work in research and development, the state secretary added.

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160624_EN_DG_COMM_Investment_Plan_IPEU_ad_Budapest Business Journal_124x320mm_1/2_page_lh.indd 24.06.16 1 16:46

BBJ_2413_spec_report.indd 23

2016. 06. 29. 21:29

24 3

www.bbj.hu

Budapest Business Journal | July 1 – July 14, 2016

Electronics manufacturers

4

RobeRt bosCH elektRonika gyáRtó kFt.

HouseHold eleCtRoniCs

ConsumeR eleCtRoniCs

automotive eleCtRoniCs

no. oF Full-time employees on June 1, 2016

yeaR establisHed

www.flextronics.com

it

3

FlextRoniCs inteRnational kFt.

www.samsung.com

teleCom

samsung eleCtRoniCs magyaR ZRt.

odm

2

www.ge.com

oem

ge HungaRy kFt.

oWneRsHip (%) HungaRian non-HungaRian

ems

1

seCtoRs

net Revenue FRom eleCtRoniCs manuFaCtuRing in 2015 (HuF mln)

Company Website

aCtivity type

total net Revenue in 2015 (HuF mln)

Rank

Ranked by total net revenue in 2015

4,396,437

Ÿ

✓

–

–

–

✓

✓

–

–

9,126

2003

GE Infrastructure Hungary Holding Kft. (100) –

Jörg bauer, Farkas bársony, Gergő Lencsés – –

1044 Budapest, Váci út 77.

(1) 237-6800 (1) 237-6801 –

Ÿ

–

✓

–

✓

✓

✓

✓

–

Ÿ

1989

– Samsung Electronics Corporation Ltd. (100)

Joseph (Jeongwoo) kim Kim Ki-sup Mónika Nagy Törökné

1138 Budapest, Dunavirág utca 2.

(1) 453-1100 (1) 453-1103 –

János lang, tamás lászló Zsolt Rába –

8660 Tab, Munkás utca 28.

(84) 526-100 (84) 526-023 zsolt.raba@ flextronics.com

758,586

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone Fax email

504,694

504,000

✓

✓

✓

✓

✓

✓

✓

✓

6,687

1992

Flextronics Sárvár Logistics Kft. (0.02) Flextronics International GmbH (99.98)

454,460

Ÿ

Ÿ

Ÿ

Ÿ

–

–

–

–

✓

Ÿ

1998

– Robert Bosch Investment Nederland B.V. (100)

Volker Schilling, Roger seemayer – –

3000 Hatvan, Robert Bosch utca 1.

(37) 549-100 (37) 549-112 info@hu.bosch.com

2007

– HonHai Group (100)

Péter Tálos – –

2900 Komárom, Bánki Donát utca 1.

(34) 886-069 (34) 886-173 komarom@ emea.foxconn.com

Sándor Gönczi József Babucs Erika Medveczky

5100 Jászberény, Fémnyomó utca 1.

(57) 415-999 (57) 415-812 jozsef.babucs@ electrolux.hu

www.bosch.hu

5

pCe paRagon solutions kFt.

6

eleCtRolux leHel HűTőGéPGyár KfT.

275,211

Ÿ

–

✓

✓

–

–

✓

–

–

3,177

1991

– AB Electrolux (100)

7

Jabil CiRCuit magyaRoRsZág kFt.

262,593

Ÿ

✓

–

–

✓

✓

–

✓

✓

4,529

2000

– Jabil Circuit Netherlands B.V. (98.10), Jabil Circuit Limited (1.90)

Viktor Krisztián Aczél – –

3580 Tiszaújváros, Huszár Andor út 1.

(49) 548-500 (49) 548-546 tis_jabil_info@jabil.com

1990

– Continental Automotive Holding Netherlands B.V. (100)

róbert Keszte, Henning döll – –

8200 Veszprém, Házgyári út 6–8.

(88) 540-400, (1) 881-9500 (1) 881-9585 –

Balázs Sebestyén, róbert Tancsics – –

9700 Szombathely, Zanati út 29/A (94) 517-800 (94) 328-838 –

lászló ábrahám Ilona Rózsa Ágnes Vajnai-Vad

4031 Debrecen, Határ út 1/A (52) 515-400 (52) 515-414 anita.kalman@ni.com

8

www.foxconn.com

www.electrolux.com

www.jabil.hu

Continental automotive HungaRy kFt.

312,827

221,385

312,827

Ÿ

✓

Ÿ

✓

Ÿ

–

Ÿ

✓

–

✓

–

–

–

–

–

–

✓

488

3,493

www.conti-online.com

9

delpHi HungaRy AuTóALKATréSz gyáRtó kFt.

195,088

Ÿ

–

✓

–

–

–

–

–

✓

1,825

1990

– Delphi Packard Austria GmbH & CO KG (91), Delphi International Operations Luxembourg S.á r.l. (9)

169,357

95,134

–

✓

–

–

✓

–

–

–

Ÿ

2001

– Enterprise International Holding B.V. (100)

www.delphi.com

ni HungaRy kFt.

www.hungary.ni.com/debrecen 10

BBJ_2413_spec_report.indd 24

2016. 06. 29. 21:29

www.bbj.hu

www.videoton.hu

RobeRt bosCH poWeR tool eleCtRiC tool pRoduCtion kFt.

154,700

95,984

Ÿ

✓

–

–

✓

–

–

✓

–

–

–

✓

✓

–

–

✓

–

no. oF Full-time employees on June 1, 2016

automotive eleCtRoniCs

ConsumeR eleCtRoniCs

HouseHold eleCtRoniCs

it

seCtoRs

teleCom

odm

oem

ems

net Revenue FRom eleCtRoniCs manuFaCtuRing in 2015 (HuF mln) 52,598

aCtivity type

9,937

2,204

yeaR establisHed

12

videoton Holding ZRt.

total net Revenue in 2015 (HuF mln)

Rank 11

Company Website

oWneRsHip (%) HungaRian non-HungaRian

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone Fax email

1938

Gábor Széles (47.05), Péter Lakatos (26.48), Ottó Sinkó (26.48) –

Péter Lakatos, Ottó Sinkó Gyöngyi Rácz Ranczné Csaba Horváth

8000 Székesfehérvár, Berényi út 72–100.

(22) 533-421 (22) 533-429 marketing.sales@ videoton.hu

2001

– Scintilla AG (100)

ansgar lengeling Péter Révay –

3526 Miskolc Robert Bosch park 1.

(46) 518-300 (46) 518-399 info@hu.bosch.com

Roh youngnam Ferenc Bányász Krisztián Szili

1097 Budapest, Könyves Kálmán körút 3/A (1) 455-6060 (1) 455-6066 –

www.bosch.hu

13

lg eleCtRoniCs magyaR keReskedelmi kFt.

25

3

Budapest Business Journal | July 1 – July 14, 2016

92,118

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

1992

– LG Electronics Europe Holding B.V. (99.99), LG Electronics Inc. (0.01)

83,284 (2014)

Ÿ

✓

–

–

✓

✓

✓

✓

–

63

1989

– Koninklijke Philips Electronics N.V. (100)

zoltán Mészáros – –

1117 Budapest, Aliz utca 1.

(1) 382-1700 (1) 382-1800 –

69,935 (1)

69,935

✓

–

–

✓

–

–

✓

✓

2,000

1994

– EPCOS AG (100)

Balázs Takács István Pintér –

9700 Szombathely, Csaba utca 30.

(94) 522-100 – –

Péter Mohácsi Tamás Káldi –

2600 Vác, Deákvári fasor 16–18.

(27) 500-400 (27) 517-026 –

www.lg.hu

14

pHilips magyaRoRsZág kFt.

15

epCos kFt.

16

ibm data stoRage systems kFt.

29,901

Ÿ

Ÿ

Ÿ

Ÿ

–

✓

–

–

–

2,595

2006

– IBM Ireland Product Distribution Ltd. (100)

17

ClaRion HungaRy elektRonikai kFt.

13,825 (2)

Ÿ

✓

✓

–

–

–

–

–

✓

420

1997

– Clarion Co. Ltd. (100)

Enokida Tatsuo – –

2760 Nagykáta, Jászberényi út 116.

(29) 640-100 (29) 640-161 clarion@clarion.hu

18

sanmina-sCi magyaRoRsZág kFt.

1997

– Sanmina-SCI Systems Holdings Inc. (100)

károly Hoffmann Erzsébet Galgán –

2800 Tatabánya, Kóta József utca 2.

(34) 515-600 (34) 515-004 nikolett.monostori@ sanmina.com

1996

– Sanmina-SCI Dutch Holdings B.V. (100)

Patrick Macdonald – –

3571 Alsózsolca, Gyár utca 3.

(46) 520-600 (46) 520-621 edina.szeman@ sanmina.com

Péter Tálos – –

2900 Komárom, Bánki Donát utca 1.

(30) 422-9608 (34) 886-001 –

Károly Kovács, Attila Kovács, róbert Kovács Orsolya Vida Tünde Berta Kovács

6725 Szeged, Cserepes sor 9/B (62) 444-007 (62) 444-181 info@procontrol.hu

www.philips.hu

www.epcos.com

www.ibm.com/hu

www.clarion.hu

www.sanmina.com

11,429 (3)

11,429

✓

–

–

✓

–

✓

✓

✓

1,118

19

sanmina HungaRy kFt.

20

FiH euRope kFt.

464

Ÿ

Ÿ

Ÿ

Ÿ

✓

–

–

–

–

Ÿ

2003

– Success World Holdings Ltd. (100)

21

pRoContRol elektRoniCs kFt.

429

205

✓

✓

✓

–

✓

–

–

–

Ÿ

1989

Károly Kovács (25), Attila Kovács (25), Róbert Kovács (25), Tünde Berta Kovács (25) –

www.sanmina.com

www.foxconn.com

www.procontrol.hu

6,191

Ÿ

✓

–

–

✓

–

–

–

–

408

NotEs: (1) Data of business year April 1, 2015-March 31, 2016. (2) Data of business year April 1, 2014-March 31, 2015. (3) Data of business year October 1, 2014-Sept. 30, 2015.

This list was compiled from responses to questionnaires received by June 29, 2016 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

BBJ_2413_spec_report.indd 25

2016. 06. 29. 21:29

4 Socialite BBJ

Picasso and Modigliani meet again in Budapest: A study in contrasts

National Gallery shows by the two contemporaries highlight some of their differences, while a parallel exhibition of African art reminds us of their shared inspiration.

DAVID HOLZER

An ambitious exhibition of the work of the Italian painter Amadeo Modigliani opens on June 29 at the Hungarian National Gallery. The exhibition will coincide for a month with ‘Transfigurations 18951972’, the remarkable Picasso showing at the same venue throughout July.

On the face of it, the work of Picasso and Modigliani, and the way they lived their lives, couldn’t appear more different. But there are intriguing similarities and connections, including their inspiration by the kind of primitive African statues that will be on view at the National Gallery in a parallel show.

For a time, they were even good friends.

A meeting in Paris They first met in 1906 when Modigliani arrived in Paris and went to live in Le Bateau Lavoir, a dark and dirty building Modigliani’s ‘Young woman in a shirt’, left. Picasso’s ‘Reading’, right. in Montmartre where Picasso also had a studio. It was here, in 1907, that Picasso painted his revolutionary “Les the embodiment of the ferociously driven but also in prints, drawings, ceramics, Damoiselles d’Avignon”. This portrays artist, did not approve. film, photography and documents from In 1906, Modigliani arrived five nude female prostitutes. Three have The fact that Picasso became popular his private archives. with American art collectors from very Iberian features while the faces of the in Paris and went to live in Le “Transfigurations” follows Picasso’s early on in his career while Modigliani journey from the simple realism of other two recall African masks.

“Barefoot Girl”, painted in 1895 when Such masks and sculptures began to Bateau Lavoir, a dark and dirty labored in obscurity didn’t help. arrive in France in the 1870s as a result building in Montmartre where The dramatic differences in the lives he was just 14, through to late works of the French colonization of Africa and of these 20th century art pioneers quoting from the Old Masters. But, both provide a backstory and explain whether it’s the revolutionary Cubism exploratory journeys into what was then Picasso also had a studio. the ongoing fascination with their of “Les Demoiselles d’Avignon” (1907) known as the Dark Continent. Artists work. The impressive exhibitions at or “Motherhood with Apple” (1971), like Picasso, Modigliani and Matisse were drawn to them because they offered to have said that Modigliani was the only the Hungarian National Gallery offer Picasso’s fascination with the human a way to depict the human body and face man who knew how to dress properly. He viewers the opportunity to appreciate form and the relationship between artist in radically new, abstract ways. was more admiring of the Italian’s dress both their achievements and considerable and model remained constant, as did his Picasso used the device of the African sense than his work, once painting over differences. extraordinary lust for life, articulated in mask to, as he put it, “liberate an utterly a Modigliani he had acquired. While the astonishing dynamism of the work. original artistic style of compelling, even Modigliani respected Picasso’s genius, Picasso transfigured Whatever your take on Picasso, it’s savage force”. Modigliani was to take the he felt it was no excuse for not dressing impossible not to respect his sheer vigor. influence in a subtler direction. correctly.

Picasso was constantly breaking through As well as celebrating Picasso’s During the period in which Modigliani Perhaps unsurprisingly, the friendship to new ways of portraying the human unique trajectory, the exhibition is also and Picasso were close, Pablo sat for wasn’t to last. Modigliani, who died at figure. It’s this fascinating aspect of his a monumental achievement on the part Amadeo. He also owned several works just 36, was heavily addicted to drink work that the exhibition at the National of its organizers. Although 74 of the 100 by him including “Girl with Brown Hair”, and drugs. Despite his comfortable Gallery celebrates. Has any artist, 20th artworks on show come from the Musée upbringing in Italy, he took to the century or otherwise, transformed their National Picasso-Paris, others have been which dates from 1918. loaned from prestigious museums that Bohemian lifestyle of approach to the same extent?

At this time, Picasso admired romantic Modigliani enough to try to help him Montmartre with a vengeance, becoming The changes in Picasso’s art over seven include Budapest’s own Ludwig Museum secure a dealer. Picasso is also supposed known as a prince of vagabonds. Picasso, decades are shown through the paintings and Museum of Fine Arts.

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Masks from Liberia (1920-30), top; Papua New Guinea (1904), middle; and Budapest (2011), directly above.

Inspired by Africa

Top: Modigliani’s ‘Reclining Nude’.

Above: Picasso’s ‘The Acrobat’. Right: Picasso’s ‘Matador and Female Nude’.

A fine Modigliani retrospective

Although Modigliani, unlike Picasso, lived a life cut short by his indulgences, he was an equally serious artist. The retrospective at the Hungarian National Gallery reflects this, featuring 61 sculptures, paintings and drawings by him.

Most of all, it’s dedicated to recognizing Modigliani’s real accomplishments as a complex and original European modernist who remained connected to classicism.

Divided into five sections, the exhibition begins with “The Temple of Humanity”, which focuses on Modigliani’s early work as a sculptor.

After 1914, he concentrated exclusively on painting and searched to paint nudes and these make up the for his own style. fourth section of the exhibition.

Working as a portraitist, he painted In 1918, in a desperate attempt to contemporaries like Picasso, becoming, rescue his declining health, Modigliani as the third section puts it, “The settled near Nice. The final section Portraitist of the Avant-Garde”. From of the retrospective – “The Lure of 1917, his art dealer and poet patron the South” – reveals the influence of Léopold Zborowski gave him models, a Cezánne on his work. Modigliani died studio and money, enabling Modigliani in 1920. It’s intriguing, if sad, to wonder

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what he would have become given the opportunity to live a life as long and rich in experimentation as his one-time friend Picasso.

Picasso “Transfigurations 1895-1972” runs until July 31. “Modigliani” runs June 29-October 2. Both at the Hungarian National Gallery (www.mng.hu/en).

“Good artists copy, great artists steal,” Picasso is rumored to have said. “Perspectives – Art and Ethnography”, an exhibition also currently running at the Hungarian National Gallery, offers an excellent opportunity to see for yourself how he and Modigliani copied or stole from African sculpture.

For Picasso and Modigliani, the sculptures were simply artworks and a source of inspiration.

Their function in tribal culture was irrelevant. “Perspectives” explores the relationship between artists, art, ethnographers and viewers to ask how African and Oceanic art should be viewed: As part of tribal culture, or in an intercultural relationship with Western art?

It is an intriguing question.

“Perspectives – Art and Ethnography” runs until October 2 at the Hungarian National Gallery (www.mng.hu/en).

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WHAT’S

ON BRIAN JONESTOWN MASSACRE July 1, A38 Named in tribute of the legendary Rolling Stones guitarist, the Brian Jonestown Massacre formed in San Francisco, California in 1990 with the focal point of band singer/guitarist Anton Newcombe remaining to this day. Its sound ranges from shoegaze to rock ’n’ roll, to blues and tributes to its namesake. The award-winning

Branko Galoic & Skakavac Orkestar.

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Fun things to d o in Budapest for the nex t t wo weeks.

documentary, DIG!, which charted the trials of Newcombe and his rival, Courtney Taylor, leader of the Dandy Warhols, has helped the band gain popularity despite no major label representation. The band in its various lineups has put out 14 studio albums to date with the latest, “Musique de Film Imaginé” (Music from an Imagined Film) released in 2015, taking the band in a new direction. a38.hu

DERBY July 1-3, Kincsem Park

BUDAPEST PRIDE Through to July 3, various venues

This festival combines horse races, concerts and a design and crafts fair all held at Kincsem Park, Budapest’s horse racing venue. The 102nd Hungarian Trotter Derby, the 94th Hungarian Derby and a set of culinary and family friendly programs help revive an old tradition that combines the thrill of horse racing with the pleasures of local gastronomy. kincsempark.hu

This year’s parade on July 2 is preceded by ten days of festivities that include concerts, DJ parties, film screenings, workshops and yoga and dance classes to celebrate the local and international LGBTQ community. In a time of rising intolerance, the Pride Parade in Budapest has seen great opposition and this year is not expected to be any different, except for the growing support of the local community. The parade, which travels along Andrássy út, is expected to be just as epic as those that have come before. budapestpride.com

ARMEL OPERA FESTIVAL Through to July 2, various venues Founded in Hungary, the Armel Festival was created to realize operatic productions that put Hungarian creators in the international spotlight. It presents six operas created in cooperation with five international opera houses with performers selected through an affiliated competition. Opera rarities, contemporary works and the modern adaptations of timeless classics are presented in Budapest over the course of six days. This round features works by Bartók, Piazzola, Coli and Henze among others. armelfestival.org

KEITH JARRETT July 3, Palace of Arts Known as one of the most creative and uncompromising jazz musicians of our time, Keith Jarrett’s improvisational piano performances reveal his unparalleled ability. Active for more than 40 years, Jarrett has been influential in the shaping of contemporary jazz.

His music embraces influences derived from the most diverse musical idioms, from jazz to classical, and from blues to folk traditions. His exceptional career

Sára Hélène.

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has seen the creation of some wonderful works, such as the legendary recording of “The Köln Concert”. The best-selling solo piano album of all time marked the 40th anniversary of its release in 2015. mupa.hu PACIFIC CHORALE July 2, 4, Szent István Basilica Founded in 1968 in California, the Pacific Chorale, which consists of 140 professional and volunteer members, regularly performs at home but also frequently works with other orchestras.

Its repertoire ranges from the classics to more modern pieces, presenting a cappella chamber concerts and collaborating regularly with the period chamber orchestra Musica Angelica.

This concert will take place in one of Budapest’s most majestic churches. en.bazilika.biz SÁRA HÉLÈNE July 5, BMC Sára Hélène is a pop/R&B project realized by Dutch-Hungarian singer, songwriter Sára Hélène Bori and Hungarian bass player and producer Dávid Szedlár. Their melodies are described as delicate and airy, with Dutch, English and Hungarian lyrics that speak about love, soul searching, and personal and universal dilemmas.

Accompanied by musicians studying at Codarts Conservatory Rotterdam, live performances have a certain groovy vibe about them. bmc.hu MAC DEMARCO July 7, A38 Canadian multi-instrumentalist and multimedia artist Mac DeMarco first emerged under the moniker Makeout Videotape, releasing his first EP “Heat Wave” in 2009. After taking on a few bandmates, Makeout Videotape ventured into the realm of live performances and the band quickly gained regional recognition. In early 2012, DeMarco began releasing his own material starting with the album-length EP “Rock and Roll Night Club” under his own name. While not completely divorced from the jangly, glazed-over pop of Makeout Videotape, the new set ADVERTISEMENT

Brian Jonestown Massacre. of songs had a darker tone. DeMarco spent much of the next year on tour and in performance before releasing his sophomore album, “Salad Days”, in the spring of 2014. His follow-up LP, “Another One” was released in August 2015. a38.hu BRANKO GALOIC & SKAKAVAC ORKESTAR July 7, BMC Croatian singer-songwriter, composer and guitarist, Branko Galoic, now based in Paris seamlessly blends rock with traditional Balkan influences. He recorded his first album, “Above the Roofs”, with renowned producer Dragi Sestic (Mostar Sevdah Reunion, Amira Medunjanin etc.) in 2000 and has since released two albums, the last of which, “Angel Song” recently entered the European World Music charts at number 15. Branko’s music is based

on the traditions of ex-Yugoslavia and mixed with different styles such as ska, pop and chanson to derive his own style that has been compared to the likes of Jaques Brel, Alain Stivell, Melingo and Vinicio Capossela. bmc.hu MYSTERY GANG July 14, A38 Hungarian band Mystery Gang’s unique garage-jungle-rockabilly style has evolved under the heavy influence of ’50s music. Three young men formed the trio in 1998 and in 2000 they released their first 7” EP on the Revell Yell label out of Japan, capturing the hearts of Japanese rockabilly fans before making a dent on the music scene back at home. They have since released seven studio albums and toured extensively developing some exceptionally tight stage performances. a38.hu

Keith Jarrett.

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Anima Musicae Chamber Orchestra July 18, Óbudai Társaskör

Junior Prima Award winning Anima Musicae has found its home in Óbudai Társaskör. They performed their first concert here six years ago and hold their rehearsals here as well. They desire to have “anima musicae” the spirit of music at each moment of their concerts that listeners will take with themselves. For this concert, which is an event of Óbudai Nyár (Summer in Óbuda) in the concert series called Muzsika a kertben (Music in the Garden) at Óbudai Társaskör, their guest is Liszt and Bartók–Pásztory Award winning bassoonist and devoted performer of contemporary music

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György Lakatos. The concert closes with a most memorable piece: the orchestra played Grieg’s masterpiece at their first concert and this will be the first time since then that they play it again. obudaitarsaskor.hu jegymester.hu

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Wine: Badacsony transcends Kéknyelű While it is famous for one An exciting development in the basalt soils of Badacsony is the indigenous grape, the emergence of the Rózsakő variety. region has much more to offer summer tipplers, and the 2015 vintages are complete and delicious to drink by virtue apricot and peach on the nose and palate of the generous fruit they often manage with a tangy twist of ginger on the fierybetter than usual. to capture alongside the “minerality”. spicy finish, although the alcohol is not ROB SMYTH

The volcanic region of Badacsony, dramatically situated on the northern shores of Lake Balaton, is synonymous with the Kéknyelű grape but there are certain other varieties waiting in the wings to make perhaps an even more exciting impression on our palates this summer.

The primary purpose of the Budai Zöld cultivar is to pollinate the noble indigenous Kéknyelű grape, but in Peter Váli’s capable hands it can make exciting wine. Válibor Budai Zöld 2015 is invitingly light and airy, especially on hot Budapest or Balaton summer nights, with a mouth-watering and distinctive combination of zesty citrus and floral (white flower) notes, with a salty touch on the finish. A certain saline feel is characteristic of Badacsony whites, which are made all the more impressive,

This balance is likely aided by the lake’s especially high at 12.5%. moderating influence. Válibor’s Budai Regarding Kéknyelű itself, I find that Zöld is made reductively in the tank with it rewards patience and needs time the use of cultured and not indigenous for its sharp acidity to soften and also yeasts (he usually prefers the latter). The for more intense flavors to develop to reason for the controlled fermentation transform what is very often a quite is that Váli is seeking to emphasize neutral wine in its youth into something freshness and fruitiness to make the with layers of complexity. Like Semillon most of this unfancied variety and he from Australia’s Hunter Valley, Kéknyelű does this with aplomb. is often underwhelming and oneAn exciting development in the basalt dimensional when young but picks up soils of Badacsony is the emergence of real character with age. Tasted recently, the Rózsakő variety, which is in fact a Szeremley’s Kéknyelű 2006 still had crossing of Budai Zöld and Kéknyelű, plenty of life in it and may not yet and also serves to pollinate the latter. have reached its true peak. It is really Although this crossing was created by powerful on the nose with aromas of Ferenc Király in 1957, it is only now apricots, walnuts and dried fruit, with starting to hit the shelves as a serious a hint of butterscotch suggesting latewine. Szászi Rózsakő 2015 is not quite harvest sweetness to come, yet the fulllike anything else I’ve tasted for some bodied palate is bone dry, and very time and I mean that in a good way. It complex with medicinal herbs, ginger starts out a little on the vegetal side and even a wee whiff of malt whisky, to on the first sniff but a few swirls of the complement the rich, mature fruit. It glass sees it head in a richer, creamier was surprisingly elegant, too. “There are and fruitier direction. It positively oozes white, rosé, red and sweet wines, and

then there are mature white wines,” says László Szeremley, who runs the winery.

Szeremley’s mature Rieslings are other fine specimens from this Badacsony pioneer. Other excellent Rieslings to look out for come from Gilvesy and Bence, both of which are varietally pure with peach, lime, green apple and petrol notes, yet also get that savory Badacsony basalt twist on the finish.

Prime place for Olaszrizling Badacsony is also one of the prime spots in Hungary for Olaszrizling, which is still Hungary’s most planted white wine grape, although the frenzy for in-fashion Furmint is seeing that grape catch up thanks to widespread planting. PanCentral European Olaszrizling, which is not at all related to the aforementioned Riesling, is generally considered a workhorse of a grape that makes decent but unexciting wines. However, it really can thrive in volcanic soils like Badacsony’s basalt that imparts great structure through the acidity it achieves, although the cooling effect of Lake Balaton can also preserve the all-important acidity, which provides the spine of the wine. The problem in making top-notch Olaszrizling is that the acidity rapidly drops of as sugar levels rise, leading to more concentrated wines often coming out flabby and

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rudderless. Not so in the volcanic soils.

There are some excellent and great value Olaszrizlings now on the market from the stellar 2015 vintage, one in which everything came together for white wine.

Szászi Szent György-hegyi Olaszrizling 2015 is a real bargain at just under the HUF 2,000 mark with lots going on – sustained all the way from the awesome aromatic attack of floral, fruity, vegetal and honey scents, to the prolonged and complex finish. This wine flies in the face of the assumption that you can’t make serious wine from unsexy Olaszrizling. So do a couple of others.

From the neighboring Káli Basin, part of the Balaton-felvidék, which has some limestone alongside the volcanic basalt soil; Káli Kövek Rezeda Olaszrizling 2015 is also a stunner but quite different in character to the previous wine. This is more about the grape’s typical green apple, pear and almond character, but it also has that magical and appealing floral touch which appears to be a feature of 2015 Olaszrizling. It has great fruit, nice concentration for the variety and playful acidity that makes the wine tingle delightfully on the palate.

Another top Olaszrizling is Laposa Borbirtok’s 4-hegy Olaszrizling 2015, which comes from four hills: Badacsony, Csobánc, Szent György-hegy in the Badacsony region, as well as from Somló hegy, which is also basalt-based. It is made both in the barrel and tank and is really floral with an oily touch but also fabulous fruit, such as orange, peach, pineapple and mango, plus jasmine and a bit of almond.

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Badacsony, right, and the surrounding hills. (Photo: Kirandulo)

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