Budapest Business Journal 3018

VOL. 30. NUMBER 18

OCTOBER 7 – OCTOBER 20, 2022

HUF 1,850 | EUR 5 | USD 6 | GBP 4

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

SPECIAL REPORT INSIDE THIS ISSUE

Energy Nagy Advocates for Public Intervention in Corporate Sector Minister for Economic Development Márton Nagy argues that addressing the current energy crisis requires public intervention in the corporate sector at an event organized by the American Chamber of Commerce in Hungary.  14 COUNTRY FOCUS

A Unique Bond Forged by Investors What shape are business relations between Germany and Hungary in nowadays? The Hungarian Investment Promotion Agency offers a detailed picture of the current conditions.  11

Top of the Listings

SOCIALITE

‘The Eastern Beat’ and Budapest’s Art Scene Anna Jopp established “The Eastern Beat” in 2020 to feature stories of expat artists living, working and creating in Budapest.

She talks to them about their work, inspiration and plans for the future.  20

NEWS

MNB Ends Rate Hike Cycle but Deploys Other Tools The National Bank of Hungary (MNB) has decided to end its most extended rate hiking cycle but warns that strict monetary conditions will remain in force.  3

BUSINESS

Tammy Nagy-Stellini, managing director of Hays Hungary, talks exclusively about the recruitment agency’s 15 years in the country, coming top of listings for the sector in the Book of Lists attracting talents, staying competitive in an uncertain economic climate, and the need for businesses to be adaptable. 7 BUSINESS

‘Winter is Coming:’ Economy Faces Tough, Uncertain Period Turbulent months are ahead for the capital markets and the Hungarian economy, according to Equilor Investment, which an agreement on EU funds may help ease. A bear market could stay with us for a long time, the consultancy says.  6

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IMPRESSUM EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Balázs Barabás, Zsófia

Czifra, Kester Eddy, Bence Gaál, David Holzer, Christian Keszthelyi, Renáta Kónya, Gary J. Morrell, Nicholas Pongratz, Gergely Sebestyén, Robert Smyth.

LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:

Should be submitted in English to news@bbj.hu LAYOUT: Zsolt Pataki PUBLISHER: Business Publishing Services Kft. CEO: Tamás Botka ADVERTISING: AMS Services Kft. CEO: Balázs Román SALES: sales@bbj.hu

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Address: Madách Trade Center 1075 Budapest, Madách Imre út 13-14, Building B, 7th floor. Telephone +36 (1) 398-0344, Fax +36 (1) 398-0345, www.bbj.hu

What We Stand For: The Budapest Business Journal aspires to be the most trusted newspaper in Hungary. We believe that managers should work on behalf of their shareholders. We believe that among the most important contributions a government can make to society is improving the business and investment climate so that its citizens may realize their full potential.

The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress.

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Budapest Business Journal | October 7 – October 20, 2022

THE EDITOR SAYS

ENERGY REALITIES NIPPING AT THE NOSE Energy is the new black, the thing everyone wants, only cheaper. It is also the only thing about which anyone wants to talk. Well, that might be somewhat of an exaggeration, but it is undoubtedly at top of mind for business leaders.

It was not by accident that this was the subject of our latest CEO Breakfast Briefing with our friends at the GermanHungarian Chamber of Industry and Commerce.

Unless you are a CEO or a finance director signing off on eye-watering energy bills, budgeting for next year, or trying to negotiate new deals, the realities of the coming winter may well, until now, have been largely theoretical. But as the nights draw in and the temperatures drop, the practicalities are starting to bite, like frost nipping at your nose.

For a start, those realities are beginning to seep into our daily news feeds. The fall school break, which would have been due in the last week of October, has been axed, with the Christmas holiday instead extended to run from December 22 to January 8, 2023. That period will extend to all state-run organizations. The compulsory holidays will, doubtless, irk those forced to take them, but at least it negates the debate about who has to stay home to look after the kids!

The National Bank of Hungary has similarly said it would lower the thermostats at its buildings to 18ºC (64ºF) during the winter, reduce hot water usage, and cut back on outdoor lighting. That 18ºC threshold will be a familiar one across government and local authority buildings this fall and winter, meaning the Christmas novelty sweater could well become an everyday office necessity until spring.

Some institutions are going even further: The Hungarian National Museum has announced that all but four of its

rural buildings will close from November until February 28, 2023. According to international news wire AP, the 111-year-old, 1,800-seat Erkel Theater in Budapest, one of the three performance spaces used by the Hungarian State Opera, will also close its doors in November.

The scramble for diversified energy supplies has prompted Minister of Technology and Industry László Palkovics to vow that Hungary will eliminate Russian gas imports by 2050 through a large-scale electrification drive, following a review of Hungary’s energy strategy in early 2023. If that 2050 dateline does not exactly seem overly ambitious (by law, that is also the year Hungary should become climate-neutral), it does indicate the depth of Hungary’s reliance on Moscow for gas, although that is not unique in this region.

It also hints at something climate activists may wish to keep an eye on: in the short-term, it seems inevitable those that have coal – Poland, Germany, and to a much lesser extent, Hungary – will try to fill immediate energy gaps with what is at hand. But it might also drive a much more rapid expansion of renewable sources. The vital question will be where the balance falls between those two ends of the seesaw.

In the meantime, the less lofty among us must do what we can. At Chez Marshall, there is a grim determination not to switch the boiler on, though the fireplace has been lit and the kids have been told to put on extra layers. I’ll leave you with words shamelessly stolen from “Game of Thrones” for one of our headlines in this issue: “Winter is Coming.”

Robin Marshall Editor-in-chief

Why Support the BBJ? • Independence. The BBJ’s journalism is dedicated to reporting fact, not politics, and isn’t reliant on advertising from the government of the day, whoever that might be.

• Community Building. Whether it is the Budapest Business Journal itself, the Expat CEO award, the Expat CEO gala, the Top Expat CEOs in Hungary publication, or the new Expat CEO Boardroom meeting, we are serious about doing our part to bind this community together.

• Value Creation. We have a nearly 30-year history of supporting the development of diversity and sustainability in Hungary’s economy. The fact that we have been a trusted business voice for so long, indeed we were the first English-language publication when we launched back on November 9, 1992, itself has value.

• Crisis Management. We have all lived through a once-in-a-century pandemic. But we also face an existential threat through climate change and operate in a period where disruptive technologies offer threats and opportunities.

Now, more than ever, factual business reporting is vital to good decision-making.

THEN & NOW The color photo from state news agency MTI shows maintenance works on the single runway at Debrecen Airport, which has been closed for a week to repair damage caused by heavy military and humanitarian use due to the war in Ukraine. In the black and white image from the Fortepan public archive, Italian-made Fiat Cr.32 biplane fighters with Austrian ensigns celebrate the opening ceremony of the Budaörs Airport in 1937.

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Budapest Business Journal | October 7 – October 20, 2022

News

• macroscope

Central Bank Ends Rate Hike Cycle but Deploys Other Tools

The National Bank of Hungary (MNB) has decided to end its most extended rate hiking cycle but says strict monetary conditions will remain.

Forint/Euro Exchange Rate, Aug. 3-Oct. 3, 2022 The official euro exchange rate of the National Bank of Hungary; exchange rate for 1 unit, in forints

ZSÓFIA CZIFRA

In a rather unexpected move, the central bank’s Monetary Council brought the cycle to a conclusion at its latest rate-setting meeting on September 27. The council raised the key rate by 125 basis points to 13% and, right after the decision, MNB Governor György Matolcsy announced the end of the tightening cycle.

In doing so, the MNB closed its most prolonged rate-hiking period in 30 years. As it was the first in the region to start such hikes, it has become the first to end them, despite the central bank expecting inflation to accelerate further.

“We are not going any further because there is no point in going higher than a double-digit base rate, and there is also favorable data coming from the global inflationary environment,” Matolcsy said at a press conference following the rate decision.

Analysts unanimously described the

125-basis point

hike as surprising, and opinions on winding up the rate hiking cycle vary.

Gergely Suppan, senior analyst at Magyar Bankholding, drew attention to the fact that the strict monetary conditions will remain even after the interest rate hikes are stopped. He noted that the forint has recently reached historic lows against the euro, despite the pace and severity of interest rate hikes in the recent period showing a “commitment” against inflation that is almost unique in the world.

Exchange Rate Drivers

Suppan said that the exchange rate of the Hungarian currency is not primarily driven by the interest rate but rather by the changes in gas prices (which significantly worsens growth prospects), the strengthening of the dollar, global risk aversion, and the uncertainties of the EU embargo and payment disputes.

Source:

He reminded that the central bank had also decided on liquidity-restricting measures at the last interest rate meeting, which supports the fact that there is no longer a need to raise interest rates significantly, even though inflation may still rise considerably for the remainder of the year, Suppan said.

The analyst noted that, due to the conflict in Ukraine, the sanctions against Russia, and the very low level of Russian gas deliveries to Europe, the rise in European energy prices had continued substantially, making the easing of shortterm inflationary pressure still unlikely.

Moreover, a significant rise in inflation is expected due to the extension of utility cuts above average consumption, energy prices expected to continue rising at current levels, continued repricing in some product areas, and a sharp rise in company costs, Suppan wrote.

Dániel Molnár, an analyst at the Makronóm Institute, believes that the end of the interest rate hike cycle was “not necessarily expedient in the current uncertain economic environment” and that the MNB should continue raising interest rates until the peak of inflation is visible, which could occur by the end of this year at the earliest.

Energy prices continue to show significant volatility, which affects the prices of all products. Normalization cannot be expected until the end of the Russo-Ukrainian war and the lifting of sanctions. If that does not happen,

the situation will result in permanently high energy prices and thus inflationary pressure, as well as a worsening of the balance of payments, Molnár warned.

He believes the continuation of interest rate increases is also necessary because it supports the exchange rate of the forint, which in turn has an impact on inflation through the prices of imported products.

and are obliged to increase interest rates in the fight against inflation, Kiss said.

In the meantime, the MNB has raised its inflationary forecast in its September Inflation Report. According to this, domestic inflation will continue to rise in the fall months, and this year it may average between

‘Unorthodox’ Return

Inflation will decrease slowly in the first half of 2023 and then more significantly from the middle of the year. The consumer price index may be in the range of 11.5– 14% in 2023 and will return to the central bank tolerance band in the first half of 2024, at between 2.5–4%, the MNB says.

Péter Kiss, investment director of Amundi Alapkezelő Zrt., explained that the MNB is returning to the use of its former “unorthodox” monetary policy tools and will primarily try to influence short-term interest rates by managing interbank liquidity, but he says it is questionable how foreign investors will evaluate this.

This will be especially difficult to explain when, according to the central bank’s forecast, inflation may rise until the end of the year, and it may not fall back to the target range until 2024, Kiss noted.

He accepted that the central bank had successfully carried out this liquidity policy in the past in a low-interest rate environment. However, it is questionable how successful the old-new approach would be with high and still rising inflation in the short term. That is especially so when the leading developed market central banks are about to get rid of non-conventional instruments

13.5–14.5% overall.

Numbers to Watch in the Coming Weeks The Central Statistical Office (KSH) was due to release its first estimates for August’s industrial output yesterday (October 6), with the August performance of the retail sector also due to be published on the same day. The September consumer price index will be out on October 11. August construction sector data will be posted on October 14.

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Budapest Business Journal | October 7 – October 20, 2022

Orbán Warns That ‘Sanction Surcharge’ may be Baked-in

Ukraine

Crisis Roundup

The cabinet of Prime Minister Viktor Orbán approved an initiative on September 28 from governing FideszKDNP MPs to organize a National Consultation on the sanctions imposed on Russia by the West, which the PM blames for “sky-high” energy prices.

NICHOLAS PONGRATZ

Máté Kocsis, the leader of the parliamentary group of Fidesz, requested the government conduct the public survey so that Hungarians could express their opinions on the matter, which he said would make them the first in Europe to be able to do so.

In a weekly interview with Kossuth Rádió on September 30, Orbán warned that the “sanctions surcharge” Europeans are currently paying on energy could be “built-in” to the economy if European Union policies concerning punitive measures against Russia remain in place.

“If we don’t protest, if we don’t get Brussels to change the sanctions policy […] the sanctions surcharge will become a fact of life for the coming 5-10 years,” the PM warned. Orbán said that the National Consultation on Brussels’ sanctions policy would give Hungarians an opportunity to establish a consensus.

“We need to voice our opinions because if the sanctions policy is not changed, the sanctions surcharge that we’re paying today, which is a temporary thing, will be built into the economy and will remain with us for the long term,” he said.

As a consequence of the higher energy prices, Hungarians are consciously preparing for this year’s heating season, according to research from IKEA. While households said they would keep the temperature in their homes higher than the 18ºC (64ºF) recommended by the government, the survey revealed that most, some 47.7%, would turn down the heating in rooms when they are not in use.

MNB Turning Down the Dial As a public institution, the management of the National Bank of Hungary (MNB) said it would lower thermostats at its buildings to 18ºC during the winter, in addition to reducing hot water usage and cutting back on outdoor lighting in an effort to

Prime Minister Gergely Gulyás announces the extended Christmas break at Hungarian schools, universities, and state offices at the Government Info press conference in the Prime Minister’s Office building on September 29.

Photo by Zoltán Balogh / MTI. save energy, the central bank said in a release on its website on September 28.

To further save on energy costs, the government announced that Hungarian students’ that there would be no fall break this year, but the winter holiday would be extended from December 22 to January 8, the Prime Minister’s chief of staff Gergely Gulyás said at a weekly press briefing on September 29.

Gulyás said a similar break would also be ordered at government administrative institutions during the same period, resulting in “significant” energy savings.

Yet, as Russia’s Gazprom has severed ties with every other European country, Hungarian energy company MVM said it had reached an agreement with the energy giant on October 3 to make deferred payments for gas over the winter, which it said would increase its financial room for maneuver.

Hungary signed a 15-year deal with Russia last year, before the invasion of Ukraine, to receive 4.5 billion cubic meters of gas per year via Bulgaria and Serbia, according to Minister of Technology and Industry László Palkovics. The minister told an energy conference organized by portfolio.hu on October 4 that Hungary was aiming to eliminate Russian gas imports by 2050 through a large-scale electrification drive, following a review of Hungary’s energy strategy in the first quarter of 2023.

On the same day, the European Commission provided Hungary with EUR 21.1 million in support to help cover the country’s costs in providing for refugees from Ukraine, according to the Ministry of the Interior. The ministry said that related services and supplies for the more than 900,000 Ukrainian refugees who have arrived in Hungary have amounted to roughly HUF 28 billion, or EUR 66 mln.

TriGranit Hands Over 1st Phase of Millennium Gardens TriGranit has completed the first phase of its Millenium Gardens office project overlooking the Danube on the Pest bank of the river. The office development is the final phase of a 25-year mixeduse office, cultural, entertainment, and retail project on a brownfield site in District XI. GARY J. MORRELL

The latest office complex at the site is being developed by TriGranit and funded by Revetas Capital, with OTP Bank and the European Bank for Reconstruction and Development providing finance. The 21,600 sqm north tower is more than 90% let with the local unit of Henkel, the Germany-based maker of Adhesive Technologies, Beauty Care, and Laundry and Home Care products, already occupying space in the building.

Tom Lisiecki, CEO of TriGranit, emphasized what he regards as the outstanding achievement of completing and leasing an office project developed during the COVID pandemic.

“It is always a pleasure to open a new office building, but Millennium Gardens

The Millennium City Center follows the concept of a “city within a city,” containing cultural institutions, offices, residential buildings, green areas, and

a 1.5 kmlong

promenade surrounding the buildings.

The location provides several public transport and road links, deemed essential for any successful office complex.

Such large office deliveries as is unparalleled for us, as the building Millennium Gardens by TriGranit. Millenium Gardens have been rare is the final element of Millennium City in recent months. Despite a strong Center. The opening of Millennium office pipeline, developers are cautious Gardens, especially in these turbulent about undertaking new projects in times, is an outstanding accomplishment friendly materials. All activities on the building site, including CO2 emissions, the current challenging economic from the TriGranit team,” Lisiecki said. were closely monitored. According to the and political environment.

“I would like to thank Revetas Capital, “Development activity remains [the] pan-European real estate investment company, the building was planned in strong in Budapest despite elevated advisor, for their trust and support. As the accordance with Breeam “Excellent” and Access4You “Gold” accreditations. inflation pressures and the weak forint,” next step, we are working intensively to comments Orsolya Hegedűs, partner continue phase two of Millennium Gardens,” Roof Garden and head of research and advisory at he added at the official handover reception.

The Budapest-based Finta Studios designed Cushman & Wakefield Hungary.

Millennium Gardens is the opening the complex, which has a green garden on “While some developments are phase of Revetas Capital’s ESG and the ninth floor and a roof terrace, both of delayed until the third quarter, the which can serve as alternative workspaces new pipeline in the second half of carbon neutrality and meeting points. A 300-seat restaurant 2022 is estimated to exceed 240,000 strategy. Steps were taken to reduce with a terrace on the ground floor will serve sqm, 49% of which is already pre-let. emissions and energy use during employees from the building as well as New supply in 2022 is likely to break construction and source environmentally nearby offices and the National Theater. a record set in 2009,” she adds.

2040

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Budapest Business Journal | October 7 – October 20, 2022

The automotive sector, Hungary’s leading manufacturing segment, has shown accelerated growth recently, boosting the headline industrial figure. While the improved performance is a welcome sign, and national economic trends may fuel future growth, the outlook remains uncertain.

CHRISTIAN KESZTHELYI

Following its year-start rebound, Hungary’s automotive sector has sped up, performing 16.6% year-on-year growth in July, according to Central Statistical Office (KSH) data published in mid-September.

The increase was a marked improvement on June’s when

China’s NIO Building Battery Swap Station China-based automotive business NIO has started building a HUF 5.5 billion battery swap station plant in Biatorbágy, on the outskirts of Budapest, with a HUF 1.7 bln Hungarian state support. Once finished, the investment is seen to create hundreds of jobs, according to State Secretary Tamás Menczer of the Ministry of Foreign Affairs and Trade. The Hungarian station will be one of the 4,000 by 2025 to operate globally, of which 1,000 will be based external to China.

Three-strong Automotive Consortium Invests HUF 1.5 bln A consortium of three Hungarybased automotive firms has

Automotive Matters

A monthly look at automotive issues in Hungary and the region

Photo by Jasen Wright / Shutterstock.com

Speeding Automotive Sector Lifts Industrial Output but Future ‘Uncertain’

the sector, an essential driver of the Hungarian economy, was up by 2.9% y.o.y. only, slowly continuing the gradual rebound from the halfa-year fall before January 2022.

In July, the automotive sector accounted for 24% of the overall manufacturing output, a slight increase from June’s 23%, the latest KSH data confirms. The automotive industry has been challenged by the semiconductor shortage, a foundational component in modern car manufacturing, and supply chain problems.

In the first half of the year, total automotive industry output grew by 4.9% compared to the same period a year earlier.

completed HUF 1.5 billion of investments, which received HUF 772 million in European Union and state grant. The investment has been carried out by a consortium of Csaba Metál, Csaba Tool and Droidx. Consortium leader Csaba Metál, one of Hungary’s biggest aluminum foundries, bought an Industry 4.0-compliant enterprise management system and supported its business partners with consulting services via the investment. Csaba Tool, an instrument and tool manufacturer, invested HUF 471 mln in installing a 10-tonne overhead crane, allowing the company to make 10-12-tonne tools; purchased tool design software; and expanded its production area by 500 sqm. Droidx, a manufacturing technology maker, expanded its production area by 840

News | 5

The statistical office confirmed that year-on-year headline industrial output increased 4% in July, accelerating from 1.5% y.o.y. in the preceding month.

The output climbed 6.6%, adjusted for the number of workdays.

Larger Growth

In January-June, the headline industrial output indicator grew by 5.1%. The figure was lifted by growth in the most significant branches of the sector.

Automotive and the computer, electronics and optical equipment segment both increased to a “larger degree,” the KSH said, while the food, drinks and tobacco segment increased to a “smaller degree.”

Output in most of the other segments fell.

sqm and bought a tool-making center that can turn out XXL parts and tools via an investment of HUF 867 mln.

Continental Opens R&D Expansion in Budapest Continental Automotive Hungary has opened its expanded Application Development Center at its Budapest research and development base. The new addition is part of a HUF 4.2 billion investment, which received a HUF 1 bln Hungarian state grant, to expand its research and development centers in Budapest and Veszprém (115 km southwest of the capital). Continental’s R&D centers in Hungary are planning to make several hundred new hires in the coming years, Balázs Loránd,

The overall growth in industrial output performed above expectation, and positive trends may be in store in the upcoming months. Magyar Bankholding chief analyst Gergely Suppan told Hungarian stateowned news agency MTI that the growth pace could accelerate due to a low base period and easing semiconductor shortage.

However, he also acknowledged that risks of the war in Ukraine, lingering supply chain issues, and snowballing energy prices may harm future output.

Despite that, though, he added that industrial stock order is elevated, and new capacities are in the pipeline.

In July, the automotive sector accounted for 24% of the overall manufacturing output, a slight increase from June’s 23%, the latest KSH data confirms. The automotive industry has been challenged by the semiconductor shortage, a foundational component in modern car manufacturing, and supply chain problems.

Data suggests that companies are getting better at managing supply chain issues, ING Bank senior analyst Péter Virovácz told MTI. Nevertheless, he cautioned that the outlook remains “extraordinarily uncertain” as high order volume may mean little if supply chain problems resurface or high energy prices force rationalization.

the head of the driving support and automated driving solutions division in Hungary, said during the inauguration. Continental employs more than 8,000 people in the country.

Rába Loses HUF 252 mln in H1 Hungarian automotive component manufacturer Rába booked a HUF 252 million loss in the first half of the year as inflation squeezed margins and financial losses weighed. Rába’s revenue was up 27% at HUF 30 billion; however, direct sales costs grew 31% to HUF 24.7 bln and other operating expenses were up 52% to HUF 4.6 bln. A financial loss of more than HUF 900 mln bit into the bottom line, Hungarian state news agency MTI said.

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Budapest Business Journal | October 7 – October 20, 2022

Business

‘Winter is Coming:’ Economy Faces Tough and Uncertain Period, Equilor Warns Turbulent months are ahead for the capital markets and the Hungarian economy, according to Equilor Investment, something an agreement on EU funds may help ease. The rapid and broad-based economic recovery following the coronavirus outbreak was primarily interrupted by the Russo-Ukrainian war and the ensuing energy crisis.

All this also means that a bear market could stay with us for a long time, the consultancy says.

GERGELY HERPAI

Erratic energy prices, galloping inflation, slowing investment, the region’s highest base interest rate, a rising wage-price spiral, and an expected slowdown in domestic consumption are just some of the factors that make the outlook gloomy.

The euro could enter the new year at around its current level to the forint.

Still, it is unlikely to strengthen next year, with the rate reaching the 420 level to the forint, according to Equilor. Its analysts expect GDP growth of 5% this year and stagnation next year, while inflation could reach 13.5% this year and

15% next,

they warn.

The Hungarian and European economies are facing their most uncertain winter in a decade, Equilor says.

Economic indicators could be affected by average winter temperatures and, thus, the use of gas reserves. Still, in the longer term, the outcome of the RussoUkrainian war and the resulting energy crisis could be a vital issue, according to the company’s most recent analysis.

In the absence of a shock weakening of the forint, regular base rate hikes could be completed this year, with ad hoc interventions in the first quarter.

After peaking at around 15%, the policy rate could gradually decline to about 10% by the end of next year, in line with developments in global conditions, Equilor believes.

Risk Premium

In addition to accelerating inflation, Hungarian government bond prices have also been weighed down by a significant increase in the country’s risk premium.

Although Standard & Poors affirmed Hungary’s debt rating in August, the outlook was downgraded to negative because of a deteriorating balance sheet and short-term country risks. With real interest rates still in negative territory, the incentive for higher interest rate hikes to increase savings and leverage is limited.

The Hungarian economy is facing several challenges. Although the debtto-GDP ratio is not exceptional by European standards, the highest yield levels in the region could put the budget under pressure in the medium term.

In addition to the fiscal deficit, the current account deficit is also high, which could be addressed by further reducing government expenditure and lowering the import ratio. In the summer, the government opted for fiscal adjustment: special sectoral taxes were increased and extended, government From left: Bálint Szécsényi, CEO; Lajos Török, senior spending cuts were announced, utility analyst, and Szilárd Buró, head of financial innovation. subsidies were linked to consumption ceilings, and preferential taxation for small businesses was abolished.

The development of the Hungarian In his view, it cannot be ruled out that With uncertainties remaining around economy and the forint exchange rate residential overheads will have to be adjusted the increase in debt refinancing and the will be significantly influenced by the again from January 1, leading to a further receipt of EU Recovery Fund resources, debate on the disbursement of EU funds, increase in inflation from the first quarter. and with tax revenues rising with any resulting agreement, and, ultimately, In addition, the system of price caps, inflation, the budget deficit would have the amount of funds disbursed. extended until the end of the year, should been around 4.9%. It could increase to In total, EUR 7.5 billion in funding be phased out soon, which could lead to a has been suspended from operational programs. As a baseline scenario, increase due to extra gas purchases, according to Equilor expects that Hungary will in inflation, depending on current Equilor’s forecast. receive the bulk of the pending amount, The domestic labor market has some 80%, but that the contested items of market prices.

Like the central banks of developed recovered quickly from the crisis caused the 2021-2027 operational programs will countries, the National Bank of Hungary by the coronavirus epidemic, with the not be paid. If this materializes, Equilor (MNB) is fighting against the build-up unemployment rate falling steadily to expects that after this year’s 5% GDP of inflation expectations and their below 4% last fall. Severe labor shortages growth, next year could see stagnation, in many sectors and specializations while in 2024, GDP growth could still be persistence at high levels: it has been raising the base rate in significant steps, are causing average wages to rise subdued at 2.5%. but this can only have a partial effect dynamically. The pace of wage growth is Domestic inflation started to rise due to the various subsidized loans and expected to accelerate towards the end in fall 2021, boosted by fiscal easing the interest rate freeze. of the year as companies try to offset the and, on the demand side, the personal Despite having the highest base rate in rising costs of inflation for their workers income tax rebate. The rise in world energy prices, which also started last fall, the region, the forint has been in a tailspin by raising wages. against the euro since the outbreak of the The resulting price-wage spiral is already has intensified significantly following war and has also drifted away from the visible, but inflation remains primarily Russia’s invasion of Ukraine. region’s other currencies. This is partially driven by external factors for the time being.

Inflation Expectations explained by the relative fragility of the High energy prices in Europe are likely to The revision of the overheads cut will Hungarian economy, and partly by the lead to a structural reorganization of the be reflected in the CPI from September withholding of EU funds, Török noted. economy, with closures and shutdowns, and could reach 20% annually in the In addition to the interest rate hike, the especially in energy-intensive and fourth quarter. Equilor expects annual MNB took other monetary tightening cost-sensitive companies, which could average inflation to be around 13.5% this measures at the end of August, including temporarily increase unemployment by year, rising to 15% next year and only an increase in the reserve requirement 1-2% in the coming quarters. Still, Equilor returning to single digits (7%) in 2024. ratio for the banking system, a regular expects unemployment to remain low in the However, Lajos Török, a senior analyst auction of central bank discount bonds, coming years, with high inflation compared at Equilor, thinks that the outlook has and the introduction of a long maturity to the past decade, and with moderate many uncertainties. He explained that deposit facility. The pace of the increase fluctuations due to structural changes. the main trends could be determined in the central bank base rate is expected primarily by the evolution of world energy to moderate from 100 basis points For more on energy matters, see our prices, but there are also several risks. over the rest of the year.

Special Report on pages 12-19.

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Budapest Business Journal | October 7 – October 20, 2022

PRESENTED CONTENT

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Business | 7

Hays Hungary: a Talented Team's 15-year Rise to the Top labor law doesn’t allow wages to be set or paid in anything other than Hungarian forints. We also see more one-off signing bonuses for new hires. In the engineering sector, some companies are even building flats in the countryside for employees, rather than renting accommodation, thereby offering more possibilities for relocation.

In August, Hays celebrated 15 years in Hungary. The Budapest Business Journal spoke with managing director Tammy Nagy-Stellini about coming top among recruitment agencies in the Book of Lists, candidate attraction, staying competitive in an uncertain economic climate, and the adaptability of businesses.

BBJ: We have heard from HR managers who say if they find a talented candidate, they will offer them a job first and then work out the role.

TN-S: Absolutely. With so much competition for talent, you need to act fast.

Employers have recognized the need to reduce the number of interviews, to make the hiring process quicker and secure the best talent as quickly as possible.

BBJ: What could the government do to make business easier for your sector?

TN-S: Further governmental measures to attract candidates, where there is a skills scarcity on the market, could make the employment process quicker for jobseekers from outside the EU and, therefore, generate more available workforce in Hungary.

BBJ STAFF

BBJ: Congratulations on Hays Hungary coming top among Recruitment agencies in the Book of Lists for the first time this year. To what do you attribute this success?

Tammy Nagy-Stellini: Thank you. A business is about its people, and I have a very talented and dedicated team. All the hard work we have been putting in has got us to the top. We have been here for 15 years and have grown the business by building long-term partnerships with clients and candidates. We also continue to offer new services. Fifteen years ago, we were just five people working in permanent recruitment. Now we also offer contracting, temporary staffing, RPO [recruitment process outsourcing], salary benchmarking, employer branding, and various consultancy services. We have kept pace with what the market needed.

BBJ: We have inflation (and thus pressure on wages), near full employment, and an energy crisis simultaneously, plus COVID still lurking and the possibility of a new wave arriving this winter. Is this the most challenging environment you have ever known in which to do business?

TN-S: These are indeed “interesting times.” Looking back over the past 15 years, the expansion of Hays Hungary has been accelerating continuously. And we are still growing today. Almost every month, we achieve record-breaking results; however, due to the uncertainty felt within the market, even more emphasis is being put on observing the market dynamics shaping our clients’ hiring plans. Most clients continue to hire, although some are waiting to see what will happen. We continue to prepare, to plan ahead so we can act early and be there for our candidates and clients. In the upcoming months, we’ll see if the recession will happen at the beginning of next year and to what extent it impacts us.

Tammy Nagy-Stellini BBJ: What are your expectations for this year and next? How will Hays hold on to its number one position?

TN-S: Up to this autumn, hiring has not slowed down in any industry we operate in. Looking to 2023, we are curious to see how the market changes. We’ll continue keeping our standards in terms of service quality and continue to develop our strategic partnerships with our candidates and clients. And, of course, putting our people and the team itself in focus.

BBJ: What are the most significant trends shaping the recruitment market?

TN-S: With inflation affecting salaries, it seems some can adapt more quickly than others, but there is only so far you can continually offer higher wages. According to our latest Hays Market Trends study, many organizations have already increased salaries throughout the year and are now looking to plan their next steps for the beginning of 2023.

In today’s market, it is imperative to retain staff by being close to your people.

You certainly want to keep the best talent within your organization, given the labor scarcity in almost all sectors. Employer branding has gained a much more critical role. Companies need to stand out and differentiate themselves from the

competition. Employers must become attractive to passive candidates and engage job seekers by offering flexible working solutions and a competitive benefits package.

Contracting as a form of employment is becoming more widespread. The flexibility offered by contracting is much appreciated both by clients and freelancers. Some of our clients, mainly in technology, already have a staff population of 70% employees vs. 30% contractors. And at the end of the project, it can be decided to extend, part ways, or employ the contractor permanently. There is also a growing demand for temporary staff to take on specific projects. This form of employment gives companies flexibility and allows them to outsource all related administrative duties.

Companies are increasingly nearshoring positions to Eastern Europe, especially in technology and business services. Their HR teams are seeking alternative ways to support hiring plans and looking for strategic recruitment partners that offer both expertise and consulting. As a result, clients ever more outsource their recruitment.

Lastly, an interesting new trend is that technology candidates would prefer getting their salary in euros or another stable currency. However, Hungarian

BBJ: What is your advice to businesses to ensure they get the best talents?

TN-S: Employer branding is vital to get onto the radar of candidates and stand out among competitors. According to our latest Salary Guide study, we’ve seen that, beyond offering a competitive compensation package, employers also need to provide a healthy work-life balance, flexible working solutions, and professional development opportunities to attract the best talent. Also, it is key for a company to take care of its employees since this is portrayed on the market and is part of building a strong employer brand.

You need to be up to date with what is happening in the market to ensure your strategy is aligned. That is why salary benchmarking and HR consultancy is so important.

BBJ: What would be your advice to those children who started secondary school or university this September?

Where they have the choice, what should they be studying?

TN-S: Study what you really love. At a conference about five years ago, a colleague from Hays asked a futurist the best foreign language for children to learn. The futurist said, “Coding!” Tech is obviously a good area to go into if you are interested in that; I do believe the demand for tech skills will remain.

According to a recent study, 65% of children entering primary school today will ultimately end up working in entirely new jobs that do not yet exist. You must develop the ability to adapt to change, new technologies, and new markets.

To university students, I would say you need to get into the mindset of being a life-long learner. Never stop being curious. Whatever you are studying, be interested in other areas, take part-time jobs, and ask questions. Be inquisitive.

8|2

Business

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Budapest Business Journal | October 7 – October 20, 2022

AutoWallis Group Heading in Fresh Directions: Austria and Online Sales

He stressed that the current business development would allow AutoWallis to test its well-known and highly successful import brand at low risk in the market to the west of its strategic territory of Central and Eastern Europe.

Significant Demand

The AutoWallis Group is opening up to online sales and Western Europe markets, with a significant acquisition and business development in each direction. The announcements align with the strategy announced last year by the auto retailer and importer, which is listed on the Hungarian stock exchange and aims to increase its turnover to more than HUF 400 billion by 2025.

GERGELY HERPAI

Speaking at a press conference on September 21, AutoWallis said it would enter the Austrian market with its SsangYong car wholesale business. It also has plans to acquire Net Mobilitás Zrt., operator of the JóAutók.hu and Autó-Licit.hu portals. It The acquisition of the exclusive import rights of SsangYong in Austria could be a decisive new direction in terms of diversification, the company argued. At the same time, the purchase of Net Mobilitás Zrt. is a first step towards the expansion of online sales. The moves follow the earlier announced acquisition of Renault Hungária

by AutoWallis Group and a JV partner.

It perceives significant demand for its value-for-money offering in a niche market segment and believes this will strengthen its visibility and position, increase its revenues and operational efficiency through synergies between group members, and support shareholder value growth. Prest said sales are expected to reach the fivedigit mark in 2023.

The acquisition of Net Mobilitás Zrt., on the other hand, brings with it the JóAutók.hu and Autó-Licit.hu From left, Andrew John Prest (head of wholesale) and Gábor Székely (investor portals. These aggregate verified used relations) of AutoWallis Group at the announcement of two new acquisitions. car advertisements from qualified sellers and are leading players in the Hungarian market. Launched share in the first six months than last in Gábor Ormosy, CEO of AutoWallis year,” Ormosy said. He did not rule out Group, said that the two latest raising the target figures outlined above transactions are significant in a but noted that the ongoing and significant JóAutók.hu is the second largest player changing and turbulent economic in the market. It supports traditional changes in macroeconomic conditions environment in which AutoWallis used car sales as well as new and made it prudent to keep them at the same intends to continue to move forward level for the time being. The management showroom car sales, where sellers are at a dynamic pace, building on its typically car dealerships, but individuals is working on further developments and capital strength and more than can also advertise on the site. acquisitions, the CEO added.

Founded in 2006, Autó-Licit.hu is The acquisition by AutoWallis’ years a car auction portal where contracted wholesale operation of the exclusive of experience and “crisis-proof strategy.” rights to import SsangYong vehicles fleet operators (multinational He recalled that the group announced companies, banks, leasing companies, in Austria means the group will now its new strategy last year, which expects public companies, fleet managers, be present in the company, listed in the Premium rental car companies, etc.) and a small category of the Budapest Stock Exchange, number of private individuals offer countries. to show explosive growth until 2025. their cars for sale.

While this further strengthens its Ormosy says it expects to become the The buyer side is open to registered leading auto retail and mobility provider in already-dominant CEE position by taking national and foreign dealers and it into a developed market for the first the Central and Eastern European region employees of contracted fleet managers. by the decade’s end. The group’s revenue time, it is described as a pilot project.

Commenting on the transaction, Ormosy The group has been the exclusive could double last year to more than HUF said that the move is intended to support importer of SsangYong since 2012 in 400 billion, while EBITDA could rise ongoing development projects, taking above HUF 14 bln. The projected growth Hungary (where it has also retailed advantage of synergies within the group. the brand since the spring of this year), is driven by the transactions completed It was also a vital step in responding followed by Romania, the Czech Republic, to the needs of the changing distribution or announced by the company so far, Slovakia and, from 2023, Austria. organic growth and planned further model, where online sales channels Andrew Prest, head of wholesale at acquisitions, the CEO said. are becoming increasingly important.

AutoWallis Group, said the move is an AutoWallis will acquire Net Mobilitás Zrt. Record Results excellent complement to the strategy to from WAM Immobilia Ingatlanhasznosító “As you know, the company reported organically through acquisitions, making és Üzemeltető Zrt. via a share swap record half-year results in August, the brands it already represents available transaction. The transaction is expected already generating more earnings per in more and more countries. to close by the end of the year.

2017,

30

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Budapest Business Journal | October 7 – October 20, 2022

Corporate finance columnist Les Nemethy takes a high-level view of the potential drivers of a “polycrisis” and how individual countries are placed to cope.

Even after many interest rate hikes, real interest rates in the United States remain in the range of

negative

According to historian Adam Tooze, we are currently potentially facing a “polycrisis:” several smaller to mediumsized crises in the world that have the potential to combine and reinforce each other. Think of many small and medium-sized fires combining to form one magnificent conflagration.

Historian Niall Ferguson talks of a crisis shaping up in the 2020s that could be significantly worse than the 1970s.

Debt is always associated with fragility.

Whereas during the 1970s crisis, global debt was hovering around 100% of global GDP, today it is in the range of 350%.

For a long time, the U.S. Federal Reserve was in denial about inflation, then labeled it as “transitory.”

Quantitative tightening and interest rate hikes were postponed to the point where the genie was already out of the bottle by the time the Fed and European Central Bank started raising interest rates.

Over the past months, the Fed has pushed through several 75 basis point increases (and the ECB a few relatively minor increases), but it has proven too little, too late, to stop inflation.

The taming of inflation typically requires positive real interest rates.

The Corporate Finance Column Photo by thodonal88 / Shutterstock.com

Is the World Heading Towards a ‘Polycrisis?’

4-5%,

and in Europe, 8 to 10% as of the beginning of October 2022. Because of significantly higher debt levels, the pain inflicted by raising interest rates is, by definition, much higher than in the late 1970s. Something will break.

Another driver is that climate change has been pushing an agenda of substituting green energy for fossil fuels.

The planning for this was done poorly, particularly in Europe. Even if we look beyond the colossal error of reliance on Russian hydrocarbons, fossil fuels were phased out faster than green fuels could be brought on stream, particularly with respect to satisfying base load capacity.

The nuclear industry, a carbon-free source of such capacity, was virtually shut down in Germany and curtailed in other European countries.

In the 1970s, the world enjoyed a number of favorable tailwinds, including good demographics and rising productivity; globalization was just beginning. These factors now constitute headwinds. Most of the world faces a demographic cliff, and globalization is stalling or reversing, resulting in diminishing efficiency and productivity.

Business | 9

The above drivers were in place even pre-COVID and the war in Ukraine, although both have served to accelerate and aggravate matters.

Is the World Ready?

So, how is the world poised to face down this polycrisis? China is losing its locomotive effect on the world economy due to an imploding real estate sector (which accounted for almost one-quarter of GDP), aggravated by the demographic cliff China is now facing. COVID lockdowns further diminish GDP growth and create supply chain havoc. The government’s insistence on recentralizing power to the Communist Party is also likely to dampen growth.

Continental Europe faces multiple challenges, the cessation of Russian gas supplies perhaps being the greatest.

Meanwhile, Italy’s newly-elected rightwing government could well bring havoc to debt markets in Europe and put stress on the European banking system: at least half a dozen major European banks see share prices collapsing and have price-to-book ratios of

less than

40%.

The bankruptcy of a globally systemically important bank (G-SIB) such as CSFB is not inconceivable.

Emerging markets worldwide are in tough shape due to higher U.S. interest rates and global crises sucking up

liquidity. Much of emerging market sovereign and corporate debt is denominated in U.S. dollars, and with the appreciation of the dollar, is becoming increasingly difficult to service. Turkey and Argentina are approaching hyperinflation. Sri Lanka and Pakistan are basket cases. Russia, Iran and Venezuela all face sanctions.

The United Kingdom is in crisis due to markets reacting poorly to giant tax cuts announced by the relatively new Liz Truss government (a controversial cut for the highest earners was dropped in an embarrassing u-turn on October 3). The Bank of England had to suddenly reverse gear from quantitative tightening to quantitative easing in a quest to re-establish stability, likely accelerating inflation.

The United States seems to be the only real economic locomotive of the world today; its job market remains surprisingly strong. Even the U.S. economy is decelerating, thanks to ever-higher interest rates. Yet inflation in America remains robust at over 8%, meaning that the Fed will likely continue increasing interest rates until something breaks. And then the world’s last economic locomotive will lose traction.

Might that be the moment that triggers a “polycrisis?” Think again of various fires coalescing. Might it be the emergence of a new strain of COVID? Or the bankruptcy of a G-SIB creating a Lehman moment?

The trigger or spark is almost irrelevant.

We know there is a huge amount of combustible material around.

Les Nemethy is CEO of EuroPhoenix Financial Advisers Ltd. (www.europhoenix.com), a Central European corporate finance firm.

He is a former World Banker, author of Business Exit Planning (www. businessexitplanningbook.com), and a previous president of the American Chamber of Commerce in Hungary.

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Country Focus Germany

Clouded Prospects, Improving Business Environment?

With the fall update of the business sentiment survey of the German-Hungarian Chamber of Industry and Commerce (DUIHK) due to start on October 4, the Budapest Business Journal asked Dirk Wölfer, the chamber’s head of communications, to review the findings from earlier this year.

BBJ STAFF

The business sentiment of German companies in Hungary are suffering from the negative impacts of the war in Ukraine and disruptions in international supply chains, according to the latest corporate survey of DUIHK members.

Given the outstanding role German businesses play in the Hungarian economy, Hungarian Minister of Finance Mihály Varga attended the official presentation of the survey results in the early summer and commented on the findings.

The annual sentiment survey, first launched back in 1994, not only features data on business expectations and investment plans, but also looks into the assessment of the regulatory framework, labor market trends and risk factors for the companies’ business outlook.

Compared to 2021, German companies saw their business situation and that of the economy as a whole in a better shape, but the outlook for the upcoming 12 months had dropped

key risk these days is surging energy and raw material prices – three out of four companies named this among the most important threats – thus outpacing even the labour shortage which ranked “only” third. In the light of latest developments, it does not surprise that the exchange rate volatility is of rising concern to the managers. As a result, two thirds of them would now vote in favour of introducing the Euro in Hungary – a jump by about 10 percentage points from last year. However, the finance minister dampened such hopes when asked: “Good economic policy can be made both with and without the euro”, he said.

An interesting detail of the survey was that disruptions of international supply and value-chains which emerged since the outbreak of the corona pandemic could even generate a chance for Hungary.

DUIHK president András Sávos and finance minister Many companies are looking or may Mihály Varga. Photo by Nóra Halász / DUIHK. look out for new suppliers in order make their supplier network more divers and resilient to shocks. When sharply. Nonetheless, a slight majority asked in which regions they would the Chamber warned. Although it still expected improved results this search for new partners, clearly provides no comfort, it is noteworthy year; even regarding employment the Central and Eastern European that these labor market tensions are and investments plans, the balance of EU member states were named not specifically Hungarian problems, sentiments was still slightly positive. as preferred target area. but affect many countries in the This is an important signal to This could even give an additional region.

Hungary, given the strong presence impetus to further investments of With regards to the quality of the of German companies in the country.

German companies in Hungary. general business environment, According to DUIHK president András Commenting on the fact that 88% of the new poll saw some further Sávos, there are about 2,700 such firms the survey respondents stated they improvements, thus extending positive operating in Hungary, employing more would again choose Hungary as an trends of recent years. The finance than 220,000 people and contributing investment location, the finance minister - who has just taken up this nearly one sixth of the gross value minister said: “We are working on post for the fifth time - was probably added in the private economy. getting to 100%.” particularly pleased to see that the Finance minister Mihály Varga noted assessment of the tax system has Talking about the current challenges that German-Hungarian economic facing Hungary’s economic policy, continued to improve, satisfaction in relations have proved “crisis-resilient,” Hungary exceeds the average of the Varga named inflation and the adding that their quality has been resulting rise in interest rates and Central and Eastern European region. raised successively in recent years. yields, which makes financing more Similarly, to the state quality of public These ties are ever more characterized expensive not only for the state infrastructure, conditions for research by cooperation in areas such as but also for companies. Hungary and development received better research and development, innovation must therefore pursue a stable and ratings than in many other countries and higher education and vocational of the region. In contrast, the surveyed disciplined fiscal policy, Varga said, training, in addition to production, forecasting that the budget deficit companies in Hungary are clearly Varga said. should fall to 4.9% of GDP this year dissatisfied with the transparency The DUIHK survey again certified and to 3.5% in in 2023, while economic of public procurement, and with the that tight labor markets remain a growth could reach around 4% in 2022. containment of corruptions: more than crucial issue for companies: two out half of the respondents had negative of three managers are unhappy with opinions which is even poorer than the the situation. This, on the other side, regional average. adds to existing wage pressures. This The full survey results year, companies expect labour costs Impacts of global can be downloaded from to rise by 10% on average – the highest developments the Chambers website forecast ever measured in the survey. in Hungarian or German: Current crises in Europe and in the But given rampant inflation and the https://www.ahkungarn.hu/ global economy have a severe impact fact that previous forecasts used konjunktur on open economies such as Hungary to underestimate reality, the final or Germany. According to the poll, the rise in wages could be even higher,

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Budapest Business Journal | October 7 – October 20, 2022

PRESENTED CONTENT

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Focus | 11

A Unique Bond Forged by Uninterrupted Investor Activity When France sneezes, the rest of Europe catches a cold, Austrian Chancellor Metternich said in the 19th century, referring to how French political developments impacted other European nations back in the day.

BBJ STAFF

In Hungary today, the phrase might be used in the context of relations with Germany to highlight to what great degree Hungarian growth depends on whether or not Germany booms. What shape are business relations between the two countries in nowadays? The Hungarian Investment Promotion Agency offers a detailed picture of the current conditions based on its data and case studies.

If you want an overall impression of Hungary’s current investment landscape, just take a look at HIPA’s press event calendar. It provides a snapshot of projects through corporate announcements and, hence, reflects current investment trends. Roughly two-thirds of the items in early fall 2022 feature the events of Germanowned companies; the ratio was pretty similar earlier in the spring.

An accident it is not; it’s part of a clear pattern.

Being the largest investor nation in Hungary, Germany accounts for around 21% of the total FDI stock, with more than 2,700 German-owned businesses employing

225,000 people

in the country, according to the Hungarian Central Statistical Office (KSH). They include giants like Bosch or Thyssenkrupp and more traditional family-owned, Mittelstand SME ventures such as OBO Bettermann or Kostal. And they tend to show an equal level of activity; in fact, all those mentioned above have made different project-related announcements this year.

The German presence in the automotive sector is particularly strong; Hungary is the only country in the world apart from China that can pride herself in hosting production sites for all three of the most significant German OEMs, namely Audi, BMW and Mercedes-Benz.

three job creators and were responsible for the highest number of HIPA-guided deals, with the exception of 2014.

This high level of activity is coupled with the ability to adapt to changing circumstances. The global supply chain disruption is the latest issue that demands such flexibility. A worldwide shortage of semiconductor components particularly impacts automakers like Mercedes-Benz. The OEM is confident the situation can be handled, although a prognosis about when the supply bottleneck would be cleared is not possible as yet.

“We are going to intensify our coordination on production planning EQB, the first fully electric car manufactured in Hungary with our direct suppliers as well at Mercedes-Benz’ Kecskemét plant, October 2021. as with the semiconductor suppliers in order to make the system more robust in the future,” a statement Like their fellow German investors agreements with vocational training from Mercedes-Benz Manufacturing in other industries, these three centers and the universities of Debrecen Hungary Kft. says. behemoths are here to stay, as and Miskolc,” Kocsis says. “Now Krones “Together with our suppliers, showcased by a solid reinvestment Hungary is not only the second pillar of we work to secure capacity and further pattern. Mercedes-Benz, for example, European production for Krones AG, but develop the technology to enable recently announced a more than we found a home here.” new generations and availabilities.

EUR 1 billion investment as yet another The company is looking forward This includes more concrete sign of its long-term commitment. and looks likely to follow the example agreements on supply quantities, The focus will be on further of the majority of fellow foreign extended planning cycles, as well flexibilization of production lines, investors guided by HIPA to go as the development of a safety stock digitization and sustainability. for reinvestment. at various points of the supply chain In fact, Hungary’s first all-electric “That’s no secret that our current and multiple supply sources.” production vehicle was produced at For Krones Hungary, the shortening the Kecskemét factory site, which of global supply chains could open production plays an ever-bigger role in the global new horizons. area is only half of our whole plot, so production network by integrating “We have already built a young and we have room for more capacities new models into series production. agile team of more than here,” Kocsis notes. “We have a proven Among other things, a new assembly track record of ramping up a greenfield and body-in-white (the pre-painting engineers production plant.” stage of the assembled auto frame) to provide a strong basis for the This optimism is based on skilled line are being built to pave the way relocation of further engineering and employees, a crisis-proof product, and a for producing a new model of the allservice package that contributes to every design functions to Hungary, but there electric MB.EA platform from 2025 on. are multiple scenarios discussed,” second bottled drink in Europe and However, German investors are Kocsis explains. every fourth globally. The Hungarian active in many other sectors beyond All in all, despite past, current and unit is an essential piece of the puzzle automotive. Between 2014 and the possible future turbulence in the as it aims to fulfill ever-increasing first half of this year, HIPA guided 171 economy, the managing director is full European demand. companies from Germany, generating of optimism. He believes that the future investments worth EUR 7.86 bln and Chart Toppers of Krones in Debrecen is bright, a stance creating 32,000 jobs.

German investors in Hungary shared by fellow German investors Trail Blazer typically top the charts in every major who have repeatedly placed their trust One such was a project by Krones, category. Between 2014 and 2021, in the local economy regardless of the a global market leader in the they consistently ranked among the top economic outlook. manufacture of fully integrated packaging and bottling line systems, which decided to settle in Hungary in German-Hungarian Bilateral Trade (2021) 2017. It chose Debrecen for its location, +11.3% y.o.y. a decision that is a welcome piece of local history for the city, as it was the Hungarian exports to Germany (2021) first significant multinational company EUR 31.8 bln, +8.6% y.o.y. to make the move. It marked the start German imports to Hungary (2021) of a new industrial era, and Krones was EUR 27.9 bln, +14.5% y.o.y. the very first business to move into the Volume of HIPA Supported German Investments (2014-2022 H1) Southern Industrial Park, recalls the managing director of Krones Hungary EUR 7.86 bln Kft., Zoltán Kocsis.

German FDI stock in Hungary (2020) For Krones, the factory was its EUR 17.5 bln first in Europe outside of Germany.

Since then, Debrecen has become something of a regional FDI hotspot, and Krones’ EUR 49 million investment has clearly paid off.

“Our expectations became a reality: we have already overshot the previously planned headcount, signed strategic

40,000 sqm

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Budapest Business Journal | October 7 – October 20, 2022

Special Report Energy

The Way Ahead for Green Energy in Hungary The cost of energy is perhaps the single biggest concern for households and businesses today.

Electricity prices have risen multiple times in the first half of this year.

Gas prices have increased by more than 10 times compared to the pre-pandemic cost, according to the European Commission.

BENCE GAÁL

The latest event in the CEO Breakfast Briefing, organized by the GermanHungarian Chamber of Industry and Commerce (DUIHK) in partnership with the Budapest Business Journal, discussed “The Future of Energy” and featured a panel consisting of Attila Steiner, State Secretary for Energy and Climate Policy at the Ministry of Technology and Industry; Viktor Sverla, head of group strategy at MOL Group; Ákos Hegedűs, CEO of Linde Gáz, and DUIHK president András Sávos.

After a short introduction by Barbara Zollmann, the CEO of DUIHK, State Secretary Steiner took the stage, outlining to the audience the government’s plans to alleviate the adverse effects of the energy crisis.

“In terms of security of supply, we have progressed quite well. It’s better to have some gas with high prices than to have none,” he noted.

He added that Hungary is wellpositioned in transitioning to sustainable energy sources but pointed out, “We have to speed up our endeavor to decrease energy dependence on Russia.” This means that Hungary

president of the DUIHK, said that while his company does have some energyrelated problems, it is lucky as it has a long-term electricity contract in place.

He also emphasized the importance of investing in sustainability projects.

Knorr-Bremse started such a program some two decades ago, but it was in the last five-to-seven years that the company started making significant investments in sustainable energy. Sávos added that the firm had decided to accelerate the program while also considering in which areas they could make savings.

From left: Robin Marshall, Attila Steiner, András Sávos, Viktor Sverla and ÁkosHegedűs. will work on updating its electric grid to allow more solar facilities to connect.

Steiner also noted that while domestic gas production currently covers

approximately

15%

of Hungary’s consumption, there is work in progress to increase this ratio to about 20%. Notably, while domestic production can make a more significant contribution, it cannot cover all of Hungary’s needs.

In terms of support to businesses, the state secretary argued that measures should be tailor-made for specific sectors, and help should be provided to SMEs looking to make themselves more energy efficient.

In the long term, Hungary aims to complete a EUR 16 billion investment plan in alternative energy by 2030, Steiner explained. That includes some 31 sub-projects and would cover the bulk of the country’s climate-neutrality goals.

European Proposals

After the state secretary’s presentation, a panel discussion followed, moderated

by BBJ editor-in-chief Robin Marshall.

In response to a question from him, Steiner said that there are currently five potential proposals from the European Commission to tackle the energy crisis.

Announced by the European Commission in mid-September, the proposals include mandatory measures to reduce electricity demand during peak hours, a cap on the high revenues some companies are making by generating electricity from lower-cost sources than gas, a solidarity tax on fossil fuel companies making big profits with the funds sent to help ease the pain for consumers and businesses, and

facilitating funding support for ailing utility companies struggling to pay for supplies on the market.

Steiner talked positively about these first four ideas, but the fifth proposal, which would set a price cap on Russian gas, was not received well by the state secretary.

He said that an EU-wide price cap on gas imports might be detrimental to Central Europe, as it cannot cope with cuts in delivery if Russia decides not to supply more (or any) gas at the prices set by the European Union.

MOL’s Viktor Sverla concurred with this argument saying, “As an economist, I cannot imagine how a thing like that could work,” referring to the commission’s proposed price cap.

Addressing the current energy situation in Hungary, Sverla told the audience that MOL is doing its best in Hungary, trying to supply filling stations, even if the fuel situation is not the same as Hungarians have gotten used to in the past

20-30 years.

Regarding windfall taxes, he noted that while companies are not happy about them, they still have to be “reasonable” in order to help those in need. In the case of the introduction of an EU-wide windfall tax, he pointed out that the general framework would have to be harmonized with national plans; otherwise, companies in countries such as Hungary, where a tax on extra profits is already in place, would be at a disadvantage on the international market.

Long-term Contract

András Sávos, vice president and head of digitalization and process optimization at Knorr-Bremse, in addition to being

“In terms of security of supply, we have progressed quite well. It’s better to have some gas with high prices than to have none. […] We have to speed up our endeavor to decrease energy dependence on Russia.”

He also warned that the more significant threat was not to the multinationals but to the local SMEs who form the value chain and are less likely to have embarked on long-term projects and more likely to struggle with rising costs. Ákos Hegedűs explained how hydrogen could be a vital alternative form of energy in the future, noting how interest in the alternative energy source is reflected in the fact that he had

some

2,000

hydrogen-related business meetings in the last two years.

However, regarding the current crisis, he admitted, “It is not the solution. Although it can help in the decarbonization process, it also requires investments.”

He argued that the recent appearance in Hungary of two hydrogen-fueled personal autos is little more than a “dog and pony” show but noted that the gas as a fuel source for buses and trains could be a significant factor in a greener future.

Held at the Anantara New York Palace Hotel on Wednesday, September 28, the CEO Breakfast Briefing started with greetings by New York Palace general manager Tamás Fazekas. Apart from providing the venue, the hotel also offered participants an exquisite range of breakfast foods, pastries, and coffee.

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Budapest Business Journal | October 7 – October 20, 2022

in Brief

MVM Reaches Agreement With Gazprom

Hungarian energy company MVM said on October 3 that it had reached an agreement with Russia’s Gazprom on making deferred payments for gas for the winter, according to napi.hu [Daily].

MVM also said it decided to tap some 800 million cubic meters of “cushion gas” in a storage facility in Hajdúszoboszló (205 km east of Budapest) and weigh its replacement with carbon dioxide in the interest of achieving emissions reduction targets. MVM noted that the market value of the cushion gas in Hajdúszoboszló is around EUR 1.5 billion. “To mitigate the impact of the increase in market prices, MVM Group and Gazprom have agreed deferred payments for the forthcoming winter period,” MVM said in a statement quoted by international news wire Reuters.

“The temporary inclusion of the deferred payment option in the contract increases MVM Group’s room for maneuver in financing and its liquidity position,” it added. Meanwhile, it was revealed that MVM booked a consolidated first-half loss of HUF 81.1 billion as costs climbed at a faster clip than revenue. According to an earnings report posted on the website of the Budapest Stock Exchange, sales revenue increased 124% to HUF 2.429 trillion. Operating costs jumped 151% to HUF 2.596 tln. Gas sales came to HUF 1.375 tln, up from HUF 638.8 bln in the base period. Electricity sales rose to HUF 825.1 bln from HUF 288.5 bln.

MOL COO Appointed INA Chairman

Photo by Blue Planet Studio / Shutterstock.com

Péter Ratatics, the COO of Hungarian oil and gas company MOL’s domestic business, has been appointed chairman of Croatian energy company INA, which MOL manages, novekedes.hu [Growth] reported on September 29. Ratatics replaces Sándor Fasimon, who resigned earlier in September amid revelations of fraudulent gas trade deals that took place under his watch “despite no involvement in any of the wrongful practices that surfaced around INA.” MOL’s other two delegates to INA’s board also resigned.

Late in August, Croatian authorities took five people into custody, including the

head of INA’s gas trade business, Damir Skugor, suspected of defrauding INA of more than HRK 1 billion through gas deals on international markets.

Production of Paks Reactor Vessels Begins Production of the reactor vessels for new blocks at Hungary’s Paks nuclear power plant has started in Russia, Minister of Foreign Affairs and Trade Péter Szijjártó said in a post on Facebook. All permits have been issued for the 330-tonne, more than 11-meterhigh reactor vessels, Szijjártó said.

Hungary’s National Atomic Energy Office (OAH) issued the implementation license to expand the Paks nuclear power plant in August. The target date for putting the two new blocks online is 2030. Meanwhile, the second September delivery of fuel rods from Russia has arrived at the Paks nuclear power plant, Minister of Foreign Affairs and Trade Péter Szijjártó said in a video message posted on Facebook early on September 28. “We’ve been able to complete both September deliveries of fuel rods,” Szijjártó said. Since the start of the war in Ukraine, the fuel rods have been delivered to Hungary by air. Paks power plant, Hungary’s only commercial source of nuclear energy, accounts for about half of electricity generation in Hungary.

Solar Power Set to Reach 8GW by 2025 Hungary’s solar power capacity could reach 8GW by 2025 and 12GW by 2028, Minister of Technology and Industry László Palkovics said at a conference in Siófok (110 km southeast of Budapest) on September 27, according to state news agency MTI. Addressing the 52nd International Gas Conference, Palkovics said Hungary’s solar capacity has increased “faster than planned.”

The issue now is how to upgrade the network to put that solar energy to use, he added. He acknowledged “debates within the government” over wind energy, adding that one advantage of wind is that it requires less space than solar. A single turbine can generate 4MW of electricity, while six hectares of solar panels are necessary to match that volume, he explained.

INSIDE VIEW

Electricity Storage, Regulation Play key Role in Development of Renewables and Energy Independence Dr. Róbert Szuchy Managing Partner BSLAW BUDAPEST Bocsák & Szuchy Ügyvédi Társulás

The EU regulatory framework supports the development of smart systems and the possibility of demand-side regulation.

It makes the deployment of smart meters mandatory, as well as the local storage of renewable energy, particularly locally produced renewable energy, and decentralized storage of electricity.

The regulation promotes a variety of decentralized and lower voltage energy transmission and storage options, including the potential of energy storage capacities in electrically powered cars.

Given the very dynamic technological development in the field of smart grids, decentralized energy production and storage, EU legislation sets out only the main regulatory and support framework, leaving each member state with a wide range of regulatory options to promote and support the deployment of new technologies, within the framework of the relevant EU state aid rules.

The prices of chemical energy storage systems for the electricity market have fallen significantly in recent years, in line with the increasing demand for electronic devices and electric vehicles.

This is evidenced by the fact that the cost of a battery unit was almost USD 1,000/kWh in 2010, but by 2021 had fallen to USD 130/kWh. Relatively low prices support the move of energy storage away from the typical uses specialized for them (e.g., grid balancing support) and offer

value-added services to market players in several areas, such as replacing off-grid diesel generators for reliability and sustainability, providing energy quality improvement services and supporting the integration of renewables into the system.

Downward Demand

In the future, chemical energy storage will allow a combination with solar energy storage, which will even be able to supply energy independently of the public grid.

As a consequence, traditional energy traders may face downward demand for electricity. Trends are significantly reshaping the functioning of the electricity system and energy markets, users’ generation and consumption patterns, and the activities of energy traders, distribution system licensees, and other non-core energy service providers.

In the new electricity market design, energy storage services should be market-based and competitive.

Consequently, cross-subsidization between energy storage and the regulated functions of distribution or transmission should be avoided.

Such restrictions on the ownership of energy storage facilities are to prevent distortion of competition, eliminate the risk of discrimination, ensure fair access to energy storage services to all market participants, and foster effective and efficient use of energy storage facilities beyond the operation of the distribution or transmission system.

With the objective of progress towards a wholly decarbonized electricity sector that is entirely free of emissions, it is necessary to make progress in seasonal energy storage. This would serve as a tool for the operation of the electricity system to allow for short-term and seasonal adjustments in order to cope with variability in the production of electricity from renewable sources and the associated contingencies in those horizons.

The emergence of household-scale energy storage will also pose new challenges. At the same time, these solutions will have significant potential to contribute to grid balancing.

www.bslaw.hu

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

News Energy

Special Report | 13

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Special Report

www.bbj.hu

Budapest Business Journal | October 7 – October 20, 2022

INSIDE VIEW

How Can Companies Consolidate Turbulent Energy Costs for 2022 and Beyond László Kenyeres

Partner

Associate

WOLF THEISS BUDAPEST

WOLF THEISS BUDAPEST

These are undoubtedly challenging times for businesses in Hungary and across the whole European continent.

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

Ádám Lukonits

Energy prices have skyrocketed due to macroeconomic and geopolitical events; the coal crises in Asia, the coronavirus pandemic, and a large number of speculative decisions from early last year are still having a negative impact on the energy market. It has never been more important to optimize energy costs than now.

Not surprisingly, photovoltaic power generation has been rising for some time. It can be implemented as a selfinvestment at the place of consumption (on-site) or elsewhere in the country using the public infrastructure (off-site).

It can be on a rooftop, ground-mounted, or some other similar installation.

It requires a one-off investment by the company suffering from the volatile market prices, while it has the advantage of being a very cheap, easyto-maintain and operate technology.

An alternative option is to use another investor’s power plant instead of investing in your own, in which case the company only has to purchase the electricity generated. Regardless of which model is applied, one thing is common: the company will have access to predictable, green electricity for a fixed or at least reasonably calculable price in the long term.

However, alongside the positives, there are some negatives to note.

Recent legislative changes made it quite challenging to secure an appropriate connection to the public grid, which is inevitable for almost every new solar investment (other than on-site power plants that do not use the public grid). Currently, those who wish to use the spare connection capacities available in the public network (i.e., not to bear the costs of upgrading the public network for access but to use already installed excess capacities) can do so following a multi-stage tender procedure with several cash deposits to be paid upfront in the aggregate amount of around EUR 10,000/MVA net installed capacity, provided that they are declared the winner of the tender at the end. But first and foremost, there must be spare capacity in the network. According to

the Hungarian system operator, there is none, and that is unlikely to change until at least 2026.

Another significant change is the requirement to develop a non-weatherdependent balancing capacity of 30% of the nominal capacity of each new weather-dependent power plant. Apart from household-scale power plants below 50 kVA, all new photovoltaic plants applying for grid connection are required to install some form of flexibility capacity to ensure the balance of the domestic electricity system. This could be battery storage, gas engines or other conventional technology, or consumer-side regulation.

Such tightening of grid connection rules could, therefore, significantly impact companies seeking a way out of the high energy prices. However, there are several other ways to cut energy costs.

Companies can enter into a corporate PPA, a long-term power purchase agreement between an operating renewable energy producer and the company, allowing the latter to purchase green electricity without the need to make any capital investment or to have a direct physical connection to the plant.

Another solution companies can benefit from is to form an energy community with other stakeholders, such as industrial facilities, municipalities, residential districts and market professionals (i.e., producers, traders, aggregators). In an energy community, they share their resources to generate, store and consume electricity, balance overproduction and overconsumption, and provide flexibility services to the network operator, thereby creating additional revenue.

The structuring, financing and implementation of photovoltaic investments, keeping up-to-date with the constant legal changes, the thoughtful negotiation of PPA contracts, and the precise regulation of the relations between the members of an energy community all require experienced legal support. We, therefore, recommend that if you or your company has energy optimization ambitions, you contact the leading legal advisors in the market.

www.wolftheiss.com

Nagy Advocates for Public Intervention in Corporate Sector to Solve Energy Crisis Minister for Economic Development Márton Nagy argued that addressing the current energy crisis requires public intervention in the corporate sector at an event organized by the American Chamber of Commerce in Hungary.

BENCE GAÁL

He told guests at Gundel Restaurant on September 22 that, due to the very challenging times, it is essential he step out and talk with companies about possible problems.

“I will spend much more time meeting with companies. My door is open to everyone,” Nagy reassured the business audience.

He argued that the foundations of the Hungarian economy are strong, but there are more asymmetries arising within the indicators, which means that the government has to be very targeted in its support.

is through comprehensive cost-based electricity pricing. He made the point that the current pricing mechanism of the European energy market is highly inefficient as it allows natural gas prices to drive electricity prices even though only about 30% of electricity production is based on it.

“Effective regulation could drive down the current price level by a fifth by creating a cost-based pricing mechanism that only allows industry the application of a fair profit,” the minister said.

Excess Profit Tax

The second proposed solution was an excess profit tax on the energy sector, which could bring about an opportunity to subsidize the energy costs of the “Effective regulation could population in need.

Nagy also blasted so-called drive down the current speculators for the volatility of the markets and the rising energy prices. price level by a fifth by He told the audience that a strict creating a cost-based regulatory framework would effectively prevent excessive speculation and pricing mechanism that restore market liquidity. only allows industry the The fourth European-level application of a fair profit.” measure supported by the minister was extending the mandate of monetary policy. Nagy called for central banks to be given the ability Nagy explained that energy prices in to influence the energy market both Europe and Asia had risen sharply, (even temporarily) by allowing especially compared with prices in the interventions in energy prices.

United States, adding that today, gas At the national level, the minister prices in America are less than a third envisioned three ways to tackle the of those in Europe. current energy crisis.

He further argued that Europe might The first was dubbed the “Great face an even harder time once the EU Reset,” essentially letting some oil embargo against Russia comes into ineffective sectors go and putting effect after December. Currently, there domestic industrial policy on is a more than a new basis.

The second approach, which Nagy tagged as “Helping Everyone,” or the spread “German Way,” is assisting all sectors between the price of Ural and Brent oil equally with a large amount of money, types, and stopping deliveries via sea which has significant budgetary might exacerbate the energy crisis on implications. The minister criticized the continent. Despite that, he noted, the German policy of distributing Hungary will keep receiving oil from aid in an untargeted way, calling it Russia thanks to an embargo exemption “helicopter money.” applied by the European Union to oil The third means, or the “Hungarian deliveries via pipeline.

Way,” as referred to by the Nagy believes there are several minister, is a targeted industrial ways to tackle the increase in energy support policy, taking into account prices at a European level. The first budgetary constraints.

USD 20

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Budapest Business Journal | October 7 – October 20, 2022

4

Special Report | 15 manufacturing SMEs with financial support when making energy efficiency investments while also considering job security aspects.

Nagy noted that supporting SMEs is vital as there is a risk that shortterm supply disruptions may negatively affect their competitiveness. In turn, the loss of export market competitiveness could also have long-term detrimental consequences.

To be eligible for the program, the main activity of the company’s operation must come from the energy sector, and its energy costs in 2021 must amount to more than 3% of sales revenue from the same year. In addition, the company is obliged to

retain

90%

None Left Behind

“We do not leave anyone behind, but at the same time, it is crucial to subsidize in a targeted manner,” Nagy told the AmCham audience.

He added that the government had identified about 24 sub-sectors where

of its Q3 2021 statistical staff headcount until Q3 2023.

The second pillar is the so-called “Factory Rescue Program,” which is still under development. Its main goal is to provide investment support for Minister for Economic Development Márton Nagy speaking the 50-100 biggest manufacturing at the AmCham forum in Gundel. Photo by Lázár Todoroff. companies, focusing on aiding their energy efficiency investments.

Nagy said that the third pillar is the the energy intensity was more than “Job Protection Program,” which will The first is an “Energy Cost and 10%. These sectors range from the become an option if unemployment Investment Endowment Program manufacturing of flat glass to the starts to rise. He noted that, in recent for Manufacturing SMEs,” which is extraction of peat. years, the most successful instruments currently in motion. The program To help companies deal with rising to tackle joblessness were tax burden aims at alleviating the financial energy costs, the government has relief, and simplified tax conditions burden of increased energy costs to envisioned three pillars of support. with benign requirements. provide energy-intensive Hungarian

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Alteo_Fenntarthatosag_252x158_EN.indd 1

2022. 10. 05. 16:26

16 | 4

Special Report

www.bbj.hu

Budapest Business Journal | October 7 – October 20, 2022

Gas Traders Rank

Ranked by total net revenue in 2021

Company WebsiTe

ToTal neT Revenue in 2021 (HuF mln)

yeaR esTablisHed

no. oF Full-Time employees on July 1, 2022

oWneRsHip (%) HunGaRian non-HunGaRian

Top loCal exeCuTive

addRess pHone email

1

mvm nexT eneRGiakeReskedelmi ZRT. www.mvmnext.hu

948,275

2019

330

MVM Energetika Zrt. (100) –

balázs Tomaj

1081 Budapest, II. János Pál pápa tér 20.

(1) 474-9999 ugyfelszolgalat@mvm.hu

2

meT maGyaRoRsZáG eneRGiakeReskedő ZRT. https://hugas.met.com

304,391

2007

55

– MET Holding AG (100)

Gergely szabó

1117 Budapest, Dombóvári út 25, (1) 464-1111 info.methu@met.com

3

audax ReneWables kFT. https://audaxrenewables.hu/

134,202

2013

193

– Audax Renovables S.A. (100)

Tibor istván Fejes

1139 Budapest, Fiastyúk utca 4–8.

(20) 459-9600 versenypiac@ audaxrenewables.hu

4

opus TiGáZ ZRT. www.tigaz.hu

39,375

1987

967

MS Energy Holding Zrt. (100) –

balázs Torda

4200 Hajdúszoboszló, Rákóczi utca 184.

(52) 558-100 titkarsag@tigaz.hu

5

pRímaeneRGia ZRT. www.primaenergia.hu

25,389

1991

270

"HO-ME 2000" Vagyonkezelő Kft. (100) –

Zoltán szirmai

1117 Budapest, Alíz utca 3.

(1) 209-9900 vevoszolgalat@primaenergia.hu

6

FlaGa HunGaRia kFT. www.flaga.hu

18,124

1990

143

– Zentraleuropa LPG Holding GmbH (100)

kinga bodó, Réka várkonyi kantiné, noémi adrienn szabó

2040 Budaörs, Puskás Tivadar utca 14.

(23) 507-600 flaga@flaga.hu

7

mvm CeeneRGy ZRT. https://ceenergy.hu/

1,587

2000

123

MVM Energetika Zrt. (100) –

lászló Zoltán Fritsch

1138 Budapest, Váci út 144-150.

(20) 597-0000 info@ceenergy.hu

A = would not disclose,

NR = not ranked, NA = not appliacable

This list was compiled from responses to questionnaires received by October 5, 2022, and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

The list is based on companies’ voluntary data submissions. 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

4

www.bbj.hu

Budapest Business Journal | October 7 – October 20, 2022

Special Report | 17

electricity Traders Ranked by total net revenue in 2021

yeaR esTablisHed

Gas

oil

Coal

emission CeRTiFiCaTe

oWneRsHip (%) HunGaRian non-HunGaRian

1

mvm paRTneR eneRGiakeReskedelmi ZRT. www.mvmp.hu

1,087,975

✓

✓

–

–

✓

2002

MVM Energetika Zrt. (100) –

kornél Czinege

1031 Budapest, Szentendrei út 207–209.

(1) 304-2000 info@mvmp.hu

2

mvm nexT eneRGiakeReskedelmi ZRT. www.mvmnext.hu

948,275

✓

–

–

–

–

2019

MVM Energetika Zrt. (100) –

balázs Tomaj

1081 Budapest, II. János Pál pápa tér 20.

(1) 474-9999 ugyfelszolgalat@mvm.hu

3

elmŰ-ÉmásZ eneRGiasZolGálTaTó ZRT. www.elmu.hu

161,263

✓

–

–

–

–

2015

E.ON Hungária Energetikai Zrt. (100) –

balázs lehoczki

1132 Budapest, Váci út 72–74.

(1) 238-1223 elmu@elmu.hu

4

audax ReneWables kFT. https://audaxrenewables.hu/

134,202

✓

–

–

–

–

2013

– Audax Renovables S.A. (100)

Tibor istván Fejes

1139 Budapest, Fiastyúk utca 4–8.

(20) 459-9600 versenypiac@ audaxrenewables.hu

5

bC-eneRGiakeReskedő kFT. www.bcenergia.com

129,250

✓

✓

–

–

–

2004

BorsodChem Zrt. (100) –

sándor varga

3700 Kazincbarcika, Bolyai tér 1.

(48) 511-816 energiaker@borsodchem.eu

6

isd poWeR kFT. www.isdpower.hu

35,756

✓

✓

–

–

–

1996

ISD DUNAFERR Zrt. (100) –

norbert siládi

2400 Dunaújváros, Vasmű tér 1–3.

(25) 584-442 isdpower1@isdpower.hu

7

budapesTi eneRGiakeReskedő kFT. www.energiakereskedo.hu

1,312

✓

–

–

–

✓

2003

Péter Takács (100) –

péter Takács

1061 Budapest, Liszt Ferenc tér 5.

(1) 240-7504 ptakacs@energiakereskedo.hu

8

alpiq eneRGy se maGyaRoRsZáGi FiókTelepe www.alpiq.hu

1,205

✓

✓

✓

✓

✓

2009

Individuals (A) Individuals (A)

Zdeněk Čihák

1085 Budapest, Kálvin tér 12.

1) 886-3400 admin.hun@alpiq.com

Rank

eleCTRiCiTy

Types oF eneRGy TRaded

Company WebsiTe

ToTal neT Revenue in 2021 (HuF mln)

Top loCal exeCuTive

addRess pHone email

18 | 4

Special Report

www.bbj.hu

Budapest Business Journal | October 7 – October 20, 2022

Fuel Retail Companies Rank

Ranked by total net revenue in 2021

Company WebsiTe

ToTal neT Revenue in 2021 (HuF mln)

yeaR esTablisHed

no. oF Full-Time employees on July 1, 2022

oWneRsHip (%) HunGaRian non-HunGaRian

Top loCal exeCuTive

addRess pHone email

2,183,827

1991

5,372

Hungarian State (25.20), other (24.50) Foreign investors (34.80), other (15.50)

Zsolt Hernádi

1117 Budapest, Október huszonharmadika utca 18.

(1) 209-0000 ugyfelszolgalat@mol.hu

10,890

– Tesco Holdings B.V. (100)

Zsolt pálinkás

2040 Budaörs, Kinizsi út 1–3.

(20) 827-0000 tescoglobalzrt@ hu.tesco-europe.com

Tibor balogh

1117 Budapest, Október huszonharmadika utca 6–10.

(1) 381-9700 info.hungary@omv.com

1

mol maGyaR olaJ- És GáZipaRi nyRT. www.mol.hu

2

TesCo-Global áRuHáZak ZRT. www.tesco.hu

3

omv HunGáRia ásványolaJ kFT. www.omv.hu

561,966

1990

60

– OMV Downstream GmbH (100)

4

auCHan maGyaRoRsZáG keReskedelmi És sZolGálTaTó kFT. www.auchan.hu

354,354

2004

6,254

– AUCHAN Retail International S.A. (A), Valhungary International SCA (A)

Gergely polgár, dominique andré ducoux

2040 Budaörs, Sport utca 2–4.

(23) 886-200 info@auchan.hu

5

sHell HunGaRy keReskedelmi ZRT. www.shell.hu

323,670

1989

94

– Shell Petroleum N.V. (100)

andrea solti istenesné

1113 Budapest, Bocskai út 134–146.

(1) 436-3200 info-hu@shell.com

6

mabanaFT HunGaRy keReskedelmi kFT. www.mabanaft.hu

78,099

2001

10

– Mabanaft GmbH & Co KG (100)

lajos alács

1016 Budapest, Mészáros utca 58/B (1) 450-2960 mabanaft@mabanaft.hu

7

lukoil lubRiCanTs euRope GmbH maGyaRoRsZáGi FiókTelepe www.lukoil.hu

34,676 (2020)

2003

2

– Oleg Tolochko (100)

Tomas Ribanszky

1138 Budapest, Népfürdő utca 22.

(1) 465-7600 Oleg.Tolochko@lukoil.com

8

mo-To '95 kFT. https://mo-to95.hu/

24,212

1995

57

Individuals (100) –

attila Hoffer, Gyula Zsolt Hoffer

9028 Győr, Őrhely út 7.

(96) 437-029 office@mo-to95.hu

9

RÜk RepÜlőTÉRi ÜZemanyaG kisZolGáló kFT. –

18,648

2005

39

Budapest Airport Zrt. (100) –

Tamás dékány

1185 Budapest, Liszt Ferenc Nemzetközi Repülőtér (1) 296-5107 companysecretary@bud.hu

10

mpH poWeR ZRT. www.mobilpetrol.hu

15,019

2009

3

Individuals (100) –

anna papp lázárné

1095 Budapest, Ipar utca 2/A (20) 400-6373 info@mobilpetrol.hu

11

J und J kFT. www.maxiline.hu

11,182

1996

82

Individuals (100) –

János pajkos

4030 Debrecen, Galamb utca 2–4.

(52) 470-519 jundj@t-online.hu

12

GRovi kFT. www.grovi.hu

9,854

1994

40

(100) –

Tibor vizler, andrea vámosi vizlerné

4300 Nyírbátor, Szentvér utca 41.

(42) 510-288 postmaster@grovi.t-online.hu

13

Full-sopRon keReskedelmi És sZolGálTaTó kFT. www.full-sopron.hu

7,499

2004

46

Individuals (100) –

Csaba bognár, péter Csapó, Csaba vasi

9330 Kapuvár, Ipartelepi út 8.

(96) 595-250 fullsopron@t-online.hu

14

enviRoCHem kFT. www.envirochem.hu

2,183

1995

6

Gábor Egri (65), Adrienne Bakos (35) –

Gábor egri

1225 Budapest, Nagytétényi út 221–225.

(1) 391-0570 mail@envirochem-ltd.com

624,526

1989

4

www.bbj.hu

Budapest Business Journal | October 7 – October 20, 2022

Special Report | 19

universal electricity providers Rank

Ranked by total net revenue in 2021

Company WebsiTe

ToTal neT Revenue in 2021 (HuF mln)

yeaR esTablisHed

no. oF Full-Time employees on July 1, 2022

oWneRsHip (%) HunGaRian non-HunGaRian

Top loCal exeCuTive

addRess pHone email

1

mvm nexT eneRGiakeReskedelmi ZRT. www.mvmnext.hu

948,275

2019

330

MVM Energetika Zrt. (100) –

balázs Tomaj

1081 Budapest, II. János Pál pápa tér 20.

(1) 474-9999 ugyfelszolgalat@mvm.hu

2

elmŰ-ÉmásZ eneRGiakeReskedő kFT. www.elmu-emasz.hu

236,393

2002

18

E.ON Hungária Energetikai Zrt. (100) –

balázs lehoczki

1132 Budapest, Váci út 72–74.

(1) 238-1150 kapcsolat@elmu-emasz.hu

3

elmŰ-ÉmásZ eneRGiasZolGálTaTó ZRT. www.elmu.hu

161,263

2015

A

E.ON Hungária Energetikai Zrt. (100) –

balázs lehoczki

1132 Budapest, Váci út 72–74.

(1) 238-1223 elmu@elmu.hu

4

audax ReneWables kFT. https://audaxrenewables.hu/

193

– Audax Renovables S.A. (100)

Tibor istván Fejes

1139 Budapest, Fiastyúk utca 4–8.

(20) 459-9600 versenypiac@ audaxrenewables.hu

134,202

2013

universal Gas providers Rank

Ranked by total net revenue in 2021

Company WebsiTe

ToTal neT Revenue in 2021 (HuF mln)

yeaR esTablisHed

no. oF Full-Time employees on July 1, 2022

oWneRsHip (%) HunGaRian non-HunGaRian

Top loCal exeCuTive

addRess pHone email

1

mvm nexT eneRGiakeReskedelmi ZRT. www.mvmnext.hu

948,275

2019

330

MVM Energetika Zrt. (100) –

balázs Tomaj

1081 Budapest, II. János Pál pápa tér 20.

(1) 474-9999 ugyfelszolgalat@mvm.hu

2

alpiq Csepel kFT. www.csepel.alpiq.hu

67,925

2001

A

– Alpiq AG (100)

Gábor briglovics, Csaba varga, balázs bene

1085 Budapest, Kálvin tér 12.

(1) 429-1030 info.csepel@alpiq.com

3

opus TiGáZ ZRT. www.tigaz.hu

39,375

1987

967

MS Energy Holding Zrt. (100) –

balázs Torda

4200 Hajdúszoboszló, Rákóczi utca 184.

(52) 558-100 titkarsag@tigaz.hu

4

isd poWeR kFT. www.isdpower.hu

35,756

1996

289

ISD DUNAFERR Zrt. (100) –

norbert siládi

2400 Dunaújváros, Vasmű tér 1–3.

(25) 584-442 isdpower1@isdpower.hu

5

oeRG óZdi eneRGiasZolGálTaTó És keReskedelmi kFT. www.oerg.hu

127

1993

21

Ózd Industrial Park Kft. (A), Fémiksz Kft. (A) –

imre kovács, péter miksztaj

3600 Ózd, Gyár út 1.

(48) 574-399 oerg@oerg.hu

5

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Budapest Business Journal | October 7 – October 20, 2022

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are finding space in Districts IX and X, leading to intriguing galleries, cafés, restaurants and bars opening in those areas.

As Jopp says, the best way to find out what’s going on is to walk around those districts or hop on a bicycle.

‘The Eastern Beat’ and Budapest’s Art Scene Back in 1989, after communism collapsed, Budapest was a paradise for expat artists trying to survive on a shoestring. I’ve long been fascinated by those fabled times.

It feels a little like I missed the best of the city when it was 1920s Paris, 1930s Berlin, and 1970s New York, fueled by pálinka and mayhem.

artists living, working and creating in Budapest. She talks to them about their work, inspiration and plans for the future, as well as what makes the city special, how it’s different from DAVID HOLZER other places, and how they pursue their careers as expat artists.

So, on my mooches around Budapest, She aims to create a network of I’m constantly living in the hope expat artists that allow and encourage that I’ll one day stumble across the connection within the local art scene by most perfectly wild and funky artists’ expanding the community and helping bar. I haven’t found it yet, but I have to tell their stories. discovered “The Eastern Beat” blog The blog is illustrated with Jopp’s own and spoken to its creator, editor, and moody monochrome photos of the artists writer Anna Jopp. and comes across as appropriately gritty Jopp established “The Eastern Beat” and low-key. in 2020 to feature stories of expat Currently, the featured artists are the Vietnamese Tra Nguyen, specializing in media art and design, and painter and illustrator Marcus Goldson.

Nguyen moved to Budapest in 2018 when she began a Ph.D. program in the city. She’s clear-eyed about the challenges facing Hungarian and expat artists in the city, saying, “People who create contemporary art are still struggling and often need to move away from Hungary to practice their way. I see even Hungarian artists struggle a lot to find their own place, so it’s much harder for foreigners.”

Goldson came here with his Hungarian wife, Ildikó, in 1993 and has been living in the city ever since.

“I really enjoyed living here from the beginning,” he tells Jopp. “It was something new, something exotic.”

His caricatural drawings have, to me, something of the grotesque energy of George Grosz, whose subject Marcus Goldson. was Berlin life in the 1930s, but Photo by Anna Jopp. without Grosz’s satirical savagery.

Anna Jopp

Go Walkabout

Asked by Jopp what advice he’d give anyone coming to Budapest for the first time, Goldson says, “I would say walk a lot; you can discover a lot more than when taking public transportation and the real feeling of the city.”

I quite agree.

Jopp, who is Polish, came to Budapest around nine years ago. Asking people if she could take their photo was a way to break the ice. She started the Eastern Beat in 2019 because she wanted to get the perspective of other expat artists, to get answers to challenges she faced, including being unable to speak Hungarian.

“I wanted to find out from other artists what brought them to Budapest and how they managed to keep doing art while living here. I particularly wanted to speak to people who are working with Hungarians and somehow are being part of the scene,” she tells me.

When it comes to meeting people, Jopp has her camera as a conversation starter. From there, she tends to find that each expat has a network and everyone in that network has their own, making it possible to meet more and more artists.

Jopp goes to events like open mic nights, where many expat musicians meet. These mainly happen in District VII. She is also active on various Facebook groups dedicated to art in Budapest. She suggests heading for Gólya, Lumen, Dürer Kert, Manyi, Bem Mozi, Lámpás, and Kisüzem.

But, as is inevitably the case with art in cities, Budapest’s creative scene constantly shifts geographically. Artists

The Budapest Question

Why artists come to Budapest, when the language is so difficult, is the big question.

“Everybody says it’s the vibe of the city,” Jopp says. “It’s physically beautiful, open and easy-going because the art scene is not as big and established as it is in, say, London or Berlin. Some people say the vibe is like Berlin, maybe 15 or 20 years ago when there were so many things to discover and do, and the scene was not so full of newcomers. It’s also not as competitive as these cities.”

The infrastructure for the arts is good, especially film, and there’s plenty of the affordable space artists need, from studios for visual artists to rehearsal spaces and music studios.

“I wanted to find out from other artists what brought them to Budapest and how they managed to keep doing art while living here.

I particularly wanted to speak to people who are working with Hungarians and somehow are being part of the scene.”

Space is one thing, but what about getting connected to sources of funding?

“For visual artists who have been here for many years and made lots of connections, it’s easier to find people to buy your art and to hear about state funding. Otherwise, it’s difficult. Many of the people I talk to sell their art online and overseas,” Jopp explains.

“Having said that, there are plenty of galleries, and many of them are open to working with foreigners. There are also more events than there were when I first arrived. For example, there’s the regular Maker’s Market, Ukmukfukk Zine Festival, Art Market Budapest and the Budapest Photography Festival. You just need to keep moving and not give up.”

The Eastern Beat is at www.theeasternbeat.com.

Jopp suggests you look for local visual artists Zoltán Tombor, Miklós Kiss, and Dia Zékány and expats Manuel Contreras, Christina Golovatic and Marcus Goldson. For Hungarian music, check out Gentry Sultan, Deva and NovaN and, for expats, Arif Erdem Ocak with Nasip Kismet band and Arrasta Pest.

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Budapest Business Journal | October 7 – October 20, 2022

Veszprém Gears up for Year as European Capital of Culture Frustrated drivers in Veszprém have been complaining for months about a surfeit of roadworks impeding their passage, primarily due to the city preparing to become the European Capital of Culture next year. But the pain will be worth it, says Mayor Gyula Porga.

KESTER EDDY

Veszprém, a city with a population of just 60,000, 120 km southwest of Budapest, may not seem an obvious choice as the European Capital of Culture. Yet, it defeated two far larger and arguably better-endowed rivals, Győr in the west and Debrecen in the east, in the final round of the competition in 2018.

“We worked very hard for this. As you may know, it’s only a single city that can apply for the ECoC title, but it was important for Veszprém and me personally to include the BalatonBakony region, the surrounding towns and villages in the application, as they face similar problems as us here. The international judging committee really liked this idea of inclusion,” Porga told international journalists at the end of September.

The outcome of this effort is that the city is now in partnership with more than 120 municipalities in the program.

Populations vary from villages of a few hundred to 20,000-30,000 in towns such as Balatonfüred, Várpalota and Ajka.

As a result, to better reflect the project’s aims, its official name is the Veszprém-Balaton 2023 European Capital of Culture (VEB2023 ECoC).

“This was not some [marketing] trick; this was genuine. I believe we are stronger when we are together,” the mayor stressed, although he admits that managing the hopes and aspirations of so many different localities is not always easy.

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of supply, though necessarily based on seasonality, which, as Tungli puts it, is “the new keyword for both bistro food and fine-dining experiences.”

Infrastructure Investments

However, despite the efforts to disperse events, it is still Veszprém that will host the biggest shows and experience the greatest number of infrastructure developments. Indeed, it is home to 49 of the grand total of 68 construction projects being undertaken to prepare for the Cultural Capital year.

In terms of value, the city will benefit from an even larger slice of investment, taking EUR 103 million of the total of EUR 111 mln allocated for developments, according to data from Veszprém 2030, the municipality’s own company responsible for infrastructure development. The Veszprém, the administration center of the eponymous surrounding county, was once home to Queen Gizella, wife of Saint King István I. Next year, it will be the Cultural Capital of Europe.

Despite COVID and the war in Ukraine, preparations are well underway. Photo by Geza Kurka Photo Video / Shutterstock.com Especially since Porga also stresses that 2023 is not to be “all about headlining stars and massive events throughout the year.” Veszprém, along with the surrounding region, has to cope with the combined effects of aging populations and youth emigration.

Thus, for the mayor, it is vital that the ECoC year is “no flash in the pan,” that events reach people in even the smallest communities and that the infrastructure improvements are widespread and sustainable.

“It was important in the bidding process to outline what challenges the city and region were facing, culturally and infrastructurally, and how, if we won the title, the city would use the cultural program to implement solutions to these challenges,” Porga says.

Events Galore

In terms of cultural programs, the ECoC project is supporting a plethora of events ranging from “traditional” concerts (be they folk, classical or contemporary), artist days and book readings to more “off-the-wall” happenings, such as “joy drumming,”

where local specialist Dániel Franczia teaches groups of beginners the fun of how to conduct a drum orchestra.

This is not to omit wine and gastronomy, an area of vital interest to the Balaton region, which has been developing its range and quality of wines over the last

30 years

in a process that has arguably been overshadowed by similar trends in more famous wine districts, such as Tokaj and Villany.

Péter Tungli, program director at Balaton Wine&Gourmet, which is managing the principal events in this segment for ECoC, is keen to promote the importance of the local viniculture industry.

“There are six different wine regions around Balaton, all with different terroirs and grape varieties, including some indigenous vines not to be found anywhere else,” he says.

Local gastronomy is mainly focused on fish from the lake and game from the Bakony forests. These resources, he maintains, represent a sustainable chain

Making Roman Remains Available to the Masses This year, fall has come early at Baláca, a lonely, windswept site 10 kilometers south of Veszprem, somewhat shielded from the gusts by the surrounding trees. It was, maybe, on such a day when, in 1904, a plowman preparing the soil here unearthed the stones of what later transpired to be the most extensive remains of a Roman farm in Pannonia.

Perhaps this should be better described as a Roman agricultural complex. For almost 120 years later, after much painstaking, on-off work

by dedicated archeologists, visitors can view the intricate yet massive 62 sqm stone mosaic and other impressive technical developments, such as underfloor heating, all associated with the lifestyles of the local “super rich” two millennia past.

Though the site is hardly the proverbial “hidden gem” of the tourist guide book (being well advertised in local tourism circles), the ECoC team believes the 2023 cultural program will boost visitor numbers to Baláca and scores of other lesser-known attractions

EURrenovation 26 mln

of the former children’s hospital, which had been derelict for two decades after the change of system, is “the flagship project” in the investment package, says Péter Lamos, chief executive of Veszprém 2030. This downtown building will open next spring as a center for movement-related arts, redesigned to host activities from folk dancing and ballet to wall climbing.

But perhaps the most intriguing development is the conversion of part of the former city prison, in the castle district, into a museum. This will not, as ECoC press officer Mihály Müller is quick to point out, focus on torture or cruel methods of correction but rather document the history of the sociological background to criminality and the rehabilitation of convicts.

“It will not be about torture; it’s not to frighten people with how prisoners were torn apart, because you can see that in many places. The message behind the new museum is completely different,” he insists.

Inevitably, some Veszprém drivers consider the current traffic jams a form of modern torture brought on by the Cultural Capital project. But when asked if the city could have attracted the EUR 103 mln in investment (primarily provided by state funding) if it had not won the hosting rights, the response of Veszprém 2030’s Lamos was straight and to the point: “Not a chance,” he said.

across the region, especially with marketing programs now being carefully prepared.

The management team at Baláca is certainly readying itself for an influx of guests, with a particular emphasis on enabling children to understand life and its challenges all those centuries ago.

“The kids love the virtual reality tour we’ve installed. It brings [the ruins] to life. We have to limit their time on this, or only a few would be able to experience it when visiting,” says Adrienn Pálinkás, cultural manager at the National Institute of Archaeology.

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Kempinski Corvinus Budapest Celebrates 30th Anniversary The Kempinski Hotel Corvinus Budapest marked the 30th anniversary of its opening with a party for partners on September 29, showcasing 30 years of culture and gastronomy.

Aliz (left) and Edit Nyári sing “Happy Birthday” by the anniversary cake.

BBJ STAFF

Among other things, the party featured a concert by Károly Nyári, the Budapest Jazz Symphonic Orchestra that he founded in 2016, his daughters Aliz and Edit, and his son Károly Nyári Jr. The musician, who built his career for 14 years in the Netherlands before returning to Hungary, started out as the pianist and singer at the Kempinski Bar for seven years, playing from 10 p.m to 2 a.m. six days a week, during which time he performed with the likes of Michael Jackson and Robbie Williams Other attractions at the party included carving stations throughout the hotel’s Infinity Room event venue, a live

presentation of carving a whole tuna, and, of course, a giant birthday cake.

The Kempinski Corvinus was the city’s first purpose-built joint-venture fivestar hotel after the political changes and officially opened its doors on September 11, 1992. The exact date of the hotel’s anniversary was marked with a staff brunch outside Budapest.

Second Home

“I have managed this wonderful hotel for 15 years out of the past 30 of its operation,” said Stephan Interthal, the popular general manager of the hotel, speaking at the party.

“Budapest, which is my second home by now, became a cosmopolitan metropolis before my eyes. In 1997, when I arrived for the first time, the city was very different, and today, Budapest surpasses several famous capitals in many aspects.

I would like to thank all those who have accompanied and supported us over the years: our owners, Kempinski Hotels, partners, guests, colleagues and friends,” he added. “I have a big place in my heart for Hungarians, their kindness and hospitality.”

The hotel is well known for its professionally curated Corvinus Art Collection, and party guests were presented with a copy of the recently

published booklet “Storytelling Suites.”

Five leading Hungarian writers were invited to spend a night in the Art Collection Suites and write a short story inspired by the rooms and the works of art there.

The hotel is also inviting travelers from around the world to join the celebrations by booking the “30 Years Kempinski Budapest Anniversary Package,” valid until December 29, which includes, among other things, a lavish buffet breakfast, an anniversary cocktail, and a 25% discount on fully flexible rates when staying for a minimum of three nights or more.

This year sees another significant milestone for the parent Kempinski Hotels group, which is also celebrating its 125th birthday.

Károly Nyári performs with his Budapest Jazz Symphonic Orchestra.

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Refreshing Fusions, Established Legends, New Works: Jazz Concerts at the Liszt Fest In addition to classical and world music, dance, literature and theater, the Liszt Fest International Cultural Festival also offers an exceptionally diverse range of jazz: the program, which starts on October 7, will feature a selection of some of the most sought-after artists from the Hungarian and international music scene.

Concerts by the Modern Art Orchestra, Sherry Williams, Ravi Coltrane, the Jazzical Trio with Erika Miklósa, and Vincent Peirani prove that the genre is alive and well and continues to inspire artists around the world to endless creativity and imaginative collaborations.

The opening concert of the series will already exemplify how different genres can coexist: the Modern Art Orchestra, led

by Kornél Fekete-Kovács, will perform an arrangement of Liszt’s “Via Crucis” in the grand space of St Stephen’s Basilica. This unique event will feature such greats of jazz

From left: Kornél Fekete-Kovács, Sherry Williams, Ravi Coltrane. and classical music as the brilliant American singer Sherry Williams, the great Hungarian soprano Lilla Horti, the composer and organist András Gábor Virágh, and New York organist Brian Charette, who is considered one of the leading figures of modern jazz.

Kornél Fekete-Kovács is also responsible for another significant concert during the festival, “Senza Nome,” held at the Béla Bartók National Concert Hall and featuring the composer and trumpet player’s award-winning work for jazz quintet and orchestra. The performers are great soloists of the Hungarian and international jazz scene, Róbert Szakcsi Lakatos, József Barcza Horváth and Ferenc Németh, as well as Alex Sipiagin on flugelhorn and trumpet, tenor saxophonist Rick Margitza and the Hungarian Radio Symphony Orchestra.

The Jazzical Trio and world-famous soprano Erika Miklósa will perform a singular program of songs: folk arrangements by Hungarian giants Liszt, Kodály, and Bartók, and the compositions of the four-time Oscarwinning German-American composer André Previn get the jazz treatment through the transcriptions of pianist Norbert Káel, a graduate of Boston’s Berklee College of Music.

Along with the permanent members of the trio, Péter Oláh on double bass, András “Pecek” Lakatos on drums, and cellist Miron Kovács will also take to the stage.

The eminent American saxophonist, bandleader and composer Ravi Coltrane will be performing at the Béla Bartók National Concert Hall; although he is named after world-famous musicians, it is thanks to his own

unique voice and unquestionable talent that he has made his mark on modern jazz history.

He comes with a personal program: instead of his own compositions, he will pay tribute to the memory and unforgettable musical legacy of his parents, John and Alice Coltrane, with a full-length show for the first time in his career. His outstanding partners will be bassist Rashaan Carter, also from a family of musicians, virtuoso Israeli pianist Gadi Lehavi, and Northern California drummer Elé Howell.

Even those less attracted to classical jazz will have no problem falling for the enviably easy-going, playful, lively, pop-infused songs of French accordionist Vincent Peirani and his bandmates, Italian guitarist Federico Casagrande and New York-based Israeli drummer Ziv Ravitz. Together, they perform tunes that now sway, now run like a torrent.

“Jokers,” the band’s latest album, which also provides the program for the concert at the Budapest Music Center, contains unique arrangements of hits by artists such as Nine Inch Nails, Marilyn Manson and Bishop Briggs, the latter of whom is featured with “River,” a song that has had a fantastic run on TikTok.

For more information on the program and events of the Liszt Fest International Cultural Festival, which runs for 16 days from October 7, visit the website lisztfest.hu. You can also find exclusive content, thematic reads, playlists and interesting news on the festival’s official blog at https://lisztunnep.blog.hu/.

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Photo by Richard Semik / Shutterstock.com

Sweet Sensations Dominate the Top 100 Best Wines The 2022 edition of Winelovers 100 legjobb Magyar Bor (100 Best Hungarian Wines) saw the top 20 almost totally dominated by sweet wine, particularly

by Tokaj’s botrytized offerings.

ROBERT SMYTH

This comes as no surprise as Tokaj Aszú is unquestionably among the world’s finest desert wines, if not sitting at the very top of the pile. In 2022, a solitary red wine broke the otherwise sweet monopoly on the top 20.

While the 2021 listing represented something of a sea change compared to previous editions with lots of reds and several dry whites among the crème de la crème (although numbers one and two were still Aszús), 2022 is a case of regular service resumed.

Indeed, back in 2020, positions 1-15 were all taken up by Tokaj’s botrytized wines, which took in different styles of Tokaj’s sweet.

The competition pits Hungarian wines that have reached the podium in leading foreign wine competitions and a few domestic events against each other. This year’s overall winner is much sweeter than Tokaji Aszú or any other of the famous wine region’s concoctions.

The winner was the Tolcsva winery Pauleczki-Vin’s Eszencia 1968. There’s an argument that at

around

3%

of alcohol, it’s not really a wine at all and that with residual sugar in excess of 450 grams per liter, its blows other botrytized wines like Aszú out of the water. But that is the context of judging in a blind tasting as the Winelovers 100 is.

Nevertheless, the fact that this wine comes from the 1968 vintage shows how well this sumptuous stuff can age.

Eszencia is made solely from the freerun juice of botrytized aszú grapes pressed under their own weight.

The must is fermented and aged in glass carboys (a rigid container). The yeast cannot survive for long in this sugar-rich environment, leaving the finished “wine” with a very low alcohol level. However, it comes at a price: EUR 295 from tokaji.com, in this case.

Runners Up

The second-, third-, and fourth-placed offerings were all six puttonyos Tokaji aszú wines. Here, the aszú berries are macerated in a base wine, with residual sugar in excess of 150 grams per liter. That’s still sweet, but nowhere near the Eszencia.

These wines were from Holdvölgy (Mád), Breitenbach Pince (Bodrogkisfalud), and Pelle Pince (Mád), respectively. Breitenbach also impressed with a dry version of Kövérszőlő that placed 35th. This is one of the permitted varieties in Tokaj and can be translated literally as the “fat grape.”

It is believed to have originated from Transylvania, is known as Grasă in Romania, and provides the unctuous base for the Cotnari sweet wines of Moldavia. These wines were once immensely popular among northern Europe’s elite and rivaled Tokaji Aszú.

The highest placed dry white was not a Furmint from Tokaj but a Juhfark from Somló: Kancellár Birtok’s 2018.

The next highest dry white was indeed a Furmint from Tokaj: Holdvölgy’s Intuition No. 3 Furmint T8/7575 2018.

A sweet wine from Badacsony and the Zeusz grape broke the Tokaj stronghold on the top places, with Szeremley’s 2005 Zeusz coming in fifth place. Huba Szeremley, who passed away at the age

Ferenc Király in 1951 when he crossed Bouvier and Ezerjó. It has two siblings: Zenit and Zengő.

Though the grapes varieties have the same parents and can have some characteristics in common, they are not, in most cases, identical, just like the offspring of two people. A fourth ‘Z’ is Zefír, a cross with Hárslevelű, also created in 1951 by Király.

Zeusz Successes

The Zeusz grape’s success was no flash in the pan this year, with Feind’s Choice 2018, from the BalatonfüredCsopak region, coming in seventh. The other exception among the sweet wines was an ice wine ( jégbor in Hungarian), which is very rare in Hungary, from the Varga Pincészet in Badacsony. It was placed in 16th and was also from the Zeusz variety.

The only dry wine to crack the top 10 was Eszterbauer Borászat’s Szekszárd Grand 2017. This blend of Kékfrankos, Merlot, Cabernet Sauvignon, and Cabernet Franc is incredibly complex, earthy and elegant, with silky tannins.

The 25% of Kékfrankos (the minimum amount to be classified as a Szekszárd Grand) brings both a local touch and takes a little of the weight out of the Bordeaux varieties to leave a superbly of smooth, sophisticated wine with fantastic drinkability.

This wine had earlier taken home gold last year, was the modern region’s medals from the international Grand pioneer. His son László is now at the helm. Prix Vinex in the Czech Republic and The grape variety is named after VinAgora in Hungary, as well as in the the Greek god of the sky, thunder, Szekszárd wine region, and costs HUF and weather and was created by 22,000 from eszterbauer-bor.hu.

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The next red on the list was the 23rd placed Maul Zsolt Pincészet’s Prémium Winery Lator 2018, a densely structured Villányi Franc (as Cabernet Franc is known in Villány) that costs HUF 9,500 from www.maul.hu.

That was followed in 24th place by another Szekszárd red offering, Vesztergombi’s Alpha 2017, a nicely crafted blend of Merlot, Cabernet Sauvignon, Cabernet Franc, and Syrah, which spent

24

months

in 300-liter barrels. It has tasty tobacco notes to accompany its deliciously vibrant red and black fruit and can be picked up for HUF 14,000 from borkereskedes.hu.

Incidentally, several red winemakers I talked to express the opinion that the Top 100 should be split into different categories, although the accompanying publication does include sub-listings of the best wines in separate categories.

The wines were tasted blind over two days by a Hungarian and international jury comprising several Masters of Wine and myself.

What a change a couple of weeks can make in the world of wine. As the crowd reveled at the Winelovers 100 Grand Tasting, held at the Corinthia Hotel Budapest on September 17, the weather was turning. Zeus was doing his stuff, the heavens opened, and the rain kept falling until the end of September, causing concern for the grapes left out on the vines – especially in Tokaj, where the thinskinned Furmint has been quite impacted.