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No. 026 / 17th March 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter
MANUFACTURING & PROCESSING January PMI reading highest in three years, says HSBC page 3 Kulczyk bids on Ciech but observers say the billionaire may need to sweeten his offer page 3 BANKING & FINANCE Talanx to complete Warsaw listing by July page 4
Poznań City Center combines a large retail center,with a train & bus station.
Photo: Bose Architects
ECE & Resolution buy new Poznań mall
Germany's ECE and UK's Resolution Property have acquired the newly completed Poznań City Center shopping mall in what is likely to be one of the largest deals on the Polish investment market in 2014. ECE is also about to break ground on a large retail project in Bydgoszcz, company representatives said. page 12
Scania downsizes Słupsk factory
Faced with dwindling demand for its Omni city bus range, Sweden's Scania has decided to cut workforce at its Polish factory in Słupsk from 500 to 300 employees. page 2
PROPERTY & CONSTRUCTION Warburg-Henderson teams up with Palmer Capital on new retail property fund for CEE page 4 New project to create 20,000 sq.m of office space in Gdynia page 6 TRANSPORT & LOGISTICS Goodman inks huge BTS deal with the Mousquetaires Group in Poznań page 7 Regional airports seek more public handouts as budget carriers trim routes page 8
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SERVICES & BPO Owen-Illinois to shift European back office operations to Poznań page 10 Work Service teams up with Fiege's staffing unit in Germany page 10 TRAVEL & LEISURE Slovakia's TMR acquires Polish ski resort in Szczyrk page 11 CONSUMER GOODS & RETAIL Leroy Merlin and OBI are potential buyers for DIY chains Praktiker and NOMI page 13 IT & TELECOM Alcatel-Lucent sees opportunity in Polish broadband roll-out page 14 POLITICS & ECONOMY Consumer inflation at 0.7% in February page 14 KEY FIGURES Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 15-17
Conference:
Primetime Warsaw II Developing a sustainable European metropolis 3 April 2014, Conference Center Muranów, The Museum of the History of Polish Jews
Building on the success of our first conference about Poland's capital, we bring you all the major issues and opportunities, in Central Europe's pre-eminent city.
Lead Speakers:
Elżbieta Bieńkowska, Deputy Prime Minister & Minister of Infrastructure and Development • Keynote: Hanna Gronkiewicz-Waltz, Mayor of the City of Warsaw • Professor P rofessor Sven Bienert, MRICS, Professor of Sustainable Real Estate at the University of Regensburg and • ULI Sustainability Fellow (Europe’s leading expert in the financial implications of sustainable development) Topics:
Single ticket price: 1,150 PLN Early bird registration: 950 PLN
and Social Challenges for Warsaw within the new European Funds Perspective 2014-2020 • Infrastructural Wola & Praga: two of Warsaw’s most dynamic districts, soon to be joined by the 2nd metro line • Cutting away the ‘green’ what are the financial results and implications of sustainable development? • Can Warsaw come up withPRafluff: comprehensive • Trends & issues in the office and retail sectors‘high street retail’ plan? • The art of Placemaking: creating attractive public spaces in and around commercial properties •
(till March 17th)
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weekly newsletter # 026 / 17th March 2014 / page 2
MANUFACTURING & PROCESSING
Scania to sack 200 staff at Słupsk bus plant, as its rivals boost sales Swedish bus manufacturer Scania is embarking on a major cost-cutting program that will see 200 jobs lost in Słupsk, Poland and 50 at Scania's head office in Södertälje, Sweden. According to the company, the planned employment reductions are to generate annual savings of approximately SEK 70m (EUR 7.9m). Talks with trade unions are underway, Scania said.
as related administration. The 200 redundancies in Słupsk, where the Swedish bus manufacturer currently employs 500 staff, will affect both blue collar and white collar employees. Owing to several years of volatile demand for fully-built city buses, Scania has tried different approaches, in cooperation with local trade unions, with the aim of retaining employees at the production unit in Słupsk, which turned out merely 96 buses last year, down from 341 in 2012 and 500 in 2011.
of votes 88% at Scania. Incidentally, MAN's bus factory in Poland turned out 1,512 vehicles last year, up from 1,343 in 2012.
"Due to intensified competition and increased price pressure, we now have to adjust staffing to lower levels. This has not been an easy decision to take, but unfortunately it is necessary for our long-term survival as a bus and coach bodybuilder here in Słupsk," says Peter Björk, Head of Scania Production Słupsk.
"Scania's restructuring of the industrial operations in Poland is made due to overcapacity and the need of making the Scania Omni range competitive – and profitable. Scania had to make about 120 people in Słupsk redundant already back in 2012 due to lower demand. As the order situation hasn't improved but worsened since then, Scania unfortunately has to make further staff reductions."
Polish bus production up 4% in 2013
Sales & production pick up in 2013
Leading makers & bus output figures
Source: JMK Analizy Rynku Autobusow
With skilled labor at a fraction of the Western European costs, Poland has emerged as one of Europe's key bus exporters over the past decade, thanks to investors from Germany (MAN) and Sweden (Volvo & Scania), as well as the domestic player Solaris Bus & Coach. In 2001 Polish factories exported merely 373 buses, but in little more than a decade the figure grew nearly tenfold, making Poland number three in Europe after Germany and Sweden.
Scania is one of the world’s leading manufacturers of trucks and buses for heavy transport applications, and of industrial and marine engines. Employing some 41,000 people, the company operates in about 100 countries. Research and development activities are concentrated in Sweden, while production takes place in Europe and South America. In 2013, net sales totaled SEK 86.8bn (EUR 9.8bn) and net income amounted to SEK 6.2bn (EUR 0.7bn). The Swedish company belongs to Germany's Volkswagen AG and its truck & bus unit MAN, which together control over
After reaching its lowest level in more than five years in 2012 (3,560 units), Poland's bust production bottomed out last year and topped 3,715 vehicles (+4.3% y/y), of which 3,303 were exported, mainly to Germany, Sweden, and Norway according to market researcher JMK Analizy Rynku Transportowego. The two key categories were city buses (3,025 units; +10.6% y/y) and long-distance buses (543; +10.6% y/y). With 1,512 vehicles completed last year Germany's MAN remains the leading bus producer and exporter in Poland, followed by Polish Solaris (1,229), Volvo
Maker
2013 Units
Units
Share
Units
Units
1,512
40.7%
1,343
37.7%
1,566
33.8%
1,229
33.1%
942
26.5%
1,140
24.6%
Volvo
699
18.8%
699
19.6%
922
19.9%
96
2.6%
341
9.6%
500
10.8%
TOTAL
Sales of Scania's Citywide model, made in Słupsk, have declined since the record years 2010 and 2011, when more than 600 units were delivered to public transport systems in Sweden, the Netherlands and the United Kingdom, among other countries. The structural changes will involve research and development, purchasing and direct production of city buses as well
Share
2011
Solaris
Other
press European buyers, forcing the Swedish company to make some tough decisions. Image: Scania
2012
MAN
Scania
Scania Citywide made in Słupsk, has failed to im-
Poland Today asked Scania's whether the Słupsk restructuring should be viewed as part of as broader capacity realignment within the VW-MAN-Scania group, but spokesman Hans-Åke Danielsson denies that is the case:
179
4.8%
235
6.6%
504
10.9%
3,715
100.0%
3,560
100.0%
4,632
100.0%
weekly newsletter # 026 / 17th March 2014 / page 3
(699), and Scania (96). In addition to complete buses, Polish factories made 700 chassis and 250 bus bodies as well as 75 trolleybuses.
Shrinking domestic bus sales Buses made in Poland: domestic sales vs. exports Exports
HSBC and Markit Economics in a press release. The PMI figure has remained over the 50 points benchmark that separates expansion from contraction for the past eight months, signaling improving conditions in the country’s manufacturing sector. The biggest improvement last month was seen in new orders, which grew at the fastest pace since April 2004. This growth was generated by both domestic and export demand. Foreign demand grew at the second-fastest rate in more than three years, HSBC said.
Domestic sales
5,000 4,000 3,000 2,000
Purchasing Managers' Index (PMI)
1,000
The 50 mark separates growth from contraction
0 2007
2008
2009
2010
2011
2012
2013
60 Source: JMK Analizy Rynku Autobusow
Domestic carriers purchased 1,389 buses last year, marking an 8.6% improvement over 2012. The number one seller in Poland was Mercedes Benz with 542 vehicles registered in 2013 (including bodies from other manufacturers mounted on Mercedes chassis), marking a 19.6% increase against 2012. Polish Solaris came second with 318 units (+23.7%), followed by MAN (63) and Autosan (62). The latter, one of Poland's oldest companies, has been in receivership since October last year.
MANUFACTURING & PROCESSING
PMI reading best in three years, HSBC says The Poland Manufacturing PMI index grew to 55.9 points in February compared to 55.4 in January 2013, reaching the highest level since December 2010, said
55
50
45 Dec 12 Feb 13
A pr 13
Jun 13
Aug 13
Oct 13
Dec 13
Feb 14
Source: Markit & HSBC
"The PMI survey remains in line with our 2014 macro outlook. This assumes a further pick-up in GDP growth through 2014 with limited inflationary pressure and CPI staying below the 2.5% central bank target," CEE economist at HSBC Agata Urbańska-Giner was quoted as saying. "The record high rate of job creation in January is a particularly positive indicator, implying stability of the current improvement. The above-expectation PMI reading will also fit in with recent upbeat comments from policy makers, including several MPC members, on a positive GDP growth outlook. For the time being improving manufacturing activity does not lift inflationary pressure. Input prices
rose marginally in January while output prices fell for the fourteenth month in a row," she added.
MANUFACTURING & PROCESSING
Kulczyk bids on Ciech but observers say the billionaire may need to sweeten his offer Polish billionaire Jan Kulczyk has placed an unexpected bid on Polish chemical producer Ciech, in which the government maintains a substantial minority stake. Kulczyk Investments, via its subsidiary KI Chemistry, seeks to acquire 66% of Ciech, offering PLN 29.5 per share. The bid was lower than the prior day's closing price of PLN 32.5, and much below average projections of analysts, some of whom expect Ciech's share price to climb to PLN 40 over several months, on the back of its ongoing restructuring and assets sell-off. "We are confident that thanks to Ciech's global expansion we will be able to significantly increase the company's value, to the benefit of all shareholders," commented Sebastian Kulczyk, who has recently taken over management of the company from his father Jan. Kulczyk's buyout bid cannot succeed without at least a partial participation from the Ministry of Treasury, which holds a 39% stake in Ciech. Although the government is hard-pressed for cash, it is unlikely to accept the investor's offer unless Kulczyk decides to sweeten the pie. "Ciech is earmarked for privatization. The Treasury is pleased to see investor interest in the company and will take KI Chemistry's offer into consideration," the
weekly newsletter # 026 / 17th March 2014 / page 4
ministry said in a communiqué distributed to the media.
in Poland the opportunity to buy Talanx shares directly in Poland, not in Frankfurt or Hannover, Germany).
Ciech is one of Poland's leading chemical companies with a stock market capitalization of more than PLN 1.7bn. The group includes more than 30 companies that produce, among other, soda ash (Ciech is its number two supplier in Europe), sodium bicarbonate, salt, fertilizers, crop protection chemicals, epoxy, polyester resins and other organic chemical products that are used in glass, furniture, chemical, construction industries and agriculture. Besides several production units in Poland, Ciech owns factories in Romania and Germany.
Two years ago Talanx International and its Japanese partner Meiji Yasuda entered the Polish market with a splash by acquiring two of Poland's top insurers, Warta and TU Europa. The two partners paid EUR 770m to buy 100% of Warta from Belgium's ailing KBC group, and slightly more than EUR 200m for a controlling stake in mortgage insurer TU Europa. Prior to the Europa and Warta deals, Talanx had been operating in Poland through two companies in motor, general liability, property and life insurance: HDI Asekuracja and HDI-Gerling Życie.
In 2012 Ciech turned over PLN 4.38bn and posted a net loss of PLN 431m, and in the first half of last year the company posted a PLN 62m net profit on PLN 1.88bn turnover. Ciech is currently seeking buyers for a number of attractive assets, including the site of its former headquarters on Warsaw's Powązkowska street that seems like a perfect spot for a large office project.
Upon applying for Polish financial markets watchdog KNF's permission to buy Warta and Europa, Talanx pledged to have its shares listed in Warsaw within two years from finalizing the takeover transaction. KNF gave its blessing for both transactions in May 2012.
BANKING & FINANCE
Talanx to complete Warsaw listing by July German insurance firm Talanx plans a secondary listing on the Warsaw Stock Exchange by mid-2014, company spokesperson Martin Schrader told Poland Today. "The exact date of the listing will be communicated to the media upon short notice. The listing of Talanx shares on WSE will not include selling new shares or raising capital. We simply would like to give investors
"Indeed, the listing follows our acquisitions of the Polish insurance companies TU Europa and Warta. Due to these acquisitions, Talanx is now the second biggest insurance group in Poland with a market share of approximately 20%. Poland is our second biggest core market in the retail business, right after our home market Germany. This shows the importance of the Polish insurance market for the Talanx Group. We want to underline this importance, and we plan to do this through a dual listing. With gross premiums written of some EUR 1.2bn in Q1-Q3 2013, the Polish business accounted for some 40% of Talanx's international retail insurance operations. Warta was on track to achieve EUR 70m EBIT target for full year 2013, "with delivery on integration targets ahead of schedule," Talanx said in its Q3 2013 report.
PROPERTY & CONSTRUCTION
WarburgWarburg-Henderson teams up with Palmer Capital on new retail property fund for CEE In the last issue of PT Business Review+ we spoke to Ben Maudling, Head of CEE at the UK-based property fund Palmer Capital, about the recent launch of their office in Warsaw. Little did we know that the guys at Palmer Capital would soon have more big news to communicate, as their company has just inked a deal with Warburg – Henderson Kapitalanlagegesellschaft für Immobilien mbH, to source deal and manage assets for their newly founded Central European Retail Fund. According to Warburg-Henderson, their new fund, aimed at institutional investors, will invest in retail properties in Poland and the Czech Republic. With a total target fund volume of c. EUR 250m, including 40% to 45% leverage, the fund targets an annual income return of 8%. The fund invests primarily in retail warehouses, smaller and well-established shopping centers, as well as high street buildings, focusing on locations with good infrastructure and solid economic fundamentals. It will also look to focus on catchment areas with high population density and growing, or at least stable, demographics. As Investment Manager, Warburg – Henderson is responsible for the institutional fund wrapper, including strategy, fund management and reporting. "With the launch of the Central European Retail Fund, we are widening our range of products by investing in attractive, new markets," commented Eitel Coridaß,
weekly newsletter # 026 / 17th March 2014 / page 5
Managing Director and responsible for Portfolio Management at Warburg – Henderson. "Poland and the Czech Republic are established destinations for real estate investments with good market transparency, that still offer yield premium of at least 100 bps compared to the German market today," he added. Warburg-Henderson will be targeting mainly retail warehouses, which as well as shopping centers in urban areas, and high street assets in the city centers. According to the company, retail warehouses are a less mature market compared to large shopping centers. They are seen as a growth segment for the coming years due to their suitable format, even for smaller catchments and the increasing motorization of the wider population. The Hamburg-based Warburg – Henderson Kapitalanlagegesellschaft für Immobilien mbH, is an Investment Manager that currently manages 17 property funds for over 100 German and international institutional investors, the majority of which, as property Spezialfonds investing in European commercial property. Their assets under management amount to approx. EUR 4.4bn as at 31 December 2013. Palmer Capital was established in London in 1992 and expanded to Continental Europe in 2007. Besides its continental European headquarters in Munich the platform Palmer Capital Investments GmbH comprises a team of 34 employees in six offices located in the Netherlands, Poland, the Czech Republic, Bulgaria, Romania and Russia. In Central and Eastern Europe Palmer Capital manages 84 assets with c. 3,000 tenants and c. 350,000 sq m lettable space in 39 cities. Globally, Palmer Capital manages over GBP 1bn of real estate across over 250 properties that it manages on behalf of discretionary investors or third party segregated mandates.
Poland Today talks to: Eitel Coridaß, Managing Director at Warburg - Henderson
• PT: Poland has been the target of German property funds for a number of years now. Why has W-H decided now was the time to invest here? Eitel Coridaß: With a high market transparency, Poland and the Czech Republic are established markets for property investments and we believe the time is right for investments in retail warehouses and shopping centers in these two countries. With a positive macroeconomic outlook, property markets in both countries are stable and healthy. Prices are attractive, particularly compared to those in Germany. Initial achievable returns are at least 100 basis points higher compared to similar German assets. Only few investors are taking advantage of the potential the retail warehouse sector has to offer, as the main focus of many investors investing in Poland and the Czech Republic is on larger shopping centers. As such, the retail warehouse sector offers attractive opportunities, in particular. Precisely here, investors are able to benefit from the expected development of this market sector by entering now. • PT: Investing in small regional retail properties takes much more "on-the-ground" presence and local expertise than buying prime assets in key cities. Palmer Capital have entered Poland only recently with only a single office deal completed to-date. Do you think together you will be able to penetrate the
large and rapidly expanding Polish retail property market? EC: Although Palmer Capital has only recently entered the Polish market under its own name, its senior staff has been active in the Polish market for over 15 years, acquiring assets for managed funds of HypoVereinsbank and Invesco throughout the country. Now, with active asset management in six countries in Central and Eastern Europe, Palmer Capital is one of the leading real estate fund and asset managers in these parts of Europe. Currently, more than 80 properties with some 350,000 sq.m rental space and around 3,000 tenants in almost 40 cities in CEE are supervised by Palmer Capital. Furthermore, Palmer Capital supervises project developments of more than EUR 50m. With a long experience in international asset management, we believe to have found the perfect partner in Palmer Capital for this fund. • PT: When do you hope to reach the target funding for the new CE Retail Fund and how many properties will it buy you, based on average deal values in the target segment? EC: The distribution process has just started. The initial feedback we have received from investors was positive. With a target volume of EUR 200 to EUR250m, the portfolio is planned to include approximately 10 to 15 properties with a maximum asset volume of c. EUR 30m. • PT: How will the funds be divided between Poland and the Czech Republic, according to your projections? EC: The target country allocation ranges for both countries from 40 to 60%. • PT: Does W-H have plans for any other funds targeting Polish properties? EC: Poland's key asset is its stable economy, which makes it attractive for real estate investments. During 2008 and 2009, Poland was one of the few countries
weekly newsletter # 026 / 17th March 2014 / page 6
that did not experience a recession. Until 2018, the International Monetary Fund expects an annual economic growth of around 3%. Therefore, even without current specific plans for additional products, we will consider this market in the future and continue to monitor its development.
DATA BOX: PROPERTY INVESTMENT MARKET IN 2013 • Polish investment market volume in 2013 hit a record EUR 3.12bn. German investors accounted for the largest share of the total transaction volume, 25%, and were the largest group of buyers. Polish investors came in fourth place accounting for 8% of all deals (EUR 263m). • The retail sector accounted for 44% of the total volume and settled at around EUR 1.38bn, a rise of approx. 20% on the previous year. The biggest deal was the acquisition of Silesia City Center in Katowice for EUR 412m by an international consortium of investors led by German financial services group Allianz. • The office market accounted for 38% of the total volume and was the best performing sector with 27 deals totaling EUR 1.19bn. Growing office deals outside Warsaw (EUR 0.19bn), however the biggest deal was closed in the capital, where US Hines Global REIT purchased New City office complex for EUR 127m. • Transaction volume on the industrial market in 2013 totaled around EUR 0.44bn (14% of total volume), a fall of around 5% on the value recorded in the peak of year 2012. The key transaction was the Norges Bank Investment Management’s acquisition of 50% shares of Prologis portfolio. Source: Cushman & Wakefield
PROPERTY & CONSTRUCTION
New project to create 20,000 sq.m of office space in Gdynia
"Tensor offers not only an excellent quality and efficiency of office space, but also rents at a very reasonable level. Headline rents in prime office locations in Tri-City range from between EUR 12.5 and 13.5 per sq. m./month. Tensor is also going to fall within this range," said Magdalena Reńska, Director of JLL's TriCity office.
Polish developer Euro-Styl, which has built a number of residential and office projects in the Tricity area in recent years, is about to break ground on its first office scheme in Gdynia. Located at 8 Łużycka St. the Tensor office park will include up to 20,000 sq.m of office space in three buildings, the first of which (4,960 sq.m) is to reach completion in 2H 2015. The three buildings will be accompanied by 446 parking spaces. "We are in advanced talks with a number of potential tenants, but it is still too early to speak of any sealed deals," Euro-Styl's marketing director Bartosz Podgórczyk tells Poland Today. "Our office completions to-date include Opera Office and BPH Office Park, completed during the 2011-2013 period with a combined GLA of 28,000 sq.m. At the moment, we are treating them as long-term portfolio investments. In the residential sector, we have so far completed apartments with a total floor area of more than 180,000 sq.m, and we have a further 38,500 sq.m under construction and 52,800 sq.m in projects that will be commenced this year."
Tensor will include three buildings, the first of which will be completed next year. Image: Euro-Styl
The Tricity area has emerged in recent years as one of Poland's hottest offshoring destinations and Tensor's developer had the project designed to match the expectations of BPO/SSC tenants. Besides all the standard class-A amenities, it will include a number of environmentally friendly solutions, such as energyefficient façades and heat recuperation systems. The leasing agent for Tensor is the property consultancy JLL.
The Łużycka St. area became one of Tricity's office hubs thanks to another local developer Allcon and its Łużycka Office Park which has a GLA of 22,500 sq.m and includes Geoban, Pramerica, and Det Norske Veritas among its tenants. Allcon is currently working on its extension, Łużycka Plus, with a further 5,770 sq.m of net office space.
Since limited availability of modern office space tends to be a major hurdle to development of regional cities, the planned 20,000 sq.m at Tensor represent an important addition to Gdynia's office stock.
weekly newsletter # 026 / 17th March 2014 / page 7
DATA BOX: TRICITY OFFICE MARKET IN 2013 • Take-up in the Tricity market in 2013 reached 45,600 sq m, of which new leases accounted for more than 53%, with pre-lets making up around 13%. This was down by around 16,800 sq m compared with 2012. The largest transaction was Thomson Reuters’ lease renegotiation of 9,000 sq m in Baltic Business Center. Other notable deals included the lease renewal for 2,800 sq m in Łużycka Office Park by Geoban (Santander group) and the IT services provider Sii’s lease of 2,700 sq m in the Olivia Business Centre complex. • Last year Tricity finished on a record high supply of 71,800 sq m, which pushed Tricity’s total office stock up to 433,000 sq m at the end of December 2013. Projects delivered in 2013 included TPS’s Olivia Business Centre – Point and Tower buildings totalling 23,900 sq m, Torus’s Alchemia in Gdańsk-Oliwa (16,700 sq m) and Euro Styl’s Euro Office Park (9,300 sq m), which became headquarters of the BPH Bank. • Asking rents stood at EUR 13–15/sq m/month, and effective rents were EUR 12–13/sq m/month. Robust supply pushed the vacancies up to 48,500 sq m at year end, accounting for 11.2% of Tricity’s total stock. Source: Cushman & Wakefield
TRANSPORT & LOGISTICS
Goodman inks huge BTS deal in Poznań Following the last year's 100,000 sq.m BTS deal with Amazon, the Australian-owned property developer
Goodman has struck another huge contract in Poland, this time with the Mousquetaires Group, Poland's leading operator of franchise-based supermarkets and DIY outlets. Under the contract, Goodman is to build a new central warehouse and office facility in Poznań for the Mousquetaires Group as well as acquire the latter's existing storage and office properties in the city. The overall transaction covers a total of 127,885 sq.m of logistics and office space and will enable the efficient replacement of the Mousquetaires Group’s current properties for modern, higher quality facilities, the companies said. By the end of March, Goodman will break ground on a 73,872 sq.m food storage and distribution facility for the Mousquetaires Group, alongside a new 8,513 sq.m two-storey office which will become the company’s new headquarters. The storage area, which includes freezing and cooling facilities, will be handed over in January 2015, with the office building following two months later. The new Mousquetaires Group’s warehouse will be situated in Swadzim, 15km from the centre of Poznan. Its location, with direct access to the S11 expressway and 10km to the A2 motorway, provides the site with ideal road transport connections. The lease agreement will be for 10 years. Goodman has also agreed to acquire from the Mousquetaires Group's existing warehouse and office premises at Janikowska St. in Poznań, totaling 45,500 sq.m. The new owner will refurbish and redevelop these properties after delivering the new storage and office space to the Mousquetaires Group, Goodman's PR representative Bartosz Sroka told Poland Today. According to Tomasz Kasperowicz, Director of Industrial and Logistics Agency at Colliers International, which was the agent behind the transaction, "the Goodman/ the Mousquetaires Group deal is by far the largest and most complex agreement signed in 2013." Besides the Janikowska St. warehouse in Poznań, the Mosquetaires Group's Polish distribution network in-
cludes also a logistics hub in Sady, in the outskirts of the city, as confirmed by communications director Eliza Orepiuk-Szymura.
The planned new Polish headquarters of the
Mousquetaires Group near Poznań will include a giant distribution center and offices.
Image: Goodman
"Flexibility was the key factor in selecting a partner for this investment, and through its decision to acquire our existing properties, Goodman came out on top. Of equal importance was Goodman’s highly skilled team, who supported us with their technical knowledge throughout our work together. The facility will be used to store food, which from a technical viewpoint means that the project is far from simple,” said Philippe Jammes, General Director of ITM Polska Sp. z o.o., which represents the Mousquetaires Group in Poland. Goodman commenced operations in Poland in 2005 and owns and manages over 375,000 sq.m of facilities in various locations throughout the country for customers including Whirlpool, DHL and Amazon. The group holds strategic land sites in all of Poland’s key logistics centers, which are capable of providing approximately 1.3m sq.m of additional warehouse space. It has a significant pipeline of active enquiry and a land bank that enables it to accommodate the individual requirements of all potential customers.
weekly newsletter # 026 / 17th March 2014 / page 8
"Our co-operation with the Mousquetaires Group is a unique example of a complex transaction between a property developer and investor and its customer. As a Group with a strong capital base, we are capable of taking part in such bespoke transactions and satisfying our customers’ most specialised requirements,” said Błażej Ciesielczak, Regional Director Goodman Central and Eastern Europe.
Often these airports' entire business depends on Ryanair. Other than charters, Ryanair is the only passenger airline flying out of Warsaw Modlin airport and the airport in Bydgoszcz, a city of some 360,000 in northern Poland. For several other airports, Ryanair operates a vast majority of the passenger flights.
"Lublin officials say that because they have the airport they were able to bring in investors, and from that they will obtain tax revenue to support the airport," said Grzegorz Sobczak, editor-in-chief of Skrzydlata Polska, a monthly magazine covering aviation. He added that EU rules allowing local authorities in regions that are far-flung or poorly connected to support airports would mean that cities such as Lublin would continue to offer them financial assistance.
The Mousquetaires Group unites more than 240 independent Polish entrepreneurs who operate retail outlets under the Intermarché and Bricomarché logos. The Group's Polish chain consists of 202 Intermarché grocery supermarkets and 93 Bricomarché DIY stores. Mousquetaires are present in 6 countries in Europe: Poland, France, Belgium, Portugal and on the Balkans. In 2012 Group's total turnover came in excess of EUR 39bn.
TRANSPORT & LOGISTICS
Regional airports seek more public handouts as budget carriers trim routes routes City governments in Poland will be propping up their regional airports for the foreseeable future, as low-cost carriers trim routes and authorities wait for the Polish market to catch up to its European peers. Fuelled by EU funds for infrastructure and eager to attract investment and tourism, many of Poland's medium-sized cities have developed or expanded airports over the past few years. But these airports have failed to gain enough passengers to stay afloat, and continue to be funded by local governments.
Lublin, a city of about 350,000 in south-eastern Poland, opened an airport in December 2012. It managed less than 200,000 passengers last year, though it has a capacity of 300,000. The facility has major competition from an established airport in Rzeszów, just about two and a half hours away by car.
In February the European Commission asked the municipalities of Gdynia and Kosakowo in the north of Poland to repay the EUR 21.8m worth of public aid they had spent on converting a former military airfield in Gdynia into a new passenger airport. The Commission said that the funding represents an undue economic advantage over the airport's competitors, in particular the Gdańsk Airport, located only 25 km away. According to EU officials, Gdynia's business plan for low-cost, chartered and general aviation traffic was unrealistic considering the lack of congestion at Gdańsk Airport, which uses only 60% of its capacity. EU rules bar member states from duplicating airport infrastructure where there is not enough demand, thus distorting competition and Image: Gdynia Airport wasting taxpayers’ money.
That leaves them vulnerable to route reductions and puts them in a difficult position if Ryanair demands lower airport charges. Nevertheless, local governments will continue to offer financial assistance to the airports, because they are seen as necessary to attract tourists and investment.
In the first two months of this year Łódź Airport, in central Poland, saw passenger traffic plummet by 34% compared to the same period last year. Ryanair's decision to cut routes in Poland – over 30 across the country according to Ewa Bieńkowska, the airport’s spokesperson – hit Łódź especially hard. Now the airport is asking city authorities to grant it more money to promote routes in an effort to win back more passengers. "We need money," said Ms Bieńkowska. "We have to have money to support the promotion of new routes. This is money that comes from the city." She complained, however, that officials in Łódź were less generous than those in say, Lublin or Rzeszów. "The city doesn't understand that it has to support the connection. Other cities give a lot of money to airlines to promote connections. Our city doesn't think it makes sense, and this is a big problem." She added that if there was money to promote a route to Paris or Rome, the airport could potentially con-
weekly newsletter # 026 / 17th March 2014 / page 9
vince Ryanair to establish the route. “Maybe we could convince them,” she said. Officially, Ryanair cut routes because of a lack of airplanes, but experts say that many of the cities couldn’t generate enough business for the routes make sense. Passenger numbers in Poland have grown overall, but at only a few airports. According to Poland’s Civil Aviation Authority, traffic at Warsaw Chopin Airport, the country’s largest, grew by 11 percent over the first three quarters of 2013. Kraków, the country’s second busiest airport, grew at a much slower rate of 4.8 percent. Traffic at the above-mentioned Rzeszów grew 1.2 percent. Eight of Poland’s other major airports all saw drops in the number of passengers. In Lublin, which was still in its first few months of operation, was working at below-capacity. That’s because Poles still haven’t adopted flying to the extent that their Western peers have. The average Pole only flies about 0.5 times per year, far below the EU average of 1.6. Experts say this means that while many small airports are suffering now, they could see more traffic in the near future. General economic growth could help as well. Poland’s GDP grew 1.6% last year, its slowest rate since 2009. But this year it could nearly double that pace, say economists. Nevertheless, even the biggest airport in Poland takes a significant hit when Ryanair takes routes away. Both Ryanair and Wizz Air, which had formerly flown to Warsaw Modlin, moved their flights to Warsaw when Modlin had to close to repair its runway in early 2013. When it opened back up mid-year, only Ryanair went back. Passenger numbers this year are therefore 5-6% lower than they were at this time last year, said Przemysław Przybylski, the spokesperson for Warsaw Chopin Airport.
TRANSPORT & LOGISTICS
Warsaw ring road tender attracts 23 international bidders A total of 23 companies and consortiums from all over Europe as well as China, Turkey, and Azerbaijan are hoping to grab the highly lucrative contracts for the construction of the southern segment of the Warsaw beltway, a strategic project with a combined price tag of some PLN 6-8bn. Their bids in what is viewed as one of the largest infrastructure tenders of the decade, will now be reviewed by Poland's roads authority GDDKiA.
The ongoing tender, concerns precisely this 18.5km piece of motorway, which will be divided into three sections, each posing a different challenge, such as a 2.7km tunnel under Ursynów, new bridge over the Vistula river, and a chain of overpasses in the Mazowiecki nature park. The GDDKiA will now take a few months to review the submitted bids, including the ones from Power Construction Corporation of China, Turkey's Güllermak, and Azerbaijan's Evrascon, after which shortlisted parties will be asked to place detailed offers. The whole investment to reach completion in 2018-19.
The project is part of a larger program to close the ring of expressways around Warsaw by 2019, announced by Prime Minister Donald Tusk at the break of September last year. The ring road is of strategic importance for the Polish capital and its completion is vital to reducing congestion in certain key areas and funneling transit traffic out of the city. The first southern section of the beltway (S2), linking the Konotopa junction (where the A2 highway from Berlin reaches Warsaw) with the Chopin airport and Ursynów (Puławska) cost approximately PLN 4.3bn and was opened in September 2013. Although its completion brought relief to many commuters and helped distribute some through traffic, it also created massive jams on Puławska street, one of Warsaw's key arteries. This is where the ring road ends at the moment, although according to plans it should be extended further east, cutting though the residential areas of Ursynów and Wilanów and across the Vistula river to connect with the S17 Warsaw-Lublin road.
The planned sections of the Warsaw beltway are marked with dotted lines, whereas green and red lines indicate sections that are opened to traffic. Image: Wikipedia CC
Besides the design & build tender mentioned above, the GDDKiA is also seeking engineering firms interested in designing the next section of the S2 motorway, east of the planned junction with the S17 towards the Mińsk Mazowiecki beltway. The subsequent tenders for the eastern sections of the Warsaw ring are expected in 2015 and 2016, as the road authority is yet
weekly newsletter # 026 / 17th March 2014 / page 10
to get environmental permits for those projects. A separate procedure is currently underway for a bypass of the notoriously congested suburb of Marki in the north east of Warsaw. In approximately three years, once the Marki bypass as well as the S8 fork near Raszyn and Janki in the south west reach completion, drivers should be able to easily get around the western and northern outskirts of the Polish capital.
dition one of the two machine service centers in the world is localized in Poland. O-I has dominant position of glass containers in baby food, spirits, beer and non-alcoholic beverages. O-I's entire European operations employ close to 8,000 staff across 11 countries and generate a turnover of approximately USD 2bn per annum. Following the planned reorganization of O-I's European business, Poznań will be also home to the company's regional headquarters in charge of northeastern Europe.
2012. Globally, the company employs 22,500 staff at 77 factories in 21 countries. "Over the last several years O-I has invested in Poland over EUR 40m to raise its quality to the highest standards and requirements demanded by the baby food industry. The investments were also designed to modernize the manufacturing sites, putting O-I Poland the leading edge of energy technology," says Michael Praeger.
SERVICES & BPO
OwenOwen-Illinois to shift European back office operations to Poznań
SERVICES & BPO
Work Service teams up with Fiege's staffing unit in Germany
US glass packaging giant Owen-Illinois (O-I) will relocate back office operations from its European headquarters in Switzerland to Poznań, Poland as part of a broader asset optimization program in the region. "Our new Business Services Centre (BSC) in Poznań will handle O-I's centralized administration services functions for Europe including standardization and implementation common 'back office' functions for all of our European operations: accounts payable and receivable, master data management and expense reporting. At the moment the European Headquarters in Bussigny-Près-Lausanne in Switzerland is handling the processes," Michael Praeger, Director of Communications Europe at O-I, tells Poland Today. "The BSC will be opened in July. When fully operational, this organization will employ approximately 40 people." O-I has been present in Poland since 1993. The company operates 2 glassworks in Poland – in Jarosław as well as in Poznań-Antoninek and hires total 730 employees. The glassworks in Jarosław is one of the biggest glass container manufactures in the world. In ad-
The new O-I Business Services Center in Poznań will be located in Malta Office Park, which was developed by Echo Investment. Image: Echo Investment
"From an operational standpoint, the situation remains unchanged. However, the fact that the Malta House will also be the office for the O-I's of northeast Europe business leadership team, headed by Viivika Remmel, country group executive of northeast Europe, brings benefits at the administrative level." Ongoing economic weakness in Europe and economic volatility in South America caused O-I to post flat sales and flat earnings for 2013. The Perrysburg, Ohio-based maker of bottles and other glass containers reported annual earnings of USD 184m for 2013 on USD 7bn turnover, with both figures showing no change from
Poland's leading temporary staffing and personnel outsourcing company Work Service has inked a joint-venture agreement with German logistics provider Fiege. With a target turnover of EUR 100m in 2014, the newly JV will include Fiege subsidiaries, Fiege uni/serv and Fiege worksess and all subordinate German business entities of Work Service. The latter will hold a 51% stake in the JV, which aims to be one of Germany's top ten temporary staffing and personnel outsourcing agencies, with Fiege Logistik Stiftung & Co. KG owning the outstanding shares. In 2013 the Fiege Group said it would concentrate their services on Central and Eastern Europe as well as India and China, and JV with Work Service is part of this strategy. Work Service is one of Poland's largest HR companies providing innovative workforce solutions ranging from permanent placement and temporary staffing to outsourcing services throughout Central and Eastern Europe. Fiege uni/serv and Fiege worksess were established in 2002 as specialists for
weekly newsletter # 026 / 17th March 2014 / page 11
personnel logistics concepts for the retail and logistics industry. Currently Fiege uni/serv is listed in the Top 25 of German temporary employment agencies. Work Service's service portfolio has a focus on HR services for banks, insurance companies and the IT industry. "The joint venture is a great opportunity for both partners. We contribute our motivated and skillful German team, a great customer base and our excellent German business network. Work Service brings along great know-how, new services and customers like banks, insurance and IT companies. This enables us to broaden our market offer. The partnership will further strengthen our market position in Germany not only for temporary staffing services but also for HR services." said Felix Fiege, Board Member of the Fiege Group. The joint venture will be the preferred partner for temporary staffing business services of the Fiege Group in Germany. In 2012, the Group generated a global turnover of EUR 1.5bn with a workforce of around 11,000, 200 units and partnerships based in 17 countries and 3m sq.m of warehouse and logistics space. Established in 1999, Work Service supplies and services an average of 21,000 workers daily to more than 2,200 long-term clients through several business lines: recruitment and personnel consultancy; temporary staffing; short-term specialist contracting for the IT, financial and medical sectors; quality control outsourcing; and merchandising processes. The company has 35 offices in Poland, Slovakia, Russia, Germany, Turkey, Romania and the Czech Republic and operates a fleet of 200 mobile assessment centers. To-date, the Wrocław-based Work Service has acquired seven staffing and recruitment companies at the combined cost of PLN 164m, including the Polish firm bought the Polish arm of global recruitment consultancy Antal International, Katowice-based staffing compa-
ny Work Express Prohuman.
and
Hungarian
recruiter
Company representatives said recently they hope to end the 2013 with a turnover of PLN 1bn, but thanks to the ongoing and planned acquisitions this year the figure is likely to reach PLN 1.8bn. In the first half of 2013 the group posted a consolidated net profit of PLN 10m (+8% y/y) on sales revenues of PLN 410m (+16% y/y). The key financial investor in Work Service is the global private equity firm PineBridge Investments, which in 2012 acquired a 20% stake in the company for EUR 26m to support its ambitious investment pipeline. Work Service has been listed on the Warsaw Stock Exchange since May 2012. The company is the market leader in Poland, has a strong presence in Russia and continues to increase its market share in the Czech Republic, Slovakia, Germany and Turkey, boasting a market share of 18.5% in the CEE region.
land Today, declining, however, to discuss details of the transaction itself as well as the company's further acquisition plans with regard to Poland. "With the Szczyrk acquisition we become a Central European company with key mountain resorts in Slovakia in the Tatras, in the Czech Republic in Špindlerův Mlýn, as well as in Poland in Szczyrk; and we believe in their mutual synergy," says Bohuš Hlavatý, CEO and Chairman of TMR's Board of Directors. "The Poles already represent a significant portion of visitors in our resorts."
TRAVEL & LEISURE
Slovakia's TMR acquires Polish ski resort in Szczyrk Slovakia's leading mountain tourism operator Tatry Mountain Resorts (TMR) has acquired a 97% stake in Szczyrkowski Ośrodek Narciarski, one of Poland's most popular ski resorts in Szczyrk. In the medium-term horizon, the new owner aims to spend some EUR 30m on development and modernization of the resort by building several new cableways, snowmaking systems and other infrastructure, bringing Szczyrk on par with Poland's best ski resorts. "The investment program is to be implemented in the medium-term," TMR's Milena Friedmanova told Po-
TMR operates a number of popular ski resorts in the Tatra Mountains. Image: TMR Strategically located in the Beskid Mountains, close to other key holiday destinations, and only 50km from the Slovak border crossing at Skalité, Szczyrk boasts long winter sports traditions. There are some 25km of high-quality ski trails in Szczyrk and approximately 60km of ski trails in the whole region. The town of Szczyrk has a solid accommodation capacity with 10,000 beds. More than four million people live in the 150km radius, which according to TMR represents a great potential for the resort's further growth.
weekly newsletter # 026 / 17th March 2014 / page 12
"In Szczyrk we seek to repeat our successful investment strategy, which opened a new era for the Tatras in terms of transportation and modernization of the resorts. Thanks to massive investments and our experience, we have been able to ensure full operation of our resorts and offer high-quality skiing conditions despite the exceptionally unfavorable winter conditions during this season, We want to put our experience to use in a resort that would be capable of hosting major sporting events in the future and one that would provide Poland's 2.3m skiers with higher quality conditions than what they have been used to locally," Dušan Slavkovský, Director of Mountain Resorts and a member of TMR's Board of Directors, commented on the acquisition. The acquisition is TMR's first successful venture into Poland, after its failed attempt to acquire the country's cable car and ski-lift operator Polskie Koleje Linowe (PKL) last year. PKL was purchased by the private equity fund Mid Europa Partners, which teamed TMR, which has been listed on the Warsaw Stock Exchange (in addition to Bratislava and Prague) since October 2012, seeks to create a cross border mountain sports area in Slovakia, Poland and the Czech Republic. The secondary listing in Warsaw was meant to support its planned expansion in Poland. The largest provider of tourist services in Slovakia, TMR owns and operates a number of ski resorts and hotels in Low and High Tatras, including Aquapark Tatralandia, the biggest Slovak all-year thermal aquapark. Its capital expenditures had amounted to EUR 190m by the end of 2013. In the financial year ended October 2013 the company posted a consolidated net profit of EUR 6.6m on revenues of EUR 54.3m (up from EUR 43.8m in the prior year) and welcomed 2.25m visitors (against 2m the year before).
RETAIL PROPERTIES
ECE and Resolution Property acquire Poznań City Center Less than half a year since Hungarian developer TriGranit, Polish state railways operator PKP, and Europa Capital launched the landmark retail project Poznan City Center (PCC), the property was sold to Germany's ECE European Prime Shopping Centre Fund and UK's Resolution Property in what is already looking like one of the largest deals on Poland's property market this year. Germany's Aareal Bank AG and pbb Deutsche Pfandbriefbank have provided EUR 190m financing to the buyers, each of whom now holds a 50% stake in the SPV that has acquired the Poznań asset. The total value of the transaction remains undisclosed, but since the capex on the entire development (including the train & bus station) came to EUR 385m, the figure was surely substantial. Located in Poland's fifth largest city of Poznań, PCC opened in October 2013 and comprises of 58,000 sq.m of leasable area, including 230 shops and two food courts on three levels. The centre is 90% leased and its key retail tenants include Saturn, TK Maxx, H&M, Reserved, Bershka, Pull&Bear and Toys’R’Us. ECE will be responsible for the property management and leasing of the centre, asset management will be undertaken jointly between Resolution and the ECE European Prime Shopping Centre Fund. "The footfall at PCC has been satisfactory from the start, owing mainly to its proximity to the train station. The problem is that nowadays negotiations with tenants take several times longer than a few years back. Decisions are being made very carefully and verified at
various corporate levels, with plentiful more details being taken into consideration. Hence, it's not easy to fill up 58,000 sq.m and we give ourselves a few extra months to achieve full occupancy," Leszek Sikora, Managing Director at ECE Polska tells Poland Today. The center can be reached easily on foot as well as with public transportation through its central location directly adjacent to the central station and the bus terminal and only a 10-minute walking distance from the city center. A total of 1,500 parking spaces are available for visitors arriving by car. A special feature of the center is the integration of the building into the central station which gives direct access. The project has received a number of awards, including "Retail Project of the Year" at CEE Retail Real Estate Awards, as well as "Project of the Year", "Mixed-use project of the year", and "Retail project of the year" at the CEE Green Building Awards.
ECE says its needs siome time to find tenants for the remaining 10% of space at Poznań City Center. Image: TriGranit
Resolution Property was founded in 1998 with the specific aim of investing in UK and European commercial real estate that offers scope for high returns through a combination of good initial stock selection, active management, refurbishment and redevelopment potential. Poznan City Centre will be Resolution’s second asset in Poland joining Galeria Pomorska in Bydgoszcz.
weekly newsletter # 026 / 17th March 2014 / page 13
"Poznan City Center is a significant addition to our Polish Portfolio and the centre presents strong asset management potential and future development opportunities in line with our European strategy," commented Peter Todd, Partner of Resolution Property.
ECE has more projects in pipeline
ECE currently manages eight shopping centers in Poland, including in Wrocław, Łódź, Kraków, Gdańsk and Szczecin, with a combined GLA of more than 400,000 sq.m. Its proprietary Polish assets include Galeria Kaskada in Szczecin. "Just today we have completed the final site purchase for the Zielone Arkady project in Bydgoszcz with a GLA of 51,800 sq.m. We are breaking ground on that project on 1 April to open before the end of October next year. We've been also given a go-ahead and budget for a 16,000 sq.m extension of Galeria Bałtycka. This year ECE Polska will be busy integrating Silesia and Poznań City Centers into our organization, but we remain on the lookout for new takeover opportunities," says Leszek Sikora. Founded in 1965, ECE manages 189 shopping centers (including 40 that are managed by METRO-ECE Centermanagement) in 17 countries with a combined retail sales area of 6m sq.m. According to ECE, their 17,500 tenants generate EUR 21bn in annual sales. As for the ECE European Prime Shopping Centre Fund, it manages EUR 775.5m in equity commitments from global leading institutional investors and concentrates on the acquisition of existing shopping centers with value-add potential across continental Europe. "With the acquisition of Poznań City Center, the ECE European Prime Shopping Centre fund is fully invested. I am very pleased that we are now also operating in the fifth biggest city of Poland – the center's highlyfrequented city center location makes it even more exciting. The management expertise of ECE will help to
further establish the center on the market and to add to its success, commented Dr. Volker Kraft, Managing Partner of ECE Real Estate Partners.
Leroy Merlin Polska CEO Christoph Dubus told the news agency ISB his company would be interested in both chains, while OBI has remained tightlipped on the issue.
RETAIL CHAINS
Leroy Merlin and OBI mentioned as potential buyers for DIY chains Praktiker and NOMI Germany's OBI and France's Leroy Merlin are viewed as the strongest candidates to acquire the Polish business of German DIY retailer Praktiker, which went bankrupt in the summer of last year. The German firm used to be part of the Metro AG group before it was spun off as an independent business in 2005. With 24 stores in good locations across the country, Praktiker may be attractive buy for any home improvement player interested in the Polish market. Praktiker's Polish arm turned over PLN 760m in 2012. Besides Praktiker, also Polish chain NOMI is looking for new owners following the collapse of its business last year. Established in 1993, NOMI used to be part of the UK retail giant Kingfisher (owners of the Castorama chain), which sold the chain to private equity company Enterprise Investors in 2003 for PLN 45m. At the time, NOMI had 39 stores across the country and annual revenues of PLN 0.5bn. Over the 20072011 period the business was profitable. In 2012 the company turned over PLN 497m and employed 1,367 staff. NOMI, which currently has stores in 28 mediumsized towns, was last owned by a Polish investment fund i4ventures.
Praktiker filed for bankruptcy in July 2013. Photo: A.Savin, Wikimedia Commons
"Polish DIY retail sector is on the verge of major consolidation process,” Dubus said, adding that some retailers, including Praktiker and NOMI, faced solvency problems last year due to a 4% y/y contraction in Poland's construction sector, creating an 'interesting opportunity' for the likes of Leroy Merlin to expand their portfolios. "We rely chiefly on slow, organic expansion, but we’re closely monitoring the sector and our competitors. If an offer to buy either Praktiker or Nomi is on the table we will consider it," Dubus added. The number one home improvement chain in Poland is the UK-owned Castorama, which boasts an 11% market share with more than 70 outlets. Other top chains include the Bricomarche with 93 franchiseeoperated shops, as well as Leroy Merlin and OBI, each with 45 stores. According to Dubus, Leroy Merlin is eyeing 2-3 openings per annum, aiming to reach 80
weekly newsletter # 026 / 17th March 2014 / page 14
stores and create 5,000 new jobs in two decades. Currently Leroy Merlin employs some 8,000 staff in Poland, where its stores are located in large and mediumsized cities. Besides its 45 brick and mortar outlets, ranging from 6,000 to 18,000 sq.m in size, Leroy Merlin operates an online store in Poland.
Poland's largest DIY chains
The company has a strong presence in Poland, with 1,000 employees in the country total, between 200 and 300 of which work in R&D, officials said. The firm’s other employees in Poland provide network monitoring and customer support services for markets all over the world, as well as sales and support for local customers. The firm sees opportunity in broadband roll-outs in the regions as the country looks to increase access to high-speed internet, Combes said. Currently, it is cooperating with Hawe and TP Teltech on broadband roll-out projects in the Warmińsko-Mazurskie and Podkarpackie voivodships, as well as supplying Orange in two other projects in the Lubuskie and Pomorskie voivodships.
Number of outlets as of end of 2013 Bricomarche Castorama* Leroy Merlin OBI NOMI Praktiker Bricoman 0
10
20
30
40
50
60
70
80
90
*) including Brico Depot Source: Cushman & Wakefield Jan 2014
IT & TELECOM
AlcatelAlcatel-Lucent sees opportunity opportunity in Polish broadband rollroll-out Global communications equipment company AlcatelLucent plans to 'refocus' on Poland and several other countries in Europe as it looks to right its ship, the company’s CEO Michel Combes told the press in Warsaw last week. "Today Poland is key in the set-up of Alcatel-Lucent," he said. "Poland is one of the countries in Europe where we have decided to refocus." Other EU markets where the firm intends to concentrate include France, Germany and Belgium, he added.
Combes told Poland Today that the company does not have any specific plans to expand its R&D centre, located in the northern city of Bydgoszcz. However, the company does plan to close down R&D centers in other parts of the world, meaning the Polish operation could benefit by taking on some of the leftover projects, Combes said.
ECONOMY
Consumer inflation at 0.7% in February Poland's inflation rose in February, figures from the Central Statistical Office showed Friday. The consumer price index rose 0.7% y/y, following a 0.5% rise in January, revised from 0.7% due to the annual change of weights in the inflation basket. Economists were looking for an inflation figure of 0.8%. Food price inflation remained unchanged at 1.8%. Month-onmonth, prices edged up 0.1% in February, same as in January, in line with expectations
CPI inflation in Poland (y/y) 5% 4% 3%
When asked about consolidation in the telecoms market in Europe, Combes came out strongly in favour. "The market is too fragmented in Europe. We have too many players, many of whom don’t have the scale and the size to invest in new technologies," he said, adding that the US market was far more competitive and receives much more investment than Europe's. "We need the right balance of consolidation when it makes sense," he said. Combes was made CEO in April of last year, and has implemented a plan to narrow the firm’s portfolio of services and clean up the balance sheet. So far he says the company has cut EUR 360m in costs and taken care of all of its refinancing needs.
2% 1% 0% Jul 11
Jan 12
Jul 12
Jan 13
Jul 13
Jan 14
Source: GUS
"In our opinion, the change of weights will have much smaller impact on the inflation at the end of the year than on the January's reading. At the same time, the pace of price growth will be subdued for the better part of the year allowing the MPC to keep interest rates unchanged until end-year," BZ WBK economists said in an e-mailed commentary.
Conference:
Hub Silesia – logistics as a driver of the region's economic growth 26 March 2014, Silvia Gold Hotel, Gliwice
During the 3rd logistics conference in Gliwice, representatives of the City, sector experts, investors interested in the region, as well as those who have already put their money in, will discuss how to maximise the potential of the city and its surroundings.
Organizers:
Content Partner:
Partner:
Media Partner:
)
Registration till 20 March 2014: www.prospectsinpoland.com
weekly newsletter # 026 / 17th March 2014 / page 15
KEY STATISTICS Consumer Prices Prices
Inflation
-0.2
0.0 +3.4 +0.8
+2.2
+1.4
+0.1 +3.7
Clothing, shoes
-4.9
-0.2
-4.9
-0.6
Housing
+1.8
+0.1
+1.8
0.0
Transport
-5.0
-3.7
-4.7
-1.7
+1.9 +0.2
+1.9
+0.1
-2.3
-1.2
-0.9
0.4
-1.2
-1.5
-1.1 +0.4
Communications -11.7
-4.9
-11.6
0.0
-7.8
-0.3
-3.2 +0.4
Gross CPI
-0.2 +0.7 +0.1 +0.5 +0.1 +0.7 +0.1
+0.6
Sep '13
Oct '13
Nov '13 Dec '13 Jan '14
m/m (%)
-0.9
+3.6
-5.8 +17.3
y/y (%)
+3.9
+3.2
+3.8
Year
2009
2010
Turnover in PLNbn
582.8 +4.3
y/y (%) Feb 14
+1.6
Dec 13
+1.6
Alcohol, tobacco +3.6
+1.8
Oct 13
+1.5 +0.7
m/m
Aug 13
+0.3
Jun 13
+1.9
y/y
Apr 13
Food & bev
Month
5% 4% 3% 2% 1% 0% -1% Feb 13
y/y m/m y/y m/m y/y m/m y/y m/m
Dec 12
Sector
Retail Turnover
Oct 12
Feb '14
Aug 12
Jan '14
Jun 12
Dec '13
Apr 12
Nov '13
Feb 12
Data in (%)
+4.8
2011
2012
2013
593.0
646.1
676.0
n/a
+5.5
+11.6
+5.6
+2.3
Residential Construction Dwellings
2009 2010
2011
2012
2013
Jan
(in '000 units)
Producer Prices Prices
Industrial Output
Permits
178.8
174.9
184.1
165.1
138.7
158.1
162.2
141.8
127.4
Commenced
142.9
m/m (%)
+0.2
-0.3
+0.1
-0.7
-0.3
-0.1
+0.1
m/m (%)
+1.5
-4.5
+9.6
+6.0
-6.2
-9.7
+2.9
U. construction
670.3 692.7 723.0
713.1 694.0
y/y (%)
-0.8
-1.1
-1.4
-1.4
-1.5
-1.0
-0.9
y/y (%)
+6.3
+2.2
+6.2
+4.4
+2.9
+6.6
+4.1
Completed
160.0 135.7
152.5
Year
2007
2008
2009
2010
2011
2012
2013
Year
2007
2008
2009
2010
2011
2012
2013
Source: Central Statistical Office (GUS)
y/y (%)
+2.0
+2.2
+3.4
+2.1
+7.6
+3.3
-1.3
y/y (%)
+10.7
+3.6
-3.5
+9.8
+7.7
+1.0
+2.2
Gross Domestic Product
Jul'13 Aug'13 Sep'13 Oct'13 Nov'13 Dec'13 Jan'14
-0.1
-0.1
-0.1
-0.1
-0.2
-1.9
-1.9
-1.8
-1.8
-1.7
-1.7
-1.7
2007
2008
2009
2010
2011
2012
2013
+7.4
+4.8
+0.2
-0.1
+1.0
+0.2
-1.8
Q2 2013
+0.8%
389,244
-2.3%
Q1 2013
+0.5%
370,089
-3.1%
2013
+1.6%
1,631,764
-1.5%
2012
+1.9%
1,595,225
-3.7%
Sentiment Indicators
2011
+4.5%
1,528,127
-5.0%
Economic sentiment and consumer confidence indicators
2010
+3.9%
1,416,585
-5.1%
y/y (%) Year y/y (%)
-64.0
-5.2
-11.1
-4.8
-3.2
-8.9
+5.8
-3.9
2007
2008
2009
2010
2011
2012
2013
+15.5
+12.1
+5.1
+4.6
+11.8
-0.6
-12.0
A
A
A
8,427
B
192 6,060
B
138 6,290
B
B
143 6,061 138
Manufacturing
3,522
154
3,491
152 3,560
155 3,625 158
Energy
6,535
198 6,196
188 5,828
177
152 3,693
157 3,766 160
Construction
3,829
163 3,556
Retail & repairs
3,365
143 3,432 146
3,421
6,021 183
146 3,408 145
Transportation
3,816
135 3,439
122 3,547
125 3,589 127
IT, telecoms
6,379
166 6,685
174 6,707
174 6,654 173
Financial sector 6,044
136 6,356
143 6,702
151 6,109 137
National average 3,878
154
3,741 149
Source: Central Statistical Office (GUS)
3,613
144 3,652 145
Co nsumer conf id ence (lef t axis) Economic sentiment (right axis)
20
120
Key Economic Data & Projections
0
100
Indicator
2010
2013
*2014
-20
80
GDP change
+3.9% +4.5%
+1.9%
+1.6%
+3.5%
Consumer inflation
+2.6% +4.3%
+3.7%
+0.9%
+1.1%
Producer inflation
+2.1% +7.6%
+3.4%
-1.3%
+0.1%
-40
60 Feb 14
A
Current account def. in % of GDP -1.5%
Nov 13
Q3 2013
-12.8
-1.9%
+21.5
Aug 13
Q2 2013
-2.1
12.2
442,167
-2.9
M ay 13
Q1 2013
+56.2
393,725
+14.3
F eb 13
Coal mining
Q4 2012
6.5 688.2
+1.9%
+9.4
Nov 12
Sector
GDP in PLN bn current prices
+8.5
+2.7%
-0.8
A ug 12
A: avg monthly wages in PLN B: indexed avg wages, 100=2005
146.1
(%)
8.8
Q3 2013
+7.8
Source: The Central Statistical Office of Poland, GUS
Gross Wages
Growth y/y unadjusted
131.7
y/y
2014
Q4 2013
m/m (%)
M ay 12
y/y (%)
-0.2
Period
Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Jan '14
F eb 12
Year
-0.1
Month
Nov 1 1
y/y (%)
Jul'13 Aug'13 Sep'13 Oct'13 Nov'13 Dec'13 Jan'14
Aug 11
m/m (%)
Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Jan '14
Construction Output
Construction Prices Price s Month
Month
M ay 1 1
Month
-21.3
+5.8
The economic sentiment (1990-2010 average = 100) is a composite made up of 5 sectoral confidence indicators, which are arithmetic means of seasonally adjusted balances of answers to a selection of questions closely related to the reference variable. Source: Eurostat
CA balance, % of GDP
2011
2012
-5.1%
-5.0%
-3.7%
-1.5%
-0.6%
Nominal gross wage
+3.9%
+5.2%
+3.7%
+3.4%
+4.7%
Unemployment**
12.4%
12.5%
13.4%
13.4%
12.6%
3.99
4.12
4.19
4.20
4.09
EUR/PLN
Sources: NBP, BZ WBK, GUS *) projections **) year-end
weekly newsletter # 026 / 17th March 2014 / page 16
100 DKK
56.72 ↑
100 SEK
47.75 ↑
10,000 JPY
USD EUR 350
50.94 ↑
300
299.98 ↑ 15.48 ↑
100 CZK 10,000 HUF
400
28 Mar 13
100 NOK
135.02 ↑
Money Supply in PLN m Monetary base M1 - Currency outside banks M2 - Time deposits M3
WIG-20 stocks Price Change Change in alphabetical 14 Mar 28 Feb end of order '14 '14 '13
WIG Total index
Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Jan '14
934,713
960,361
947,443
421,160
418,259
955,419
953,446
978,924
962,416
- Net foreign assets 150,517 148,702 143,430 140,617 Monetary base: Polish currency emitted by the central bank and money on accounts held with it. M1= currency outside banks + demand deposits M2= M1+ time deposits (inc in foreign currencies) M3= the broad measure of money supply Source: NBP
-3%
-19%
36.79
-10%
+4%
WIG-20 blue chip index
6.8
-8%
-9%
103.1
-10%
-2%
2,341 2,341. 341.98
4.9%
4.9%
4.8%
4.7%
4.8%
PLN (total)
4.9%
4.8%
4.8%
4.8%
4.7%
4.8
EUR (up to 1m EUR) 1.9%
1.8%
2.0%
1.9%
1.9%
2.0%
↓ Eurocash
EUR (over 1m EUR) 3.5%
3.2%
2.5%
3.0%
2.9%
3.6%
↓ Grupa Lotos
↓ Asseco Pol.
↓GTC
Warsaw Inter Bank Offered Rate (WIBOR) as of 14 Mar 2014 Overnight
1 week
1 month
3 months
6 months
2.59%%
2.59%
2.61%
2.71%
2.74%
2.50%
412,469
-3% ↓
38.5
4.9%
4.8%
Jan '14
414,941
Change end of '13
4.9%
4.8%
161,544
935,095
+3%
4.9%
4.9%
Dec '13
113,455
-8% ↓
-5%
5.1%
PLN (over 5 y)
164,010 114,401
Change 1 week
399.5
PLN (up to 5 y )
Nov '13
113,718
112.05
↓ BZ WBK
4.2%
153,672
113,174
↓ Bogdanka
4.3%
Oct '13
546,487
49, 49,520. 520.84
-11%
4.5%
154,967
555,851
+2%
4.5%
Reference
538,837
-5% -12%
4.5%
↓ Handlowy
41.9
-19%
-21%
Change 1 week
-7% ↓
↓ Kernel
24
-25%
-37%
Change end of '13
-2% ↓
101.5
-13%
-14%
↓ JSW
Central Bank (NBP) Base Rates
536,237
46.9
4.6%
Lombard
NBP deposit
Rediscount
↓ KGHM
4.00%
1.00%
2.75%
↓ mBank
485.1
-11%
-3%
WIG Total closing index
↑ Orange Pol.
10.69
+6%
+9%
last three months
Credit
↓ Pekao
184
-5%
+3%
55,000
The financial sector's net lending in PLN bn,
↑ PGE
18.6
+1%
+14%
54,000
↓ PGNiG
4.31
-15%
-16%
40.55
-7%
-1%
30.2
-32%
-23%
50,000 49,000
loan stock at the end of period Type of loan
Sep '13
Nov '13
Dec '13
Jan '14
↓ PKN Orlen
Loans to customers
901,288
906,298
903,890
914,189
↓ PKO BP
- to private companies
260,585
262,396
259,061
263,063
↓ PZU
415
-6%
-8%
- to households
559,965
563,157
562,381
567,984
↓ Synthos
4.96
-7%
-9%
1,627,119 1,601,293
1,628,197
↑ Tauron
4.88
+1%
+12%
Total assets of banks
1,612,836
Source: Central Bank NBP
53,000 52,000 51,000
14 Mar 14
348.70 ↑
as of 14 March 2014
29 Jan 14
506.75 ↓
100 CHF
14 Mar 14
100 GBP
Warsaw Stock Exchange, rates in PLN
on loans to non-financial corporations PLN (up to 1 year)
7 Jan 14
423.34 ↑
23 Oct 13
100 EUR
Key indices
Term / currency
450
16 Aug 13
304.81 ↑
10 Jun 13
100 USD
Stock Exchange
Average weighted annual interest rates
20 Feb 14
as of 14 March 2014
Interest rates
7 Jan 14
100 USD/EUR against PLN
Central Bank average rates
6 Dec 13
Currency
Source: Warsaw Stock Exchange
T rade Poland's ten largest trading partners, ranked according to 2013
Poland exports and imports according to commodity groups, according to SITC classification EXPORTS in PLN bn 2013
y/y (%)
share (%)
2012
EXPORTS in PLNbn
IMPORTS in PLN bn share (%)
2013
y/y (%)
share (%)
2012
share (%)
No Country
Jan 2014
share
IMPORTS in PLN bn *2013
share No
Country
Jan 2014
share
*2013
share
10,999 20.7% 139,334 21.5%
69,304
+9.7
10.9
61,694
10.5
47,906
+6.2
7.4
44,287
7.0
1 Germany
8,624
+7.3
1.4
7,967
1.3
4,150
+4.0
0.6
3,989
0.6
2 UK
3,488
6.5%
41,503
6.5%
2 Russia
7,852 14.8%
Crude materials except fuels
15,744
+10.5
2.5
14,024
2.4
21,585
-3.7
3.3
22,053
3.5
3 Czech Rep.
3,394
6.3%
39,421
6.2%
3 China
5,497 10.3% 60,914 9.4%
Fuels etc
30,013
+1.4
4.7
29,389
4.9
75,539
-11.7
11.7
85,280
13.2
4 France
3,313
6.1%
35,745
5.6%
4 Italy
2,357
4.4% 33,703 5.2%
1,864
+34.2
0.2
1,342
0.2
2,646
-9.2
0.4
2,887
0.5
5 Russia
2,140 4.0% 34,058
5.3%
5 Netherlands
1,856
3.5% 25,005 3.9%
Chemical products
59,103
+7.7
9.3
54,295
9.1
92,917
+3.1
14.3
89,140
13.9
6 Italy
2,391
4.4% 27,450
4.3%
6 France
1,971
3.7% 24,533 3.8%
Manufactured goods by material
129,915
+2.0
20.3
126,161
21.1
112,392
0.0
17.3
110,773
17.4
7 Netherlands
2,269
4.2%
25,292 4.0%
7 Czech Rep.
1,869
3.5% 23,778 3.7%
239,434
+6.1
37.5
223,646
37.4
216,608
+4.1
33.4
203,718
32.1
8 Ukraine
n/a
2.8%
18,037
2.8%
8 USA
1,209
2.3%
17,350
82,816
+8.5
13.0
75,925
12.7
58,210
-1.1
9.0
57,646
9.1
9 Sweden
1,723
3.2%
17,498
2.7%
9 UK
1,295
2.4%
16,861 2.6%
1,782
n/a
0.2
2,653
0.5
16,242
n/a
2.6
18,515
2.8
10 Slovakia
1,293
2.4%
16,795
2.6% 10 Belgium
1,309
2.5%
14,913 2.3%
100
648,195
0.0
100
638,288
100
Food and live animals Beverages and tobacco
Animal and vegetable oils
Machinery, transport equip. Other manufactured articles Not classified TOTAL
638,599
+5.8
100
597,096
14,097 26.1% 159,622 25.0%
Source: Central Statistical Office (GUS)
1 Germany
*) preliminary estimates
79,601 12.3%
2.7%
weekly newsletter # 026 / 17th March 2014 / page 17
Industrial Industrial Properties
Regional Data Industrial output Jan 2014 *
Poland's regions (main cities indicated
Indus-
in brackets)
try
Monthly wages (PLN) Jan 2014**
Unemployment Dec 2014
Constru- Indus- Constru-in '000 ction
try
%
ction
New dwellings Jan 2014
Existing stock, sq.m
by region, Q4 2013
Num- Index *
Warsaw central
ber
VaEffective Under const cancy rents EUR/ ruction, sq.m ratio sq.m/mth
563,000
17,000
Warsaw suburbs 2,063,000
22.3%
3.6–5.1
12.5%
2.1–2.8
98.4
82.9
4,076
3,967
161.2
13.8
1,176
72.3
Central Poland
1,021,000
80,000
15.2%
2.1–3.3
Kujawsko-Pomorskie (Bydgoszcz) 107.6
138.6
3,321
3,143
156.7
18.8
608
91.0
Poznań
1,023,000
215,000
4.4%
2.5–3.15 2.4–3.3
Dolnośląskie (Wrocław) Lubelskie (Lublin) Lubuskie (Zielona Góra) Łódzkie (Łódź)
104.3
84.6
3,787
2,976
140.4
15.0
346
59.2
Upper Silesia
1,431,000
37,000
9.3%
117.8
106.4
3,396
3,030
63.5
16.5
434
82.8
Wrocław
780,000
259,000
11.7%
2.6–3.1
103.9
100.4
3,735
3,094
158.2
14.5
433
71.2
Tri-city
184,000
46,000
9.2%
2.8–3.3
Kraków
141,000
0
4.0%
3.3-4.0
97.6
100.3
3,708
3,274
172.4
12.1
1,393
70.1
Mazowieckie (Warszawa)
106.5
86.6
4,380
4,776
295.3
11.4
2,491
90.7
Opolskie (Opole)
103.7
146.9
3,509
3,460
55.0
15.0
147
86.0
Podkarpackie (Rzeszów)
102.7
146.9
3,333
2,998
160.4
16.9
585
101.9
Podlaskie (Białystok)
106.4
98.6
3,209
3,613
74.0
15.7
228
69.9
110.6
93.3
3,892
3,305
119.9
13.9
774
85.4
Śląskie (Katowice)
100.1
95.7
4,270
3,493
218.4
11.7
1,030
102.6
Warsaw
Świętokrzyskie (Kielce)
109.0
55.5
3,356
3,153
94.7
17.1
211
106.0
Kraków
Warmińsko-Mazurskie (Olsztyn)
102.1
137.1
3,427
2,964
121.2
22.4
452
135.7
Katowice
5,898
Wielkopolskie (Poznań)
108.5
85.8
3,769
3,545
152.3
10.0
1,368
137.8
Poznań
Zachodniopomorskie (Szczecin)
110.7
93.0
3,474
3,422
117.2
18.7
511
69.9
Łódź
National average
104.1
93.8
4,076
3,967 2,260.7
14.0
12,187
87.2
Wrocław Gdańsk
Małopolskie (Kraków)
Pomorskie (Gdańsk-Gdynia)
Commercial Properties New apartments* Q3 '13
City
PLN/sq.m
*) Index 100 = same period of the previous year. ** without social taxes Sources: Central Statistical Office GUS, NBP, C&W
Offices 2H'13
Retail rents**2H'13
Change Headline Vacancy Retail ratio
High
y/y
rents**
centres streets
8,146
+3.4%
11.5-25.5
11.75%
80-90
5,989
-13.1%
13-15
4.90%
35-45
78
+9.0%
13-14
7.30%
35-45
56
6,351
-6.7%
14-16
14.20%
35-45
55
4,780
-3.8%
12-14
14.40%
35-45
25
5,997
-4.3%
13-15.5
11.75%
35-45
40
6,398
-1.2%
13-15
11.20%
35-45
31
85
*avg, offer-based ** EUR/sq.m/month; Retail units 100-150 sq.m
Poland Today Sp. z o. o. ul. Złota 61 lok. 100, 00–819 Warsaw, Poland tel/fax: +48 22 464 82 69 mobile: +48 694 922 898, +48 602 214 603 www.poland-today.pl Business Review+ Editor Lech Kaczanowski office: +48 22 412 41 69 mobile: +48 607 079 547 lech.kaczanowski@poland-today.pl
Foreign Direct Investment (EUR m) Q1 '13
Q2 '13
Q3 '13
1,861
1,381
2,886
175
-3,020
-1,794
310
-550
-1,203
2007
2008
957
2,588
-1,529
2009
2010
2011
2012
in Poland
17,242
10,128
9,343
10,507
14,832
4,716
Polish DI
-4,020
-3,072
-3,335
5,484
-5,276
375
CA balance vs GDP
-8,893 -10,059
-5,313
-139 1,203
1,017
2,334 4,048
4,816
1,274 1,686
1,047
-18,129 -17,977 -13,332 -5.1%
-5.0%
-3.7%
15
-2,313
486 -2,027
-3.1% -2.3%
-2.0%
A-
stable
Standard & Poor's
A-
stable
Moody's
A2
stable
12
6 months- EUR 375 (PLN 1480) 3 months- EUR 245 (PLN 980) Sales Director James Anderson-Hanney
Real Earnings
mobile: +48 881 650 600
Average gross wage vs inflation. 9
2,000
1,800
6
Source: NBP, BZ WBK Source: Central Statistical Office GUS
Wage
180 160 140 120 100 Jan 10
Sep 11
May 11
Business Review+ Subscription 1 year- EUR 690 (PLN 2760)
Source: Rating agencies
Q4 13
CA balance
2012 Q1 '13 Q2 '13 Q3 '13
outlook
2,400
Q2 13
Services, net
2011
number (left axis) % (right axis)
2,600
rating
Fitch Ratings
% of population in working age
Q4 12
Trade balance
2010
Agency
Registered unemployed, in ‘000 and
2,200
Current Account (EUR m) Period
Unemployment
Q2 12
Year
Q4 '12
Q4 11
Polish DI
Q3 '12
Q2 11
in Poland
Q2 '12
Q4 10
Quarter
Country Credit Ratings
james.anderson-hanney@poland-
CPI
Jan 12
Sep 12
Index 100 = Jan 2005. Source: GUS
May 13
today.pl
Jan 14
Publisher Richard Stephens Financial Director Arkadiusz Jamski Creative Director Bartosz Stefaniak New Business Consultant Tomasz Andryszczyk