Poland Today Business Review+ No. 050 by Poland Today Business Review+

1 year subscription: EUR 690 (PLN 2760) Newsletter Editor: Lech Kaczanowski lech.kaczanowski@poland-today.pl tel. +48 607 079 547 Sales Contact: James Anderson-Hanney james.anderson-hanney@poland-today.pl

No. 050 / 1st September 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter

MANUFACTURING & PROCESSING ARX Equity Partners acquires window coverings maker Anwis page 2

FOOD & AGRICULTURE Poultry giant Cedrob seeks mulling merger with listed meatpacker PKM Duda page 11

ENERGY & RESOURCES State investment fund PIR lends PLN 430m to Grupa Lotos page 3

RETAIL IKEA speeds up Poland expansion; breaks ground on 30,000 sq.m Bydgoszcz store page 12

Two thirds of Poles support development of nuclear energy page 4

Donald Tusk (left) will succeed Herman Van Rompuy (centre), working alongside Italy's Federica Mogherini (right), who was chosen as EU's new foreign policy chief. Photo: M. Śmiarowski/KPRM

Polish PM Donald Tusk gets top EU job

In a historic decision that cements Poland's emergence as an important player in the European Union ten years after it joined the bloc, EU leaders have appointed Polish Prime Minister Donald Tusk as European Council president. Mr. Tusk's departure for Brussels later this year will lead to a major shake-up of Poland's political scene where a new cabinet has to be put together shortly before next year's general election. page 14

tel. +48 881 650 600

Pharma distributor acquires drugstore chain Drogerie Natura page 13

Grontmij & Arcadis to draft flood risk management plans for Poland page 4

Retail sales up by 2.1% y/y in July page 14

PROPERTY & CONSTRUCTION Amstar and BBI buy Złota 44 from Orco page 5

POLITICS & ECONOMY Government reaches out to pensioners and poor families as elections loom page 15

TRANSPORT & LOGISTICS Panattoni Europe breaks ground on its 5th logistics park in Poznań region page 6

GDP rises 3.3% in Q2 on domestic drivers page 16

Wizz Air boosts Poland capacity by 25% page 7

KEY FIGURES Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 17-19

InPost parcel lockers to debut in Malaysia page 8

July jobless rate lowest since 2011 page 16

CEE M&A AND PRIVATE EQUITY FORUM 2014 CROSS-BORDER OPPORTUNITIES WITHIN EASTERN EUROPE 2 OCTOBER 2014 THE WESTIN, WARSAW Mergermarket’s Central & Eastern European M&A Forum is taking place this Thursday. Don’t miss out – make sure you join us to hear from expert speakers who will share their thoughts on the key deal trends likely to be seen in the CEE region over the next year.

Strategic partners:

Confirmed speakers include: • Roland Haidner, Director of M&A, Telekom Austria

• Artur Tomala, Managing Director, Goldman Sachs

• Bohdan Malaniuk, Deputy Head of M&A, CEZ

• Alexander Merwart, Director, Leveraged Finance, Commerzbank

• Przemysław Schmidt, Board Member, Czerwona Torebka SA

• Dominique Le Maire, Managing Director, Unicredit

• Krysztof Krawczyk, Managing Partner, Innova Capital

• Michal Surowski, Head DCM Poland, Societe Generale CIB

• Robert Manz, Managing Partner, Enterprise Investors

• John-Paul Warszewski, Managing Director, Nomura International plc

• Piotr Nocen, Managing Partner, Resource Partners

• Ivan Meloun, Head of Acquisition & Leveraged Finance, CSOB

• Bart Dujczynksi, Investment Director, Kulczyk Investments

• Tomasz Kwiecien, Managing Director, Mezzanine Management

• Tomasz Blicharski, Associate Director, Mid Europa Partners

• Maciej Dyjas, CEO, Eastbridge Group

• Till Burges, Principal, HarbourVest

• Dominika Zbychorska, Director of M&A, PZU

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Media partners:

Internationally engaged

Places are limited - book your place today at events.mergermarket.com/cee-poland2014 Please use the registration code PT14 when booking

For a full line-up of speakers, to download the agenda or register your place, please visit: mergermarketgroup.com/event/cee-poland2014; email events@mergermarket.com or call +44 (0) 207 010 6219

weekly newsletter # 050 / 1st September 2014 / page 2

MANUFACTURING & PROCESSING

ARX Equity Partners acquires window coverings maker Anwis Private equity company ARX Equity Partners (ARX) and experienced executive Jacek Gromniak have successfully carried out a management buy-in of Anwis Polska, a top Polish producer of custom-made window coverings and one of the leading manufacturers of window coverings and related components in Europe. Financial details of the transaction, made by ARX CEE III LP, were not disclosed. Anwis founder Antoni Wiśniewski, who had led the company for 35 years, will continue supporting the company as supervisory board member. With sales revenues of EUR 22.6m in 2013, Anwis operates in Poland, where it has a market leading position, and Germany. The Włocławek-based company will seek to further strengthen its position in these markets, as well as looking towards international expansion in the Benelux countries and France. ARX and Gromniak plan to grow Anwis through organic expansion in existing and new geographies, with selective add-on acquisitions possible in the medium term, ARX representatives said. "Exports generate approximately a half of Anwis' revenues and distribution abroad is being handled by local dealers and producers. Anwis aims to significantly boost its exports to Western Europe, at the same time maintaining its current market share in Poland. We are looking at acquisition targets in Poland and abroad with the view to increase its market shares as well as product range," ARX Co-Managing Partner Jacek Korpała tells Poland Today.

"Anwis is a clear market leader in Poland in custommade interior windows coverings. It has grown sales dynamically over the past few years, exceeding the overall market trend, and we believe that it can further leverage its strong reputation for product quality and service capabilities to grow in Poland as well as internationally, said Jacek Gromniak, who will become the new CEO of the business. Mr. Gromniak is wellacquainted with this market segment as he had previously served as CEO of Somfy Poland, the local unit of major multinational manufacturer of motors and controls for window covering systems. Somfy has recently launched a production plant in Poland which will gradually become one of the company largest units worldwide.

Anwis is Poland's leading producer of custom-made Source: Anwis window coverings. The market for tailor-made interior window coverings is forecast to grow steadily in the coming years, with areas addressed by Anwis forecast to grow faster than the overall market at in excess of 5% per annum over the medium-term. The German market for tailor-made interior window coverings is currently worth around EUR 400m, while the Polish market for interior and

exterior window coverings is approximately half of this size. "Anwis is great illustration of the succession-driven dealflow opportunity in CEE, and another example of ARX providing a tailored transaction solution to a retiring founder while partnering with a seasoned and entrepreneurial buy-in manager.," says Jacek Korpała. Since the founders of many businesses established in the 1990s are beginning to seek successors, there has been a growing talk about the opportunities this generational shift may crate for private equity investors. "Although so far we have not seen many transactions like the Anwis deal, we believe things will change in the coming years, mainly because of the passing time, but also due to changes in the economy. Polish entrepreneurs are in no way less open to cooperation with PE funds than their Western European peers, but they often take longer before initiating the succession process," Jacek Korpałą tells Poland Today ARX focuses on lower mid-market buyouts in Central and Eastern Europe, targeting companies within the EUR 10-50m turnover range. Since 1998 the fund has completed more than 20 buyouts in the region. Their Polish portfolio includes pet products retailer Kakadu and children's clothing chain 5.10.15. In December last year the fund exited Polish plastics processor Ergis Eurofilms, generating an overall internal rate of return of over 33% and 4.5 cash-on-cash multiple. "We are expecting to exit 5.10.15 and Kakadu next year," says Korpala.

weekly newsletter # 050 / 1st September 2014 / page 3

ENERGY & RESOURCES

State investment fund PIR lends PLN 430m to Grupa Lotos Ten months after it began analyzing the project, Poland's state-run investment vehicle Polskie Inwestycje Rozwojowe (PIR) has sealed the agreement to provide oil refiner Grupa Lotos with PLN 430m worth of financing for a new offshore upstream project in the Baltic Sea. The project, worth nearly PLN 1.8bn, will enable the Warsaw-listed Lotos to make use of its license and develop the B8 deposit, thus significantly boosting the group's own oil production.

will transfer its license and oil rig to the SPV as contribution in kind. According to the company, this is the first extraction project in Central Europe to be implemented using the project finance formula.

should double to 33%. The increased use of own resources should contribute to the improvement of the energy security of the state," said Włodzimierz Karpiński, Minister for the Treasury.

The recoverable resource potential of B8 is estimated at 3.5m tons of crude oil. The launch of industrial production from the B8 deposit is scheduled for late 2015, with annual output being estimated at ca. 250,000 tons of crude or around 5,300 barrels of oil equivalent per day. The raw material will be delivered to the Lotos refinery in Gdańsk, and the parallel product, natural gas, will be supplied to the already operational CHP plant in Władysławowo.

Lotos was the first company to sign a cooperation agreement with PIR in October last year (see BR+ No. 007 page 5) and its B8 project is the first to receive funding from the state-controlled investment vehicle. Led by Mariusz Grendowicz, the former CEO of mBank, PIR mediates in the allocation of low-cost capital for strategic projects that have a hard time raising commercial financing. Created last year as part of the government's "Polish Investments" program to stimulate economic recovery by investing future privatization proceeds into projects of strategic importance, PIR has recently agreed to inject up to PLN 750m into a PLN 1.5bn cogeneration project in Silesia, developed by Tauron (see BR+ No. 027) as well as PLN 150m into a public-private heat & power plant project in Olsztyn (see BR+ No. 022 page 4).

The financial commitment from PIR enabled Lotos to get additional financing for the project to the tune of ca. PLN 660m from Bank Gospodarstwa Krajowego (BGK) – another state-controlled entity, as well as Bank Pekao SA, the Polish unit of Italy's Unicredit. "With advanced financial engineering, it was possible to create the right conditions for banks to provide long-term loans. So far, no one has carried out such a complex and multi-level transaction in the oil production sector in our part of Europe," said PIT CEO Mariusz Grendowicz.

According to the available geological estimates, the potential resources covered by Grupa Lotos' license for that section of the Baltic Sea are close to 30m Source: Grupa Lotos tons of crude oil.

So far, Lotos has been financing all work on the B8 project from its own resources. According to the agreement between the refiner, PIR, and the banks, from now on the investment will be carried out under the project finance formula, by a special purpose vehicle appointed for that purpose. Its sole shareholder will be Lotos' extraction arm Lotos Petrobaltic, which

"It is a very important investment, aligned with our strategy of supporting domestic exploration and production activities of Polish companies. We estimate that the annual yield from the B8 deposit should account for nearly one-third of the current oil production volume in Poland. Owing to the project, the share of Baltic Sea deposits in domestic oil production

The fund's other projects included a PLN 120m investment into a PLN 560m fiber optic joint venture with backbone network operator HAWE (see BR+ No. 018 page 12, and possible participation in a PLN 12bn petrochemical project by Polish refiner Grupa Lotos and chemical company Azoty (see BR+ No. 014 page 2). In June PIR has agreed to inject some EUR 30-40m into a private equity fund managed by EnerCap that will focus on development of heat & power sources in Central and Eastern Europe (see BR+ No. 040 page 4). So far eight projects with a combined value of PLN 6.6bn have received an initial green from PIR, but Lotos was the first one to close an agreement on financing. PIR is currently analyzing 53 investments.

weekly newsletter # 050 / 1st September 2014 / page 4

ENERGY & RESOURCES

among the Poles is highly dependent on international situation," PISM analysts said of the survey results.

Two thirds of Poles support development of nuclear energy As the Chernobyl and Fukushima disasters are becoming an increasingly distant memory, and amid growing tensions between Russia, Poland's key supplier of gas and oil and the West, the Poles are warming up to the idea of nuclear power as a way of securing energy independence. According to a brand new survey by think tank PISM, almost two thirds of Poles (64% to be exact) support development of nuclear plants in the country. The support is the highest among young, well-educated city dwellers but it is considerably weaker in the western part of the country than in central or eastern Poland. The survey shows that 48% of respondents regard nuclear energy as a way of making Poland independent in terms of energy, although even more (58%) see development of renewable energy sources as the best way forward. Other potential solutions mentioned include shale gas (chosen by 21% of those polled) and further expansion of coal-based power generation (8%). "The Poles seem to believe that increasing the role of fossil fuels in the Polish economy, regardless of successful diversification of suppliers or growth in domestic extraction, will cement Poland's dependence on Russia. Although support for nuclear plants dropped in Poland in the wake of the Fukushima tragedy and Germany's subsequent decision to abandon this energy source, it has bounced back as a result of the Ukraine crisis, making up for the earlier decline. It proves once again, that the support for nuclear energy

PGE listed Żarnowiec, Choczewo and Gąski on the Polish Baltic coast as the most likely locations of the country's first nuclear plant, with Żarnowiec being Source: PGE the most likely candidate.

Poland's first nuclear power unit is to go online by 2025, according to the national nuclear power program the Polish government adopted earlier this year. The first unit would then be set to start up by the end of 2024, with a second unit starting up by the end of 2030. The second nuclear power plant is scheduled for operation around 2035. PGE has signed non-exclusive agreements with reactor vendors to investigate Areva's EPR, GE-Hitachi's ABWR and ESBWR, and Westinghouse's AP1000 as potential technology choices for the project. A timeline issued earlier this year by the Polish government foresees selection of the location and reactor technology for the first plant by the end of 2016, with all the necessary construction approvals in place by the end of 2018. Australian company Worley Parsons was recruited to carry out site characterization work under a PLN 252m agreement signed last year. In July PGE chose British engineering firm Amec as the technical adviser for its nuclear power plant project, under a bid worth just over PLN 1.3bn, with PLN 205m of that for "required work" and PLN 1.1bn for optional services.

Poland, which currently relies on its vast coal reserves to produce about 90% of its electricity, is scrambling to find alternative energy sources - including nuclear and shale gas - to meet European Union greenhouse gas emission limits by 2020. Faced with growing pressure from the EU, which expects Poland to gradually do away with its coal-fired power stations, the government has been keen to find a viable long-term alternative, albeit one that would not increase the country's dependence on Russian gas. According to plans, by 2035 nuclear power plants are to generate 36% of the country's electricity. At the same time, the highly polluting lignite-fired stations are to see their share drop from 66% as of end of 2010 down to 34%.

ENVIRONMENT

Grontmij & Arcadis to draft flood risk management plans for Poland Dutch consulting & engineering company De Bilt – Grontmij, in consortium with UK's Arcadis, Denmark's DHI Group and the Polish Institute of Meteorology & Water Management (IMGW)have been recently appointed by the Polish National Water Management Authority (NWMA) to prepare comprehensive flood risk management plans for Poland, covering at least 15,000 km of the country’s rivers or roughly 90% of its territory. River flooding is the most destructive natural hazard in the Baltic Sea Basin, particularly in Poland. Flood risk management and flood resilience became major issues following the dramatic floods in Poland in 1997 and 2010, when dozens of people were killed. The

weekly newsletter # 050 / 1st September 2014 / page 5

winning consortium are to draft flood risk management plans over the coming 1½ years for a total fee of EUR 10m. The NWMA will use the flood risk management plans to improve the flood protection level, reducing the potential negative impact on human life and health, environment, cultural heritage and economic activity. The project – part of the final stage of the implementation of the European Union Flood Directive – will have a major impact on all future flood protection activities in Poland. The FRMPs should be completed and approved by the Polish Government by the end of 2015. The FRMPs will then be updated every six years. "The primary objective of Grontmij’s assignment is to draw up the flood risk management plans for Odra river basin. Arcadis is responsible for provision of similar services with regard to Vistula and Pregoła river basins. DHI is the provider of IT and software technology cooperating closely with the with content related teams working in river basins. IMGW is the leader of the Consortium," Piotr Szymczak, Head of the Consulting Group at Grontmij Polska tells Poland Today. Grontmij and its partners will advise on the definition of flood risk management goals and flood hazard and will conduct risk assessments, to create the ultimate flood management plans for the river basins. "The Odra river basin, the area of responsibility of Grontmij, is divided into five working subareas, each with a different catchment area characteristics and identified flood hazard and risk. A pool of additional experts has been hired or subcontracted taking into account the above mentioned unique features of every water region. This project sets a firm basis for further development of Grontmij water business in Poland," says Szymczak. "Flood risk management plans must be formed in coordination between the various stakeholders responsible for different areas of activities, such as water man-

agement , spatial planning, human security, crisis management , cultural heritage , protected areas , etc. and their objectives should be included in plans concerning those areas," he adds. Established in 1915, Grontmij is listed on the NYSE Euronext stock exchange. As one of the leading European water experts, Grontmij has capabilities to service the full water value chain; from flood protection to improving the quality of drinking water. Grontmij Polska is a Polish company which operates within the European structure of Grontmij with almost 300 experts (160 FTEs) in engineering, economics and law, offering consultancy and engineering services to public and private investors. In Poland, Grontmij supervises the modernization of the Wrocław Floodway System, the biggest in Poland and one of biggest in Europe system of waterways and hydraulic structures. The company is also involved in three out of six incineration plants that are currently under construction in Poland. In the past, the Dutch consultancy supervised a major portion of the Poznań city bypass and in June 2010 it issued Poland's first BREEAM sustainable building certificate for Ghelamco's Trinity Park office project in Warsaw.

PROPERTY & CONSTRUCTION

Amstar and BBI buy Złota 44 from Orco Real estate developer Orco Property Group has sold its flagship project Złota 44 in downtown Warsaw to Skyline Residences, a special purpose entity registered in Luxembourg by US property fund Amstar and Polish firm BBI Development. The transaction totaled EUR

63m although according to unofficial estimates Orco had invested some EUR 100m more in the project. Designed by Polish-born celebrity architect Daniel Liebeskind, Złota 44 aimed to be the most luxurious apartment building in Poland, offering a wide range of additional services and facilities available exclusively to its residents, including a 25m indoor swimming pool, sauna, and spa. Located between the Palace of Culture and the Central Railway Station, the 192m high tower were to become Europe's second-tallest all-residential skyscraper, with 54 storeys and 251 apartments. Orco broke ground on the project in 2007, but its completion has since been delayed several times and sales of apartments have been rather disappointing. According to most recent plans, Złota 44 were to be finalized in spring 2014 but Orco has instead written off EUR 121m on the project, thereby admitting it had been a huge commercial fiasco.

BBI Development is in touch with the renowned Polish-born American architect Daniel Libeskind who designed Złota 44. The company is going to make some adjustments in the project but their exact extent is to be decided within the next few months. Image: ARUP

Orco's net loss amounted to EUR 227m last year, compared to EUR 42m in 2012. Its gross asset value stood at EUR 1.035bn last year, down by EUR 313m from the

weekly newsletter # 050 / 1st September 2014 / page 6

prior year, largely due to a like-for-like drop in assets' value. The French company had never recovered from the shock of the global financial crisis and it was rescued from bankruptcy by Czech billionaire Radovan Vitek, who offered the ailing business an equity boost. Amstar paid EUR 63m for Złota 44, with BBI Development expected to invest EUR 2m into the scheme by the end of Q1 2015, remaining a minority shareholder. The two partners are to obtain further financing for the project from banks, but should the project go over the estimated budget, BBI is to pitch in an additional EUR 1.25m with Amstar expected to contribute EUR 3.75m more. BBI Development will manage and oversee the development process, with its responsibilities including selecting a general contractor for Złota 44, as well as managing the apartment sales process and commercializing the retail space in the building. Construction on the development will be re-launched in the first quarter of next year and finished in 2016, said Michał Skotnicki, the CEO of BBI Development. The company is in talks with Inso which was the general contractor before work on Złota 44 was put on hold. Złota 44 was topped out in February 2012 and its façade has since been completed but the new owners will have to fit out the building's interiors and deal with an even greater challenge of convincing wealthy homebuyers that the project does indeed offer the prestige Orco had promised to deliver nearly a decade ago. The building's much-touted design has failed to impress critics, and investor expectations with respect to Warsaw's residential market have become much more realistic than at the peak of the post-EU accession property boom. Orco has reportedly managed to sell some 20% of apartments in Złota 44 Established in 1987, Amstar is a real estate investment manager that acquires, develops and manages office,

multifamily, retail, hotel and industrial properties in select US and international markets. With its headquarters in Denver, Colorado, and additional offices in London, Istanbul, Kiev, Bermuda and New Delhi, Amstar’s team consists of more than 73 employees worldwide. Amstar Advisers, LLC is an SEC-registered investment adviser with USD 2.6bn in assets under management (as of June 30, 2014). As for BBI, following last year's completion of a PLN 600m mixed use development Plac Unii that comprises three buildings with a total GLA of 56,800 sq.m, and includes also 41,300 sq.m of class A+ offices, the Polish developer and its Belgian partner Liebrecht & wooD are working on another major office & retail scheme in Warsaw, the Koneser project in the Praga district. Located on a 5ha site between Ząbkowska, Nieporęcka, Białostocka and Markowska streets, the project will comprise over 300 housing units, 22,500 sq.m of retail and service space and 22,000 sq.m of offices. Liebrecht & wooD joined forces with BBI Development to develop the retail & office section of Koneser, which constitutes around 59% of the total space at the complex. The investment value is set at PLN 450m, and the completion of the project is planned for 2017. BBI has just recently broken ground on a 13,000 sq.m office & retail bulding Centrum Marszałkowska, locatd on top of Warsaw's Świętokrzyska subway station. The company's other major future undertakings will be include 180-metre class A office skyscraper in the very centre of Warsaw, at the corner of Emilii Plater and Nowogrodzka streets. In the residential segment, BBI is developing luxury condos as part of its Rezydencja Foksal project near Warsaw's high street Nowy Świat.

TRANSPORT & LOGISTICS

Panattoni Europe breaks ground on its 5th logistics park in Poznań region US industrial property developer Panattoni Europe has acquired an 18ha site for its 4th distribution complex in the Poznań area, Panattoni Park Poznań IV, which is planned to offer 116,500 sq.m at full build-out, bringing the company's total warehouse stock in the region to 320,000 sq.m. Phase one of the project, a 35,000 sq.m building, is already under construction with completion scheduled for February 2015. Panattoni has also secured the first tenant for the park, Poland's listed IT and consumer electronics distributor Komputronik that will take up 10,000 sq.m in building one. According to a recent report by property consultancy JLL, warehouse vacancy rate in Western Poland remains considerably lower than elsewhere in the country, as growing numbers of investors appreciate the region's strategic location as a logistics hub for Western and Eastern Europe. Both in Poznań and Wrocław vacancies are slightly over 50,000 sq.m (4.7% and 6.2%, respectively). Moreover, since this floor space is divided between a number of parks, tenants seeking larger areas often need to consider working with a developer on the delivery of a brand new scheme, JLL said. "The Poznań market is going from strength to strength. It is enough to look back at the first half of this year. The region can boast the highest amount of

weekly newsletter # 050 / 1st September 2014 / page 7

space completed with as much as 82,500 sq.m, with net demand reaching 103,000 sq.m, i.e. twice as much as in H1 last year," comments Robert Dobrzycki, Managing Partner Panattoni Europe. "There are 215,000 sq.m currently under construction, of which nearly half is thanks to the efforts of Panattoni Europe and the development of the logistics centre for Amazon. The warehouse space we offer in the region includes BTS facilities, as well as 'multi-let' warehouses, leased by such global brands as Hennes & Mauritz, Raben, or Henkel".

ing 360,000 sq.m. Apart from the facilities for Amazon, this figure is comprised of such investments as the recently established Panattoni Park Sosnowiec or Panattoni Park Poznań III, as well as a new facility at Panattoni Park Łódź East. Panattoni was the most active of all developers in the first half of 2014, delivering 108,000 sq.m of space (36% share of total completed stock), and was followed by MLP with 43,000 sq.m (14%), and Prologis (35,000 sq.m - 12%). During the first half of 2014, developers delivered 298,000 sq.m of new supply, marking an 85% increase on 1H 2013. The largest completions so far in 2014 have involved Panattoni's BTS for Castorama in Stryków (50,000 sq.m), the extension of Prologis Park Wrocław V (35,000 sq.m), and a BTS project for US quad manufacturer Polaris completed in Opole, also by Panattoni.

Effective rents remain stable in 1H Key industrial market indicators as of Q2 2014 *Effective Region

rents EUR /sq.m/month

Warsaw inner city

Panattoni Park Poznań IV is to include three buildings with a combined warehouse space of 116,500 sq.m. Image: Panattoni

Panattoni Park Poznań IV will three buildings, featuring modern class A space, suitable for warehousing and also light manufacturing. The investment is located in Komorniki near Poznań between important road junctions on the A2/S11 motorway connecting Berlin and Warsaw - "Poznań West" interchange and "Komorniki" interchange. With such close proximity of the city and well developed public transport infrastructure, the facility's location is easily accessible to the qualified labour pool from the 650-thousand agglomeration. At present, Panattoni Europe is developing the largest amount of new warehouse space in the market, total-

Warsaw suburbs Upper Silesia

Vacancy

Supply in sq.m

rate

3.5-5.0

15.6%

587,000

2.1-2.8

11.6%

2,064,500

2.4-3.3

9.4%

1,452,500

2.25-3.3

4.7%

1,086,000

Central Poland

2.1-2.8

17.2%

1,180,500

Wrocław

2.5-3.1

6.2%

815,000

Tri-City

2.5-2.9

9.5%

205,000

Szczecin

2.7-3.4

3.2%

61,500

Kraków

3.3-4.0

99,000

Poznań

Source: JLL *) refers to Big Box units except Warsaw inner city with Small Business Units

In terms of the ownership structure of the Polish industrial market, more than half of existing floor space is in the hands of the three largest market players and their partners. The largest share of stock is owned by Prologis (26%), followed by SEGRO (13%) and Blackstone (12%). Despite being the most active on the de-

velopment front, Panattoni owns merely 5% of the existing stock, as the company's strategy is to dis-pose completed projects.

TRANSPORT & LOGISTICS

Wizz Air boosts Poland capacity by 25% Hungarian low cost airline Wizz Air has announced a large-scale expansion in Poland with three new aircraft and 25% y/y capacity growth targeted in 2015. With these new services Wizz Air is now offering a combined total of 103 routes to 47 destinations from its seven Polish airports. The airline has also increased frequencies on some of the most popular routes across its Polish network. From 17 January 2015 the airline will launch two new winter services to ski destinations, connecting Warsaw with Verona and Turin with one flight per week. The airline will also deploy a fifth Airbus A320 aircraft adding 6 new services from 29 March 2015. Four weekly flights will operate from Warsaw to Dortmund, two weekly flights to Larnaca and Lisbon and weekly services to Alicante, Catania and Malta. The airline has also increased frequencies on some of its most popular routes from Warsaw in the summer 2015 season. London Luton, Brussels Charleroi, Milan Bergamo, Budapest, Paris Beauvais, Eindhoven, Glasgow and Liverpool will be operated with more weekly flights than before starting 29 March 2015. With these 8 new services Wizz Air is now offering a total of 30 routes to 16 countries from Warsaw Chopin Airport. In August 2014 Wizz Air celebrates the 10th anniversary of operations from the Polish capital, during which time a total of 9m passengers chose the air-

weekly newsletter # 050 / 1st September 2014 / page 8

line's services to and from Warsaw. With the addition of the fifth Airbus A320 aircraft, Wizz Air’s investment in Warsaw rises to above USD 400m and the base grows to close to 200 employees.

Wizz Air is Poland's No. 3 airline

Molde (Norway) and Frankfurt Hahn, from Katowice to Belfast, from Poznań to Malmo and from Lublin to Stockholm Skvasta. This announcement follows earlier growth in the Polish regions of Gdańsk, Katowice, Poznań, Szczecin and Warsaw Chopin. "Today is another major step forward for Wizz in Poland. In merely three weeks we have announced three new Poland-based aircraft, 13 new routes and 1.4m additional seats in 2015. We are highly committed to continuing to bring more of our low fares and optional services to best meet the needs of the Polish traveling public. Wizz's ever expanding network and increasing frequencies on existing routes will certainly attract more passengers traveling on leisure or business. Our growth will generate over 1,400 jobs across Poland and boost tourism across the country, commented József Váradi, CEO of Wizz Air at a press conference in Warsaw.

Passengers on routes to and from Poland incl. domestic, in million

Ryanair

LOT*

WizzAir

Lufthansa

EasyJet

Norwegian

SAS

2013 2012

Air France

KLM

0.0

1.0

2.0

3.0

4.0

5.0

6.0

and Poznań, and flies also to Lublin and Szczecin. As the country's third largest airline, after Ryanair and LOT, WizzAir expects to carry 4.6m passengers on Polish routes this year. At last week's conference Váradi admitted that the company is increasingly interested in launching domestic flights in Poland, but its current aircraft are too big to offer satisfactory seat occupancy ratios. At the moment WizzAir flies only Airbus A320 180-sitters.

TRANSPORT & LOGISTICS

InPost parcel lockers to debut in Malaysia This November, Polish postal services group Integer.pl will introduce its innovative parcel locker solution InPost to Malaysia, its second Asian destination after Hong Kong. InPost Malaysia will be supported by a local partner Impressive Communications Sdn. Bhd., an experienced IT solutions integrator. The first stage will see a total of 140 of InPost's automatic lockers deployed across the Klang Valley by the end of 2014. It is expected that the national network will reach 350 installed automated terminals by 2016 and will be available in such location as shopping malls, universities and residential areas/compounds.

7.0

Source: ULC *) including Eurolot

Last week Wizz Air said it would will deploy two new aircraft in Katowice and Poznan, bringing its fleet in Poland to 18 Airbus A320. The 5th Katowice and 2nd Poznan based aircraft will be delivered on 29 March on 21 May, respectively. Wizz Air also announced five new services starting in early 2015 from Gdańsk to

WizzAir is beefing up Polish bases with three new aircraft. Photo: WizzAir

The importance of Poland for WizzAir can be illustrated by the fact that the company will soon keep a third of its entire fleet (which totals 53 aircraft) in Poland, where it has bases in Warsaw, Gdańsk, Katowice,

"Asia will soon be the world's largest e-commerce market and we as the global leader in automated parcel networks have decided to make a strong commitment to the region. Malaysia is one of the seven 'Asian Tigers,' and it is also a strategic market for further entry into South East Asia thanks to the market’s maturity and openness to innovation. Taken together, Malaysia and Singapore generate almost 50% of e-commerce sales in South East Asia despite barely representing

weekly newsletter # 050 / 1st September 2014 / page 9

8% of its total population," says Rafal Brzoska, CEO of InPost.

InPost parcel lockers have been a global hit. Photo: InPost

In Hong Kong, InPost has established cooperation with CX Courier Ltd. - a leading Asian courier company - to implement 300 terminals by the end of 2016. The first terminals will be available as early as Q4 2014 and 150 are planned to launch in 2015. In the Middle East North Africa (MENA) region, InPost announced a joint venture with logistics and transportation solutions provider Aramex. The partnership will ensure consumers across the MENA region and Africa will be able to access private automated parcel lockers for all e-commerce activities. The network is planned to officially start at the end of 2014 and will cover, amongst others: the United Arab Emirates, Saudi Arabia, Oman, Bahrain, Qatar, Jordan, Lebanon, Kuwait, Egypt and the Republic of South Africa.

However, despite its recent inroads into Asia and South America, Europe remains Integer.pl's key market. Recently, InPost signed strategic agreements with Carrefour Italy, TNT Express Italy and with the leading Italian e-commerce platform- Banzai. Up to 1,000 InPost parcel lockers will be deployed in Italy by the end of 2015. Moreover, InPost confirmed cooperation with Transport for London (TfL) to locate InPost parcel lockers at parking near London Underground stations. There are an estimated 3,500 parcel lockers that rely on the Integer.pl technology in operation globally at the moment, most of them in Europe. After debuting in Latin America and Asia, the next big target for InPost is the US, where Integer.pl wants to launch 10,000 locations by 2016. The global expansion, which has taken Integer.pl's parcel lockers to 20+ countries and 500 cities around the world, has been partially financed by PineBridge Investments, the global multi-asset class investment manager. Two years ago the two companies agreed to invest EUR 108m in the easyPack venture that drives the international expansion, with PineBridge contributing EUR 50m, and the Warsaw-listed Integer.pl – the outstanding EUR 58m. But the original funding began to run dry, especially since by 2016 the total investment outlays may reach EUR 1bn. In a move to keep up the momentum, in mid-April Integer.pl raised EUR 53m from a private placement aimed at nearly 150 Polish and international investors. Currently, Integer.pl is working to add an extra 6,000 parcel lockers to its network globally.

Poland Today talks to: Rafal Brzoska, CEO of InPost (See the upcoming September issue of Poland Today's print magazine for a full version of the interview)

• PT: How did your career in business begin? RB: I started in 1999 when I was still a student. I was in my third year at the University of Economics in Kraków when I decided to set up my company. I started with a very simple kind of business – the delivery of supermarkets' leaflets. Supermarkets were booming in the late 1990s and that was a very good starting position. Thanks to that I gained experience. Within two years we became a market leader with this kind of service, with a 40% market share. So when my colleagues graduated I already had a quite valuable asset – a company that was worth millions by 2003. • PT: Really? You had built a company worth millions in just four years? • RB: Yes. A private equity fund offered to buy the business and the valuation was something like PLN 25m. That was a good experience for me. I wasn't aware of the business's value, frankly speaking. I refused the offer and I decided to continue growing my own business. The result was that in 2006 we set up the first private postal operator in Poland, InPost. We decided to compete with Poczta Polska (Polish Post), a state-owned company with strong support from the government. Despite that, we were able to build strong competition.

weekly newsletter # 050 / 1st September 2014 / page 10

We began our most exciting project in 2010: the parcel machines project. Now we are spending hundreds of millions of euro to develop it in various countries. We are already present in 22 countries. It is definitely the most important project within the company. So far I am satisfied with the achievements. I think that I have achieved 15 or maybe 18% of my goal. So there is still a lot to do. And I am definitely not planning to cash out or change the interest in terms of the business activity. • PT: How were those early years of starting out when you were competing with a state-owned giant? RB: There was, and there still is, difficult competition. If someone decides to compete with a state-owned company, they have to be aware that they will face a lot of difficulties. That was exactly what we had starting from the beginning all the way up until now. It’s definitely unfair. Unfortunately it’s an ongoing story. Nevertheless, we are winning. If we are growing, it means we are successful in this competition . Some of the battles we have lost, but I think that most of them we have won. And the success is a combination of strong belief, strong execution, good people, teamwork, and also a lot of money spent especially to strengthen our position, both at the beginning and on the ongoing rivalry . We invested widely only this year to protect ourselves, to recover in terms of PR and brand because of the strong attack at the beginning of the year when we and our partners won a big tender run by the Ministry of Justice. We were attacked down the whole line. So I think this is a very good case study for MBA students: how to react and recover after such an attack, and how prove that you are really providing better quality than the state-owned company, despite the mess they create publicly. During our history we have faced many problems, but also many positive effects. Only going forward, devel-

oping new services, implementing innovative ideas – that is how we are reacting to this kind of issues. We always try to be a few steps ahead of the competition, not only in the postal business. In the parcel business we do exactly the same thing. Four years ago no one in the global market was convinced that automatic parcel machines would be the future of logistics. Now, we have created the current mania around parcel machines. We are the global leader. Ninety-five percent of the machines produced over the last two years came from our factories. So that is how we deal with the strong competition that we face. • PT: So what lessons should others draw from your company's experience? RB: It won't be a fair game – that is the main lesson. Second, you must be very consistent in your main strategy. You can't change the strategy every quarter or every year, because this is something that will negatively affect the business. You also have to have a resistance to being attacked. You may be attacked, not only from one side, but from every side, even from sides you are not expecting you will be hit. This year we were visited by all the inspectors from all kinds of authorities. • PT: So where does that fit in when it comes to the challenges Poland has to face going forward? RB: We have a lot to do– not even to improve, but to show to society that businesspeople are not thieves. Businesspeople provide a lot of jobs. Within the Integer.pl Group I employ 10,000 people. I pay a lot of taxes – here in Poland, too, not in (tax haven) Cyprus, for example. So this is still a long journey. We need to prove that Poland and the Polish economy are business friendly. Frankly, I am not astonished about all of the results where Poland as a country is ranked low in terms of doing business. Living here and being aware of the situation, I know that this is the result of what I have

seen. I would be disappointed if we were in 10th place and we are not feeling it. It is not giving me satisfaction of course, but this is the natural result of the politics. • PT: What do you think should be Poland’s biggest priority in terms of improving the business environment? RB: You can’t say there is one priority because the situation is very complex. The thing to understand is that it doesn’t matter who is leading the politics within the country, whether it’s the left, the right or something in between. Before elections they always say that they would like to change a lot to make Poland a more business friendly, more business-orientated country. Afterwards there are only a few attempts, and at the end of the day, there is this problem that a lack of money always results in decreasing the competitive advantages of the Polish economy. So there are new taxes imposed on different sectors of the economy. The tax authorities become more strict in terms of execution of taxes – in some cases completely illegally. So there are always a lot of plans, but unfortunately the outcome is not sufficient or is even worse than before. So what should be the main change? I’m not expecting any kind of one main change. Politicians should simply deliver on their pre-election promises. Nothing more. Now, unfortunately businesspeople are so frustrated that again and again we have the same story that the promises are not even half-delivered. They have completely lost their belief that something might change. So if the politicians can’t deliver, or know that they won’t deliver: just don’t make the promise before the elections. That would be a huge change in terms of expectations. Especially mine.

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• PT: In what way do you think Polish businesses will need to adapt if they are to be successful in the future? RB: We – businesses in Poland – are trying to survive. We are very creative. And I think that we are very good at it. Especially in comparison to businesses run by businesspeople in France, the UK, Italy, I see that we are much more flexible. I think that this is the result of the situation that we have here in Poland. We have to be more flexible. • PT: What about the global business environment? Have you felt at any point during your firm’s global expansion that being a Polish company was a hindrance?? RB: Yes, especially in the UK. We didn’t get positive feedback from the typical UK-based companies. It’s a shame. But I can understand it. It’s a similar situation if a company from Romania or Bulgaria tries to sell something on the Polish market. We don’t treat these companies the same way as we would a Polish one. Frankly, it’s not fair. And that’s a shame too. So these cultural differences will remain a difficulty in terms of the export of Polish products, but I think that it is improving. The situation will definitely be better in the coming years because we have proved in many fields that we can compete or have even better products than very well-positioned local companies from Western Europe – or from America for that matter. • PT: InPost’s parcel machines are not the only ones out there. What makes InPost’s solution successful? RB: That’s very easy: we are the only producer and hard user of the solution. We are not selling hardware, like the others. We are investing our own money into having our own network, selling the service to end consumers. We know how to commercialize the services. That’s the main difference. No one knows that. And we are being copied by Amazon and various other operators. But in terms of scale we are far away from them, because we know how to do it. Of course, we

have made a lot of mistakes; we learned a lot. But that we have the know-how is our main asset. We know how to do it properly, country to country. That’s why also, for instance, Australia Post has chosen us as the main company to deliver them hardware, providing maintenance and sharing knowledge about how to commercialize the solution in Australia. Even if we were, at the beginning of the pilot stage, a big sub-contractor for French NeoPost. After the pilot, Australia Post decided to cooperate directly with us, not NeoPost, being aware of this knowledge that we have. • PT: InPost is currently testing pick-up/drop-off machines for groceries. Shopping centre footfall is dwindling. Are we watching the end of an era in retail? RB: We see the huge potential generally in automation. We strongly believe in e-commerce. This is the fastest growing part of the economy. So if we have competences in this sector, we want to develop them. We observe that right now, grocery is the fastest growing part of e-commerce. We know that we have to have something for this sector of the economy, because they are struggling with the logistics. So if we can offer them special lockers, and they are able, thanks to this, to decrease the cost of logistics, or they can close their manually handled click-and-collect points and offer 24/7 service, of course it will affect the whole grocery business heavily. Because 24/7 service and the convenience of picking up of already delivered and ordered grocery products gives a huge advantage to the mobility to society. And potentially, it will even double or triple the growth of grocery. So we are naturally driven by new trends in the e-economy. That’s a kind of mission for us: to be always a challenger and leader in implementation of new solutions based on ecommerce growth.

• PT: Integer’s business used to rest on three key pillars: mass mailings, postal services and parcel machines. Do you believe that the former two will naturally vanish as digital distribution fully takes over? RB: I don’t think that the physical retail economy will completely disappear, but it will certainly change. Already we can observe that hypermarkets for instance, also in Poland, are struggling with huge decreases in traffic. People now prefer to do shopping in small convenience stores or supermarkets like Biedronka, instead of going to a huge hypermarket. Now in South Korea, Tesco has just printed out all the products on the wall of the subway stations and while you are waiting for the train you can scan the products with your mobile, add it to your cart, and it will be delivered to your home. So if you imagine that you can do the same thing and within two hours you can pick it up from a special locker, it will tremendously change the physical retail business. So we are really facing a huge change in the way that we are shopping – and the mobility of society is the main driver for this change.

FOOD & AGRICULTURE

Poultry giant Cedrob seeks mulling merger with listed meatpacker PKM Duda Poland's largest poultry meat producer Cedrob is mulling a merger with the Warsaw-listed meatpacker PKM Duda. Cedrob, which in recent months has accumulated an estimated 10% stake in PKM Duda, last week placed a buyout bid on a further 23% of shares in the company, hoping to become its largest shareholder. The two companies have been cooperating for a while and their potential future merger is to generate

weekly newsletter # 050 / 1st September 2014 / page 12

substantial synergies in purchasing, production, and sales. In the official communiqué, Cedrob said it has no intention of increasing its ownership in PKM Duda beyond 33%, adding, however that it cannot exclude such a possibility once its strategy changes. The poultry firm is offering PLN 47.3m for 23% of PKM Duda. At the moment, PKM Duda's key shareholders, besides Cedrob, are financial investors, the largest of which is the ING Bank with a 9.55% stake. According to the BM BGŻ brokerage, PKM Duda's turnover is likely to reach PLN 1.86bn with net earnings at PLN 21.4m. As for Cedrob, it belongs to 26 poultry farm owners, 10 of whom hold a combined 98.4% stake in the company. They include Mirosław Koźlakiewicz, member of parliament representing the ruling Civic Platform (PO) party, who chairs Cedrob's supervisory board and owns 14.6% of the company. Cedrob is expecting its 2014 sales revenues to hit PLN 2.25bn, up from PLN 2.03bn last year. Although the two companies operate in totally different segments of the meat market (Cedrob in poultry and PKM Duda mainly in pork) considerable synergies, particularly in distribution, may come from the fact that their geographical footprints are largely complementary. Another key player in Poland's meat sector, the Smithfield Foods-owned Animex has been successfully trading in pork, beef and poultry for years.

RETAILERS

IKEA speeds up Poland expansion; breaks ground on 30,000 sq.m Bydgoszcz store Swedish flat pack furniture giant IKEA is speeding up expansion in Poland, with two brand new stores under construction in Bydgoszcz and Lublin and plans to increase turnover from PLN 2bn to PLN 18bn over the next two decades. IKEA breaks ground on the Bydgoszcz project on September 2 at the intersection of Fordońska and Łowicka streets in the city's Fordon district. The project will include a three-story, 30,000 sq.m IKEA store as well as a warehouse, and 1,100 parking places. Scheduled to open in 2H 2015, IKEA Bydgoszcz will be the chain's 9th Polish outlet. According to IKEA, the project will create an estimated 250 new jobs, including 200 positions directly in the store, and 50 – in auxiliary businesses, cooperating with the retailer. Asked whether the store will be later followed by a retail park, which has been the case with virtually all of IKEA's Polish projects to-date, Katarzyna Balashov, Deputy PR Manager at IKEA Retail replies: "The size of our Bydgoszcz plot enables us to build only an IKEA outlet and we have no further investment plans with respect to this location, but as a good neighbor we are hoping our presence will contribute to growth of other businesses and shops in the Fordon district." In recent weeks, Inter IKEA Centre Polska (IICG), the retail property development arm of Inter IKEA

Group, has acquired a 25.7ha site in Zabrze, where the company plans to build an enclosed shopping centre with an integrated IKEA store. It also owns investment sites in Opole and a number of other major cities. This year the company is hoping to break ground on a two-story retail cluster in Lublin with some 80,000 sq.m of GLA, that will encompass an IKEA store, shopping gallery (49,000 sq.m), hyper-market (11,000 sq.m), food court, and 3,000 parking spaces. The project has seen some delays due to bureaucratic procedures.

IKEA Bydgoszcz will be the Swedish chain's 9th Polish store. Image: IKEA Retail

"More than a month ago we began construction of roads which are an important part of our Lublin project. As soon as we’re ready we will start building the store itself, which we plan to complete in 2016," Katarzyna Balashov, tells Poland Today. As part of the IKEA group, IICG Poland is responsible for preparation, implementation and management of commercial property projects. In Poland, the group owns eight shopping centers, which are situated in Gdańsk, Łódź, Poznań, Wrocław, Katowice and Warsaw (three centers: Janki, Targówek and Wola Park). All of them, except Wola Park, are accompanied by IKEA stores. IICG's biggest investment last year was the expansion of the Franowo retail park in Poznań, which opened in September 2013. The company added 14,000 sq.m of retail space to the park, expanding its total area to 80,000 sq.m.

weekly newsletter # 050 / 1st September 2014 / page 13

IICG has just broken ground on the 17,500 sq. extension of Warsaw's Wola Park retail centre, which the company acquired last year. The project will boost the center's GLA to 77,500 sq.m, making it the city's second largest shopping mall, following its completion scheduled for the autumn of 2015. The key tenant in the new section of Wola Park will be the British home improvement retailer Castorama, with a 10,000 sq.m store. Besides the DIY outlet, Wola Park will get 20 new fashion units, expanding its total store numbers in excess of 200. Inter IKEA's property arm has also initiated construction work on extension of its Bielany Shopping Park in Wroclaw. After completion, the building will accommodate around 200 tenants and its GLA will amount to 145,000 sq.m, up from the current 80,000 sq.m. Last year, tenants at Inter IKEA Centre's eight Polish retail parks reported a 4% y/y increase in sales, while footfall grew by 3%. As for the IKEA Retail unit, which operates eight furniture and home goods stores in Poland, it achieved sales revenues of PLN 2bn in fiscal year 2013 [September 2012 â&#x20AC;&#x201C; August 2013; ed.], marking a 9% increase y/y. Poland is IKEA's fastest growing global market after Russia and China and one of the top suppliers of furniture to the IKEA chain worldwide.

RETAILERS

Pharma distributor acquires drugstore chain Drogerie Natura CEPD, the retail arm of Poland's leading pharmaceutical distributor Pelion Healthcare Group has acquired Polbita, owner of the Polish drugstore chain Drogerie Natura, from Alior Bank and Erste

Group Bank. With 258 outlets throughout the country (including 240 proprietary and 18 franchise-based ones), Drogerie Natura remains one of Poland's leading drugstore chains. The company employs 1,500 staff and it posted an EBITDA profit on PLN 420m revenues in 2013. With the acquisition of Drogerie Natura, CEPD seeks to diversify its revenue streams and strengthen its position in the health and beauty segment in order to ensure long term turnover growth. As part of the agreement, CEPD has agreed to inject PLN 10m into Polbita while Alior and Erste are to provide the business with long-term financing to the tune of PLN 150m, secured by PLN 62.5m worth of guarantees from CEPD and Pelion. "We decided to acquire a drugstore chain following an analysis of the Polish beauty products market which has seen an average annual growth rate of 5% in the past seven years," says CEPD CEO Ron Drori, who previously led the Polish arm of Israeli-owned drugstore chain Super Pharm. According to Drori, the situation on Poland's pharma market forces pharmacy owners to diversify their operations. According to market researcher PMR, Poland's beauty products market was worth PLN 20bn in 2013 and by the end of 2016 the figure is to reach PLN 23bn. "We have experience in managing large retail networks in Poland and abroad and we are certain that we can utilize it to the benefit of Drogerie Natura," says Drori. "Initially our goal will be to broaden the product and service range and strengthen relations with suppliers. A development strategy for the coming years will be created shortly. We will also explore synergies with other areas of CEPD's operations, including our product range, e-commerce capabilities and real estate portfolio."

CEDP N.V. (Corporation of European Pharmaceutical Distributors) is a holding company incorporated under the Dutch law, established by Pelion (then known as Polska Grupa Farmaceutyczna or PGF) to develop a pharmaceutical retail network in Central and Eastern Europe. The holding company operates through local operating subsidiaries, active in different countries of the CEE region, with a network of 1,300 pharmacies in Poland, Lithuania and the UK and a staff of more than 3,500 employees. In Poland CEDP runs more than 900 Dbam o Zdrowie-branded pharmacies, including 597 proprietary and 316 franchise-based units. The key shareholder in Pelion Healthcare is Polish billionaire Jacek Szwajcowski, who started his first pharma wholesale business in early 1990s. Last year Pelion turned over PLN 7.3bn (+9% y/y) and its net earnings totaled PLN 100m (+75%). Alior Bank got involved in the drugstore business back in 2011 when it provided PLN 220m worth of financing for the acquisition of Polbita by another Polish drugstore operator Interchem. Their joint project was a fiasco, which led to both companies filing for bankruptcy at the end of 2012. In the case of Polbita the motion was withdrawn with Alior most likely becoming the company's owner around that time, despite the lack of any official communiquĂŠs in that matter. The key player in Poland's drugstore sector is Germany's Rossmann, which currently operates more than 900 stores throughout the country and plans to hit the 1,600 mark by 2018. Rossmann's revenues totaled PLN 5.5bn last year. Other major operators include Polish Dayli and Portuguese-owned Hebe.

weekly newsletter # 050 / 1st September 2014 / page 14

real growth of retail sales will be close to 4% y/y, while average growth of private consumption demand should near 3%y/y." On the flipside, according to the bank, rising uncertainty and waning pace of improvement in the labor market will limit consumer confidence to some extent.

CONSUMER GOODS & RETAIL

Retail sales up by 2.1% y/y in July Retail sales in Poland rose at an annual rate of 2.1% in July, on a 4.7% monthly increase, largely in line with market consensus, the Central Statistical Office (GUS) said last week. In real terms, Polish retail sales were up by 3.1% y/y in July after a 1.8% y/y increase in June, GUS added.

Retail sales in Poland (y/y) 15%

"In general, the set of economic data released in the recent weeks reduced optimism regarding GDP and inflation outlook for the nearest quarters and we think the Monetary Policy Council will cut interest rates in Poland (by 75bp in total in the next three months). However, we doubt if there are enough votes to support the first rate cut already in September," BZ WBK experts said.

POLITICS & ECONOMY

Polish PM Donald Tusk gets top EU job

10%

5% 0%

"We think that better result may be to some extent connected with very good weather in July, which led more people to spend their holidays in Poland instead of going abroad. On top of that we had higher than expected sales of motor vehicles," BZ WBK bank analysts commented on the result.

EU leaders have unanimously chosen Poland's centreright prime minister Donald Tusk as president of the European Union alongside Italy's Federica Mogherini as EU foreign policy chief. According to observers, Tusk's victory cements Poland's emergence as an important player in the European Union ten years after it joined the bloc. Mr. Tusk and Ms. Mogherini will work closely with the new European Commission President, Jean-Claude Juncker. Although Tusk had been rumored as a potential candidate for months, few in Poland believed a Pole could ever be elected to an international position of power.

"In general, higher consumer spending is justified by decent growth of real income of Polish households. We think that in nearest months the sales growth will accelerate and in the second half of the year average

Mr. Tusk, who will now chair all EU summits and represent the 28-bloc's prime ministers in legislative fights, is replace the current council president, Herman Van Rompuy, becoming the first politician from

-5% Jan 12

Jul 12

Jan 13

Jul 13

Jan 14

Jul 14

Source: GUS

the ex-Communist bloc to get a European leadership position. Mr. Tusk will serve for two-and-a-half years (renewable), starting on December 1. Ms. Mogherini's term, starting on November 1, is five years. "I come from a country that deeply believes in a united Europe," Mr. Tusk said in Polish after the vote. "I am also convinced there is no intelligent alternative to the EU." The Polish PM, who speaks fluent German but poor English and no French, added that in December he would be "100% ready" to speak English. Tusk's limited language skills had been brought up by Europe's centre-left socialists and other leaders who opposed his candidacy. Herman Van Rompuy called Donald Tusk "one of the veterans of the European Council," and praised "the determined and confident way he has steered Poland through the economic crisis, and managed to maintain steady economic growth". According to the current European council president, Mr. Tusk would face three major challenges: the stagnating European economy, the Ukraine crisis and "Britain's place in Europe." Tusk told reporters that Europe could benefit from Poland's experience, adding that pursuing economic growth could be achieved while maintaining fiscal discipline. Poland was the only country in the European Union to avoid recession during the global crisis. David Cameron, the UK prime minister, had initially resisted Tusk's candidacy after the two had fallen out over EU migration issues. But once Mr. Cameron reached a truce with Mr. Tusk in a recent phone call, opposition began to fade away, and the Pole was selected quickly by leaders at a Brussels summit. Analysts argue that Tusk's appointment will give excommunist countries in Central and Eastern Europe that are critical of Moscow new clout in the EU. Po-

weekly newsletter # 050 / 1st September 2014 / page 15

land has been one of the most vocal supporters of sanctions against Russia over its involvement in the Ukraine crisis. The relationship between Tusk and Mogherini may be an rocky one, as Poland and the Baltic states had strongly opposed her candidacy for the EU's next foreign policy chief, for being soft on Russia. Donald Tusk (57) has been Poland's leader since 2007 and is the only Polish prime minister to have been reelected since the collapse of communism in 1989. Although his victory can be seen as a huge success for Poland and Mr. Tusk personally, it will lead to a major reconstruction of Poland's Civic Platform (PO)-led government merely a year before the general election. Names of his potential successors, which have appeared in the press last week included Parliamentary speaker Ewa Kopacz, who is seen as the most likely to take Tusk's place, Deputy Prime Minister ElĹźbieta Bienkowska, Defence Minister Tomasz Siemoniak, Foreign Minister RadosĹ&#x201A;aw Sikorski, former deputy Prime Minister Grzegorz Schetyna and former leader of the European Parliament Jerzy Buzek. The choice will be critical as the ruling Civic Platform has been trailing in polls behind its main opponent, the conservative Law & Justice (PiS) for months (see the next story for more details).

POLITICS & ECONOMY

Government reaches out to pensioners and poor families as elections loom Troubled by low popularity ratings for his ruling Civic Platform (PO) party ahead of November's municipal

elections and next year's parliamentary ballot, Prime Minister Donald Tusk has unveiled a number of initiatives aimed at helping low-income pensioners and poorer families, who are the traditional voter base for PO's key opponent Law & Justice (PiS). According to a recent poll by TNS Polska, PiS is backed by 31% of voters, down from 35% in July, while the PO is backed by 26%, up from 23%. The government plans to amend Poland's system of indexing pensions and disability benefits in 2015 by introducing a minimal indexation amount in order to increase the lowest pensions amid low inflation. Without the changes, indexation of pensions next year would be very low as it would be solely inflationlinked, PM Tusk said in a policy speech to the lower house of parliament . As a result, the minimum monthly pension increase will be PLN 36, the PM specified. Additionally, Poland will double the amount overall available for pension indexation. The overall cost of the additional indexation is to reach PLN 1.7bn, the Finance Ministry said. "This will effectively boost slightly the growth rate of social benefits next year leading to an average pension growth by more than 0.5%, according to our estimate," BZ WBK bank analysts commented on Tusk's proposals. Poland will also adjust rules on personal income tax to enable low income households to make full use of standard deductions for children. The government will enable the so-called "negative income tax" by paying out the difference in cash for families not earning enough to fully utilize the standardized deductions for children. According to the Ministry of Finance, the program could cost Poland some PLN 1.1bn, which together with the expected cost of the new pension indexation represents less than 0.2% of GDP, according to BZ WBK estimates. "These are expenses we can afford," Tusk told deputies.

"The planned changes will probably add slightly to domestic demand growth in 2015, as they will affect mainly incomes of lower-earning groups with the highest propensity to consume. However, 0.2% of GDP is not a big impulse. At the same time, we still expect that government to boost public spending on investment, making use of funds from the new EU financial perspective. Both factors should help to maintain GDP growth at close to 3% on average in 2015, despite the challenging external environment," BZ WBK said. At the same time, the government vowed to keep its public sector deficit below 3% of GDP in 2015, as required by the European Commission, Finance Minister Mateusz Szczurek told MPs. In its April convergence program update, Poland assumed a general government surplus of 5.8% of GDP in 2014 (on account of the pension system reform) and a deficit of 2.5% in 2015. In order to keep the deficit in check, Poland will increase military spending to 2% of GDP in 2016 rather than next year, as it had planned, Prime Minister Donald Tusk told the parliament. The military spending next year will thus remain at the 2014 level of 1.95% of GDP, although in nominal terms it will be higher, Tusk emphasized. The government will draw up its 2015 budget based on a GDP growth forecast of 3.4% and an average annual inflation forecast closer to the level expected by the central bank, Finance Minister Mateusz Szczurek said last week. The government had earlier hoped to base the 2015 budget on a 3.8% GDP growth forecast and 2.3% annual average inflation. In its latest inflation projection, the central bank put its inflation forecast at 1.4%.

weekly newsletter # 050 / 1st September 2014 / page 16

POLITICS & ECONOMY

GDP rises rises 3.3% in Q2 on domestic drivers

economists consumer demand is likely to grow at a similar pace in the coming quarters, in line with increasing real household incomes.

Quarterly GDP growth in Poland (y/y*)

POLITICS & ECONOMY

July July jobless rate lowest since 2011

"It appears that the surge in investment spending at the beginning of the year was to much lower degree than we had assumed boosted by the said one-off effects and the underlying trend was continued also in the second quarter. Indeed, the growth of investment loans for corporate sector did not signal any slowdown over the past months, which suggested that company activity in this area remains strong," the bank said. According to GUS, Poland's domestic demand accelerated significantly, to 5.1% y/y, marking the best result since Q4 2010. Private consumption growth accelerated in the second quarter to 2.8% y/y. According to

3% 2% 1%

Q1'14

Q2'14

Q4'13

Q2'13

Q3'13

Q1'13

Q3'12

Q4'12

Q1'12

Q2'12

Q4'11

Q2'11

0% Q3'11

"To large extent, it resulted from strong positive contribution of inventories to GDP growth, which in the second quarter amounted to 1.7 percentage points. The biggest positive surprise in our view was the fixed investment growth, surging by 8.4% y/y in Q2 vs. 10.7% in Q1," commented BZ WBK analysts who had expected the Q2 figure reach no more than 3%. Their expectation was that a number of one-off effects that propped up the economy in Q1 (very good weather, temporary tax allowances which boosted car purchases) would expire in Q2, thus slowing down economic activity.

Poland's registered unemployment rate fell to 11.9% in July from 12.0% in June, reaching the lowest level since 2011, according to Central Statistical Office (GUS) figures released last week. The reading is slightly above the Labor Ministry's prior estimate and a PAP consensus survey, both of which pointed to 11.8% unemployment.

Q1'11

The Polish economy expanded by 3.3% y/y in Q2 2014 on the back of robust domestic demand, announced GUS, the central statistical office. The figure proved a notch higher than the flash estimate GUS released in mid-August (3.2% y/y), and only marginally lower than 3.4% y/y recorded in the first quarter.

Source: GUS *) seasonally unadjusted

Registered unemployment in Poland 15% 14%

On the flipside, however, net exports contributed negatively to the GDP (at -1.6 percentage points) for the first time since the end of 2010. Amid weak recovery in Europe and escalating tensions between Russia and the West, the external trade balance will likely continue weighing down on GDP growth in the subsequent quarters. "Although the GDP growth and its structure in Q2 2014 was better than we had expected, we are afraid that the momentum of GDP growth may slow down further in the second half of the year, probably sliding below 3% y/y, because of worse external environment, negatively affecting Polish exporters, and lack of clear impulses boosting the local demand. The average GDP growth in 2014 may be slightly above 3% in our view," BZ WBK economists said in Friday's commentary.

13% 12% 11% May 13

Jul 13

Sep 13 Nov 13

Jan 14

Mar 14 May 14

Jul 14

Source: GUS

"At the end of the month the number of registered unemployed amounted to 1.88m and was lower by 1.8% m/m and 10.3% y/y. In nominal terms the number of unemployed fell by 34,000 versus previous month, which is significant slowdown in the improvement on the labor market as compared with previous months. As compared with June newly registered unemployed increased sharply by some 25% (to 200,000), mainly due to increase in number of unemployed re-entering the unemployment rolls (by 22.6% m/m). However, one should notice that in July job offers declared during a month increased to nearly 97,000, or by 13.1% m/m and by 24.2% y/y," BZ WBK commented on the data.

weekly newsletter # 050 / 1st September 2014 / page 17

KEY STATISTICS Consumer Prices Prices

Inflation

-1.1

Alcohol, tobacco +3.9

+0.3 +3.9 +0.2 +4.0

+0.1 +4.0

0.0

Clothing, shoes

-4.4

+2.8

-4.6

-0.1

-4.7

-0.8

-4.9

-2.8

Housing

+1.7

0.0

+1.6

0.0

+1.6

-0.1 +0.6

0.0

Transport

-2.1

-0.1

-0.1 -0.4

-0.6

-0.2

Communications

-1.7

-1.5

+0.3

0.0

Gross CPI

-1.1

-0.1

+0.3

0.0

Apr '14 May '14 Jun '14 +2.3

-2.7

-1.1

+3.1

+8.4

+3.8

+1.2

+4.7 +2.1 2013

2% 1%

Year

2009

2010

2011

2012

Turnover in PLNbn

582.8

593.0

646.1

676.0

n/a

-1%

y/y (%)

+4.3

+5.5

+11.6

+5.6

+2.3

+1.2

Residential Construction Dwellings

-0.2 -0.2

2009 2010

2011

2012

2013 Jan-Jul y/y

178.8

174.9

184.1

165.1

138.7

158.1

162.2

141.8

(in '000 units)

Producer Prices Prices

Jul '14

+12.5

y/y (%)

-1.0 +0.8

+1.3 +2.4 +2.6

+0.2 -0.1

Jul 14

-1.7

May 14

-0.3

Mar 14

-0.9

Mar '14

m/m (%)

m/m

Jan 14

-0.8 -0.4

Nov 13

-0.5

Sep 13

+0.3

y/y

Jul 13

Food & bev

Month

May 13

y/y m/m y/y m/m y/y m/m y/y m/m

Retail Turnover

Mar 13

Jul '14

Jan 13

Jun '14

Nov 12

Sector

May '14

Jul 12

Apr '14

Sep 12

Data in (%)

Industrial Output

Permits

2014

(%)

92.2

+18.9

Commenced

142.9

127.4

85.5

+18.9

m/m (%)

0.0

-0.1

-0.2

-0.1

0.0

m/m (%)

+2.9

-1.8

+9.4

-2.3

-1.7

-0.1

+2.0

U. construction

670.3 692.7 723.0

713.1 694.0

701.7

-0.3

y/y (%)

-1.0

-1.4

-1.3

-0.7

-1.0

-1.8

-2.0

y/y (%)

+4.1

+5.3

+5.4

+4.4

+1.7

+2.3

Completed

160.0 135.7

152.5

78.8

-2.7

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

Jan'14 Feb'14 Mar'14 Apr'14 May'14 Jun'14 Jul'14

-0.1

0.0

-1.7

-1.6

-1.5

-1.4

-1.3

-1.2

2007

2008

2009

2010

2011

2012

2013

+7.4

+4.8

+0.2

-0.1

+1.0

+0.2

-1.8

y/y (%)

+18.7

+24.2

+3.2

+14.0

+16.9

+0.9

-3.9

+14.4

+17.4

+12.2

+10.0

+8.0

+1.1

2007

2008

2009

2010

2011

2012

2013

138

8,615

6,290

143 6,061

196 6,333 144

+1.6%

1,635,746

-1.3%

2012

+1.9%

1,596,379

-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%

+15.5

+12.1

+5.1

+4.6

+11.8

-0.6

-12.0

155 3,625

158 3,690

161 3,663 160

5,828

177 6,021

183 6,736 205 6,358 193

-20

145 3,456 3,913

166 3,706 158 147 3,544

151

Transportation

3,547

125 3,589

127

IT, telecoms

6,707

174 6,654

173 6,695

174 6,986

Financial sector 6,702

151 6,109

137 6,602

148 6,749 152

National average 3,613 144 3,652

145 3,823

152 3,895 155

Source: Central Statistical Office (GUS)

138 3,666 130 181

120

-40

Key Economic Data & Projections

100

Indicator

2010

GDP change

+3.9% +4.5%

+1.9%

+1.6%

+3.5%

Consumer inflation

+2.6% +4.3%

+3.7%

+0.9%

+0.3%

Producer inflation

+2.1% +7.6%

+3.4%

-1.3%

-1.4%

CA balance, % of GDP

-5.1%

-5.0%

-3.7%

-1.3%

-0.6%

Nominal gross wage

+3.9%

+5.2%

+3.7%

+3.4%

+4.3%

Unemployment**

12.4%

12.5%

13.4%

12.2%

3.99

4.12

4.19

4.20

4.12

60 Nov 1 1

157 3,766 160 3,895

Co nsumer conf id ence (lef t axis) Economic sentiment (right axis)

3,560

3,421 146 3,408

-1.1%

2013

y/y (%)

Energy

3,693

n/a

397,429

-1.3%

Manufacturing

Retail & repairs

413,457

+3.4%

-1.9%

Construction

+3.3%

Q1 2014

455,528

Aug 14

Q2 2014

405,554

May 14

Q1 2014

Current account def. in % of GDP

+2.7%

Feb 14

Q4 2013

GDP in PLN bn current prices

+2.0%

Nov 13

Q3 2013

146.1

Q3 2013

A ug 13

Q2 2013

Growth y/y unadjusted

131.7

Q4 2013

Year

M ay 13

A: avg monthly wages in PLN B: indexed avg wages, 100=2005

Coal mining

-64.0

Source: The Central Statistical Office of Poland, GUS

Gross Gross Wages Sector

m/m (%)

F eb 13

y/y (%)

-0.2

Period

Jan '14 Feb '14 Mar '14 Apr '14 May '14 Jun '14 Jul '14

Nov 12

Year

-0.2

Month

A ug 12

y/y (%)

Jan'14 Feb'14 Mar'14 Apr'14 May'14 Jun'14 Jul'14

M ay 1 2

m/m (%)

Jan '14 Feb '14 Mar '14 Apr '14 May '14 Jun '14 Jul '14

Construction Output

Construction Prices Price s Month

Month

Feb 12

Month

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

EUR/PLN

2011

2012

2013

*2014

Sources: NBP, BZ WBK, PKO BP, GUS *) projections **) year-end

weekly newsletter # 050 / 1st September 2014 / page 18

56.53 ↑

100 SEK

45.89 ↑

100 NOK

51.70 ↑

10,000 JPY

USD EUR

350

300

15.16 ↑

100 CZK 10,000 HUF

400

307.70 ↑ 133.70 ↑

Money Supply in PLN m Monetary base M1 - Currency outside banks M2

as of 29 August 2014

WIG-20 stocks Price Change Change in alphabetical 29 Aug 22 Aug end of order '14 '14 '13

WIG Total index

Jan '14 Feb '14 Mar '14 Apr '14 May '14 Jun '14

PLN (up to 1 year)

4.2%

4.5%

4.4%

4.5%

PLN (up to 5 y )

4.9%

4.8%

4.9%

4.8%

PLN (over 5 y)

4.8%

4.7%

PLN (total)

4.8%

4.7%

EUR (up to 1m EUR) 2.0%

2.0%

1.9%

2.0%

1.9%

↑ BZ WBK

EUR (over 1m EUR) 3.6%

3.4%

3.3%

3.0%

2.7%

3.4%

↓ Eurocash

168,511 548,394 119,261 969,754

May '14

Jun '14

162,246 557,651

173,096 572,376

119,649

120,828

975,001 980,090

- Time deposits

439,137

435,386

986,142

991,120

426,351

985,769 434,256

996,171 1,002,137

- Net foreign assets 126,943 142,260 144,033 152,864 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

51,868. 868.77

↓ Asseco Pol.

42.3

-8%

Change 1 week

-1% ↓

↑ Bogdanka

116.5

-7%

Change end of '13

+1% ↑

-4%

-1%

-28%

WIG-20 blue chip index

↑ Grupa Lotos

30.14

-15%

↑ JSW

33.48

-37%

2,4 2,416. 16.97

↓ Kernel

25.75

-6%

-32%

Change 1 week

-1% ↓

↓ KGHM

131.8

-3%

12%

Change end of '13

+1% ↑

↑ LPP

8,500

-6%

↑ mBank

463.5

-7%

WIG Total closing index

↓ Orange Pol.

10.74

-1%

10%

last three months

Credit

↓ Pekao

180.1

-2%

54,000

The financial sector's net lending in PLN bn,

↓ PGE

21.81

-2%

34%

53,000

loan stock at the end of period

→ PGNiG

4.88

-5%

52,000

39.43

-4%

51,000

Warsaw Inter Bank Offered Rate (WIBOR) as of 29 August 2014 Overnight

1 week

1 month

3 months

6 months

2.64%

2.59%

2.60%

Reference

Lombard

2.59%

164,008 122,209

-6%

34.5

Jul '14 570,507

-2% -2%

370.5

Central Bank (NBP) Base Rates Apr '14

76.21

↓ Alior Bank

NBP deposit

4.00%

Type of loan

Rediscount

1.00%

2.75%

Apr' 14

May' 14

Jun' 14

Jul' 14

Loans to customers

928,450

930,652

940,703

939,641

↓ PKO BP

- to private companies

270,886

273,360

276,709

274,549

→ PZU

- to households

573,332

574,800

578,639

581,447

↓ Synthos

1,639,359 1,660,583 1,667,783

1,678,129

↓ Tauron

Total assets of banks

→ PKN Orlen

Source: Central Bank NBP

38.25

-1%

-3%

50,000

469

49,000

4.6

-2%

-16%

4.99

-5%

14%

29 Aug 14

100 DKK

Warsaw Stock Exchange, rates in PLN

on loans to non-financial corporations

15 Jul 14

349.30 ↑

29 Aug 14

530.56 ↑

100 CHF

23 Jun 14

100 GBP

11 Apr 14

421.29 ↑

4 Feb 14

100 EUR

Key indices

Term / currency

450

22 Nov 13

319.65 ↑

13 Sep 13

100 USD

Stock Exchange

Average weighted annual interest rates

6 Aug 14

as of 29 August 2014

Interest rates

23 Jun 14

100 USD/EUR against PLN

Central Bank average rates

29 May 14

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 Jan-Jun 2014 Food and live animals Beverages and tobacco Crude materials except fuels Fuels etc

y/y (%)

share (%)

2013

EXPORTS in PLNbn

IMPORTS in PLN bn share (%)

Jan-Jun 2014

y/y (%)

share (%)

2013

share (%)

No Country

Jan-Jun share 2014

IMPORTS in PLN bn 2013

share No

Country

Jan-Jun share 2014

2013

36,142

+7.5

10.8

69,304

10.9

24,588

+5.4

7.3

47,906

7.4

1 Germany

86,686 25.9% 162,548 25.1%

1 Germany

72,536 21.6%

4,613

+12.3

1.3

8,624

1.4

1,994

+4.2

0.6

4,150

0.6

2 UK

20,918

2 Russia

38,637 11.5% 79,578 12.1% 32,589 9.7%

6.2%

42,138

6.5%

8,277

+3.1

2.6

15,744

2.5

10,695

-1.4

3.2

21,585

3.3

3 Czech Rep.

20,265

6.1%

40,110

6.2%

3 China

14,094

-4.5

4.7

30,013

4.7

37,188

+5.3

11.1

75,539

11.7

4 France

19,152

5.7%

36,367

5.6%

4 Italy

142,161 21.7% 61,127 9.3%

17,731 5.3% 34,940 5.3%

980

+18.0

0.3

1,864

0.2

1,299

+1.5

0.4

2,646

0.4

5 Russia

14,707

4.4% 34,069

5.3%

5 Netherlands

12,512 3.7% 25,409 3.9%

Chemical products

30,614

+4.5

9.3

59,103

9.3

50,051

+7.8

14.9

92,917

14.3

6 Italy

15,552

4.6%

4.3%

6 France

13,152 3.9%

Manufactured goods by material

66,704

+3.5

20.6

129,915

20.3

60,007

+8.1

17.9

112,392

17.3

7 Netherlands

13,366 4.0%

7 Czech Rep.

11,451 3.4% 24,054 3.7%

110,703

+4.2

33.0

216,608

33.4

8 Ukraine

6,174

1.8%

18,020

2.8%

8 USA

8,142 2.4%

17,431

31,898 +14.4

9.5

58,210

9.0

9 Sweden

9,661

2.9%

17,581

2.7%

9 UK

8,746 2.6%

17,184 2.6%

10 Slovakia

8,371

2.5%

17,099

8,319

15,137 2.3%

Animal and vegetable oils

Machinery, transport equip.

128,331

+8.2

37.7

239,434

37.5