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No. 017 / 7th January 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter
HEALTHCARE British firm McKinlay Development open their first Polish retail park page 11
MANUFACTURING & PROCESSING German ood packaging firm Weidenhammer to produce Pringles cans in Kutno page 2 Industry sentiment worsens in December page 3 BANKING & FINANCE Competition watchdog disciplines cash loan company Provident page 4 EBRD announces new strategy and bond buying program in Poland page 4
With its 3,500-km backbone network, Hawe is a "carrier for carriers."
Photo: Hawe SA, A Bogdański
HAWE finds ally for huge FTTH project
Poland's state-owned investment vehicle PIR will invest PLN 120m into a fiber-to-the-home network developed by Warsawlisted telecommunications company HAWE. With an estimated price tag of PLN 560m, the project is to bring ultra high-speed Internet access to 870,000 Polish households by 2019. page 12
President signs pension reform bill
President Bronisław Komorowski has signed the new pension reform bill and sent it to the constitutional tribunal for review, citing "conflicting opinions" on the controversial law. page 13
ENERGY & RESOURCES Mining technology giants Famur and Kopex mulling merger page 5 State-sponsored shale alliance falls through, nuclear energy deal remains in force page 6 PROPERTY & CONSTRUCTION Construction market to rebound in 2014 page 6 Ghelamco, Immobel and Penta competing for top Warsaw site page 7
tel. +48 881 650 600
SERVICES & BPO Shell's Kraków centre to recruit 150 new employees page 8 Top staffing company Work Service acquires Hungarian peer page 9 CONSUMER GOODS & RETAIL GTC & Avestus close sale of Kraków retail center to Invesco page 10 HEALTHCARE Hospital operator EMC to pay PLN 30m for Lubin healthcare unit page 11 POLITICS & ECONOMY Investment in special economic zones sees 26% growth in 2013 page 13 Unemployment tops 13.2% in November page 14 KEY FIGURES Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 15-17
weekly newsletter # 017 / 7th January 2014 / page 2
MANUFACTURING & PROCESSING
Food packaging firm Weidenhammer to produce Pringles cans in Kutno
snack business from FMCG giant P&G. Starting from this year, the Pringles snacks, which are now Kellog's 2nd largest brand after Special K, will be made also in Poland.
Since Weidenhammer is the company that supplies the trademark cardboard tubes for Pringles snacks, its decision to invest in Kutno is hardly a surprise. After all, Pringles' owner, the US food giant Kellogg is currently gearing up to launch production of savory snacks in the same location in 2014 (see PT Business Review+ No. 008 page 13). The Kellogg Company became the world's number two savory snack producer in 2012 with the USD 2.7bn acquisition of the Pringles
Gorenje's Warsaw listing disappoints
Slovenia's Gorenje, one of Central and Eastern Europe's top household appliance makers, fell 9% at its Warsaw bourse debut on January 30th, 2013, after it raised far less than planned at its secondary listing on the region's largest equity market. Gorenje, already listed in Slovenia, raised nearly EUR 17m on the Warsaw Stock Exchange, well below the EUR 45m it was hoping to get (see PT Business Review+ No. 012 page 2).
The Łódź special economic zone has issued an investment permit for German packaging company Weidenhammer Packaging Group, which seeks to build a factory of composite cans for snacks and other foodstuffs in Kutno (110km west of Warsaw). The PLN 25m project is to reach completion by the end of 2015 and initially create 31 new jobs. With 12 production sites, over 1,100 employees and annual sales of EUR 245m in 2012, the Weidenhammer Packaging Group is one of the world's two leading suppliers of composite cans, composite drums and rigid plastic containers. Founded in Hockenheim, Germany in 1955, the family-owned enterprise has since evolved to become a market and technology leader in its segment. Weidenhammer customers include international brand product manufacturers Nestlé, Unilever, Kellogg, Procter & Gamble, Rügenwalder Mühle, Imperial Tobacco and BAT.
MANUFACTURING & PROCESSING
Weidenhammer supplies composite cans to top global consumer brands.
Photo: Weidenhammer
"We are rolling out the production in the second half of 2014," Eugene Evans, who heads Kellogg's Polish operations, told Poland Today back in October. "We have already hired 50 people and we aim at doubling that number by next summer." UMA acquired the Kutno site in 2007 and completed a factory building of approximately 15,000 sq.m shortly after. The project had been sitting idle for nearly half a decade before Kellogg returned to Kutno in 2013 with new plans. In early 2013 the Łódz Special Economic Zone said UMA promised to invest a further PLN 225.8m (approx. EUR 54.8m) in the Kutno project that were to create a minimum of 40 new jobs. Company representatives said the investment was for a 10,000 sq.m extension to the existing building which will contain a raw material area, process, packing and warehouse.
Market insiders said Slovenia's economic problems were a factor in putting off investors. According to World Bank projections the Slovenian economy is to shrink by 1% this year, as the country is struggling to avoid following Cyprus, Ireland, Greece, Portugal and Spain in seeking an international bailout to keep its economy afloat. Gorenje, a manufacturer of energy-efficient appliances under multiple brand names, had intended to use most of the proceeds from its second equity boost to deleverage, with the rest being earmarked for strategic investments. The Gorenje group generates 95% of its revenue outside Slovenia. "Entry to the Warsaw Stock Exchange is an important step in Gorenje's development strategy, which will improve Gorenje's reputation as an international player both with our customers and our business partners. Moreover, it is yet another step in the internationalization of all aspects of our business. Following the internationalization of downstream trade some 40 years ago, and internationalization of manufacturing, the
weekly newsletter # 017 / 7th January 2014 / page 3
cross listing and admission to trading on the WSE further internationalizes our financing as well," commented Gorenje President and CEO Franjo Bobinac. Following the two recent rounds of Gorenje's equity boost, Japan's Panasonic Corporation is the second largest shareholder with a 10.5% share, behind stateowned fund Kapitalska družba with 18.09%. Gorenje and Panasonic are bound by a strategic partnership that involves cooperation in development, manufacturing, and sales. The Japanese giant acquired EUR 10m worth of the Slovenian appliance maker's shares in the first offering. The third largest shareholder is the International Finance Corporation, a World Bank member, which subscribed Gorenje shares in 2010 and holds an 8.49% share. The biggest buyer during the Warsaw issue was Universal Investment Capital S.L., an international private investor of Spanish and German origin, which purchased an 8.4% stake in Gorenje for EUR 8m.
MANUFACTURING & PROCESSING
Plastic parts maker Nifco to create 180 jobs in Świdnica Japanese manufacturer of plastic parts and components Nifco has obtained an investment permit for its 4th project in the Wałbrzych Special Economic Zone Invest-Park. The company, which has operated a factory in Świdnica since 2007, will spend PLN 60m on new production lines for plastic ventilation ducts and storage compartments for motor vehicles. The project is to reach completion before the end of 2016 and create 180 jobs.
"We are very pleased with Nifco's decision on a further expansion of their Polish plant, as their investment in Świdnica will create new jobs. It is also a clear indication that the cooperation between our town and the Wałbrzych special economic zone is mutually beneficial," commented Świdnica's mayor Wojciech Murdzek. Industrial plastic parts and components represent some 86% of Nifco's global turnover, which totaled nearly JPY 140bn in 2012 with a net income of JPY 5.35bn. The company makes also bedding and furniture. Japan and Asia generate more than 80% of Nifco's sales, with Europe contributing merely 6%. Its product range spans plastic fasteners, rivets, clips, buckles, clamps, bands and dampers.
Purchasing Managers' Index (PMI) The 50 mark separates growth from contraction 55
50
45 Oct 12 Dec 12 Feb 13 Apr 13 Jun 13 Aug 13 Oct 13 Dec 13
Source: Markit & HSBC
MANUFACTURING & PROCESSING
Industry sentiment worsens in December, PMI data data show Poland's purchasing managers' index PMI, fell to 53.2 points in December from 54.4 points in November, breaking seven months of consecutive gains, report by HSBC and Markit showed. It was the sixth consecutive month when the figure remained above the key 50-point threshold, which separates expansion from contraction, indicating improving business conditions in manufacturing. "The rates of growth for output, new orders and exports all remained strong, but were weaker than in November," HSBC and Markit said in their statement. "The underlying strength of demand in the sector was further illustrated by ongoing solid increases in both input volumes and employment."
New order growth held for the seventh successive month, albeit at a rate slower than the 34-month record set in November. Output rose for a sixth straight month, again at a slower pace, the slowest since July. Backlogs fell "solidly" during the month, analysts wrote. "The solid increase in new orders necessitated another sharp increase in purchasing activity in December," analysts wrote, citing the fastest gain in input volume orders since March 2011.
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BANKING & FINANCE
Competition watchdog disciplines cash loan company Provident Provident Polska, the Polish arm of British consumer credit provider International Personal Finance plc (IPF) has been subjected to a PLN 12m (GBP 2.4m) fine by the Polish Office of Consumer Protection and Competition UOKiK for "collective infringement of consumer interests." According to the regulator, the personal home credit service company should include the fee for home collection service and an additional preparatory fee associated therewith in the total cost of credit and, therefore, the APR (annual percentage rate) figure. IPF argues that the home collection service is optional and therefore does not have to be announced as part of the cost of credit. "On the basis of legal advice received, we believe that we are correctly calculating the total cost of credit and APR and are planning to appeal the decision. The deadline for doing so is 7th January 2014. The decision would then go through the court appeal process and it is likely to be a number of months before a final ruling is received. At this stage, it is not possible to estimate the impact, if any, a final negative ruling might have on IPF's Polish business. We will continue to review the position and a further announcement will be made as appropriate," IPF said in a statement. Listed on the London and Warsaw Stock Exchanges, IPF operates in Poland, the Czech Republic, Hungary Mexico and Romania, with Poland being its largest market. Last year the company launched in Lithuania
and Bulgaria. Their key product are small sum, shortterm unsecured cash loans ranging from GBP 50 to GBP 1,000 (in Poland from PLN 300 to PLN 10,000) repaid over a period of around 12 months. Their trademark feature is the personal home collection service provided by dedicated agents who deliver the loan to and collect repayments from the customer's home each week. Although the home collection service is optional, it forms an intrinsic part of IPF's lending model, which is based on regular face to face contact with customers. According to IPF, weekly home visits by its agents help customers stay in control of their repayments. Provident agents, who visit their clients' homes, are also best placed to judge potential new loan opportunities. As of end of September 2013, IPF had 2.5m clients, of which 0.83m in Poland. The Polish business contributed more than a half of IPF's profit before taxation in Q1-Q3 2013 (GBP 39.8m of GBP 74.8m). Considering that the underlying profit growth in Poland during that period came to GBP 9.8m, the GBP 2.4m fine imposed by the UOKiK seems rather substantial. Tighter restrictions on bank lending led to a minor boom in Poland's payday loan market, with many newcomers entering the sector in recent years. Concerned about the rapid expansion of non-banking lenders, in September, Poland's Ministry of Finance published a discussion document including potential changes to legislation of the consumer finance market. The proposed measures for consultation include a new licensing regime, access to credit bureau for non-banking financial institutions, a cap on default charges and a 30% cap on non-interest charges connected to the total cost of credit, as defined in the EU Consumer Credit Directive.
BANKING & FINANCE
EBRD announces new strategy & bond buying program in Poland In the final days of 2014, the European Bank for Reconstruction and Development (EBRD) announced a new strategy for Poland and a program that aims to support the country's capital market. Branding it as "an advanced transition country," EBRD Board of Directors decided to focus the bank's activities in Poland over the coming three years on areas where "transition challenges remain the highest and where reforms can be deepened," the institution said in a statement. The number one challenge listed by EBRD is promotion of a low carbon economy. "Given Poland’s continued high dependency on coal, low carbon solutions, energy efficiency and reduction of green-house gas emissions will remain a strategic priority for the EBRD. The Bank will continue to support diversification of energy sources with a focus on renewable energy and improving energy efficiency, both on the demand and supply sides," EBRD said. The London-based institution will also seek to enhance the private sector's role in the economy. "Accelerating the implementation of the structural reform and privatization agenda is crucial to consolidate sustainable economic growth. Moving toward a more resilient economic model built on private investment and productivity growth increases will also require more innovation, providing risk capital and corporate restructuring, and will include supporting Polish companies in their regional expansion and cross-border investments," reads the EBRD communiquÊ.
weekly newsletter # 017 / 7th January 2014 / page 5
Last but not least, the bank aims to assist Poland in the development of a sustainable financial sector and capital markets. Building on lessons learned during the crisis, the EBRD will assist in the development of funding mechanisms addressing banks' past balance sheet mismatches, financing small businesses (particularly in poorer regions of the country) and promoting the development of local debt and equity capital markets, to reduce the dependence on foreign financial inflows and to boost the use of local currency instruments. As part of these efforts, on December 20th, 2013, EBRD launched a new framework aiming at supporting the debt capital market in Poland. "The Financial Institutions Debt Capital Market Framework will have a volume of up to EUR 250 million for investments in medium to long-term senior bonds and structured finance products issued by banks and non-bank financial institutions in the next three years," the statement read. "The aim of the framework is to contribute to the development of the Polish corporate bond market, support the diversification of medium term funding sources of participating financial institutions and improve the maturity structure of their balance sheets." The first project realized within the framework of the program will consist in the acquisition of up to 20% of senior unsecured bonds issued by BZ WBK bank, the Polish subsidiary of Spain's Banco Santander, for PLN 100m (ca. EUR 24m), the EBRD also said.
bonus (see PT Business Review+ No. 012 page 3). The bank eyes PLN 377m gross profit on the transaction..
lay the foundations for the proposed share swap, with Famur offering two of its own shares for a single Kopex stock.
ENERGY & RESOURCES
Mining technology giants Famur and Kopex mulling merger Two of Poland's top mining technology giants, Famur and Kopex, are embarking on merger talks that may lead to the creation of a major global player in this market segment. The combined capitalization of the two Warsaw-listed firms totals PLN 3.3bn. "Our goal is to establish, together with Kopex, a single global Polish brand and supplier of equipment and services for the underground and open pit mining sector," said Waldemar Łaski, CEO of Famur, who invited Kopex's executives to the negotiating table, proposing a merger though a share swap. "Famur intends to apply to the competition watchdog UOKiK for a permission to merge with Kopex by the end of January 2014."
IN BRIEF:
Famur produces highly specialized equipment such as longwall systems used in underground mining. With a turnover of PLN 1.47bn in 2012, the company exports its products worldwide and has local units in Russia, Germany, Ukraine and India. As for Kopex, it produces machinery and equipment and offers a range of services to mining companies around the world. In 2012 its sales revenues came in excess of PLN 2bn.
Poland’s top lender PKO BP completed the sale of a 66% stake in payment card settlement operator eService to a unit of US EVO Payments International, PKO BP said. PKO BP reported inking the deal to sell the 66% stake for USD 113 million to EVO in early November, with the price to be adjusted for cash and earn-out
The majority shareholder in Famur is a Polish venture TDJ, which also happens to own a 9.99% stake in Kopex. Under a recent agreement, Famur has been given time until mid-2014 to acquire the Kopex stake from TDJ at PLN 10.75 apiece. This transaction would
Famur develops and produces advanced mining systems: shearers, roof supports, conveyor belts, etc. Photo: Famur
Famur managers believe that the merger with Kopex will generate a whole range of synergies for the two firms, including a more comprehensive offer for mines, stronger R&D capabilities, better production efficiencies, improved position vis-à-vis global competitors, and resources for further growth. In the coming weeks Famur will concentrate on negotiations with Kopex and its owners, hoping to reach an agreement shortly and finalize the whole transaction by the end of June. "With a capitalization of more than PLN 3.3bn following the merger, the expanded group may attract the interest of foreign investors, which could prove beneficial for the current shareholders of both firms," Łaski said.
weekly newsletter # 017 / 7th January 2014 / page 6
ENERGY & RESOURCES
StateState-sponsored shale alliance falls through, nuclear deal prevails revails Back in July 2012, when the five Polish statecontrolled companies: natural gas giant PGNiG, copper group KGHM and power groups Tauron, PGE and Enea inked a framework agreement on cooperation in shale gas exploration and extraction, government officials made sure the news received widespread coverage in all major media. However, the deal expired on December 31st, 2013, and according to sources cited by Reuters it will not be renewed.
of fractures on its first-ever shale gas horizontal well at the Lubocino site, Wejherowo license.
which has the leading role in the process of building Poland's first nuclear power plant.
PGNiG has recently teamed up with US Chevron (see PT Business Review+ No. 015 page 4) to explore shale fields in south east of Poland and their agreement may signal a new trend, whereby Polish license holders seek support from more experienced global partners to tap into Poland's unconventional gas and oil reserves more quickly.
The government has charged PGE, the country's leading power company, with the task of building the country's first nuclear power plant. According to plans, the first of the planned two nuclear power units (each with a capacity of 3,000 MW) is to go online by 2023. One of the NPPs could be built in Żarnowiec, roughly 100km west of Gdańsk, already housing the ruins of a huge nuclear power plant whose construction was stopped in 1990 through a popular referendum.
Assessing Poland's shale riches Estimated recoverable shale gas reserves in bn cb.m
EIA (2011)
IN BRIEF:
EIA (2013)
Lotos Petrobaltic, a subsidiary of Poland's number two oil refiner Grupa Lotos, has purchased an offshore jack-
Wo o d M ackenzie (2010)
Based on the deal signed on July 4, 2012, the five companies planned PLN 1.7bnoutlays on joint exploration and extraction of shale gas from the first three pads at PGNiG's Wejherowo license on the Baltic coast. But they missed a number of deadlines for mapping out details of the deal and said that they had now let it expire. At the beginning of January 2013 PGNiG admitted it had suffered setbacks while conducting a series
6,000
5,000
4,000
3,000
2,000
1,000
*PIG (2012) 0
The arrangement was the brainchild of Poland's former treasury minister Mikołaj Budzanowski, who was dismissed in mid-2013, following the surprising announcement by Russia's Gazprom and the statecontrolled Polish company EuRoPol Gaz, regarding a new joint pipeline project. As neither Mr. Budzanowski, nor Polish Prime Minister Donald Tusk had any idea about those plans, the premier sacked the head of treasury for insufficient supervision over state-owned enterprises. Since Budzanowski's departure, many of the otherwise sensible initiatives he initiated, have been dissolved.
*) Poland's Geological Institute PIG estimates the country's recoverable shale gas reserves at 346-768bn cb.m Source: EIA, PIG, Wood Mackenzie, PT archives
Another alliance between state-controlled energy utilities PGE, Enea and Tauron as well as copper group KGHM, focused on the development of Poland's first nuclear power station, is to remain in force, despite failure to meet conditions precedent set in the cooperation agreement initialed in September, the companies said in separate market filings. On September 23, 2013 the parties agreed that PGE would keep a 70% stake in its nuclear power unit PGE EJ1 and sell the remaining 30% of shares to Enea, Tauron and KGHM with each of the firms taking a 10% stake. PGE EJ1 is a special-purpose unit of PGE,
up drilling platform which will be used for exploration works on its Baltic Sea exploration licenses, the company announced. The platform, currently operating off the western African shore, is capable of operating at the depth of up to 105 meters and will be able to reach 120 meters once platform legs are extended, Lotos said. It will be transported to the Baltic Sea in Q1 2014. The new rig will replace the group's current Baltic Sea platform 'Petrobaltic' which will be transformed into an extraction platform and will become the production center at Lotos' B8 Baltic license where Lotos plans to launch commercial production at end-2015.
PROPERTY & CONSTRUCTION
Construction market to rebound in 2014 The value of Poland's construction sector is to grow by 3.5% in 2014, following last year's 8.9% decline from
weekly newsletter # 017 / 7th January 2014 / page 7
the record level of EUR 48bn, reported market researcher PAB-PCR&F Institute. Their projections are seen as optimistic, however, as many analysts expect a further contraction this year, before the sector finally rebounds in 2015, fuelled by a fresh injection of funding from the European Union's new budget. Other negative factors that Polish general contractors may face in 2014 include higher prices of building materials and subcontractor services. The EU has earmarked some EUR 17.5bn on Polish infrastructure projects in its 2014-2020 financial perspective, but the money is unlikely to start flowing anytime soon, as most of the largest tenders remain at a relatively early stage. Market insiders generally agree, however, that the segments that will see most construction activity in the coming years will be road building, railway infrastructure and energy sector. Rail network improvements alone are to cost PLN 9bn in 2014.
Poland's construction market Total turnover, year-on-year change in real terms 15% 10% 5% 0% -5% -10% 2009
2010
2011
2012
*2013
*2014
*2016
Source: Euroconstruct *) projected
The past year saw a significant decline in large contracts, but when it comes to small (below PLN 5m) and medium-sized projects (PLN 20m), their numbers remained relatively unchanged. Although huge infrastructure developments, such as highway or stadium
deals attract most attention, they are also the most risky for builders. Some of Poland's largest and most experienced construction firms (most notably Polimex-Mostostal and PBG), as well as a number of foreign players (for instance Austria's Alpine Bau, Irish SRB) severely miscalculated that risk and failed to finalize some key projects, often ending up on the verge of bankruptcy themselves. Only time will tell whether the painful lesson of the 2011-2012 infrastructure boom will result in more realistic bids in future tenders. Aside from its focus on several key market segments, Poland's construction industry is also showing clear signs of increasing geographical concentration, according a brand new report by market research and consulting company PMR. The country's top five regions (voivodeships) generate a steep 55% of the total construction output. The Mazowieckie province alone contributes more than 18% of the market’s value, ahead of Silesian, Wielkopolskie, Małopolskie and Dolnosląskie, whose combined shares amount to 37%. A review of more than 1,000 planned projects done by PMR researchers reveals that the current trend is unlikely to reverse in the coming years. On the contrary, it may even pick up pace. According to PMR, Poland's construction market will continue to be dominated by infrastructure projects in the near future as the country still has a lot to catching up to do before it reaches the EU average. Improvement of the technical condition of roads and railway lines is at the top of project lists in all the regions covered by the report. Most of the planned road building projects will focus on developing better road connections between the major cities, including Warsaw, Kraków, Wrocław, northern Gdańsk, west-central Poznań and eastern Lublin. Traditionally, the Mazowieckie province will see the strongest construction activity in terms of new developments, with Warsaw being the driving force behind
the region’s growth. Some major projects in the capital city will include: the extension of the city’s ring road and outbound routes (see PT Business Review+ No. 016 page 9), and subway network as well as the upgrade of the Rail Baltica line linking Warsaw and the eastern city of Białystok. Significant funds will also be allocated to development of Warsaw’s railway links to Radom and Łódź in central Poland.
PROPERTY & CONSTRUCTION
Ghelamco, Immobel and Penta competing competing for top Warsaw site The coming weeks will see Poland's state railways company PKP select a partner to develop a new Dworzec Gdański station, just north of Warsaw's city centre along with the surrounding area. Regardless of which option is selected, the project, estimated at PLN 1.2bn, is likely to become one of the largest and most attractive mixed-use developments in the Polish capital, mainly due to the size of the plot (4.7ha) as well as its unique location with direct access by rail, subway, tram, buses and cars. Besides Dworzec Gdański, only the Central Station and its surroundings offer equally wide selection of transportation options. Back in autumn, PKP shortlisted three parties for the project: Belgian developers Ghelamco and Immobel as well as a consortium led by Czech private equity fund Penta Investments. The latter has sizeable investments in different sectors in Poland and abroad, but so far it has had little exposure to Polish real estate. Outside Poland, however, Penta is no stranger to property investments. PKP rejected initial offers from Poland's Echo Investment and Marvipol and Slovakia's HB Reavis. According to the railway operator,
weekly newsletter # 017 / 7th January 2014 / page 8
its selection criteria included experience in similar projects, deadline and project profitability guarantees, as well as the manner in which the new project incorporates the transport function of Dworzec Gdański, which is both a railway and subway station.
The Belgians have also made inroads into the residential segment with and upscale Warsaw project Woronicza Qbik (350 soft lofts), and they are about to break ground on their first retail projects in Warsaw (see PT Business Review+ No. 015 page 11.)
Penta seeks to build three giant office buildings, including one taller than 100 meters, as well as a brand Image: PKP/Penta/Epstein new train station at the site.
Ghelamco envisages nine office buildings at the site, one sitting on top of the station that is to be moved Image: PKP/Ghelamco underground.
Without a doubt, Flemish developer Ghelamco has the most experience of the three rivals, at least as far as property development in Poland is concerned. Over the past 22 years Ghelamco has built nearly 0.5m sq.m of offices and warehouses in Poland. Their ongoing projects include the BREEAM-certified Warsaw Spire complex, which will consist three office buildings (the main 220-metre tower plus two 55m-tall blocks) with a combined office space of 100,000 sq.m. and an underground parking lot for 1,200 vehicles. Their other major recent and ongoing developments include Łopuszańska Business Park with 17,000 sq.m, and the new T-Mobile HQ, a 40,000 sq.m office complex on Marynarska 12. Outside of Warsaw, Ghelamco is developing a 60,000 sq.m. class A project Synergy Business Park in Wrocław. Earlier this year the company sold its Warsaw office projects Mokotów Nova (to Curzon Capital Partners III fund for EUR 121m) and Senator (to Union Investment for EUR 120m).
Immobel wants to place the train station between large office blocks.
Image: PKP/Immobel
Despite its 150 years of experience on the Belgian market, Immobel is still a relative newcomer in Poland. The company entered the Polish market in 2011 with a focus on office and residential projects. It's projects to-date include the Okrąglak and Kwadraciak office buildings in Poznań (with a combined GLA of nearly 8,000 sq.m), as well as the Cedet project in Warsaw, which will involve the redevelopment and extension of one of the city's best known buildings, the former Smyk kids department store, to create a 21,000 sq.m retail & office complex. Immobel acquired the three properties from Centrum Development and Investments, which manages more than PLN 1bn worth of retail property assets in key Polish cities. The company also owns development sites in Warsaw and Gdańsk. Listed on Euronext Brussels, Immobel focuses on office and residential and landbanking segments, and, occasionally, retail projects.
Established in 1994, Penta is a Central European investment group operating in the private equity and real estate sectors. In private equity, it manages an evergreen fund of its partners, the company's only shareholders. Its portfolio companies provide jobs to more than 30,000 people and reported revenues of EUR 4.4bn in 2012. Penta invests into retail, healthcare, aerospace industry, mechanical engineering, utilities, entertainment and banking projects.
SERVICES & BPO
Shell's Kraków centre to recruit 150 new employees Oil giant Shell seeks to recruit a further 150 staff at its Polish business service centre. The Kraków Technology Park, where the Shell Business Service Centre Kraków is located, has just awarded a third operations permit to the British-Dutch energy company. The Kraków centre provides its customers with services in four main areas: finance operations, HR services, cus-
weekly newsletter # 017 / 7th January 2014 / page 9
tomer service and supply & distribution. Shell offers development opportunities for both graduates and experienced professionals.
Shell the number two player on the market after Polish giant PKN Orlen and number one among foreign operators, with a 7% market share.
"Shell Polska employs close to 2,000 in the Kraków special economic zone, and as such it is one of the largest centers operating in the area," said Wiesława Kornaś-Kita, head of the Kraków Technology Park, which was established back in 2005 to attract business process outsourcing and shared services projects. Besides Shell, the Zabierzów sector of the Kraków special economic zone has since attracted the likes HSBC Service Delivery, Affiliated Computer Services, HCL Poland, UBS Service Centre (Poland), Luxoft Poland and Sabre Polska.
Shell is currently in the process of rebranding and upgrading the newly-acquired network, with most of the Neste stations to be transformed into regular manned Shell outlets, some with full-scale shops onsite and others with "walk-in" or "walk-to" counters. According to Shell, the operation is to create some 1,000 additional jobs. In addition to the fuel retail business, Shell is developing its aircraft refueling operations in Poland, as the first foreign operator to have entered this market segment. Since the beginning of the year its subsidiary Shell Aviation has launched operations at the airports in Katowice, Kraków and Warsaw. At the latter airport, Shell is relying on infrastructure provided by Polish PKN Orlen subsidiary Petrolot, which until recently had monopolized Poland's aviation fuel sector. Besides Petrolot and Shell, other aircraft refuellers currently operating in Poland are Lithuanian Baltic Ground Services, and Polish Lotos Tank.
SERVICES & BPO
Kraków Technology Park issues 32 permits last year. Investors promised to spend PLN 647m on new projects in the zone and create 1,287 jobs. Photo: KPT
Shell is one of the most active foreign investors in Poland's fuel retail sector. As of end of 2012 Shell had 309 proprietary and 69 franchise stations in Poland. Shell Polska turned over PLN 7.4bn in 2012, up from PLN 4.83bn and its workforce stood at close to 2,000 as of end of last year. The company has recently acquired a chain of 105 unmanned gas stations in Poland from Finland's Neste. The EUR 80m acquisition has made
Top staffing company Work Service acquires Hungarian peer Poland's leading temporary staffing and personnel outsourcing company Work Service has acquired a 75% stake in its Hungarian peer Prohuman. The EUR 16m transaction brings the Polish company one step closer to becoming the top human resources player in Central and Eastern Europe.
Established in 2004, Prohuman is part of Prohume Group that includes five ventures operating across a broad range of segments (HR services, merchandising, sales promotion, marketing events and telemarketing). One of Hungary's top staffing companies, Prohuman recruited more than 6,000 temporary employees in 2012. To-date, the Wrocław-based Work Service has acquired seven staffing and recruitment companies at the combined cost of PLN 164m. In Q3 2013, the Polish firm bought the Polish arm of global recruitment consultancy Antal International for PLN 27.1m as well as a Katowice-based staffing company Work Express. The key financial investor in Work Service is the global private equity firm PineBridge Investments, which last year 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 15.4% in the CEE region. The long-term plan is to make Work Service one of Poland's 100 largest companies in a couple of years and with PineBridge's help its management is well on track to achieving that goal. The private equity fund confirmed it was ready for further capital injections, should Work Service indentify further attractive takeover targets. 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). With approximately 27,000 employees on a monthly
weekly newsletter # 017 / 7th January 2014 / page 10
basis, Work Service serves more than 1,000 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.
and the transaction, which follows the preliminary sale agreement signed at the beginning of October (see PT Business Review+ No. 007 page 10), will generate EUR 50m in net cash proceeds for the Polish developer. The decision to sell the stake in Galeria Kazimierz is in line with GTC’s strategy to generate net cash from disposal of assets, as announced in 2012.
With close to USD 70bn under management, PineBridge is an independent asset manager with over 60 years of experience in developed and emerging markets. Their global platform for institutional and individual offers solutions across asset allocation, equities, fixed income, private equity and hedge funds. In 2012 PineBridge agreed to invest EUR 50m into a EUR 108m roll-out of an EasyPack parcel network developed by the Warsaw-listed postal services firm Integer.pl. PineBridge company belongs to Hong-Kong billionaire Richard Li, son of the world's 9th richest person Li Ka-shing, whose wealth Forbes estimates at some USD 25.5bn. Thru Hutchison Whampoa Limited and Cheung Kong Holdings, Li Ka-shing is the world's largest operator of container terminals and the world's leading health and beauty retailer (of the Rossmann and Watson's fame).
CONSUMER GOODS & RETAIL
GTC & Avestus close sale of Kraków retail center to Invesco Just before Christmas, following a green light from the Polish antitrust authority UOKiK, the Warsaw-listed developer GTC and European real estate private equity firm Avestus Capital closed the EUR 180m sale of their Galeria Kazimierz shopping mall in Kraków, to a subsidiary of Invesco Group. Each of the sellers received EUR 90m, according to a GTC communiqué,
Galeria Kazimierz is one of Kraków's most popular Photo: GTC shopping destinations. "We are continuing to refresh the company's portfolio by selling maturing assets and replacing them with new developments that offer attractive return. Those new developments include two shopping malls planned in Warsaw’s districts of Wilanów and Białołęka. These projects are progressing on schedule," said Alain Ickovics, President of GTC Management Board. Galeria Kazimierz shopping mall is located in the historic centre of Krakow, by Podgórska street. While be-
ing one of the most popular shopping centers in city and its metropolitan area, the mall offers almost 40,000 sq.m of leasable space. Galeria Kazimierz anchor tenants include companies such as: Alma, Cinema City, EMPiK and Reserved. GTC, which developed one of Warsaw's most popular shopping centers Galeria Mokotów, is currently getting ready to break ground on two new massive retail projects in the Polish capital's fastest growing residential districts of Wilanów and Białołęka. GTC estimates that phase one of Galeria Białołęka will open its doors in 2015 with a GLA of 64,000 sq.m, whereas Galeria Wilanów is to welcome its first customers in 2016 with an initial GLA of 61,000 sq.m. Established in 1994 in Warsaw, GTC currently operates in Poland, Hungary, the Czech Republic, Romania, Serbia, Croatia, Slovakia, Bulgaria, Russia and Ukraine. The company develops new projects and manages completed properties in three key sectors of real estate: office buildings and parks, retail and entertainment centers and residential. To date, GTC has developed approximately 950,000 sq.m of net commercial space and 300,000 sq.m of residential units. The company currently manages a combined 602,000 net sq.m of completed and operational commercial space and holds a large portfolio of investment projects at various stages of development that will enable it to develop of 1.1m sq.m of commercial space and 615,000 sq.m of residential space. GTC's total assets exceed EUR 1.9bn. A few weeks ago (see PT Business Review+ No. 012 page 5), Israeli Kardan NV, a company linked to GTC's original founders, sold its 27.75% stake in the company to Lone Star Real Estate Fund III for EUR 160m. Kardan booked GTC Poland at a value of EUR 194m at the end of June 2013.
weekly newsletter # 017 / 7th January 2014 / page 11
DATA BOX: RETAIL SALES Poland's retail sales increased more-than-expected in November, data released by the Central Statistical Office GUS showed. Retail sales rose 3.8% y/y in November, following a 3.2% gain in October. Economists had expected sales to rise 3.2%. On a monthly basis, retail sales shrunk 5.8% in November, after a 3.6% rise in the previous month.
Retail sales in Poland (y/y) 20% 15% 10% 5% 0% -5% May 11
Nov 11
May 12
Nov 12
May 13
Nov 13
The company hopes to seal the deal by the end of January, following a green light from the competition watchdog UOKiK. Located some 70km north-west of Wrocław, Lubin boasts one of the highest disposable incomes in Poland, as the town is home to the country's copper and silver mining conglomerate KGHM. EMC Instytut Medyczny operates 8 hospitals and 16 outpatient specialty and primary care clinics. In merely a decade, the company has developed from a local firm operating a hospital in Wrocław into a network of medical centers, being expanded consistently throughout Poland and abroad. Since 2005, EMC has been listed on the Warsaw Stock Exchange. In the first three quarters of 2013 EMC saw its sales revenues go up 5.5% and reach PLN 126m, while its net earnings came to PLN 1.75m. Its ongoing investments include modernization of the geriatric hospital in Katowice (from 38 to 88 beds), expansion of Bukowiec hospital (new operating theater and a central sterile services department), and redevelopment of outpatient clinic in Piaseczno (10 new rooms).
vincingly achieved. Currently, the shareholding structure is consolidated and we are glad that such a reputable brand as PZU has decided to stay with us and support the development of EMC."
Health expenditure* per capita In selected OECD countries as of 2011, in USD PPP Norway Germany France UK Finland Spain Greece Czech Rep Slovakia Hungary Poland Estonia 0
1,000
2,000
3,000
4,000
5,000
6,000
Source: OECD *) public & private
Hospital operator EMC to pay PLN 30m for for Lubin healthcare unit
Penta launched a public offer for the 85.4% of shares and 79.51% of voting rights in EMC Instytut Medyczny at the end of May 2013. The bid, which valued EMC at about PLN 157m (EUR 37.4m), closed in July and boosted Penta's stake in the Wrocław-based business from 14.6% to 68.41%. Polish insurer PZU remains the second major shareholder with a 27.12% share. When Poland Today spoke to Eduard Maták, partner responsible for Penta's healthcare projects, back in August 2013, he confirmed the fund would support EMC's acquisition policy.
One of Poland's leading private hospital and clinic operators, EMC Instytut Medyczny, majority-owned by the Czech private equity company Penta Investments, has inked a preliminary agreement to acquire a PLN 30m stake in a regional healthcare unit in the western Polish town of Lubin from local authorities.
"The company is a well established hospital operator in Poland and our aim is to take a very active part in the consolidation of the hospital segment through EMC," Eduard Maták, who is responsible for Penta's healthcare portfolio, told Poland Today. "Our main goal was to gain control over EMC which was con-
Source: GUS
HEALTHCARE
Besides EMC, Penta's healthcare sector acquisitions last year included 250 Mediq pharmacies in Poland from Dutch Mediq International. The PLN 229m takeover made Penta's Dr. Max Poland's 2nd largest pharmacy chain with more than 300 locations, and a 3.5% market share. "We are ready to grow at the annual rate of 20 – 30 pharmacies and Penta is determined to stay with Dr.Max project for at least five years. In Poland, there are many small pharmacy chains that operate less than 10 pharmacies. We consider them as attractive potential targets for Dr.Max," Eduard Maták, told Poland Today. Established in 1994, Penta is a Central European investment group operating in the private equity and re-
weekly newsletter # 017 / 7th January 2014 / page 12
al estate sectors. In private equity, it manages an evergreen fund of its partners, the company's only shareholders. Its portfolio companies provide jobs to more than 30,000 people and reported revenues of EUR 4.4bn in 2012. Penta invests into retail, healthcare, aerospace industry, mechanical engineering, utilities, entertainment and banking projects. In 2012 Penta entered the hospital segment through acquisition of Svet zdravia, which operates 10 hospitals in Slovakia. The OECD estimates total health spending in Poland at 7% of GDP, compared to 9.6% in the UK, and 17.6% in the USA. According to PMR forecasts, in the years 2013-2015 the country's private healthcare market will be growing at a compound rate of about 5% annually, reaching PLN 39bn in 2015 (up from PLN 33.8bn in 2012).
IT & TELECOM
State investment fund to support HAWE's PLN 560m fiberfiber-totothethe-home home project Poland's state-owned investment vehicle Polskie Inwestycje Rozwojowe (PIR), has signed an agreement with the Warsaw-listed backbone network operator HAWE concerning a potential joint investment in a fiber-to-the-home network that will bring ultra highspeed internet access to 870,000 households in Poland. According to information Poland Today received from PIR's representatives, the investment will amount to approximately PLN 560m over six years and PIR’s share in the venture is likely to reach close to PLN 120m.
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 563m in Lotos Petrobaltic's B8 exploration project in the Baltic Sea (see PT Business Review+ No. 007 page 5) and possibly take part in a PLN 12bn petrochemical project by Polish refiner Grupa Lotos and chemical company Azoty (see PT Business Review+ No. 014 page 2). 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. The HAWE project would be PIR’s first investment in partnership with a private investor. "Fibre optic networks are the future in Poland. Investments in fiber optic infrastructure are necessary, as they will pave the way for unlimited digital services. PIR wants to participate in such investments," commented Mariusz Grendowicz, PIR President. "A 10% increase in broadband Internet coverage translates into a higher gross domestic product, job creation, enhanced business effectiveness and a more innovative economy. Advantages for the public sector are also significant, including the possibility to implement electronic ser-vices or data exchange," he added. The FTTH technology, which enables the provision of many innovative services and the fastest symmetrical Internet access, is virtually non-existent in Poland. The FTTH broadband network penetration rate in Poland amounts to a mere 0.5%, while European leaders such as Lithuania and Sweden boast penetration rates of more than 20%. In October 2013 HAWE started a pilot project involving the construction of a FTTH network in the Ursynów district of Warsaw in cooperation with Orange Poland. So far, work on the development of the FTTH project has been funded by HAWE from its own resources. HAWE's strategy envisages the construction of FTTH networks in the last
mile and the sale or lease of links to operators serving end-customers. The agreement envisages that later in the project development process, a special purpose vehicle would be established with shares held by PIR and HAWE. The level of financial commitment of HAWE would amount to PLN 130m, while PIR would be expected to invest almost PLN 120m. The SPV would also acquire debt financing provided by a bank in the amount of ca. PLN 250mand credit from infrastructure vendors, in the amount of ca. PLN 60m. "Initially, the project would be implemented under a partnership scheme, with the network being leased throughout the term of the agreement to a selected Partner and a guaranteed lease level, while after the expiry of the partnership agreement, it would be made available to other telecommunication operators," PIR said. "Ultimately, the network would be constructed in an open model, whereby it would be immediately available to all telecommunication operators without a prior partnership agreement stage. This means that the company would not provide end services to clients at any stage of the FTTH project and that it would not compete with the operators present in the market." The objective of the project would be to ensure longterm development of the broadband Internet network in the country, which fits with the objectives of the European Digital Agenda for Poland. The latter is one of the key pillars of the Europe 2020 strategy, which sets the targets for EU growth until 2020. "The project will enable sweeping pro-consumer changes to be introduced in the Polish telecommunications market," said Krzysztof Witoń, HAWE's CEO. With its own backbone network of 3,500km, HAWE is a "carrier for carriers," with telecoms services to other operators generating more than 80% of its sales reve-
weekly newsletter # 017 / 7th January 2014 / page 13
nues, the rest being infrastructure services. In 2012 HAWE turned over PLN 107.9m (down from PLN 140m in 2011) with an EBITDA of PLN 33m (against PLN 69.8m in the preceding year).
POLITICS & ECONOMY
President inks pension reform bill and takes it to constitutional court Shortly before the end of last year, President Bronisław Komorowski signed the controversial legislation that will force Polish state-guaranteed private pension funds (OFEs) to transfer about half of their assets into a state vehicle in an attempt to cut public debt. However, in line with expectations, the president decided to send the bill to the Constitutional Tribunal for review, as opinions on the law are "contradictory and even mutually exclusive." Under the new law, the OFEs are to transfer 51.5% of their assets to the state pension vehicle ZUS on 3rd February this year, after which they will be banned from investing in treasury debt and state-guaranteed bonds starting 2016. The state pension institution will be also responsible for distributing the pensions, and therefore the funds will also be required to gradually transfer employee assets to ZUS starting 10 years prior to retirement. According to government estimates, the changes will lower Poland's public debt by 9.2 percentage points from its current level of 55% of GDP and reduce annual borrowing needs by PLN 20-25bnin the years 2014-2017. Pension funds in the mandatory system held PLN 303.4bn of assets, including PLN 131.1bn of stocks and PLN 125.8bn of bonds as of 31st October, data from Po-
land’s financial markets regulator show. The owners of companies running the funds include Dutch Aegon and ING, German Allianz, US MetLife, British Aviva, French AXA, Italian Assicurazioni Generali, and Swedish Nordea Bank. What is more, participation in the OFE system has been made optional. While every OFE account remains in place with its rump equity assets, Poles will have four months to determine if the portion of their future social security premium - 2.9% - should continue to go to the OFE funds. Should they fail to declare, their premiums go to a virtual individual account at the ZUS. They’ll be able to review their decision in 2016. The government-sponsored changes to the country’s three-tier pension system have sparked controversy, including concern that canceling bonds would amount to uncompensated expropriation. The overhaul is opposed by 53% of Polish voters, according to a recent poll. According to his aides, the president expressed concern about several elements of the bill, including the prohibition to invest into Treasury bonds and increasing the share of assets invested into equity as well as a ban for OFE to advertise and fines for infringing this ban. During the legislative consultation process, concerns about the bill's constitutionality were raised by government agencies and a slew of private lobby groups as well. Komorowski had earlier criticized the bill for increasing risks for future pensioners but also said that he would most likely not block the law, saying that the legislation was necessary to preserve Poland’s fiscal stability. Poland should see the Constitutional Tribunal issue the ruling on the pension reform within four months, the Tribunal's former judge Jerzy Stępien told the broadcaster TVN CNBC. The president's decision means that T-bonds held by private pension funds OFE will be transferred to the social security ZUS and
cancelled, a situation unlikely to be reversed, Stępien said. The government has already included the pension-fund changes in its 2014 budget, which will run a 4.6% of GDP surplus as a result of the asset transfer, according to a November forecast by the European Commission. For the past 14 years, Poland has had a hybrid pension system, with part of workers' contributions diverted from the state pay-as-you-go system to private pension funds, known collectively as the second pension pillar. Shortly after the new system was introduced, the government found itself in a pickle, forced to finance payouts for pensioners covered by the old system at the same time contributing to OFE accounts for would-be pensioners belonging to the new system. Poland ended up borrowing left and right and its debt skyrocketed as a result, from PLN 273bn in 1999 to PLN 888bn in mid-2013, with the pension system being responsible for roughly a half of the new liabilities. In the end, the government admitted the system was too costly for public finances and failed to deliver additional benefits for future pensioners.
POLITICS & ECONOMY
Investment in special economic zones sees 26% growth in 2013 The government's decision to extend the lifetimes of Poland's special economic zones (SEZ) until 2026 seems to have reignited investor interest in the incentives they offer. According to preliminary estimates, Poland's special economic zones welcomed PLN 7.14bn in new investment commitments last year, which represents an increase by PLN 1.48bn (26%) against the 2012 level. The number of investment
weekly newsletter # 017 / 7th January 2014 / page 14
permits increased by nearly a half, and investors pledged to create a minimum of 8,100 jobs in new projects, some 2,300 more than in the prior year. Statistics provided by the state investment promotion agency PAIiIZ are equally heartwarming, with 53 investment agreements sealed last year for projects worth EUR 902.5m that will lead to creation of 19,000 new jobs, some 90% more than indicated in their 2012 report. PAIiIZ is currently in talks on a further 164 new projects, worth approximately EUR 3.3bn. If implemented, they are said to generate employment for some 30,500 individuals.
Special economic zones in 2013 Declared new outlays in PLNm Katowice Pomerania Wałbrzych Euro-Park Mielec Kraków Technology Park
was the EUR 75m Solvay plant in Włocławek, which will supply silica to tire makers. In the food sector, US giant Mars is expanding its production complex in Sochaczew, west of Warsaw, at the cost of EUR 60m. As far as job creation is concerned, no-one came close to the e-commerce giant Amazon, which intends to hire more than 6,000 employees at three huge distribution hubs near Wrocław and Poznań. In the highskill segment, IT services company IBM unveiled plans for 2,000 positions at a new business services centre in Katowice. The second half of the year saw much more investor activity than the first six months, partly due to the government's decision to give the SEZ an additional couple of years, which made them more attractive to companies. On the other hand, the current EUapproved regional ceilings on public aid will remain in force only through mid-2014, when they are to be replaced by new, less generous limits (see PT Business Review+ No. 013 page 15). As a result, the SEZ are expecting to stay very busy in the first half of this year.
Kamienna Góra Łódź
POLITICS & ECONOMY
Kostrzyn-Słubice
Unemployment tops 13.2% in November; November; improvement expected by midmid-2014
Legnica Słupsk Suwałki Starachowice Warmia-Mazury Tarnobrzeg 0
250
500
Employers posted 55,700 new job offers for the month, down from the prior month, but up on corresponding period of last year. Labor offices had 38,500 unfilled posts at month's end. According to a brand new report by the central bank NBP, Poland's labor market is likely to see a more pronounced recovery in mid-2014, with the manufacturing sector expected to be the main source of employment increase in the coming quarters. Labor demand in Poland has been on the rise since Q2 2013 and the trend is also visible in Q4 data, NBP analysts also said. "That growth most probably means a slow reversal of the hitherto negative tendency observed from the beginning of 2011 to Q1 2013," the report said.
DATA BOX: C/A DEFICIT • Poland's current account deficit in Q3 2013 narrowed from the same period last year, data released by the National Bank of Poland showed on January 2nd, 2014. The current account deficit shrunk to EUR 2.072bn from EUR 3.606bn in the corresponding period of 2012. Economists had forecast a shortfall of EUR 2.306bn. In Q2, there was a surplus of EUR 486m. • The merchandise trade showed a surplus of EUR 1.017bn versus a deficit of EUR 419m a year ago. The surplus in the services trade came in at EUR 1.047bn, which was slightly smaller than prior year's EUR 1.084bn.
750 1,000 1,250 1,500
Source: SEZ
Traditionally, the automotive sector was the key source of FDI, with General Motors Manufacturing Poland investing EUR 95m to launch the production of the next generation Astra V compact passenger model at its factory in Gliwice. Another major project
Poland's registered unemployment rate rose to 13.2% in November 2013 from the prior-month level of 13.0%, according to Central Statistical Office (GUS) figures. There were 2.116m registered jobless at endNovember, up by 40,900 from the preceding month. When compared to November 2012, the number of registered jobless was up 57,900.
• The income account showed a shortfall of EUR 4.644bn compared to EUR 5.027bn in 2012. Current transfers revealed a surplus of EUR 508m versus EUR 756m in the same period a year ago. Source: Central Bank NBP
weekly newsletter # 017 / 7 January 2014 / page 15
KEY STATISTICS Consumer Prices Prices
+0.1 +3.6
+0.1
-2.7
-4.7 +0.7
-4.8 +3.5
-4.9
-0.2
+2.0
+0.1
+1.8
+1.8 +0.2
+1.8
+0.1
-1.4
+0.5
-1.4 +0.8
-2.3
-1.0
-2.3
-1.2
Communications -9.7
0.0
-9.7
-7.2 +2.8
-11.7
-4.9
Transport
Gross CPI
+1.1
-0.3
+0.1
0.0
y/y
m/m
Jul '13
+1.0 +0.1 +0.8 +0.2 +0.6 -0.2
Aug '13 Sep '13
Oct '13 Nov '13
m/m (%)
+3.8
-0.7
-0.9
+3.6
-5.8
y/y (%)
+4.3
+3.4
+3.9
+3.2
+3.8
Year
2008
2009
2010
2011
2012
Turnover in PLNbn
564.7
582.8
593.0
646.1
676.0
+13.3
+4.3
+5.5
+11.6
+5.6
y/y (%) Nov 13
Housing
+1.9 +0.3
Sep 13
-4.8
+0.2 +3.7 +0.2 +3.6
-0.1
Jul 13
Clothing, shoes
+1.9
May 13
Alcohol, tobacco +3.6
0.0
Mar 13
-1.2 +2.6
Jan 13
2.5
Nov 12
Food & bev
Month
5% 4% 3% 2% 1% 0% -1%
Sep 12
y/y m/m y/y m/m y/y m/m y/y m/m
Retail Turnover
Jul 12
Nov '13
May 12
Oct '13
Mar 12
Sep '13
Jan 12
Sector
Inflation
Aug '13
Nov 11
Data in (%)
Residential Construction Dwellings
2008 2009 2010
2011
2012 Jan-Nov y/y
230.1
178.8
174.9
184.1
165.1
142.9
158.1
(in '000 units)
Producer Prices Prices
Industrial Output Out put
Permits
2013
(%)
126.3
-17.6 -11.2
Commenced
174.7
162.2
141.8
121.0
m/m (%)
+0.1
+0.7
+0.2
-0.3
+0.1
-0.7
-0.3
m/m (%)
-0.7
+2.6
+1.5
-4.5
+9.6
+6.0
-6.2
U. construction
687.4 670.3 692.7 723.0
713.1
706.7
-3.3
y/y (%)
-2.5
-1.3
-0.8
-1.1
-1.4
-1.4
-1.5
y/y (%)
-1.8
+2.8
+6.3
+2.2
+6.2
+4.4
+2.9
Completed
165.2 160.0 135.7
152.5
129.6
-4.6
Year
2006
2007
2008
2009
2010
2011
2012
Year
2006
2007
2008
2009
2010
2011
2012
Source: Central Statistical Office (GUS)
y/y (%)
+2.0
+2.0
+2.2
+3.4
+2.1
+7.6
+3.3
y/y (%)
+11.6
+10.7
+3.6
-3.5
+9.8
+7.7
+1.0
Gross Domestic Product
May'13 Jun '13 Jul'13 Aug'13 Sep'13 Oct'13 Nov'13
2006 +3.2
-2.0 2007 +7.4
-0.1
-0.2
-1.9 2008
-0.1
-1.9
-1.8
2009
+4.8
-0.1 -1.8
2010
+0.2
-0.1
2011 +1.0
-0.2 -1.8 2012 +0.2
y/y (%)
-27.5
Year
2006
y/y (%)
+18.1
+19.1 -18.3 2007 +15.5
+7.8 -5.2 2008 +12.1
-0.8 -11.1 2009 +5.1
+9.4
+14.3
-4.8
-3.2
2010
2011
+4.6
+11.8
-2.9 -8.9 2012 -0.6
A
A
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
-2.0%
395,657
-2.3%
Q1 2013
+0.5%
377,815
-3.1%
Q4 2012
+0.7%
442,231
-3.5% -3.5% -4.9%
Sentiment Indicators
2010
+3.9%
1,416,585
-5.1%
Economic sentiment and consumer confidence indicators
2009
+1.6%
1,344,384
-3.9%
Co nsumer conf id ence (lef t axis) Economic sentiment (right axis)
20
120
Key Economic Data & Projections
0
100
Indicator
2013
2014
-20
80
GDP change
+3.9% +4.5%
+1.9%
+1.5%
+3.1%
Consumer inflation
+2.6% +4.3%
+3.7%
+0.9%
+1.5%
Producer inflation
+2.1% +7.6%
+3.4%
-1.2%
+0.7%
-40
60 No v 1 3
A
B
192 6,060
404,310
+0.8%
1,522,736
Aug 13
A 8,427
+1.9%
Q2 2013
1,462,734
M ay 1 3
Q3 2013
Q3 2013
+1.9%
Feb 13
Q2 2013
Current account def. in % of GDP
+4.5%
N ov 12
Q1 2013
GDP in PLN bn current prices
2011
Aug 1 2
Q4 2012
Growth y/y unadjusted
131.7
2012
M ay 12
A: avg monthly wages in PLN B: indexed avg wages, 100=2005
Coal mining
+16.1
Source: The Central Statistical Office of Poland, GUS
Gross Gro ss Wages Sector
m/m (%)
Feb 1 2
y/y (%)
-2.0
-0.1
Period
May '13 Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13
N ov 11
Year
-0.2
Month
Aug 1 1
y/y (%)
May'13 Jun '13 Jul'13 Aug'13 Sep'13 Oct'13 Nov'13
May 11
m/m (%)
May '13 Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13
Construction Output
Construction Prices Price s Month
Month
Feb 1 1
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
CA balance, % of GDP
*2010
*2011
*2012
-5.1%
-5.0%
-3.7%
-1.4%
-0.3%
Nominal gross wage
+3.9%
+5.2%
+3.7%
+3.2%
+4.4%
Unemployment**
12.4%
12.5%
13.4%
13.5%
12.7%
3.99
4.12
4.19
4.20
4.06
EUR/PLN
Sources: NBP, BZ WBK, GUS *) actual figures **) year-end
weekly newsletter # 017 / 7th January 2014 / page 16
55.84 →
100 SEK
46.86 ↑
100 NOK
49.62 ↑
10,000 JPY
USD EUR 350
300
15.14 ↑
100 CZK 10,000 HUF
400
292.53 ↑ 139.51 ↓
Money Supply in PLN m Monetary base M1 - Currency outside banks M2
as of 3 January 2014
WIG-20 stocks Price Change Change in alphabetical 3 Jan 20 Dec end of order '14 '13 '12
WIG Total index
Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13
PLN (up to 1 year)
5.0%
PLN (up to 5 y )
5.4%
PLN (over 5 y)
5.3%
PLN (total)
5.3%
5.0%
EUR (up to 1m EUR) 1.9%
2.3%
EUR (over 1m EUR) 2.9%
3.5%
4.7%
4.6%
4.5%
4.5%
4.5%
5.1%
5.1%
4.9%
4.9%
4.9%
4.9%
4.9%
4.8%
4.8%
4.8%
↑ Bogdanka
4.9%
4.8%
4.8%
4.8%
↑ BZ WBK
1.9%
1.8%
2.0%
1.9%
↑ Eurocash
3.5%
3.2%
2.5%
3.0%
↑ Grupa Lotos
↑ Asseco Pol.
Warsaw Inter Bank Offered Rate (WIBOR) as of 3 Jan 2014 Overnight
1 week
1 month
3 months
6 months
2.58%%
2.58%
2.61%
2.70%
2.72%
153,867 531,124 114,083 928,359
Sep '13
Oct '13
166,620 540,873
154,967 536,237
113,223 931,042
113,174 935,095
538,837 113,718 934,713
412,407 405,703
414,941
412,469
M3
949,988
955,419
953,446
- Net foreign assets 154,035 147,978 150,517 148,702 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
Lombard
2.50%
153,672
- Time deposits
947,228
Reference
Nov '13
NBP deposit
4.00%
+6
51,497. 97.81
128.35
+1
-6
Change 1 week
+1% ↑
382.1
+1
+58
Change end of '12
+9% ↑
+12
49
+6 +2
-12
WIG-20 blue chip index
↓ GTC
7.4
-2
-25
↑ Handlowy
103
+1
+5
2,4 2,405.22
54.05
0
-42
Change 1 week
0% →
↑ Kernel
41.2
+8
-38
Change end of '12
-7% ↓
Rediscount
↑ KGHM
118.2
+4
-38
2.75%
↓ mBank
490
-1
+50
178.25
0
+6
16.16
-6
-11
5.17
-2
-1
1.00%
→ Pekao
Credit
↓ PGE
The financial sector's net lending in PLN bn,
↓ PGNiG
loan stock at the end of period Type of loan
+6
36.1
→ JSW
Central Bank (NBP) Base Rates Aug '13
47.95
WIG Total closing index last three months 56000 55000 54000
↑ PKN Orlen
42.52
+5
-14
↓ PKO BP
38.94
-3
+6
906,298
→ PZU
449.5
-1
+3
51000
262,396
↑ Synthos
5.69
+4
+5
50000
260,585
563,157
↓ Tauron
4.36
-5
-8
1,612,836
1,627,119
↑ TP SA
9.83
+1
-20
Jul '13
Aug '13
Sep '13
Nov '13
Loans to customers
901,863
908,106
901,288
- to private companies
263,491
262,963
559,965
- to households
556,027
560,608
Total assets of banks
1,627,182 1,626,489
Source: Central Bank NBP
53000 52000
3 Jan 14
100 DKK
Warsaw Stock Exchange, rates in PLN
on loans to non-financial corporations
5 Dec 13
338.84 ↓
3 Jan 14
502.14 ↑
100 CHF
22 Oct 13
100 GBP
14 Aug 13
416.45 ↓
7 Jun 13
100 EUR
Key indices
Term / currency
450
27 Mar 13
305.17 ↓
18 Jan 13
100 USD
Stock Exchange
Average weighted annual interest rates
18 Oct 13
as of 3 January 2014
Interest rates
13 Nov 13
100 USD/EUR against PLN
Central Bank average rates
26 Sep 13
Currency
Source: Warsaw Stock Exchange
T rade Poland's ten largest trading partners, ranked according to 2012
Poland exports and imports according to commodity groups, according to SITC classification EXPORTS in PLN bn Jan-Oct 2013
y/y (%)
share (%)
2012
IMPORTS in PLN bn share (%)
Jan-Oct 2013
y/y (%)
share (%)
2012
share (%)
EXPORTS in PLNbn JanNo Country Oct share 2013
*2012
Share No
IMPORTS in PLN bn JanCountry Oct share *2012 2013
Share
56,746
+9.4
10.7
61,694
10.3
38,800
+4.3
7.2
44,287
6.9
1 Germany
133,127 25.0% 150,046 25.1%
1 Germany
7,170
+6.0
1.4
7,967
1.3
3,338
+1.0
0.6
3,989
0.6
2 UK
34,789
6.5%
40,184
2 Russia
66,670 12.4%
Crude materials except fuels
13,343
+10.5
2.5
14,024
2.4
18,009
-6.4
3.4
22,053
3.5
3 Czech Rep.
32,706
6.1%
37,475 6.3%
3 China
50,619 9.4% 57,235 9.0%
Fuels etc
24,776
+0.6
4.7
29,389
4.9
63,364 -10.0
11.8
85,280
13.4
4 France
30,127
5.7%
34,862
4 Italy
27,799
5.2% 32,782
1,484 +36.0
0.3
1,342
0.2
2,213
-9.0
0.4
2,887
0.5
5 Russia
28,841
5.4%
32,290 5.4%
5 France
20,573
3.8% 25,303 4.0%
Food and live animals Beverages and tobacco
Animal and vegetable oils Chemical products Manufactured goods by material Machinery, transport equip. Other manufactured articles Not classified TOTAL
6.7% 5.8%
115,531 21.5% 134,933 21.1% 91,033 14.3% 5.1%
49,367
+6.8
9.3
54,295
9.1
78,196
+2.5
14.6
89,140
14.0
6 Italy
22,997
4.3% 29,067 4.9%
6 Netherlands
20,271
3.8% 24,543
109,878
+1.3
20.6
126,161
21.1
94,121
-2.1
17.5
110,773
17.4
7 Netherlands
20,950
3.9%
7 Czech Rep.
19,660
3.7% 23,327
3.7%
200,458
+5.4
37.6
223,646
37.5
177,909
+3.1
33.1
203,718
31.9
8 Ukraine
15,017
2.8%
68,214
+5.9
12.8
75,925
12.7
48,271
-3.4
9.0
57,646
9.0
9 Sweden
14,666
1,380
n/a
0.1
2,653
0.5
13,347
n/a
2.4
18,515
2.8
10 Slovakia
13,939
532,816
+4.9
100
597,096
100
537,568
-0.9
100
638,288
100
26,678 4.5%
3.8%
17,213
2.9%
8 USA
14,579
2.7%
16,436
2.6%
2.7%
15,811
2.6%
9 UK
14,208
2.6%
15,509
2.4%
2.6%
15,288
n/a
n/a
14,619
2.3%
Source: Central Statistical Office (GUS)
2.6% 10 South Korea
*) preliminary estimates, full year
weekly newsletter # 017 / 7th January 2014 / page 17
Industrial Industrial Properties
Regional Data Industrial output Jan-Nov 2013 *
Poland's regions (main cities indicated
Indus-
in brackets)
try
Monthly wages (PLN) Jan-Nov 2013 **
Unemployment Nov 2013
Constru- Indus- Constru-in '000 ction
try
ction
%
New dwellings Jan-Nov 2013
Existing stock, sq.m
by region, 1H 2013
Num- Index *
Warsaw central
ber
Warsaw suburbs
VaEffective Under const cancy rents EUR/ ruction, sq.m ratio sq.m/mth
2,728,000
41,000
15.9%
3.5–5.0 1.9–3.2
99.9
94.7
4,237
4,031
150.9
13.0
15,174
113.2
Central Poland
1,021,000
8,000
16.5%
1.9–3.1
Kujawsko-Pomorskie (Bydgoszcz) 102.4
105.9
3,337
3,297
146.7
17.8
5,808
105.1
Poznań
1,041,000
50,000
3.6%
2.3–2.9
Upper Silesia
1,478,000
33,000
5.8%
2.5–3.1
795,000
84,000
5.5%
2.4–3.0
Dolnośląskie (Wrocław)
102.6
96.3
3,673
3,031
129.9
14.0
5,636
89.7
Lubuskie (Zielona Góra)
96.6
91.0
3,373
2,983
58.2
15.3
3,026
104.7
Łódzkie (Łódź)
104.1
90.8
3,667
3,061
149.8
13.9
5,644
79.0
Małopolskie (Kraków)
97.2
90.8
3,749
3,361
161.5
11.4
13,544
101.9
106.8
78.6
4,466
4,785 280.9
11.0 25,962
93.1
Lubelskie (Lublin)
Mazowieckie (Warszawa)
Wrocław Gdańsk
192,000
n/a
9.6%
3.2–4.0
Kraków
149,000
n/a
7.6%
4.0-4.1
Commercial Properties
97.9
94.9
3,487
3,199
50.5
14.0
1,558
101.2
Podkarpackie (Rzeszów)
108.7
97.4
3,257
3,088
149.7
16.0
5,329
95.8
Podlaskie (Białystok)
105.8
97.0
3,179
3,767
69.5
14.9
3,592
87.8
Pomorskie (Gdańsk-Gdynia)
102.8
94.7
3,875
3,494
112.0
13.1
11,037
90.0
Śląskie (Katowice)
97.7
90.7
4,516
3,552
206.7
11.1
9,540
108.2
Warsaw
8,081
-0.5%
11.5-25.5
10.5%
85
Świętokrzyskie (Kielce)
101.5
88.5
3,378
3,191
87.9
16.1
2,385
87.1
Kraków
6,026
-15.0%
13-15
2.71%
41
78
Warmińsko-Mazurskie (Olsztyn)
98.8
84.0
3,171
3,074
112.2
21.1
4,020
86.3
Katowice
5,817
+8.7%
13-14
8.29%
48
56
104.8
91.1
3,669
3,624
142.5
9.5
12,345
93.7
Poznań
6,341
-8.0%
14-16
14.66%
44
55
112.1
86.7
3,417
3,274
107.1
17.4
4,988
76.4
Łódź
4,811
-2.8%
12-14
14.97%
31
26
101.8
88.0
3,906
13.2 129,588
113.2
Wrocław
5,970
-7.7%
13-16
12.37%
38
41
Gdańsk
6,403
+0.7%
13-15
11.24%
39
31
Opolskie (Opole)
Wielkopolskie (Poznań) Zachodniopomorskie (Szczecin) National average
3,707 2,116.0
New apartments* Q2 '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 1H'13
Retail rents**1H'13
Change Rents** Vacancy y/y
Retail
High
centres streets 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
2000
1800
6
Source: NBP, BZ WBK Source: Central Statistical Office GUS
Wage
180 160 140 120 100 Nov 09
Jul 10
Mar 11
Business Review+ Subscription 1 year- EUR 690 (PLN 2760)
Source: Rating agencies
Q3 13
CA balance
2012 Q1 '13 Q2 '13 Q3 '13
outlook
2400
Q1 13
Services, net
2011
number (left axis) % (right axis)
2600
rating
Fitch Ratings
% of population in working age
Q3 12
Trade balance
2010
Agency
Registered unemployed, in ‘000 and
2200
Current Account (EUR m) Period
Unemployment
Q1 12
Year
Q4 '12
Q3 11
Polish DI
Q3 '12
Q1 11
in Poland
Q2 '12
Q3 10
Quarter
Country Credit Ratings
Nov 11
james.anderson-hanney@poland-
CPI
Jul 12
Index 100 = Jan 2005. Source: GUS
Mar 13
today.pl
Nov 13
Publisher Richard Stephens Financial Director Arkadiusz Jamski Creative Director Bartosz Stefaniak New Business Consultant Tomasz Andryszczyk