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No. 058 / 27th October 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter
MANUFACTURING & PROCESSING Automotive seals maker SaarGummi to build plant in Tarnów page 3 BANKING & FINANCE Consumer protection watchdog fines four financial institutions over unit-linked policies page 3 ENERGY & RESOURCES Polish Polenergia seeks to plug Ukraine into Western Europe's gas supply network page 4 Polish Elemental Holding goes shopping in Slovakia page 4 Delta Packaging's clients include the likes of McDonald's, Kelogg, and Nike. Photo: Delta Packaging
Delta Packaging zones in on Gliwice
Northern Irish firm Delta Packaging, which supplies the world's top consumer and foodservice brands, will open a greenfield plant next year in the Silesian town of Gliwice. Estimated at EUR 20m, the project is to create more than 100 jobs. page 2
Cisco to create 500 jobs in two years
US networking and telecom technology giant Cisco plans to double the headcount at its Kraków support center that currently employs 500 staff. BR+ talks to Cisco's Norm DePeau. page 5
PROPERTY & CONSTRUCTION Polish builders are slowly regaining foothold, says Deloitte page 5 IT & TELECOMS Railway giant PKP makes second attempt to sell telecoms unit TK Telekom page 7 START-UPS Polish e-learning site Brainly raises USD 9m financing, opens office in NYC page 7
tel. +48 881 650 600
TRANSPORT & LOGISTICS Maltese firm Mariner Capital negotiating acquisition of Port of Gdańsk's stevedoring subsidiary page 6 RETAIL PROPERTIES Belgian real estate firm Mitiska REIM joins forces with Warsaw's Peppercorn Properties to invest in Polish retail parks page 9 Poland's retail stock increases by 0.3m sq.m in Q1-3 page 10 FOOD Kellogg reveals back story of their Kutno project page 11 POLITICS & ECONOMY Top politician makes explosive claims about Russia and Ukraine page 11 OPINION Quote authorisation and press freedom page 13 KEY FIGURES Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 14-16
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Florian Nowotny CFO CA IMMOBILIEN ANLAGEN AG
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weekly newsletter # 058 / 27th October 2014 / page 2
MANUFACTURING & PROCESSING
operate in the Katowice special economic zone, which offers a range of tax breaks and other incentives.
Delta Packaging to employ 105 at new factory in Gliwice Northern Ireland-based specialty packaging firm Delta Packaging will launch a 10,500 sq.m production facility next year in the Gliwice section of the Katowice Special Economic Zone. The plant will be developed by industrial property firm Panattoni Europe as a build-to-suit project at the latter's Panattoni Park Gliwice II, and it is expected to reach completion in mid-June 2015. Delta supplies innovative packaging for products ranging from ice cream to consumer electronics. "Poland was always the likely choice, although we explored joint venture and partnership options in Czech Republic, Slovakia, Slovenia and Hungary. We view the location as perfect for servicing the Western European countries, the attractive Polish market itself and of course as a springboard for supply to the East. The existence of a sophisticated printing and packaging industry, the highly skilled and educated workforce and a real 'can-do' attitude shown by everyone involved in the project cemented the decision making process with our partners", Neal McCone, Director at Delta Packaging Ltd, tells Poland Today. The new Polish facility will include close to 900 sq.m of office space and, more importantly, a purpose-built 9,700 sq.m storage and manufacturing unit, encompassing both rotary flexographic and sheet-fed lithographic printing technologies, in-line functional barrier coating capability and a full range of gluing & finishing options. The investors, Delta and its partner European Packaging Solutions, have obtained the permit to
Delta Packaging Limited is an independent manufacturer of high quality printed folding carton packaging based in Belfast, Northern Ireland. Serving the food manufacturing industry, specifically for the dairy, prepared meats, cereals, beverages, ice cream, bakery and biscuit sectors as well as having strategic partnerships in the global branded food service sectors, the company has enjoyed year-on-year growth for the last decade. Its clients include the likes of McDonald's, KFC, Kellogg, Nike as well as top UK retail chains.
Earlier this year Delta has completed a brand new production development in Belfast. Photo: Delta Packaging
"Our project partners, European Packaging Solutions Poland Sp. z. o.o are projecting a capital investment totally approx EUR 20m over five years. The initial phase in building, M&E and equipment is approx EUR 10m. The plant should have an optimum capability of approximately 30,000 tons throughput per annum. We expect to have approximately 105 employees by the end of phase two," says McCone. "The plans are for European Packaging Solutions to develop its packaging offering in line with Delta's Northern Irish range: high quality, volume folded carton solutions for the Food Service, Retail Food and Beverage and Household Goods sectors. Their offer will include both litho and flexo printing capability and the partnership is expected to develop stronger supply links with Deltas existing and proposed new customers," he explains. Gliwice is an industrial town situated near the intersection of the A1 motorway that leads from Baltic ports down to the Czech Republic and the south of Europe, and the A4, which links Germany and Ukraine, passing through some of southern Poland's key industrial hubs along the way.
Delta serves some of the world's largest foodservice brands, among other sectors. Photo: Delta Packaging
As for Panattoni Europe, the US-owned industrial property firm is currently developing 162,600 sq.m of new warehouse space in Poland, which is comprised of such investments as the recently established Panattoni Park Sosnowiec, Panattoni Park Ożarów II or Panattoni Park Poznań III and IV, as well as a new facility at Panattoni Park Łódź East. The company has just completed two giant fulfillment centers for Amazon totaling 246,000 sq.m. The developer also tops the podium in terms of performance for H1 2014 - the company delivered 108,000 sq.m to the market (incl. 50,000 sq.m for Castorama and 33,600 sq.m for Polaris), that is more than twice as much as the runnerup, and also had the highest number of square meters under construction, with as much as 34,900 sq.m.
weekly newsletter # 058 / 27th October 2014 / page 3
MANUFACTURING & PROCESSING
Automotive seals maker SaarGummi to build plant in Tarnów Much to our dismay, we rarely get to report on new investments in the east of Poland, an area that badly needs more development. Hence, we were all the more pleased to learn about a major new project in Tarnów. SaarGummi, a Chinese-owned, Luxembourg-based producer of automotive sealing systems, has picked Tarnów for its first factory in Poland (and 13th globally). According to a letter of intent SaarGummi representatives inked earlier this month with the Tarnów Industrial Cluster (TKP), the project is to total approximately PLN 55m and create 500 jobs, and it will take up some 7,600 sq.m of production and office space. TKP's Rafał Dzikowski said the SaarGummi investment will be included in the Kraków Special economic zone, which grants the company with a range of incentives including tax breaks and job creation subsidies. Poland Today approached SaarGummi with questions about the investment, but company representatives chose to keep a lid on any further details. "SaarGummi intends to continue its strategy of international growth, but it is too early today to reveal any additional information concerning our possible investments in Eastern Europe," said Anja Lewer, Senior Marketing Manager at SaarGummi. SaarGummi is a major global manufacturer of sealing systems for the automotive industry. It boasts an estimated 20% share in the global marked for static and
dynamic seals. The company's core market is Europe and its key clients include Volkswagen BMW, Mercedes, Opel/GM and Porsche. Some of SaarGummi's innovative, high-tech products are also being used in the aerospace sector. The company operates worldwide out of 12 locations in Europe (Germany, Spain, Czech Republic, Russia and Slovakia), North and South America and Asia with a total of around 4,600 employees and turnover of EUR 386m. Since 2011 the SaarGummi Group has belonged to the Chinese stateowned corporation CQLT, a top-500 company in China.
BANKING & FINANCE
Consumer protection watchdog fines four financial institutions for unitunit-linked policies
The watchdog had received a large number of consumer complaints relating to the so-called unit-linked life insurance (Polish: polisolokaty), a type of investment product disguised as insurance to avoid the capital gains tax. There are a number of issues with this type of investment product: the agreement is concluded for many years, and customer savings are being invested in unit-linked insurance products, which may bring a profit after 10 or 15 years , but they may just as well bring a loss. Most consumers complained that those products had been presented to them as a standard deposit or shortterm insurance. Many people concluding an agreement are not aware that they may lose their savings if they withdraw from it prematurely. Neither are they aware that the profit depends on the investment risk involved.
Poland's cartel prevention and consumer protection office UOKiK has imposed fines four financial institutions: life insurer Aegon TU na Życie, Idea Bank, financial broker Open Finance as well as Raiffeisen Bank Polska (formerly Polbank EFG) a combined PLN 50m for misleading customers with regard to certain unit-linked life insurance products. The highest fine (PLN 23.4m) was placed on Aegon.
UOKiK looked into sales procedures, correspondence as well as face to face and phone conversations between salespeople and their clients, where it found evidence that the customer complaints had indeed been justified. Open Finance and Idea Bank were found guilty of failing to inform clients adequately about certain features of the product (for instance the risk or the high contract termination fees). Aegon was acting inappropriately already during the duration of the contract, whereas Polbank EFG (unit of Greece's Eurobank EFG recently acquired by Austria's Raiffeisen) was engaging in forbidden practices at all stages.
"The severe fines we imposed on these four institutions correspond with the gravity of their infringements. They are all the more justified, as we have not seen sufficient efforts on the part of those institutions to provide support to the clients who got mistreated. It shows a clear lack of integrity and signals that the selfregulation of the financial services sector is insufficient," UOKiK's boss Adam Jasser said.
Overall, the consumer protection office received more than 600 complaints concerning unit-linked insurance products, while the insurance ombudsman received 1,200 of them last year alone. Many come from elderly clients who got talked into buying risky policies for 1015 years. Polish banks and insurance companies have sold an estimated PLN 50bn worth of unit-linked insurance products to-date.
weekly newsletter # 058 / 27th October 2014 / page 4
ENERGY & RESOURCES
Polish Polenergia Polenergia seeks to plug Ukraine into Western Europe's gas supply network Polish company Polenergia, controlled by billionaire Jan Kulczyk, seeks to build new gas interconnectors on Poland's borders with Germany and Ukraine thus opening up a gas imports route for its partner, Ukraine's Naftohaz. Polenergia and Naftohaz said they had been working on a joint concept since June. Last year Ukraine consumed 45bn cb.m of gas. Currently the country is almost fully dependent on Russian gas, which Moscow likes to use as a political card, as Ukraine lacks any other viable sources of the fuel. "Together we have come up with the idea for a WestEast gas corridor that would connect Ukraine with the European gas transmission network. This would also mean new opportunities for the LNG terminal currently under construction in Świnoujście, because the Ukrainians are interested in annual deliveries at the level of 8-10bn cb.m. This project would be beneficial to all parties involved," Polenergia's deputy CEO Radosław Dudziński said during the recent Baltic Business Forum. With total capital expenditures being estimated at EUR 440-460m, the investment is to include two new gas pipelines. The first one is to connect the German gas grid in the Berlin area with the Polish transmission system near Świnoujście, with an annual capacity of 5bn cb.m to Poland and 3bn cb.m to Germany. The other one, with a total length of 110km and annual capacity of 8m cb.m (with an option for expansion to 10
cb.m per annum) would lead from the Polish town of Drozdowicze near the Ukrainian border to the Bil'cheVolitsa area near Lviv, where it would connect with the Naftohaz grid. Bil'che-Volitsa is also home underground caverns capable of storing up to 17bn cb.m of gas, which could potentially be used also to keep emergency supplies for Poland. According to Polenergia, a realistic completion date for the German-Poland pipeline is the end of 2018 or early 2019, whereas the Ukrainian section could be opened in 2019 or 2020. Since according to the Polish law the country's gas transmission system can be operated only by the state-run company Gaz-System, Polenergia said it was ready to pass the Polish section of its Poland-Germany pipeline onto the national grid operator. In order to secure financing for the investment, Polenergia and Naftohaz need to come up with a viable business case for the project, which will require long-term commitments from all parties interested in utilizing the new transmission capacities. Naftohaz's subsidiary Ukrtransgaz and Gaz-System are currently working on feasibility studies for the new interconnectors. Polenergia trades and distributes electricity and operates a 116-megawatt heat and power plant in Nowa Sarzyna. The company also owns off-shore wind farm projects, and a plan for a coal-fired plant. Kulczyk is currently getting ready to merge Polenergia with the Warsaw-listed wind park operator Polish Energy Partners (PEP) to create Poland's largest privatelyowned power utility. Back in July, a Chinese equity fund CEE Equity Partners, funded by the ExportImport Bank of China, agreed to acquire a PLN 240m stake in the business helping PEP finance construction of 380 MW of wind farms by 2016. In 2017-2022, PEP plans to build additional 500 MW of on-shore wind farms and 600 MW of off-shore farms on the Baltic
Sea, for which it wants to find a partner. The company may also sell its 1,800-MW, coal-fired power plant project Elektrownia Północ in 2016.
ENERGY & RESOURCES
Polish Elemental Holding goes shopping in Slovakia Only weeks after it agreed on an acquisition in Turkey (see BR+ No. 052), the Warsaw-listed metals recycling company Elemental Holding has taken over a 67% stake in Slovakian metals trader Metal Holding. The EUR 3.1m transaction is part of Elemental Holding's international expansion, which began in March with the acquisition of Lithuania's EMP Recycling. "We keep looking at potential acquisition targets along the Estonia-Turkey axis, or from southern to northern Europe," Krzysztof Szymański, spokesperson at Elemental Holding, told Poland Today last month. Elemental Holding carried out the transaction via its fully-owned subsidiary Collect Point. The new owner will seek to expand the range of services provided by the Slovakian company to include recycling of electrowaste and catalytic converters. With a modern processing plant in Tomaszów Mazowiecki in central Poland and a waste obtaining network spanning the entire country, Elemental Holding specializes in recycling of integrated circuits and printed circuit boards, processing of electrowaste, as well as recycling, transport and trading in non-ferrous metals and steel. It is one of the leading suppliers of non-ferrous metals to Polish foundries.
weekly newsletter # 058 / 27th October 2014 / page 5
In March, the Polish company took over a controlling stake in Lithuania's EMP Recycling, which holds a 60% share in Lithuania's electrowaste, catalytic converter and non-ferrous metals recycling sector. Elemental Holding representatives said their goal is to reach a similar market position in the other two Baltic states, Latvia and Estonia. In September, the Polish firm agreed to acquired a 51% stake in Turkish peer Evciler for USD 11m. The transaction, which the Polish company will partially finance with proceeds from a new share issue, is to be sealed by midDecember. Elemental Holding turned over PLN 860m last year (down from PLN 895m in 2012) while its attributable net earnings topped PLN 24.4m (up from PLN 18.4m in 2012). The company has been listed on the Warsaw Stock Exchange since December 2013..
PROPERTY & CONSTRUCTION
Polish builders are slowly regaining foothold says Deloitte Poland's construction sector is slowly emerging from crisis, says consultancy Deloitte in a brand new report on the industry that was badly impacted by the 20112012 infrastructure boom, which left some of its largest players seeking bankruptcy protection. According to Deloitte, the combined revenues of the nine largest Warsaw-listed builders increased by 6% y/y totaling PLN 7.2bn in the first half of the year and were accompanied by improving margins. The market capitalization of the same nine firms rose by nearly 39% between the end of 2012 and mid-2014.
Deloitte experts list the new EU financial perspective and Poland's continued underdevelopment in terms of infrastructure as the key drivers of growth for the sector in the coming years. According to publicly available government strategies, Poland needs to invest an estimated PLN 500bn in infrastructure by 2020, a large chunk of which should end up being pocketed by building firms. The available funding earmarked for infrastructure projects by the EU is to reach EUR 24.3bn in the 2014-2020 period, but it will begin to trickle down to companies only after 2015. Investment activity will continue to focus on roads, railways, power generation and environmental protection. The past years have been tough for Polish builders. Many companies struggled to complete loss-making infrastructure development contracts, finding little understanding on the part of their public clients. The number of projects have also been shrinking lately, as funding from the previous EU budget began to dry out.
cials as well as a workable way of combining PPP with EU funding, a breakthrough still seems like only a distant possibility.
IT & TELECOMS
Cisco to double staff numbers at Kraków support center US IT and telecommunications technology giant Cisco seeks to double staff numbers at its support centre in Kraków, hoping to reach the 1,000 employee mark in the coming years. Launched two years ago, the centre provides services to other Cisco units as well as externally, to clients.
"The 6% revenue growth in 1H is not really a significant improvement, but combined with a 7.3% increase in construction and assembly activity in the same period, it seems like the worst is most likely over for Polish builders," commented Maciej Krokosiński of Deloitte's Audit department, adding that the percentage of bankruptcies in the sector declined by 21% y/y overt the same period, giving even more reasons for optimism.
The Kraków centre is one of a number of global Cisco sites, which operate under the so-called “Follow the Sun” model to serve customers and partners on a 24/7 basis. This means that each region supports worldwide customers during the local business hours of the region and hand over critical issues at the end of their day to the next region to continue working with the customers for the following hours.
Deloitte argues that the one underexplored area that could potentially generate more business for building firms are public-private partnerships (PPP). Despite much talk in the past decade about the PPP as a way to speed up municipal investments, only one in four of the PPP tenders announced in the 2009-2013 period led to the signing of a contract, of which many failed to secure financing. Moreover, most of the said projects were very small - worth no more than a few million złotys each. However, without sufficient knowledge and experience in the PPP formula among public offi-
Cisco is an American multinational corporation headquartered in San Jose, California, that designs and sells networking and communications technology and services. With more than 74,000 employees worldwide, Cisco posted a net income of USD 7.85bn on USD 47.1bn turnover in the fiscal year ended July 2014. Cisco's current portfolio of products and services is focused upon three market segments – enterprise and service provider, small business and the home.
weekly newsletter # 058 / 27th October 2014 / page 6
Poland Today talks to: Norm DePeau, Vice President Global Services Delivery, Kraków Site Leader at Cisco Systems Photo: Cisco
• PT: Back in 2011 Cisco Poland general manager Dariusz Fabiszewski told me the Kraków Support Centre would "provide services externally to custom-
• PT: What is the current headcount at the centre and what kind of specialists make up the biggest share of your Krakow staff? How many of them are nonPoles? NDP: We currently have over 500 Cisco employees at in our Kraków offices, and we are proud of the diversity that our workforce provides. While approximately 70% of our employees are from Poland, we also have 34 other countries represented in our workforce. In meeting with the employees from other countries, I am reminded of the attractiveness of Kraków as a destination for top quality employees to relocate, raise
Employment at BPO/SSC centers in Poland 175,000 150,000 125,000 100,000 75,000 50,000 25,000
Source: ABSL
*) as of April
**2015
*2014
*2013
2012
2011
0 2010
Our site continues to grow above the rate at which we originally projected, and we remain confident that the value Cisco Kraków offers to our customers and Cisco’s internal functions will drive continued growth for the foreseeable future. Many of our services support Cisco teams and customers both within the Europe, Middle East, Africa and Russia regions and in other regions around the globe. Our continued growth is a testament to the quality of employees we are able to hire in Krakow from top universities and from the local and regional labour markets..
families, and have the opportunity to enjoy exciting careers with Cisco. Our workforce is made up of professionals with degrees in Engineering, Business and Finance, and includes a diverse experience base in these disciplines.
2009
The company is particularly proud of its Cisco Networking Academy, a global education program that teaches students how to design, build, troubleshoot, and secure computer networks. Networking Academy provides online courses, interactive tools, and handson learning activities to help individuals prepare for ICT and networking careers in virtually every type of industry. Last year alone some 26,000 students in Poland took part in Cisco Networking Academy courses. One of the latest Cisco initiatives in Poland, Polish City of the Future, which the company is implementing in cooperation with nine partners that include IBM, Philips, Samsung , Schneider Electric and Swarco, focuses on solutions for smart cities.
ers and partners, as well as internally within Cisco, across multiple functions including Cisco Services, Finance, Operations and others" focusing on the EMEA & Russia region. Have the competences and geographical footprint of the centre expanded since? Norm DePeau: Cisco Kraków now includes five major services disciplines. Our Global Business Services team provides business support services to Cisco’s business functions, while the Finance & Cisco Capital unit specializes in Finance functional services. Our Advanced Services team provides a wide range of services and business solutions to Cisco customers, who can also get technical service from our Technical Services and our Technical Assistance Centre. Finally, there is the Cloud and Managed Services unit that offers secure Cloud services to Cisco customers.
2008
Cisco Poland was established in 1995. Most of Cisco’s business is done in cooperation with partners, and in Poland the company has built an ecosystem of some 1,000 partners, including system integrators, IT distributors and resellers. Its clients in Poland include service providers, enterprises, small and medium businesses as well as public sector institutions.
**) projected year-end
• PT: It's been said that Cisco aims to double its staff numbers in Kraków. Over what time span? Will this growth come from any particular type of services/processes or across all of the centre's competences? NDP: Our estimate for doubling the headcount in our Kraków offices is based upon a relatively conservative two-year outlook. We continue to forecast growth from all of the Services functions currently located in Krakow, as the Kraków site is considered a very strategic location for Cisco as part of our global site strategy. We will most certainly see significant growth in our Cloud & Managed Services team, as Kraków’s new building, which will open in December, includes one of three global Network Operations Centers supporting our Cloud Services customers, a major growth area for Cisco. While estimates of growth are subject to revision up or down, the outlook at the present time for Kraków remains very positive.
weekly newsletter # 058 / 27th October 2014 / page 7
• PT: What sorts of talents are you recruiting in Kraków at the moment? NDP: We continue to need a wide range of talent in Business, Finance, and Technology. It is important to note that our growth in Kraków has been strong and steady since the site was launched two years ago. The steady growth is a sign of the long term commitment Cisco is making in Kraków. As teams located here continue to demonstrate the value they provide in their respective organizations, we have seen a continued interest in placing more employees here. • PT: Have you secured office space to accommodate your future expansion? NDP: Of course! Cisco has a long term vision for our facilities in Kraków. We are just finishing the new building that many of our Technical Services, Advanced Services, and Cloud & Managed Services team members will move into in January. We will continue to house employees in our existing offices and have plans for additional office space as needed to support our ongoing growth at our current site. • PT: One hears about large IT outsourcing projects in Kraków almost on a weekly basis. We are talking about thousands of IT jobs to be created in the city over the coming years. How is this affecting the local market? What have been Cisco's experiences in this respect? NDP: I truly believe that Cisco offers employees something unique in the Kraków labor market. Employees who come to Kraków have the opportunity to join a fun and exciting team at a growing and highly strategic site. Cisco is world leader in networking infrastructure, software, security and cloud services and has repeatedly demonstrated the ability to succeed in the rapidly evolving technology marketplace. We have a vision to become the number one IT company in the world, and we are on a course to lead the market as the Internet of Things connects people and devices in new and exciting ways never before envisioned. Many
companies will see the value that the city of Kraków and the local workforce offers. Few will offer employees truly exciting, rewarding, long-term careers. Cisco will offer employees all of this with a culture that rewards development, collaboration, growth, diversity, and community service.
This time, the list of potential investors is likely to feature Netia and possibly also Exatel, the telecoms unit of Poland's energy utility PGE, whose business has relied to a large extent on TK Telekom's infrastructure. Interested parties may submit their bids by November 19, 2014.
IT & TELECOMS
START-UPS
Railway giant PKP makes second attempt to sell telecoms unit TK Telekom
Polish ee-learning site Brainly raises USD 9m financing, opens office in New York City
Poland's state railways company PKP has invited investors to bid on its telecommunications subsidiary TK Telekom. According to market estimates, the company, which runs a nationwide fiber optic network and provides data transfer services to telecom operators, may be worth some PLN 200m.
Polish social learning network Brainly has raised USD 9m in new venture funding this October and plans to use the resources to expand in the US. The round (a second one for Brainly which had raised USD 0.5m worth of seed funding back in 2012) was led by General Catalyst Partners, and includes existing investor Point Nine Capital and new investors Runa Capital and Learn Capital, Brainly said.
TK Telekom posted net earnings of PLN 5.8m and EBITDA of PLN 40m on PLN 289m turnover last year. A portion of its revenues came from building contracts, which is a line of business that can be bought separately. This is PKP's second attempt at offloading TK Telekom in less than two years. The previous tender attracted GTS Poland, Netia, Exatel, as well as the consortium of Hawe and IT Polpager (the latter being linked to Polish billionaire Zygmunt Solorz-Żak, owner of the Cyfrowy Polsat DTH provider and Plus mobile network). Following exclusive negotiations with a number of parties, PKP gave up on the sale, saying none of the offers had been attractive enough.
Founded in 2009 in Poland, where it enjoyed tremendous success, Brainly is a social network for students asking and answering questions specifically about homework. It works like a message board where users pose questions at an average of 8,000 per hour. Brainly has since expanded into 35 additional countries throughout Europe, South America, and Asia, including Russia, Indonesia, and Brazil. Each month, more than 30 million people around the globe visit Brainly’s websites to seek homework help. Headquartered in Kraków, Brainly has recently opened an office in the New York City to speed up its expansion in the United States. Currently only some
weekly newsletter # 058 / 27th October 2014 / page 8
0.5m of the site's 30m monthly visitors are from the US, which, according to Brainly founder Michał Borkowski, makes it a very promising market for the service. Although the company is looking for a US based executive team, Borkowski will remain Brainly's CEO.
Brainly.com, which was created in Poland as Zadane.pl, has big plans for the US market Photo: Brainly
To use Brainly, registered users post homework questions and problems to the site, and in return, other users post answers to the questions. By helping other students answer questions, users earn points, which then allow them to ask their own questions, creating a natural cycle of help and engagement. Brainly also has a volunteer "quality assurance" team of 450 moderators, mostly students, who continuously scan the site for inappropriate or poor quality responses. "Every student in the world eventually becomes stuck on a homework problem, causing frustration and loss of confidence," said Michal Borkowski, CEO of Brainly. "Our vision is to help students become unstuck by turning homework into an opportunity to inspire learning and collaboration. With this funding, we will be able to accelerate this vision by bringing new expertise to our team, reinventing the next generation of our product, and expanding Brainly to new geographies." Future plans include premium membership as an additional source of revenue for Brainly, which currently makes money on ads.
"With its large and fast-growing user base, global relevance, and vision to inspire a generation of students, Brainly is building a standout community and brand in the edtech space," said Nitesh Banta of General Catalyst, who joins Brainly's board alongside his colleague Adam Valkin. "hey are taking a common offline behavior – homework help and collaboration – and moving it online, achieving all the efficiencies and benefits we see in other industries and democratizing access to afterschool learning," he adds. General Catalyst Partners is a venture capital firm that makes early stage and growth equity investments. Their past investments include such online hits as Airbnb and Snapchat.
Poland Today talks to: Jakub Piwnik, PR & Marketing Manager at Brainly • PT: Brainly is present in 35 markets but your first foreign office was launched in New York. Why there and why is being physically present in the US so important for Brainly? Jakub Piwnik: There are a couple of factors to this. Firstly, New York is simply a great place to be running a start-up from. Also for time zone reasons, it's a good place for managing business in the other hemisphere. At the same time, the US is a priority market for us and this is where our investors come from. • PT: How about the funding Brainly has raised, what exactly will you spend it on? JP: We already have a number of specific goals, mainly the opening of the US office and acquisition of the best talent there, as well as further international expansion. Aside from that, we intend to focus on recruiting staff for our Kraków office. It is extremely important for us to be providing a top quality product, which requires the best available IT and mobile technology profes-
sionals. Currently Brainly employs a few dozen staff and our team continues to grow. • PT: What is Brainly's key source of revenue and do you intend to introduce additional revenue streams? JP: At the moment our top priority is product development and international expansion. The funding we acquired will enable us to focus on these things. Of course, we are considering monetization but it's still too early for that. However, it will never be our intention to generate revenues by introducing fees for users.
TRANSPORT & LOGISTICS
Maltese firm Mariner Capital negotiating negotiating acquisition of Port of Gdańsk's stevedoring subsidiary The Port of Gdańsk Authority has granted the Maltabased Mariner Capital exclusivity is negotiations concerning the sale of Port Gdański Ekspolatacja (Port of Gdańsk Cargo Logistics), the port's stevedoring subsidiary. In total five bidders had placed purchase offers on the company, including a consortium of PKP Cargo and Węglokoks. PGE is the last remaining Port of Gdańsk subsidiary that is yet to privatized, although several attempts at its sale have already been made. The company provides cargo handling and storage services in the so called inner port (along eight quays situated on both banks of Martwa Wisła river and the Port Canal). It is also the exclusive provider of handling services in the Gdańsk Container Terminal and the port's Duty Free Zone. The total length of its operational quays, all of
weekly newsletter # 058 / 27th October 2014 / page 9
which have good road and rail access, is 5km. Its operations cover an area of some 90ha in the Port of Gdańsk. With a staff of approximately 500 people, PGE handles some 3.5-4m tons of cargo per annum, mainly bulk commodities such as coal, coke and grain. It has the capability to serve all types of terminals that currently operate in the Port of Gdańsk (handling bulk goods, containers, cars, and grain except for crude oil.
PGE handles all types of cargo, except for liquid fuel. Photo: Port Gdański Eksploatacja
Mariner Capital owns container terminals in Riga (Latvia), Venice (Italy), and Durres (Albania). The company specializes in development, and management of marine terminals and logistics services. The Port of Gdańsk Authority manages an area of some 700ha that is home to the Deepwater Container Terminal (DCT), as well as coal, liquid fuels, and LPG terminals, among other businesses. The port is well connected with the A1 highway that links Gdańsk with the rest of the country.
RETAIL PROPERTIES
Belgian r eal estate firm Mitiska REIM joins forces with Warsaw's Peppercorn Properties to invest in Polish retail parks Belgian real estate investment firm Mitiska REIM has teamed up with a Warsaw-based developer and manager Peppercorn Properties to build a portfolio of 10-15 retail parks in Poland over the next five years. The first two assets in the portfolio are two small retail parks in the Polish towns of Andrychów and Stalowa Wola, which the Belgians acquired last week from Polish builder P.A. Nova for PLN 17.2m. P.A. Nova, a listed Polish construction firm and property developer, will use the proceeds to finance the completion of its other ongoing projects, including the Galeria Galena shopping mall in Jaworzno, the company said in a communiqué. Completed three years ago, the Stalowa Wola retail park has a GLA of 2,700 sq.m, while the Andrychów project, opened in 208, offers 2,700 sq.m of lettable retail space. Both retail centers are very well located in their relevant catchment areas and benefit from the strong footfall generated by Kaufland. Both properties are 100% let with long-term lease agreement to wellknow and reputable tenants as Jysk, Pepco, Takko, Deichmann, Empik, RTV euro AGD, Rossmann, Textil Market, etc. Mitiska REIM has also acquired an option to purchase a third property from P.A. Nova - a Kaufland-anchored project in Myszków, which likewise is 100% let.
"After successful previous transactions in Romania and Serbia, the acquisition of these well-performing retail parks formally marks our entry in yet another new market. Equally it is the beginning of a promising partnership with our country partner for Poland, Peppercorn Properties. We have strongly appreciated the efforts of Darren Haines-Powell and his team at Peppercorn Properties that lead to the completion of this purchase. We eagerly look forward to working and growing together in the years to come. As we strive to be in other countries as well, together with Peppercorn we hope to be an expansion platform for our valued retail partners in Poland. We plan to build a portfolio of approx. 10-15 retail parks in Poland in the next five years,” said Axel Despriet, CEO at Mitiska REIM.
One of the first Polish retail parks in Mitiska REIM's Photo: Mitiska REIM portfolio.
Mitiska REIM is a Brussels-based real estate investment management company, which manages the EUR 200m specialist real estate fund "First Retail International" (FRI) targeting retail park properties in Europe. FRI’s current portfolio represents a total investment value of EUR 100m. For investments outside of
weekly newsletter # 058 / 27th October 2014 / page 10
Belgium, Mitiska REIM establishes partnerships with experienced local country partners, such as Peppercorn in Poland, Poseidon Group in Serbia and Alpha Property Development in Romania. Led by Darren Haines-Powell, the Warsaw-based Peppercorn Properties specializes in the development and management of retail parks and convenience retail centers in all parts of Poland. The company is currently working on a convenience centre in Wałbrzych in the south west of Poland. Peppercorn obtained a building permit for the Piaskowa Góra Arcade in Wałbrzych last year and the scheme is currently under construction with a scheduled opening in Q2 2015. Located by a main street leading to the center of Wałbrzych, an industrial city in the south west of Poland, next to an existing OBI DIY superstore, Piaskowa Góra will include 10 retail units with a combined lettable space of 4,000 sq.m and 150 parking spaces. The centre's anchor tenant will be the discount grocery Biedronka and will also include a medical centre and fitness club. According to Peppercorn, more than 35,000 people live within a 5-drive from the site. "We are very happy to complete these first acquisitions in Poland with Mitiska REIM and look forward to extending the portfolio with further acquisitions and developments in line with a very detailed strategy that Mitiska have developed for FRI," says Darren Haines-Powell, Managing Director at Peppercorn Properties. "We have already entered into negotiations for the acquisition of more existing retail parks and land for the development of similar parks and continue to look for further opportunities to develop or acquire properties."
RETAIL PROPERTIES
Poland's modern retail stock increases by 0.3m sq.m in Q1Q1-Q3 2014 An estimated 340,000 sq.m of new retail space was delivered to the Polish market in the first nine months of the year, including 265,000 sq.m in shopping centers, according to figures published by the real estate consultancy JLL. In Q3 alone, developers completed 75,100 sq.m, the bulk of which was in two projects in the north east of the country: Galeria Warmińska in Olsztyn (41,000 sq.m), and Brama Mazur in Ełk (17,250 sq.m). The remaining large schemes completed in July-September were two retail parks in Nowa Sól and Ketrzyn with a combined GLA of 11,100 sq.m. JLL reports that a further 814,500 sq.m of retail stock is currently under construction, in shopping malls, retail parks and outlet centres. Shopping centres account for more than 700,000 sq.m in 32 projects (including nine extensions). Approximately 80,000 sq m of new floor space in shopping centres is expected to hit the market this year (total of ca. 345,000 sq.m in 2014), with over 480,000 sq.m to be completed in 2015. In addition, 12 retail parks, with approximately 70,000 sq.m of space, are being developed, with the majority of them in cities of below 200,000 inhabitants. In the outlet centre segment two new projects are under development, both by Polish company ADV Por Property Investment, in Lublin and Białystok. The latter may get a second outlet center in the place of the former Galeria Podlaska mall. As far aas extensions aere concerned, Spain's Neinver is adding more space to its Factory Ursus Outlet in Warsaw.
"Retail chains in Poland are believed to be in good condition and the country remains an attractive market for further expansion. The last three months have become busy for both new market entrants and those already present on the market. Brands already present on the market are actively, albeit selectively, expanding. All potential locations are still being carefully examined. Unsurprisingly, prime assets located in the main metropolitan areas attract most retailer demand. Landlords of centers, which are perceived as secondary by market stakeholders, or those located in very competitive markets, are facing downward pressures on rents and high expectations from tenants with regard to fit-out contributions," said Marta Augustyn, Associate Director, Retail Agency, JLL.
DATA BOX Total retail supply in Poland stands at 12.2 million sq m of GLA, including 8.76 million sq.m of shopping centre stock in 376 projects. At present, the shopping centre density in Poland stands at 227 sq.m / 1,000 inhabitants and will increase to 245 sq.m after the completion of the stock currently in construction stages. This exceeds the European average of 196 sq.m; however, it is still lower than Western European average of 260 sq.m.
Q3 newcomers in the fashion segment included three French brands (Devred 1902, Sinequanone and Undiz); an Italian chain, Eye Sport, and Fullah Sugah from Greece. Kiehl’s Since 1851 from the USA and Italian Kiko Milano debuted in the health & beauty sector, while in electronics, Apple opened Poland's first Apple Shop at Media Markt Okęcie in Warsaw. The number of hypermarket operators has dropped from five to four following the acquisition of Real stores by France's Auchan, and all grocery retailers are actively seeking new formats in order to keep up with changing customer expectations. In the home improvement
weekly newsletter # 058 / 27th October 2014 / page 11
sector, Swiss strategic investor Papag bought 24 Praktiker DIY stores at the beginning of the year, and 14 Nomi stores have recently joined the Bricomarche chain. Prime shopping centre rents remain the highest in Warsaw (peaking at EUR 105/ sq.m /month) and they are expected to remain stable across the country in the short to mid-term. At the end of H1 2014, the average shopping centre vacancy rate in major agglomerations stood at 2.8%, down by 0.4 percentage points when compared to the end of 2013.
RETAIL
Retail sales see weak growth in September; September; economists conomists blame warm weather weather Polish retail sales rose at an annual rate of 1.6% in September, on a 0.9% monthly decrease, the Central Statistical Office (GUS) said last week. The analyst survey by PAP Polish news agency had shown consensus expectations for annual growth of 2.4% and a monthly decline of 0.1%. In real terms, Polish retail sales were up by 3.0% year on year in September after a 2.8% y/y increase in August, GUS added. "Retail sales growth disappointed in September, slowing to 1.6%y/y. The poor result was mainly driven by the weak performance of clothing and footwear and this might have been due to exceptionally good weather last month, which postponed a switch from summer to autumn clothes. Meanwhile, data on the unemployment indicate that the positive trends in the labor market strengthened again, which should support the
private consumption in the second half of the year. On the other hand, one may worry how sustainable this improvement is amid decelerating external demand leading to weaker performance of the manufacturing," BZ WBK economists commented on the news. According to GUS, Poland's registered unemployment in September stood at 11.5%
bling the latter's output and raising staff numbers to 200. Kutno is one of two Kellogg sites in Europe (the other one being Mechelen, Belgium) where Pringles are made. Since the story went online, we have been contacted by Rupert Maitland-Titterton from Kellogg's European head office in Manchester, who contributed some additional information about the project.
Retail sales in Poland (y/y)
Poland Today talks to: Rupert Maitland-Titterton, Senior Director, Corporate Communications, Public Affairs & Sustainability, Europe at Kellogg Company
15%
10%
5%
0%
-5% Mar 12
Sep 12
Mar 13
Sep 13
Mar 14
Sep 14
Source: GUS
FOOD
Kellogg reveals back story of Kutno project In the last issue of BR+ we ran a story about the brand new Kellogg factory in Poland, which has been turning out the popular Pringles-branded savory snacks since June 2014. Next year the US-owned food giant will launch a second production line at the plant, dou-
• PT: Kellogg began the Kutno project back in 2007, as far as I know with a different type of production in mind. The plant (15,000 sq.m) stood idle for a couple of years until work restarted in 2013. Is it therefore fair to say that the whole project was completed in 13 months? Rupert Maitland-Titterton: In 2009 Kellogg built a manufacturing facility at Kutno, which was designed to produce cereal. Because of the decline in cereal consumption which we have seen across Europe in the last few years, we did not require the additional capacity in our cereal supply chain network that we had previously forecasted. For this reason, cereal manufacture at Kutno did not start up. Following the acquisition of Pringles by Kellogg in 2012, it was clear that we needed additional manufacturing capacity for Pringles to help support our snacks strategy. It made sense to use some of the infrastructure that we had already built at Kutno for this purpose. However, it still required extensive construction and considerable investment to create the state of the art Pringles facility that we have ay Kutno today.
weekly newsletter # 058 / 27th October 2014 / page 12
• PT: In early 2013 the Łódz Special Economic Zone said Kellogg's SPV UMA had promised to invest "a further PLN 225.8m" (approx. EUR 55m) at the site. Now that the plant is up and running, could you give us a final estimate of the total CAPEX that went into the Kutno project? • RMT: Our investment in Kutno is one of the biggest capital investments made by Kellogg in the past ten years globally. I’m afraid I can’t share detailed financial information.
KELLOGG COMPANY Kellogg is the world’s leading producer of snacks, cereals and frozen foods. The company was founded in Battle Creek, Michigan more than 100 years ago by William Keith Kellogg. The NYSE-listed company has approximately 31,000 employees at 50+ manufacturing facilities in 18 countries around the world. Its 2013 Kellogg's net sales totaled USD 14.8bn, while its net earnings topped USD 1.8bn. Kellogg acquired the Pringles business in 2012 from P&G for USD 2.7bn, becoming the world's second largest savor snack maker.
• PT: Are you sourcing raw materials locally or importing them? • RMT: We always look for opportunities to source raw materials locally where possible. We currently have suppliers in Slovakia, Hungary and Czech Republic serving our Kutno manufacturing site. Our packaging manufacturer, Sonoco, has a plant at Kutno dedicated to producing Pringles cans, while DSSmith – who are also located close to our plant – provide corrugated packaging material. • PT: Based on the production figures Kellogg provided (15m cans of Pringles in 4 months) one can estimate the annual capacity of the plant at some 4550m cans. Is it going to double with the launch of the
second production line? How many cans of Pringles a year are you selling in Europe at the moment? • RMT: I’m afraid we can’t share this sort of commercial information. However, what I can say is that Pringles continues to grow from strength to strength in the EMEA region. This additional capacity at Kutno will help us further drive the brand across the region.
POLITICS
Top politician makes explosive claims about Russia and Ukraine Radosław Sikorski, former foreign minister and currently speaker of Poland’s lower house of parliament, landed in hot water last week for some statements he made in an interview with US website Politico. In it he is quoted as asserting that Russian President Vladimir Putin offered to split Ukraine between Russia and Poland during a 2008 meeting with then-Prime Minister Donald Tusk. According to the story, Putin said that Ukraine’s eastern regions would become Russian, while the western regions would go to Poland. That such an offer might have been made is hardly surprising. Mr Putin has been quoted on several occasions as calling Ukraine an “artificial” country – in 2008 he told US President George W. Bush that Ukraine isn’t “a real country”. Earlier this year, the deputy speaker of Russia's Duma, Vladimir Zhirinovsky, sent a letter to Western leaders offering much the same arrangement as Sikorski said Putin offered Tusk. Nevertheless, the seeming revelation that the president of Russia himself had made an outright offer to split up a sovereign nation 19th-century style was an
explosive one, and one that had the potential to knock the current government’s careful movements toward reconciliation with Moscow off course. The revelation was only “seemingly” made, however, because Mr Sikorski has now completely retracted his statements, saying his memory “failed” him and admitting that he was not at the meeting between Tusk and Putin. He now says such an offer was never made and that the February 2008 visit to Moscow included no one-on-one meeting between Mr Tusk and Mr Putin. Whatever his motives, the story has been a huge embarrassment for Sikorski, an Oxford graduate and former reporter, who served seven years as foreign minister and who is anything but a newcomer to the world of international politics and media. Due to his cosmopolitan credentials, Sikorski’s name is often brought up when Poland submits candidates for top international jobs. Despite calls by the opposition for his dismissal and fury among his own party colleagues, it looks like Sikorski will keep his job as speaker of the Sejm. However, Sikorski’s ambitions are considered to be much higher. Many have seen Sikorski as the future president of Poland, Europe’s top diplomat or NATO boss. However, with the recent blunder, the former foreign minister has thrown his credibility out the window, at the same time casting a shadow of doubt over Poland’s legitimate concerns about Russia’s actions in Ukraine.
weekly newsletter # 058 / 27th October 2014 / page 13
himself and is married to a prominent Washington Post columnist.
OPINION
Quote authorisation and press freedom freedo m
To retract or redact comments before publication is a waste of both the journalist’s and the source’s time, not to mention a detriment to the reader – for whom all of this is being done in the first place. Readers deserve to know the whole story, and that is what journalists want to tell.
by Poland Today Editor Andrew Kureth
But too often, especially in Poland, this practise is used to water down important information, or worse, crowbar in things that were never said – usually promotional material or statements intended to make the source look good. This never gives any service to the reader, and always hurts the quality of the reporting, which reflects badly on the newspaper, magazine or website in question (quote approval rules generally don’t apply for radio and television, where the quotes are recorded and cannot be easily changed).
Last week there was one story that dominated the news. Radosław Sikorski, former foreign minister and currently speaker of Poland’s lower house of parliament, made some statements in an interview with a US website that he wished he hadn’t. The story was published, resulting in a full-blown international incident. Mr Sikorski later retracted his remarks, but he contends they never would have been published if he had been offered “authorisation” of his quotes. Quote authorisation is a practise by which a journalist submits quotes to a source for the source to review, correct and change as necessary. In Poland, journalists are legally required to offer authorisation if the source requests it. While some see this as a holdover from communist times where censorship was the norm, the practise is common throughout Europe. In the United States, it is virtually unheard of. That someone would be allowed to change things they said on record is anathema, and for good reason. Public figures – and politicians especially – know very well what they are doing when they give statements to the press. This goes doubly for Mr Sikorski, who is a former journalist
I can recount numerous times over my career where quote approval has ruined a genuinely good story. This is particularly the case with face-to-face interviews. Just this year, I interviewed a prominent businessperson. As requested, I sent the quotes back for approval. The source sent back minor corrections – a few changes to facts that they had misremembered, but nothing that affected the story materially. But then I was required to send the interview to the company’s press agency. Entire sentences were struck out (of course those that were most interesting) and words were changed to make some of the phrasing seem less harsh. When I called up the press agency to argue over the changes, I was told that the information in my interview had not yet been revealed to a particular stock market, and could therefore result in legal trouble for the firm. “See how difficult my job is?” complained the press agency representative. I wanted to tell her that it
would be far less difficult if she spent more time training her client what to say in interviews before they happened, rather than checking for legal missteps after the fact. Polish law does not require the press to print such interviews – if you don’t like the changes, you don’t have to publish the story. But press agencies know the game: they will often hold the quotes until just before press time, forcing editors to either run the piece or scramble for content at deadline. Also, in this difficult market for media, newspapers are loath to anger potential clients or powerful figures. Even though Polish law says journalists can publish the unauthorised quotes if there is recorded proof that the words were said, doing so would put that newspaper on a blacklist, ensuring advertisers would stay away. Poles often say they wish their country had Western levels of community engagement – one simple way to help that along would be to abolish its rules on quote authorisation. Poland currently ranks 19th in Reporters Without Borders’ Press Freedom Index. While that is impressive, Poland still lags behind regional neighbours such as the Czech Republic (13) and Estonia (11), as well as many Western European countries which it aspires to emulate such as Germany (14), Sweden (10) and Finland (1). Admittedly, Poland scores far above the United States (45), but restrictive laws put in place after the 9/11 tragedy overshadow that country’s admirable culture for eschewing any sort of quote approval. The unhindered ability of journalists to inform is a key element of keeping societies thriving and free. Quote authorisation rules only help vested interests obfuscate the truth and are detrimental to media culture. While I understand the desire of politicians and businesspeople to send a honed, sterile message to the public, we ought to hold them responsible for what they tell journalists. Polish society can only benefit.
weekly newsletter # 058 / 27th October 2014 / page 14
KEY STATISTICS Consumer Prices
Inflation
+0.1
Alcohol, tobacco +4.0
+0.1 +4.0
0.0 +3.8
0.0 +3.6
0.0
Clothing, shoes
-4.7
-0.8
-2.8
-2.7
-4.7
+1.1
Housing
+1.6
-0.1 +0.6
+0.1 +0.5
+0.1
Transport
-0.6
-0.2
0.0
-1.0
-4.9
0.0 +0.6
-1.0 +0.8
Communications +1.3
+2.4 +2.6
Gross CPI
0.0
+0.3
-5.1
-1.5
+1.2 +3.9
-0.2 -0.2
-3.2
+1.3 +4.0
-0.3 -0.4
-0.3
-1.1
2%
y/y (%)
+3.8
+1.2
+2.1
+1.7
+1.6
1%
Year
2009
2010
2011
2012
2013
0%
Turnover in PLNbn
582.8
593.0
646.1
676.0
685.7
-1%
y/y (%)
+4.3
+5.5
+11.6
+5.6
+2.3
0.0
Sep 14
-2,0
Jul 14
-1.6
+4.7
Mar 14
-2.1
Jul '14
-1.1
m/m
May 14
-1.1
Jun '14
-2.7
Jan 14
-1.7
May '14
m/m (%)
Sep 13
-0.3
Month y/y
3%
Nov 13
-0.9
y/y m/m
Jul 13
Food & bev
y/y m/m y/y
Retail Turnover
4%
Mar 13
y/y m/m y/y
Sep '14
May 13
Sector
Aug '14
Jan 13
Jul '14
Nov 12
Jun '14
Sep 12
Data in (%)
0.0
Aug '14 Sep '14
Residential Construction Dwellings
2009 2010
2011
2012
2013 Jan-Sep y/y
178.8
174.9
184.1
165.1
138.7
158.1
162.2
141.8
127.4
(in '000 units)
Producer Prices
Industrial Indust rial Output
-0.9
Permits
2014
(%)
120.3
+14.8
Commenced
142.9
114.6
+17.0
m/m (%)
-0.2
-0.2
-0.2
-0.1
-0.1
+0.3
+0.1
m/m (%)
+9.4
-2.3
-1.7
-0.1
+2.0
-8.5
+16.5
U. construction
670.3 692.7 723.0
713.1 694.0
709.4
+0.1
y/y (%)
-1.3
-0.7
-1.0
-1.8
-2.1
-1.5
-1.6
y/y (%)
+5.4
+5.4
+4.4
+1.7
+2.3
-1.9
+4.2
Completed
160.0 135.7
152.5
100.1
-2.9
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 (ESA2010)
Month
Mar'14 Apr'14 May'14 Jun'14 Jul'14 Aug'14 Sep'14
Mar '14 Apr '14 May '14 Jun '14 Jul '14 Aug '14 Sep'14
Construction Output
Construction Prices Month
Month
Mar'14 Apr'14 May'14 Jun'14 Jul'14 Aug'14 Sep'14
Month
Period
Mar '14 Apr '14 May '14 Jun '14 Jul '14 Aug '14 Sep '14
m/m (%)
-0.2
-0.1
-0.1
0.0
0.0
0.0
0.0
m/m (%)
+24.2
+3.2
+14.0
+16.9
+0.9
-5.4
+19.8
y/y (%)
-1.6
-1.5
-1.5
-1.4
-1.2
-0.9
-0.8
y/y (%)
+17.4
+12.2
+10.0
+8.0
+1.1
-3.6
+5.6
Year
2007
2008
2009
2010
2011
2012
2013
Year
2007
2008
2009
2010
2011
2012
2013
y/y (%)
+7.4
+4.8
+0.2
-0.1
+1.0
+0.2
-1.8
y/y (%)
+15.5
+12.1
+5.1
+4.6
+11.8
-0.6
-12.0
Source: The Central Statistical Office of Poland, GUS
Gross Wages
131.7
146.1
GDP in PLN bn current prices
Growth y/y unadjusted
Current account def. in % of GDP
Q2 2014
+3.3%
413,457
Q1 2014
+3.4%
397,429
-1.2% -1.2%
Q4 2013
+2.7%
455,528
-1.3%
Q3 2013
-1.9%
+2.0%
405,554
2013
+1.7%
1,662,052
-1.3%
2012
+1.8%
1,615,894
-3.6%
A: avg monthly wages in PLN B: indexed avg wages, 100=2005
Sentiment Indicators
2011
+4.8%
1,553,582
-5.0%
Sector
Economic sentiment and consumer confidence indicators
2010
+3.7%
1,437,357
-5.1%
8,615
196 6,333
144 6,382 145
3,625
158 3,690
161 3,663
160 3,743 163
Energy
6,021
183 6,736 205 6,358
193 6,020 183
Construction
3,766 160 3,895
166 3,706
158 3,884 166
Retail & repairs
3,408
145 3,456
147 3,544
151 3,577 153
3,913
3,589
127
IT, telecoms
6,654
173 6,695
174 6,987
181 6,835
177
Financial sector
6,109
137 6,602
148 6,747
152 6,738
151
National average 3,652
145 3,823
152 3,895
155 3,740 149
Transportation
138 3,666
Source: Central Statistical Office (GUS)
130 3,650 129
0
100
-20
80
-40
60 Se p 14
138
120
Jun 14
6,061
Manufacturing
C onsumer confidenc e (le ft a xis) Economic se ntiment (right axis)
20
M ar 14
B
Dec 13
A
B
Sep 13
A
B
Jun 13
A
Ma r 13
B
Dec 12
A
Se p 12
Q2 2014
Jun 12
Q1 2014
Mar 12
Q4 2013
Dec 11
Coal mining
Q3 2013
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
Key Economic Data & Projections Indicator
2011
2012
GDP change
+4.5%
+1.9%
+1.6%
+3.1%
+3.1%
Consumer inflation
+4.3%
+3.7%
+0.9%
+0.1%
+0.8%
Producer inflation
+7.6% +3.4%
-1.3%
-1.1%
+0.9%
CA balance, % of GDP
-5.0%
-3.7%
-1.4%
-1.7%
-2.6%
Nominal gross wage
+5.2%
+3.7%
+3.4%
+3.5%
+4.1%
Unemployment**
12.5%
13.4%
13.4%
11.8%
11.5%
4.12
4.19
4.20
4.17
4.09
EUR/PLN
2013
*2014
*2015
Sources: NBP, BZ WBK, PKO BP, GUS *) projections **) year-end
weekly newsletter # 058 / 27th October 2014 / page 15
56.74 ↓
100 SEK
46.00 ↓
100 NOK
50.78 ↑
10,000 JPY
USD EUR 350
300
15.23 ↓
100 CZK 10,000 HUF
400
308.61 ↓ 136.87 ↓
Money Supply in PLN m
Jul '14
Monetary base
173,096
164,008
M1
572,376 570,507
M2
WIG-20 stocks Price Change Change in alphabetical 24 Oct 17 Oct end of order '14 '14 '13
WIG Total index
Mar '14 Apr '14 May '14 Jun '14 Jul '14 Aug '14 4.5%
4.4%
4.4%
4.5%
4.4%
4.4%
PLN (up to 5 y )
4.9%
4.8%
4.8%
4.8%
4.7%
4.8%
↓ Alior Bank
PLN (over 5 y)
4.7%
4.7%
4.7%
4.7%
4.7%
4.7%
↑ Asseco Pol.
PLN (total)
4.7%
4.7%
4.7%
4.7%
4.7%
4.7%
↑ Bogdanka
EUR (up to 1m EUR) 1.9%
2.0%
2.0%
1.9%
1.7%
1.6%
↑ BZ WBK
378.1
+2%
-2%
EUR (over 1m EUR) 3.3%
3.0%
2.7%
3.4%
3.1%
2.5%
↑ Eurocash
34.9
+3%
-27%
WIG-20 blue chip index
↓ Grupa Lotos
27.4
-1%
-23%
Warsaw Inter Bank Offered Rate (WIBOR) as of 24 Oct 2014 Overnight
1 week
1 month
3 months
6 months
2.12%
2.08%
2.03%
1.98%
1.97%
120,828 980,090
Sep '14
Reference
Lombard
NBP deposit
Rediscount
167,008
166,104
2.00%
3.00%
1.00%
2.25%
574,529
578,485
Aug '14
122,209
124,986
124,389
985,769 1,003,128 1,003,354
- Time deposits
426,351
M3
996,171 1,002,137 1,020,561 1,021,824
434,256
448,037
444,514
- Net foreign assets 290,786 301,207 304,359 310,172 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
53,320. 320.13
PLN (up to 1 year)
Central Bank (NBP) Base Rates Jun '14
- Currency outside banks
as of 24 October 2014
48
+8%
4%
112.45
+2%
-11%
Change end of '13
+2%
-46%
2,4 2,426. 26.20
+6%
-38%
Change 1 week
+1% ↑
→ KGHM
126
0%
+7%
Change end of '
+1% ↑
9,700
0%
+8%
489.95
+2%
-2%
WIG Total closing index
10.2
+1%
+4%
last three months
175
-3%
-3%
22.47
+5%
+38%
↓ Pekao
The financial sector's net lending in PLN bn,
↑ PGE
56,000 55,000 54,000
4.9
0%
-5%
53,000
→ PKN Orlen
41.62
0%
+2%
52,000
954,978
→ PKO BP
36.50
0%
-7%
277,482
280,248
↑ PZU
485.75
+3%
+8%
587,136
590,208
→ Synthos
4.09
0%
-25%
↑ Tauron
5.36
+6%
+23%
→ PGNiG Jul' 14
Aug' 14
Sep' 14
Loans to customers
940,703
939,641
950,774
- to private companies
276,709
274,549
- to households
578,639
581,447
1,667,783
1,678,129
1,718,251 1,737,728
Source: Central Bank NBP
+4% ↑
23.48
↑ mBank
Jun' 14
+1% ↑
Change 1 week
28.56
Credit
Total assets of banks
-7
↑ Kernel
↑ Orange Pol.
Type of loan
+3
↑ JSW
→ LPP
loan stock at the end of period
75.7
51,000 50,000 49,000 2 Oct 14
100 DKK
Warsaw Stock Exchange, rates in PLN
on loans to non-financial corporations
24 Oct 14
350.26 ↑
24 Oct 14
536.21 ↑
100 CHF
19 Aug 14
100 GBP
1 Apr 14
422.45 ↓
10 Jun 14
100 EUR
Key indices
Term / currency
450
23 Jan 14
333.87 ↑
12 Nov 13
100 USD
Stock Exchange
Average weighted annual interest rates
10 Sep 14
as of 24 October 2014
I nterest rates
25 Jul 14
100 USD/EUR against PLN
Central Bank average rates
19 Aug 14
Currency
Source: Warsaw Stock Exchange
Trade 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-Aug 2014
y/y (%)
share (%)
2013
EXPORTS in PLNbn
IMPORTS in PLN bn share (%)
Jan-Aug 2014
y/y (%)
share (%)
2013
share (%)
No Country
Jan-Aug share 2014
IMPORTS in PLN bn 2013
share No
Country
Jan-Aug share 2014
2013
share
47,583
+4.7
10.8
69,304
10.9
32,301
+4.4
7.3
47,906
7.4
1 Germany
114,332 25.9% 162,548 25.1%
1 Germany
96,855 21.7%
6,653
+17.4
1.5
8,624
1.4
2,752
+4.9
0.6
4,150
0.6
2 UK
28,057
2 Russia
50,762 11.4% 79,578 12.1%
Crude materials except fuels
11,094
+2.8
2.5
15,744
2.5
14,207
-1.9
3.2
21,585
3.3
3 Czech Rep.
Fuels etc
18,587
-6.2
4.2
30,013
4.7
49,238
+1.1
11.1
75,539
11.7
4 France
Food and live animals Beverages and tobacco
6.4%
42,138
6.5%
27,311
6.2%
40,110
6.2%
3 China
44,877 10.1%
24,906
5.6%
36,367
5.6%
4 Italy
23,545 5.3% 34,940 5.3% 16,733 3.8% 25,409 3.9%
1,303
+6.8
0.3
1,864
0.2
1,746
-0.9
0.4
2,646
0.4
5 Russia
19,751
4.5% 34,069
5.3%
5 Netherlands
Chemical products
40,967
+4.2
9.3
59,103
9.3
66,751
+6.5
15.0
92,917
14.3
6 Italy
19,763
4.5%
27,958
4.3%
6 France
Manufactured goods by material
88,764
+2.3
20.1
129,915
20.3
79,720
+7.0
17.9
112,392
17.3
7 Netherlands
18,050
4.1%
25,707 4.0%
166,823
+5.4
37.8
239,434
37.5
146,209
+3.1
32.8
216,608
33.4
8 Ukraine
n/a
n/a
18,020
59,131
+10.3
13.4
82,816
13.0
43,864 +15.2
9.8
58,210
9.0
9 Sweden
12,527
2.8%
17,581
10 Slovakia
11,080
2.5%
17,099
Animal and vegetable oils
Machinery, transport equip. Other manufactured articles Not classified TOTAL
597
n/a
0.1
1,782
0.2
8,838
n/a
1.9
16,242
2.6
441,502
+4.6
100
638,599
100
445,626
+4.4
100
648,195
100
142,161 21.7%
Source: Central Statistical Office (GUS)
17,139 3.8%
61,127 9.3%
25,041 3.8%
7 Czech Rep.
15,305 3.4% 24,054 3.7%
2.8%
8 USA
10,635 2.4%
2.7%
9 UK
2.6% 10 Belgium
17,431
2.7%
11,431 2.6%
17,184 2.6%
11,044 2.5%
15,137 2.3%
weekly newsletter # 058 / 27th October 2014 / page 16
Industrial Industrial Properties
Regional Data Industrial output Jan-Sep 2014 *
Poland's regions (main cities indicated
Indus-
in brackets)
ction
102.7
Kujawsko-Pomorskie (Bydgoszcz) 104.6 Lubelskie (Lublin) Lubuskie (Zielona Góra)
Unemployment Sep 2014
Constru- Indus- Constru-in '000
try
Dolnośląskie (Wrocław)
Monthly wages (PLN) Jan-Sep 2014**
%
Existing stock, sq.m
New dwellings Jan-Sep 2014
by region, 1H 2014
Num- Index *
Warsaw central
try
ction
ber
109.7
4,381
4,237
125.7
10.9
9,505
78.7
Central Poland
109.1
3,449
3,312
126.4
15.7
4,448
96.6
Poznań
102.2
83.6
3,740
3,088
113.9
12.4
3,882
88.2
Upper Silesia
115.5
104.8
3,482
3,083
47.4
12.8
2,170
97.3
Wrocław
Warsaw suburbs
VaEffective Under const cancy rents EUR/ ruction, sq.m ratio sq.m/mth
617,000
8,000
14.7%
1–5.0
2,137,000
14,000
11.3%
1.9–3.2
1,107,000
59,000
11.7%
1.9-3.1
1,100,000
316,000
1.9%
2.3–2.9
1,576,000
57,000
7.9%
2.3–3.1
939,000
315,000
6.2%
2.4–3.0
Łódzkie (Łódź)
100.9
110.5
3,748
3,335
128.4
12.1
4,673
101.0
Tri-city
215,000
45,000
4.2%
2.2–3.7
Małopolskie (Kraków)
100.9
105.7
3,842
3,389
137.3
9.8
11,126
100.0
Kraków
159,000
11,000
1.9%
3.5-4.0
Mazowieckie (Warszawa)
100.0
107.1
4,629
4,970
254.6
10.0
21,956
111.1
Opolskie (Opole)
106.0
119.9
3,654
3,567
42.7
12.0
1,315
100.6
Podkarpackie (Rzeszów)
102.4
112.2
3,422
3,126
132.3
14.3
4,691
107.0
Podlaskie (Białystok)
107.2
119.2
3,330
3,940
60.3
13.1
2,836
103.5
Pomorskie (Gdańsk-Gdynia)
108.5
119.9
4,039
3,485
95.2
11.2
6,768
79.7
Śląskie (Katowice)
101.0
108.1
4,577
3,556
178.7
9.8
7,375
94.6
Warsaw
Świętokrzyskie (Kielce)
107.9
101.5
3,444
3,335
76.0
14.3
2,481
141.5
Kraków
Warmińsko-Mazurskie (Olsztyn)
104.7
111.5
3,297
3,170
93.9
18.2
3,020
100.9
Katowice
5,602
Wielkopolskie (Poznań)
106.4
102.8
3,758
3,794
118.0
7.9
9,875
101.2
Poznań
6,552
+3.3%
Zachodniopomorskie (Szczecin)
103.9
103.3
3,557
3,500
91.1
15.2
4,017
99.7
Łódź
4,936
+2.6%
National average
103.4
107.4
4,016
11.5 100,138
98.1
Wrocław
6,092
+2.0%
Tricity
6,092
-4.9%
3,821 1,821.9
Homes & Commercial Commercial Properties New apartments* Q2 '14
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'14
Retail rents**1H'14
Change Headline Vacancy Retail ratio
High
y/y
rents**
centres streets
7,924
-2.0%
11 -25
6,389
+6.0% 13.5-14.5
3.6%
35-40
78
-3.7%
5.4%
35-40
50
14-15
11.5%
35-40
62
11.5-12.5
10.6%
35-40
78
14.15
10.9%
35-40
45
12.8-13.5
11.5%
35-40
40
13.35% 100-120
11.5-13.8
148
*avg, offer-based ** EUR/sq.m/month; Prime 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)
Unemployment
Q4 '12
Q1 '13
Q2 '13
Q3 '13
Q4 '13
Q1 '14
in Poland
2,886
175
-3,020
1,885
-2,899
2,771
Polish DI
-1,203
957
2,588
-1,449
1,575
562
2009
2010
2011
2012
2013
in Poland
10,128
9,343
10,507
14,896
4,763
-4,574
Polish DI
-3,072
-3,335
5,484
-5,935
-607
3,684
-5,175
2,309
4,048
4,642
159
71
5,249
1,941 1,684
2,013
-18,519 -14,191 -4,984
-1,324 -1,403
-553
CA balance vs GDP -5.0%
-3.7%
-1.3%
138
-1.3%
-1.1%
n/a
A-
stable
Moody's
A2
stable
6 months- EUR 375 (PLN 1480) 3 months- EUR 245 (PLN 980) Sales Director James Anderson-Hanney
Real Earnings
mobile: +48 881 650 600
Average gross wage vs inflation. 9
2,000
1,800
6
Source: NBP, BZ WBK, PKO BP Source: Central Statistical Office GUS
Q3 14
-10,059
12
Q1 14
CA balance
2013 Q4 '13 Q1 '14 Q2 '14
Standard & Poor's
Wage
180 160 140 120 100 Sep 11
May 11
Jan 12
Business Review+ Subscription 1 year- EUR 690 (PLN 2760)
stable
Source: Rating agencies
Q3 13
Services, net
2012
outlook
A-
2,400
Q1 13
Trade balance
2011
15
2,200
Current Account (EUR m) Period
number (left axis) % (right axis)
2,600
Q3 12
2008
Fitch Ratings
% of population in working age
Q1 12
Year
Agency rating
Registered unemployed, in ‘000 and
Q3 11
Quarter
Country Credit Ratings
Sep 12
james.anderson-hanney@poland-
CPI
May 13
Index 100 = Jan 2005. Source: GUS
Jan 14
today.pl
Sep 14
Publisher Richard Stephens Financial Director Arkadiusz Jamski Creative Director Bartosz Stefaniak New Business Consultant Tomasz Andryszczyk