Books on Poland
% of GDP
Update No: 090 - (27/10/04)
Poland to reduce its force in Iraq
The prime minister of Poland, Marek Belka, told his parliament on October 15th
that he would begin drawing down the 2,500 Polish soldiers in Iraq in January,
another blow to a U.S.-led coalition that has lost nearly one-third of its
members this year.
The strength of the coalition has been a major issue in the U.S. presidential
debates. President Bush repeatedly cited the Poles as a steadfast ally. Poland,
seen by the U.S. as a key ally in Iraq, has 2,500 soldiers in the south-central
part of the country, leading a multi-national division of 8,000 troops.
But the government has come under growing pressure to pull out, with nearly
three quarters of Poles against the deployment.
Polish officials have suggested they might first reduce the force by 40 percent
and pull out the last troops by the end of next year.
Addressing his parliament before a vote of confidence, Prime Minister Belka
promised, ``We will not remain in Iraq an hour longer than is sensible, than
necessary to achieve our mission's goal: To return Iraq to the Iraqi people and
give security to the world.''
Polish officials had been hinting at a troop reduction for nearly two weeks.
Of the 30 allied forces, only six have 1,000 or more soldiers in Iraq. Eight
other countries have withdrawn all of their troops from the coalition since
February: the Dominican Republic, Honduras, Nicaragua, Norway, the Philippines,
Singapore, Spain and Thailand.
Officials of two other countries, Ukraine and Moldova, have indicated a desire
to withdraw, and the subject has been under discussion in several other
countries, such as the Netherlands and Denmark.
Armenia's prime minister also suggested the Caucasus country might not send
troops to Iraq, saying conditions there have changed since the 50 were promised.
Belka's victory expected to boost political stability
Belka spent much of the past year in Baghdad, working in the U.S.-led temporary
administration, before taking over as prime minister from Leszek Miller in May
when the ruling Democratic Left Alliance (SLD) party was embroiled in sleaze
In a bid to secure parliament backing in a confidence vote in June, he promised
to submit his cabinet to another vote in October, after presenting the 2005
budget draft. His victory should boost political stability, ensuring that
elections are not held until mid-2005.
Belka told parliament the economy was on a sustainable growth path and that this
year's expansion would be around 6 percent, adding that the zloty's value was
"The zloty has strengthened, achieving a level which is optimal for the
interests of exporters and importers, as well as debt servicing," he said
of the currency, which has gained 11 percent against the euro since Poland
joined the EU in May.
'Now investment to play key role in GDP growth path'
Poland's economy is to grow faster than 5% year-on-year for the next six
quarters, though, after 2005, that growth will heavily rely on a strong surge in
investment, Economy and Labour Minister, Jerzy Hausner, said recently.
"Poland's 5% gross domestic product growth is secured for the next six
quarters," Hausner said. "The investment spending boom, by that I mean
spending growth above 10%, will be the key to what happens beyond 2005." At
the same time, Hausner named four major factors that, despite increased
profitability, are blocking corporate investment. Heading his list was
bureaucracy, followed by political instability, costly and hard-to-get loans, as
well as an unclear and restrictive monetary policy.
Poland's GDP grew, in line with expectations, by 6.1% year-on-year in the second
quarter of 2004, down from 6.9% in the first quarter. The long-awaited
investment boom failed to make an appearance, as investments grew by mere 3.3%
year-on-year. Half-year GDP growth reached 6.5% year-on-year, and half-year
investment growth totalled 3.4%.
Poland seeks €1.39bn in IPO of nation's biggest bank
The Polish Treasury has released details of the initial public offering of the
country's biggest bank, PKO Bank Polski SA, which aims to raise about six
billion zlotys, or around €1.39bn. The bank also reported first-half results
under Polish accounting standards, the Wall Street Journal Europe reported.
Subscription for shares in what will be Eastern Europe's largest privatisation
this year took place October 22nd to November 3rd, with pricing to be set on
November 3rd, according to the issuing prospectus. The sale, which has long been
expected, will be Poland's largest privatisation since the IPO of the country's
dominant telephone operator Telekomunikacja Polska SA in 1998.
PKO BP is Poland's largest bank, with total assets of 86bn zlotys. It is a
leader in both the deposit market, with a share of 21%, and the credit market,
with a share of 14.2%. It has 1,222 of its own branches and 3,140 franchised
agencies around Poland.
"Interest in the offer is already high. I'm sure supply won't satisfy the
demand," said Pawel Borys, portfolio manager at DWS investment fund in
Brokers and analysts are still going over the more than 900-page issuing
prospectus, but many said the Treasury should easily raise six billion zlotys
from the sale, an amount mentioned earlier by Treasury Minister, Jacek Socha.
The Treasury wants to sell 300 million, or 30% of the bank's shares, meaning the
share price would likely be around 20 zlotys. "Of course, it's a
simplification, but if the price is fair, the six billion zlotys is
realistic," said analyst, Artur Szeski, of CDM Pekoa in Warsaw.
About 75 million shares will be offered to individuals, 90 million to domestic
institutional investors and 105 million to foreign investors. An additional 30
million shares will be used as "bonus" shares or to increase the above
tranches, the prospectus said.
The bank also posted six-month group net profit of 845.7 million zlotys, up 27%
from 664.52 million zlotys earlier. Total interest revenue slipped 3.4% to 2.55
billion zlotys from 2.64 billion zlotys in the year-earlier half, but net
interest income rose 8.3% to 1.82 billion zlotys. The figures were reported
according to Polish accounting standards.
Weglowa hits 182m zlotys in 8-month net profit
The European Union's largest coal producer, Poland's Kompania Weglowa (KW), rode
high worldwide coal prices to an eight month net profit of 182m zlotys versus
140m zlotys at end-July, the company said in a recent statement, New Europe
KW's August revenues reached 737.5m zlotys, up from 705.2m zlotys in July.
Eight-month revenues for KW reached 5.41bn zlotys, as it sold 33.5m tonnes of
coal at an average price of 161.53 zlotys per tonne. Some 68.5 per cent of its
production was sold on the domestic market and 31.5 per cent was exported.
The company posted a 449.5m zloty profit on sales for the eight-month period,
but the high cost of shutting mines down and of severance payments reached
213.6m zlotys, hindering net profitability. The company continues to cut jobs,
reaching 74,600 employees at end-August a 10,400-person reduction since the
beginning of 2004. The coal group is still awaiting a decision on an equity
boost of 900m zlotys. It is being reanalysed by the government at the behest of
the treasury, which calls the proposed increase "very high." The
company was supposed to receive an injection of 400m zlotys by end-July,
followed by additional funds later. The company was formed last year from the
assets of five coal producers (Bytomska, Rudzka, Gliwicka, Nadwislanska and
Rybnicka) with 24 mines and nine servicing companies.
EBRD again delays decision on loan to Elektrim
The European Bank for Reconstruction and Development (EBRD) has put off for the
third time a decision on allotting a €75m loan that would allow Warsaw-based
telecom and power group Elektrim to finish building the Patnow II power block in
Sides have agreed to still fine-tune the potential loan agreement with fellow
creditors. Elektrim hopes that, despite the tighter construction schedule caused
by the delay, it will be able to complete the investment by a deadline set by
the State Treasury after the power group bought PAK, which includes the Patnow
power plant and two others. In April, Bojar said that to meet the Treasury
deadline, construction must start in early July. Thus, the delay could threaten
the entire project.
"The delay is significant but we don't want to comment on the EBRD's
decision. The main difficulty in credits for PAK is the question of long-term
energy contracts, which are a very large barrier in organising financing, as the
banks don't know how the plants will sell the electric power," Elektrim's
spokesperson Ewa Bojar told Interfax.
In accordance with European Commission demands, the Polish government plans to
void in 2005 long-term energy-supply contracts, which the cash-strapped industry
had been using to secure financing for investments. About 40% of the Patnow II
power block was completed before construction was suspended in May 2003, due to
lack of funding and a disagreement with the Treasury over building deadlines.
PKN Orlen wants EU to okay Unipetrol buy in December
Polish fuel giant PKN Orlen expects a green light from the European Commission
for a merger with Czech oil firm Unipetrol in mid-December, Pawel Poreba of PKN
Orlen's press office said, Interfax News Agency reported.
"Since Shell, Conoco and Agip have declared that they are not going to use
their pre-emptive rights in the purchase of Ceska Rafinerska, we can now submit
a motion to the EU for the approval of our purchase of Unipetrol. We intend to
do it by mid-September and the European Commission will have 90 days to make its
decision," Poreba said.
An investor consortium of Royal Dutch/Shell, Agip and ConocoPhillips owns 49% of
Rafinerska and hold pre-emptive purchase rights to Unipetrol's 51% stake. In
June, PKN Orlen signed a 13bn Czech crowns (€417m) deal with the Czech
National Property Fund (FNM) to buy a 63% stake in the biggest Czech downstream
oil firm. The Polish company signed side deals with ConocoPhillips and the Czech
Republic's number two chemical group, Agrofert, to unload non-core assets in the
group. PKN Orlen signed for the purchase of Unipetrol in September, prior to
which a final price for the Czech group was not made official. The deal allowed
for the price to be adjusted down 25% or up15% depending on valuation changes
from January one to purchase date.
Polish, German firms in talks on possible pipeline
Polish state fuels monopoly, the polish Oil and Gas Company (PGNiG), and the
Lipsk-based German natural gas company Verbundnetz Gas AG (VNG AG) announced
recently in Warsaw that they were considering cooperation in the construction of
a natural gas pipeline in north-eastern Poland, Polish Radio said, Deutsche
Presse-Agentur (dpa) reported.
PGNiG and VNG officials declined to reveal details concerning the possible
length and route of the pipeline. A decision on whether to go ahead with the
project would be expected in early 2005, PGNiG and VNG officials said.
The companies signed two agreements recently creating trade and transit firms in
which each will hold a 50% state. PGNiG and VNG also announced plans to review
further opportunities for trans-European natural gas transit which could lead to
pipeline projects linking Poland and Germany.
VNG AG supplies natural gas to regional, municipal and industrial clients in
PGNiG is owned entirely by the polish State Treasury and is charged with
guaranteeing Poland's energy security by providing sustainable and uninterrupted
supplies of natural gas. In recent years the company has been seeking ways to
ease Poland's heavy dependency on gas supplies from the Russian far east by
finding alternative sources.
FOOD & DRINK
KP records 440m zloty profit
Kompania Piwowarska (KP), one of the largest breweries, recorded a zl 440m
profit in the financial year ending in March, on revenues of zl 2.65bn, Warsaw
Business Journal reported recently. Although chief rival Zywiec Heineken
attained sales of zl 3.2bn in 2003, it only managed a net profit of zl 206.2m.
In order to sustain its profitability, KP has focused on distribution and sales,
increasing employment in this area by 300 over the past months and boosting its
share of beer sales in hypermarkets from 20% to 27%. KP's Zubr brand, produced
by the Dojlidy brewery, recorded the highest increase in sales, capturing 5.1%
of the market, claims KP. Meanwhile, the company's flagship brand, Tyskie, is
the market leader with 15.8%. KP's total market share at the end of June
totalled 32.3%, as compared with Zywiec Heineken's 34.5%. Carlsberg Okocim is
the third largest player with 13.5% of the market.
Softbank to purchase 14% of Comp Rzeszow
Listed IT integrator Softbank, part of Poland's leading IT firm Prokom Group,
will purchase a 14% stake in Comp Rzeszow for 42.1-46.5m zlotys in an upcoming
initial public offering (IPO), Softbank said in a statement.
Softbank, which signed the deal for 495,000 shares, aims to further hike its
stake in Comp Rzeszow to 20-23%. It will place orders during the book-building
process. The two companies, which both specialise in delivering IT services to
the banking sector, signed an alliance agreement in order to strengthen their
position and extend their product portfolio.
The analysts are not unanimous on the importance of the deal. Some treat it as a
financial investment for Softbank rather than an alliance, others see it as a
first step towards a merger. "It is yet another signal of the beginning of
the inevitable consolidation process in the Polish IT industry," CA IB
analyst Przemyslaw Sawala-Uryasz said, Interfax News Agency reported.
MINERALS & METALS
Kety to invest in Ukraine
Poland's largest aluminium goods maker, Grupa Kety, will invest 31m zlotys in a
Ukrainian aluminium elements and segments manufacturing plant and spend an
additional 30m zlotys on a takeover which is currently being finalised, Grupa
Kety President, Jan Kryjak, said, Interfax News Agency reported.
"The move is in line with our strategy of becoming a leading aluminium
goods producer in the Central and Eastern Europe," Kryjak said. "We
are finishing a takeover transaction of similar size, outside of Poland, but I
will be able to give more details at the beginning of the fourth quarter."
Privatisation of Polish Pharmaceutical Holding
Treasury Minister, Jacek Socha, has announced the 2006 privatisation of Polish
Pharmaceutical Holding (PHF) via a share floatation, Warsaw Business Journal
"In the first phase we will direct our offer at financial investors. If the
need arises to increase the company's share capital, we will carry out a new
share issue. The state will retain no less than a 70% stake in PHF," said
Socha. The following phases of privatisation would entail selling shares to
different groups of investors, but an advisor would decide upon the final
details of the project. "Privatisation of the whole holding will be more
beneficial than selling the Polfas separately, but it is too early to assess the
value," Socha said. Initially, the holding will have the structure of a
financial group, while the Polfas will retain their legal identities. "The
moment the holding is privatised, it should have a clear and efficient operating
structure," he stressed.
BT enters the Polish market
TP SA will have to face a new rival on the telecommunications market-British
Telecom. BT has opened a branch in Warsaw that in the future will become a BT
marketing centre for all of Central and Eastern Europe, New Europe reported
recently. BT has announced a decision to open an office in Warsaw and launch
intense activities in Poland in order to offer a full range of Information and
Communication Technology (ICT) solutions to organisations operating in many
places in the region. "BT consistently aims at transforming from a
traditional operator of voice services into an advanced IT technology and
telecommunications company," said Francois Barrault, president of BT
International. "Developing activities in Central and Eastern Europe is an
important element of building the foundations for future growth, and we are glad
to be able to offer a full range of services to companies and organisations in
Poland." BT perceives Poland as an important ITC service and outsourcing
market with promising development prospects.
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