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Books on Poland
REPUBLICAN REFERENCE
Area (sq.km)
312,685
Population
38,626,349
Capital
Warsaw
Currency
Zloty
President
Aleksander
Kwasniewski
Private sector
% of GDP
70%
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Update No: 095 - (31/03/05)
Polish premier to switch parties, after resignation
Prime Minister Marek Belka has said that he will quit Poland's unpopular
governing party and join a new political group. The move was the clearest sign
yet that he is getting ready for elections expected as early as June.
His remarks confirmed weeks of speculation that he intends to join and campaign
for the new Democratic Party, founded by ex-communists and former Solidarity
activists, on May 5th -- the day he has said he will hand in his resignation.
"On May 5th I will feel a free person, in the political sense" Belka
told supporters of the new Democratic Party in the central city of Lodz. "I
will not only join the new initiative, but I will also join the new party's
political campaign."
Belka has been in office since May 2004. He has been backed by the pro-EU and
pro-NATO Democratic Left Alliance of reformed communists, SLD, which has
governed Poland since heavily defeating the Solidarity-led coalition government
in the September, 2001 elections.
But he has seen the party's popularity plunge, largely because of a series of
corruption scandals. The government lacks a clear majority and has suffered from
complaints about unemployment, which tops 18%, the highest in the EU, and budget
deficits, as well as corruption. Polls suggest that the centre-right opposition
would win elections if they were held now.
The new party has a chance to "radically change the tone of the political
discussion" in Poland, Belka said. Belka said on radio that if parliament
does not dissolve itself, he is ready to stay in office until parliamentary
elections, which must be held by mid-October.
Earlier in the new decade
The previous premier, Leszek Miller, stepped down in May 2004 after Poland
officially joined the EU. Miller had administered the government since 2001, but
lost his majority after a split with the Peasants' Party (PSL) in March 2003.
In March 2004, a year later, a group of deputies bolted the SLD to form a new
party, forcing the resignation of Miller on May 2nd. SLD member Marek Belka was
then appointed as acting prime minister by President Aleksander Kwasniewski.
Other main opposition parties are the free-marketeering Civic Platform, the
Eurosceptic PSL, and on the far right Samoobrona (Selfdefence), the League of
Polish Families, and the crime-bashing Law and Justice.
Civic Platform is in first place in polls
Opinion polls indicate that a change of government is in the offing. The
opposition Civic Platform (PO) is the top political party in Poland, according
to a poll by PBS Sopot published in Rzeczpospolita. 25 per cent of respondents
would vote for the PO-led by Donald Tusk-in the next general election.
The Law and Justice Party (PiS) and the Self-Defence of the Polish Republic (SRP)
are tied for second place with 14 per cent, followed by the League of Polish
Families (LPR) with 12 per cent.
The governing SLD is only fifth with 11 per cent, followed by the Peasant's
Party (PSL) and the Labour Union (UP).
Chequered, but colourful, political landscape
Polish politics, excepting when dominated by Russia, have always been turbulent,
fissiparous and fractious. In times gone-by the Poles operated a crazy system of
allowing just one member of the national assembly to exercise a veto over
legislation. One bad apple could rot the rest. It is hardly surprising that the
nation then lost its independence largely as a consequence. It was divided up by
Russia, Prussia and Austria in the course of the three great Partitions of
Poland in 1772-95.
Poland won a belated independence again in 1918. But in effect a fourth
partition of Poland took place in 1939 between Nazi Germany and the USSR.
Towards the end of nearly five decades of communism (which Stalin himself said
fitted Poland as a saddle does a cow), the Poles staged a great revolt. A Polish
pope elected in 1978 and the rise shortly afterwards of Solidarity, the trade
union movement led by Lech Walesa, provoked the imposition of martial law in
1981. Stasis and stagnation once again.
But the Pope and Solidarity remained intact. Then came the emergence of Mikhail
Gorbachev in Moscow in 1985. This happy conjuncture brought renewed independence
in 1989. It is of course now highly cherished, although the Poles agreed to join
the European Union (EU) last year, in principle a derogation of independence
that ultimately safeguards it for good.
Solidarity proved better at fighting the communists than ruling itself. The
former communists in SLD did not fare much better. Shortly, it now very much
looks, comes the chance of the free marketeers and the right.
Economy recovering
Poles, who were sceptical about the benefits of European Union membership,
have seen their economy thrive since the country joined on May 1st 2004. Poland
posted year-on-year GDP growth of 4.7 per cent in the year to November, the
latest figures available.
According to analysts from American investment bank Merrill Lynch, Poland's
ratings by international agencies will be heightened in 2005. At the moment
Poland has the lowest rating in credit credibility among main Central and
Eastern European countries. However, the economic indicators are much better
than country's ratings would indicate. Merrill Lynch suggests the three major
agencies, Standard&Poor's, Moody's and Fitch Ratings, are bound to raise
ratings during this year.
Outside of Poland, Hungary enjoys high marks from agencies while its economy
stands on risky ground, mainly because of a high budget deficit. Analysts claim
that the unstable situation will continue throughout 2005 and Hungarians must
expect lower rankings. Slovakia, as in Poland's case, was previously
underestimated in ratings, which was corrected by Moody's. A similar correction
is expected for Poland soon.
CEE region countries' ratings in foreign currency,
Standard&Poor's Moody's Fitch
Ratings
Poland BBB+
A2
BBB+
Hungary A-
A1
A-
Czech
Republic A-
A1
A-
Slovakia A-
A2
A-
CEE region countries' ratings in local currency
Standard&Poor's Moody's
Fitch Ratings
Poland A-
A2
A
Hungary A
A1
A
Czech
Republic A
A1
A
Slovakia A-
A2
A+
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BANKING
Raiffeisen Polska records historic profit in 2004
The Polish unit of Austrian bank, Raiffeisen plans to continue its growth trend
from the last two years in to2005 after hitting a record net profit of 165.4m
zlotys, up 90 per cent on 2003's 86.9m zlotys, Raiffeisen Bank Polska's
President, Piotr Czarnecki, said recently, New Europe reported. "These are
very good results. We are satisfied with the bank's development in 2004 as we
have reached significant growth and recording permanent growth on the very
competitive Polish market isn't easy. We aim to continue the trend started two
years ago," Czarnecki was quoted as saying.
Raiffeisen Bank Polska credit volume is up 17 per cent to 6.22bn zlotys in 2004
from 5.3bn zlotys in 2003. At the same tine the percentage of irregular credits
in 2004 decreased to 9.55 per cent from 14.5 per cent in 2003. The total amount
of deposits in 2004 increased by 8 per cent to 6.7bn zlotys from 6.2bn zlotys in
2003. "This is a good result as there is a trend of resigning from bank
deposits on the market. In 2004 the market average for deposits was down 1.5 per
cent, while we recorded an 8 per cent growth," Czarnecki said.
Results on banking activities were up 27 per cent to 630m zlotys in 2004 from
2003's 496m zlotys. At the same time costs increased 2.5 per cent to 339m zlotys
in 2004. Raiffeisen plans to increase its market share in credit cards from the
current 5.8 per cent. The bank issued over 110,000 credit cards in 2004, marking
a 112 per cent growth in comparison to 2003. The bank, which is increasing its
market share in servicing small-and medium-sized enterprises (SMEs), also plans
to become involved in credits to micro companies, those that generate an annual
turnover of below 3.4m zlotys.
The Raiffeisen Bank Polska management board is planning to recommend not paying
dividends from net profit for 2004, even though a small part of the profit is
expected to be paid out to the bank's owner, Raiffeisen International.
Bank Polski's net increases 27%
PKO Bank Polski SA reported a 27% jump in the fourth quarter and full year
profit, as Poland's biggest lender benefited form strong credit growth, falling
risk provision and lower corporate taxes, the Wall Street Journal Europe
reported recently.
Fourth quarter net profit grew to 297.7m zlotys (€74.2) form 234.5m zlotys.
This was the bank's weakest quarterly result in 2004. The fourth quarter has
tended to be the weakest in the Polish banking industry in the past few years as
banks tend to book extra costs and revalue assets at the end of the year.
Full year net income rose to 1.51bn zlotys from 1.19bn zlotys. The company
reports according to international accounting standards.
Polish bank's net profit doubles
Polish bank Pekao SA said its fourth-quarter net profit more than doubled,
lifted by lower provisions and growing fee income, as well as a cut in the
corporate tax rate, the Wall Street Journal Europe reported.
The bank, in which UniCredito Italiano SpA owns a 52.93% stake, forecast
improved earnings this year, as Poland, the largest economy among the European
Union's new members, continues its strong growth.
Pekao said net profit for the fourth quarter climbed to 340m zlotys (€85.2m)
from 162m zlotys for the same period a year earlier. For the full year, Pekao's
net profit rose 46% to 1.34bn zlotys form 919.8m zlotys a year earlier.
Improved asset quality in the fourth quarter allowed Pekao to halve its net
provisions. Income from fees and commissions gained on a strong contribution
from mutual-funds group pioneer Pekao. But net interest income fell, signalling
the bank has yet to achieve the strong credit growth shown by some domestic
rivals.
Pekao and UniCredito jointly own Pioneer Pekao, Poland's largest mutual-fund
group, whose total assets under management rose to 13bn zlotys at the end of
December 2004, up on year to year by 29%.
"Our performance this year will be mainly driven by higher revenues, thanks
to strong loan growth, the mutual-fund business and fee-generating
products," Chief Operating Officer, Luigi Lovaglio, said.
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BIOTECHNOLOGY
Bioton planning to raise 100m zlotys from IPO
Polish biotechnology firm Bioton intends to raise up to 100m zlotys from the
initial public offering (IPO) planned for mid-March in order to invest in the
development of its product portfolio and in foreign expansion, Bioton's
President, Adam Wilczega, said recently, Interfax News Agency reported.
"Our goal is to collect funds for our further development, including the
widening of our project portfolio, investing in the production of new drugs and
making capital investments abroad, in order to strengthen our position on
foreign markets," Wilczega was quoted as saying.
Only after the issue price-range is know will the company be capable of more
precisely specifying the amount it hopes to collect from the market. "But
this will be less than 100m zlotys," Wilczega said. Bioton, which will be
the first listed biotechnology firm in Poland, plans to become a global player
on the insulin market.
The company plans to export its products to South Asia, Australia, Western
Europe, North America and Russia, where Bioton is planning to gain 20 per cent
of the market in the next two years.
"We are currently registering our products in Russia - a process which we
expect to be completed in the second half of the year. Afterwards we will begin
selling insulin on this market, estimated at US$200m annually," Wilczega
said. Bioton intends to build a plant for insulin production in a joint venture
with its Russian partner, which is expected to begin operations in two to three
years time. Bioton will have a 38 per cent stake in this joint venture called
Bioton Wostok. Bioton's foreign investments will also include the purchase of a
24 per cent stake in Singapore based firm SciGen which will be selling Bioton's
products in south Asia and Australia.
Furthermore, Bioton means to build a plant in Singapore. Aside from investments,
Bioton is proposing to increase the share of exports in its total sales from the
current 30 per cent.
The company recorded sales revenues of 93.99m zlotys in the first three quarters
of 2004 with a net profit of 6.2m zlotys.
Sales revenues grew to 119.33m zlotys and net profit to 7.9m zlotys for the
whole of 2003.
After the IPO, in which the company will sell 10 per cent of its capital, the
company's shareholding structure will be as follows: Poland's IT firm Prokom
Investments will own a 45.5 per cent stake; the Swiss based investment fund
NIHONSWI, which is connected with Prokom, will possess 14 per cent; Bank Austria
Creditanstalt (BACA) will have 11.25 per cent; the Institute for Biotechnology
and Antibiotics (IBA) will hold a 10.2 per cent stake; 10 per cent will belong
to investors in the IPO; and the remaining 9 per cent will be owned by other
investors. The company plans to issue 16m shares in two tranches for both
individual (3.2m shares) and institutional (12.8m shares) investors.
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ENERGY
PKN Orlen homes in on better market position
Poland's number one fuel firm PKN Orlen intends - in line with its new strategy
- to focus on its core activity, cost reduction and restructuring to achieve a
leading position in the fuel sector in Central and Eastern Europe, Orlen
announced recently, Interfax, News Agency reported.
"The new strategy is designed to further improve the company's
effectiveness and focuses on the realisation of strictly selected investments
with a high rate of return. PKN Orlen, by prioritising core activity, intends to
strengthen its presence in key business areas on the domestic market and to
continue the restructuring of its assets portfolio," a company statement
said. Orlen underscores that the new strategy is based on a detailed analysis
with regard to the future of fuel markets. "As a result (of the analysis)
we have chosen directions that will lead the company to its goal of top company
in its class," the statement added.
Orlen further plans to monitor possibilities of expansion in both downstream and
upstream operations. The company is also determined to continue through 2005 the
800m zlotys of cost-cutting measures begun by the company's previous management
board.
Orlen said that in the first half of 2004 the company had cut 68% of the total
costs it had planned to axe last year. Orlen had targeted cost cuts to 450m
zlotys in 2004.
The company's new strategy also includes the restructuring and optimism of its
retail network through 2009 to maintain, in the first instance, and then boost
market share in Poland to 30% from the current 28.6%. To its shareholders, Orlen
plans to pay a 30% dividend from net profit every year. Orlen's 2004 net profit
is expected to hit an all-time record high, according to a recent statement by
PKN Orlen President Igor Chalupec, and could measure as much as double 2003's
987m zlotys net.
J&S targets global expansion
Privately-held oil trading house J&S, sometimes panned in the Polish local
press as a relatively mysterious, small-time supplier of crude oil to Poland's
leading refineries, has grown beyond this market and is becoming a major global
oil trading player as it moves further into the US and Chinese markets and
consolidates Russia-sourced oil transport through Poland, Interfax reported on
February 4th.
"Poland accounts for less than 30% of J&S's total turnover; however our
Poland-based company deals solely with J&S's global petrochemical and
chemical product sales and logistics, so considering the position of Poland in
our global business from the point of view of share in Polish turnover is a
little bit unfair assessment of the company as a whole," Group CEO Jarek
Astramowicz said.
The Cyprus-registered J&S was founded in 1993 by Polish nationals Gregory
Jankilewicz and Wiaczeslaw Smolokowski, now has offices in 13 countries trading
nearly all types of oil and oil-related products. After consolidating its
various trading arms in 2004, it now has equity capital of US$50m earning US$5bn
in revenue in 2003.
Full results for 2004 will be released in April and are expected to
significantly exceed 2003 results. While Polish refineries PKN Orlen and Lotos
are some of its largest single clients, the company also expects to continue
using the key oil terminal Naftoport, in the Polish Baltic Sea port of Gdansk,
as an export funnel for its diversified Russian and CIS supply hub. The
company's real focus for 2005 is on international markets, particularly the US
and China, where J&S wants to send oil, some via Naftoport.
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EUROPEAN UNION
Poland enjoys export boom following EU entry
Poland is enjoying an export boom to non-EU members following entry into the
25-member bloc, Rzeczpospolita daily reported recently.
The increase has been fuelled by lower tariff barriers on its products, gained
in conjunction with European Union membership. Polish exports to China leapt 123
per cent in 2004 compared to the previous year, the report said, with an 87 per
cent growth in exports to Japan, an 85 per cent export leap to Russia, a 46 per
cent increase to the United States and 20 per cent growth to South Korea.
Imports to Poland from non-EU members also saw significant growth during the
same period, also due to eased tariff barriers. Imports from China were up 41
per cent, those from Japan 40. US imports to Poland were up 20 per cent, while
Russia experienced 21 per cent growth. While 83 per cent of Polish exports are
destined for the internal EU market, analysts note that robust export growth to
non-EU members is fuelled largely by the sales of multinational corporations,
such as General Motors, based in Poland.
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FOOD & DRINK
Animex predicts bigger sales
Polish meat producer Animex plans to increase its sales by 20-25 per cent to
2.4-2.5bn zlotys in 2005 thanks to further growth of its export sales, mainly to
Japan and Korea, and focus on its branded products, Morliny and Krakus, over raw
meat sales, Animex President, Morten Jensen, said recently, New Europe reported.
"We want to maintain our growth rate of 20-25 per cent in sales in
zlotys," Jensen said. "Our goal is to double the sales of our branded
products, as we will be focusing on promoting Krakus and Morliny in
Poland." Animex claims it reached two billion zlotys in revenues in 2004,
but unfavourable forex rates along with livestock price increased deteriorated
the margins. For the upcoming year the company expects to hold the margins
levels, thus also driving the net profit up by 20-25 per cent. Jensen declined
to specify the net profit for 2004.
Mieszko boosts sales in 2004
Polish confectioner, Mieszko, plans to significantly improve its financial
results from 2004 onwards, as the company's sales revenues grew 11 per cent to
174.3m zlotys from 157m zlotys a year earlier, Interfax News Agency reported.
The group also plans to record 2-digit organic growth for another two years,
Mieszko chief, Marek Moczulski, added. Mieszko also recorded 134,000 zlotys net
profit in 2004 after a 12.2m zlotys net loss in 2003, mainly caused by carrying
out a wide restructuring programme. "Our financial results will
significantly improve in 2005. We are certain of it. "We want to maintain
2-digit organic growth for another two years yet at the same time we are
thinking very actively about acquisitions if they will generate extra value for
our shareholders," Moczulski said. He didn't want to disclose any details
about the acquisitions but Mieszko is likely to buy a Polish-based firm.
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TELECOMMUNICATIONS
Energis records solid revenues result
Polish alternative telecoms operator Energis increased its 2004 revenues to
243.2m zlotys, a 76 per cent increase on the 137.7m zlotys the company achieved
in 2003, on the back of client growth and a wider range of services, Energis
President, Jaroslaw Mikos, said recently, Interfax News Agency reported.
"Year 2004 was very good for us - our plans were known and we managed to
beat them," Mikos said. The company's EBITDA (earnings before interest,
tax, depreciation and amortisation) reached 23 million zlotys at year-end,
versus 1.3m zlotys in 2003. Roughly 66 per cent of revenues were generated by
voice services, with the remaining revenues being generated from data transfers.
Throughout 2004 Energis, which only offers telecoms services to business
clients, extended its services with local-calls services, premium-rate
connections and supplied solutions - which allow all major Polish web portals to
offer dial-up services independent of the incumbent TPSA.
TPSA targets higher revenues for 2005
France Telecom-owned Polish telecom incumbent TPSA aims to increase its revenues
by 1 per cent year-on-year to 18.75bn zlotys in 2005, driven by a
revenue-increase from the mobile and data segments, which should offset the
deterioration of revenues from fixed-line, TSPA President, Marek Jozefiak, said,
Interfax News Agency reported.
In "2005 we want to further focus on the growth segments: data and
mobile," Jozefiak said. "Revenues are expected to increase by 1 per
cent year-on-year and Centertel is expected to reach a 9 million client
count." In the data segment TSPA aims for 1.1 million clients by end-2005,
versus end-2004's 648,000. In 2004 revenues from this segment increased by only
9.8 per cent year-on-year to 1.80bn zlotys. In terms of profitability TPSA aims
for at least 8.06bn zlotys thanks to cost-cutting, a strong zloty and good
performance by its mobile phone operator, Centertel, the group said. TPSA
revenues increased by 1.51 per cent year-on-year to 18.56bn zlotys and fell
short of the 2-3 per cent growth guidance the company gave earlier.
URTiP steadfast on tender rules
Poland's telecommunications and postal regulator, the URTiP, stands fast on its
tender rules for GSM 1800 and third generation UMTS mobile phone licences, which
will allow a fourth mobile operator on Polish market, despite wide opposition to
the tender conditions from alternative telecom operators, URTiP Director,
Boguslaw Zyborski, said, Interfax News Agency reported.
"At this point in time we have not implemented any regulatory
changes," Zyborski said. The tender was made possible by Poland's new
telecommunications law, which came into force on September 3rd, 2004 and is in
line with EU legislation, Zyborski underscored that tender rules are designed to
uphold two key EU directives: to ensure competitiveness in the telecom market
and financial credibility of new players.
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