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No. 062 / 24th November 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter
MANUFACTURING & PROCESSING Volvo to close down Wrocław construction equipment plant page 2 BANKING & FINANCE Atlantic Fund Services acquires fund distributor Moventum page 2
The Koreans are buying a 70% stake inthe Białystok-based Adampol.
Photo: Adampol
Hyundai Glovis acquires Adampol
Korea's Hyundai Glovis has acquired a majority stake in Polish Adampol, one of Europe's leading finished vehicle logistics companies. The value of the business, as estimated by the buyer, is about EUR 70m, making the Adampol deal the largest-ever takeover made by a Korean logistics firm. page 4
PiS demands rere-run of local elections
Following a series embarrassing technical problems that prevented the ballot from being tallied on time, Poland's electoral authority PKW announced that the ruling centre right party PO had won the most seats in regional assemblies. The main opposition party PiS, which seemed like a clear winner based on exit polls, says the vote was rigged and demands a re-run. page 12
SERVICES & BPO Germany's ista to open 3rd Polish shared services unit in Opole page 3 TRANSPORT & LOGISTICS DCT Gdańsk secures EUR 290m financing for new investment page 5 PROPERTY & CONSTRUCTION Echo signs Deloitte as key tenant for Warsaw high rise project Q22 page 5 Office vacancy rate on the rise in Warsaw as Kraków experiences a mini building boom page 6
tel. +48 881 650 600
HOSPITALITY Orbis accepts Accor's offer and buys 46 CEE hotels for EUR 142m page 7 FOOD Nestlé's pet food plant to employ 230 staff from next year page 8 RETAIL FMCG giant Eurocash merges its tobacco distribution subsidiary with Kolporter page 9 RETAIL PROPERTIES Rosehill acquires large Warsaw retail project with Griffin's money page 10 POLITICS & ECONOMY Industrial output sees weak growth in October page 9 OPINION France and Poland: friendly relations, opposing economic philosophies page 13 KEY FIGURES Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 14-16
Poland Today leading the debate at MIPIM 2015 Poland Today is delighted to announce that we will be exclusively hosting
the ‘Primetime Poland’ lunch & afternoon conference during ‘New Europe’ day on Wednesday 11 March at the world’s most prestigious real estate event. This is an extraordinary achievement for a magazine which has only just celebrated its 2nd anniversary on the market, ranking alongside its other successes, including:
• Exclusive interviews with President Bronisław Komorowski and former
Deputy Prime Minister Elżbieta Bieńkowska • Bringing 50 journalists from around the world to Warsaw in May so they could hear about Poland’s economic transformation for themselves • Establishing Primetime Warsaw as the pre-eminent conference about the future development of the nation’s capital city Poland Today will also be an official media patron at MIPIM 2015.
To find out more please contact Magdalena Gawlikowska at magdalena.gawlikowska@poland-today.pl, or on (+48) 602 223 634
weekly newsletter # 062 / 24th November 2014 / page 2
services, has completed the acquisition of Moventum S.C.A, a Luxembourg-based distribution platform for independent fund advisors and funds.
MANUFACTURING & PROCESSING
Volvo to close down Wrocław construction equipment factory Volvo Construction Equipment (Volvo CE) has announced plans to close down its backhoe loader factory in Wrocław, as the company relocates production to China. The exact time line of the closure, which will lead to an estimated 200 redundancies, has not yet been confirmed. As part of the Volvo Group’s ongoing activities to improve profitability and reduce costs Volvo CE decided to discontinue product development and production of backhoe loaders and motor graders in Europe and Americas and transfer these operations to its Chinese subsidiary SDLG. Combined with other efficiency enhancement measures, this will result in a workforce reduction of about 1,000 employees, of whom the majority are in Poland, the US and Brazil, Volvo said. Volvo Group is hoping the measures will reduce its structural costs by SEK 3.5bn. "The phase out is expected to take place in 2015 but no further details are available as of yet," Volvo's Polish spokesperson Anna Nojszewska tells Poland Today. According to Volvo, its current product lines of technologically advanced and high-spec Volvo-branded backhoe loaders and motor graders have addressed a relatively small premium segment of the market. SDLG-branded backhoe loaders and motor graders will better serve customer demands in the large and growing value segment of the market.
"This acquisition will provide a powerful blend of Moventum’s experience in product distribution and independent financial advisors’ (IFA) support, together with Atlantic’s state-of-the-art technology solutions," comments Roman Lewszyk, the Chairman and CEO of Atlantic’s European business. Volvo says demand for its premium segment backhoe loaders, like the ones made in Wrocław, has been limited. Photo: Volvo CE
The Volvo Group has approximately 3,000 staff in Poland at the moment, a half of whom are employed at its bus factory in Wrocław. After taking on production from the Swedish plant in Saffle, Wrocław is Volvo's largest bus production unit in Europe. It has turned out more than 10,000 buses to-date, and in 2014, for the first time ever, its full-year production is to come in excess of 1,000 units. Asked whether the expanding bus plant could potentially provide employment opportunities for redundant workers from the construction equipment unit, Ms. Nojszewska replies: "Of course we are analyzing all scenarios that would enable us to keep as many employees as possible."
Atlantic acquired Moventum from Global Portfolio Advisors and Banque de Luxembourg. The transaction has been approved by the Luxembourg Regulator.
Polish mutual funds (TFI) in 2014 Assets under management in PLNbn 215 210 205 200 195 190 185 Jan
BANKING & FINANCE
Atlantic Fund Services acquires fund distributor Moventum The Warsaw-based European unit of Atlantic Fund Services, a US-owned independent provider of fund
Feb
Mar
Apr
May
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Jul
Aug
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Source: IZFiA
"Until now we have been a rather modest distributor. The acquisition of Moventum will let us seriously step into the market of global distribution of funds," highlights Roman Lewszyk. Atlantic Fund Services is a global third party fund administrator with USD 18bn in assets under administration and operations in Luxembourg, the UK, Poland
weekly newsletter # 062 / 24th November 2014 / page 3
and the US. The European unit, operating from Warsaw with a staff of 180, provides fund administration, fund accounting, transfer agency, distribution and compliance solutions to clients in Poland, Austria, the Czech Republic, and Liechtenstein. Atlantic supports registered and unregistered investment advisors, and advisors to pension funds, mutual funds, hedge funds, UCITS, SIFs, common and collective funds, ETFs and other pooled investment products. Atlantic's US operation has been providing administration services since 1986. "Atlantic has been operating in Poland since 1995 and we are one of the top players in this market, currently servicing 1.6m customer accounts. We believe that the Moventum deal will enable us to open the door to global markets for Polish mutual funds," Roman Lewszyk tells Poland Today. "We have been active in Luxembourg since 2011 and we know how to assist Polish funds in placing their products in that market. Many institutional investors worldwide earmark certain portions of their portfolios for CEE assets and it's up to Polish funds to create products that would appeal to them. I think the best option format in this case would be Luxembourgbased UCITS, which Atlantic can help set up and promote, and Moventum - deliver to global investors. We think this mix of capabilities is unique on the Polish market," he adds. Moventum, which distributes funds in 120 markets globally, currently has EUR 3.5bn of euro assets under administration. The company supports 1,850 financial advisors, insurance companies, fund of funds and banks located in 19 jurisdictions. Moventum has distribution agreements with 450 fund companies for over 9,000 funds.
SERVICES & BPO
Germany's ista to open 3rd Polish shared services unit in Opole Germany's ista International, one of the global leaders in the sub-metering, billing, visualization and management of energy, water and other ancillary costs, is setting up its third Polish outsourcing unit in the southwestern city of Opole. ista Shared Services Polska, one of ista's two Polish subsidiaries, is hoping to recruit 200 staff in Opole by the end of 2016. "We have two locations in Poland at the moment, one in Katowice, with 200 employees, and another in Gliwice, where we have 670 staff. Theoretically we could expand in both cities, but we have instead chosen Opole, which offers better availability of German speaking employees. Moreover, our intention is to grow very dynamically, starting with 50 employees already in January 2015, which is proving much easier in Opole, where after two weeks of hiring we have already recruited roughly a third of that number. Last but not least, expanding in Katowice without relocating to new offices would be impossible, and in Gliwice - very difficult," Jacek Styczeń, CEO of ista Shared Services Polska, tells Poland Today. Asked whether Opole -a relatively new destination for business services firms -offers sufficient infrastructure, Mr. Styczeń replies: "Generally, the conditions leave a lot to be desired. However, although there is no typical BPO/SSCcompliant office space available in Opole at the moment, our situation is pretty comfortable in this respect. In the first year we will be located in the CWT
building downtown, which enables us to grow up to 100 workstations, and starting from January 2016 we are relocating to a new building, designed to meet the needs of business services firms, and capable of accommodating up to 500 employees, giving us and other investors ample room for growth. The project in question, owned by CGI, is currently under construction in the vicinity of the Karolinka shopping center." As a typical shared services centre, ista SSC's Polish units provide mainly support, bookkeeping and IT services to other companies from the ista group, mainly from Germany, but also from Poland, Belgium, Denmark, Austria, Switzerland and the UK. "We are seeking candidates with good German and analytical skills, diligent team players with attention to detail. As far as education is concerned we are interested in high school and university graduates as well as students."
Europe's 3rd largest market
ista's history goes back 100 years to the foundation of Clorius and ista, the Danish and German pioneers of consumption-based billing of energy and water. Since the fall of the Berlin Wall in 1989 ista has expanded not only in Germany but also internationally. Today ista is represented in 25 countries with approximately 4,700 employees worldwide. Last year ista turned over EUR 744m and monitored meters in 12m homes. The company supplies property managers, owners and energy utilities with metering and recording devices and also installs them. With these devices, it records the individual consumption of water, heating, cooling, gas, power and ancillary costs as well as analyses energy data. ista Polska, the Polish unit, serves 6,500 clients, monitoring meters in 1.2m homes. It employs 117 staff in 10 locations with annual revenues of approximately EUR 20m.
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"Based on the number of housing units, Poland could be Europe's third largest market after Germany and France. However, only a half of the estimated 6.5m apartments that can be equipped with individual heat meters use such devices, while the remaining 50% is being billed based on floor space, and has no way of monitoring actual usage and paying for it," ista Polska's CEO Tomasz Bazga tells Poland Today.
ing the Adampol deal the largest-ever takeover made by a Korean logistics firm. The sellers included Belgium's EMPE (which sold its entire 41% stake in the Polish firm), as well as Adampol's CEO Elena Ĺ ukanowa and deputy CEO Adam Byglewski, who maintain a 30% ownership in the business following the transaction.
According to studies, by introducing central heating bills based on individual consumption in the estimated 3.2m Polish homes that are being currently charged per sq.m, Poland could save approximately 8.9 TWh per annum and reduce its CO2 emissions by 2m tons, an amount comparable to that generated by the country's chemical industry. "We are offering almost exclusively remote metering devices, which enable real-time monitoring of energy consumption, allowing homeowners to control costs and become more conscious users. In order for this to become a norm, Poland has to implement provisions of the EU Energy Efficiency Directive, which calls for all residential units in member states to be equipped with individual devices that measure actual energy usage," Mr. Bazga says.
TRANSPORT & LOGISTICS
Hyundai Glovis buys Poland's top finished car logistics company Korean automotive logistics firm Hyundai Glovis has inked an agreement to acquire a 70% stake in Adampol, a Polish company that specializes in over the road shipping of cars. The value of the business, as estimated by Hyundai Glovi,s is about EUR 70m mak-
With the acquisition of Adampol, Hyundai Glovis will actively pursue business opportunities in Europe, the company said. Currently the Korean firm has ten logistics hubs across Europe and Russia including Germany, Slovakia, the Czech Republic, and Russia. Headquartered in Seoul, Korea, Hyundai Glovis is part of the Hyundai Kia Automotive Group. Its predecessor company, Hankook Logitech Co. Ltd was formed in February 2001. It changed its name to Hyundai Glovis in June 2003. Hyundai Glovis provides ocean transportation, air transportation, inland transportation, logistics consulting, storage, packaging services as well as supply chain management services.
Hyundai Glovis president Kim Kyung-bae met Adampol's founder and vice chairman Adam Byglewski and major shareholders on November 18 at the signing ceremony in Białystok. Photo: Hyundai Glovis
Established on November 9, 1989, the very day the Berlin Wall came down, Adampol has since grown to become Europe's 10th largest forwarder of finished cars by revenue. The company has recorded an average annual growth rate of 15% for three years since 2011. Last year, it transported about 400,000 cars for BMW, GM, Toyota, and Volkswagen, with sales revenues of more than EUR 100m and a 10-percent operating profit ratio. In Q1-Q3 2014 its net earnings topped EUR 1.5m. With a head office in Bialystok, it has a number of branch offices across Europe, including in the UK, Belgium, Russia, and Italy. Adampol employs 640 staff and has a proprietary fleet of 386 car haulers. An estimated 600 additional trucks are at its disposal via partners and subcontractors.
Although its core competence is finished vehicles logistics and forwarding, Hyundai Glovis provides also parts supply logistics and container services. Photo: Hyundai Glovis
Hyundai has been Adampol's client for the past six weeks, generating approximately a fifth of the Polish company's revenue.Asked whether tying the knot with the Korean automotive giant is not going to hurt Adampol's relations with other carmarkers, Mr. Byglewski told Poland Today: "This cooperation is the next step in Adampol's development, one that opens up new business opportunities, and it in no way affects the company's relationship with its current clients."
weekly newsletter # 062 / 24th November 2014 / page 5
TRANSPORT & LOGISTICS
DCT Gdańsk secures EUR 290m financing for new investment Poland's leading container terminal, the Australianowned DCT Gdańsk, has secured EUR 290m financing from a consortium of banks for a key expansion project that will boost the facility's annual handling capacity beyond 3m TEU. The agreement is a major step towards the launch of construction works. A few weeks ago DCT named Belgium's Besix BV as the general contractor for the project. "The initial capacity of the new berth will be 1.5m TEU annually, which means it will match that of our existing terminal, bringing the total handling capacity of DCT Gdańsk up to 3m TEU. We intend to subsequently expand the facility by a further 1m TEU, but the timing of phase two will depend on market situation," Adam Żołnowski, Chief Financial Officer at DCT told Poland Today. The brand new, 656m-long berth will be ready to operate in 2016. It will be equipped with 5 STS cranes, delivered by Liebherr Container Cranes Ltd., 15 RTG cranes and additional yard equipment. Unlike the existing T1 terminal, which is an artificial box pier protruding into the sea, T2 will be positioned along the waterfront, reducing costs and offering better access to larger ships, even the kinds that are still on drawing boards. The draught will be up to 17m, along the quay. "We are directly employing 530 staff at the moment and we are expecting this number to double gradually following the launch of T2. This does not include jobs to be created by our partners in logistics, construction.
In general direct and indirect effect, combined with induced effect could reach 8-10 thousand jobs," Żołnowski said.
PROPERTY & CONSTRUCTION
E cho signs Deloitte as key tenant for Warsaw high rise project Q22
DCT Gdańsk: the existing T1 terminal (right) and the planned new T2 terminal (left). Image: DCT Gdańsk
DCT Gdańsk belongs to Global Infrastructure Fund II, managed by the Australia-based Macquarie Group. The construction of DCT1 began in 2005 and the terminal welcomed its first ship in June 2007. Total investments to-date have come in excess of EUR 200m. The terminal offers year-round ice-free access with a 17.0m deep approach channel and up to 16.5m depth along the berth. The adjacent rail terminal, 4 x 1000m long is also operated by DCT Gdańsk. In 2013 DCT Gdańsk handled more than 1m TEU, up from nearly 0.9m in 2012. It is a key Baltic stop on Maersk's deepsea container service from, serviced by the Danish company's first E-class type vessel Emma Maersk.
Seven years after it moved into Skanska's Atrium City building in Warsaw, which was then renamed Deloitte House, the consultancy Deloitte is gearing up to relocate its Warsaw offices across the street, to the Q22 skyscraper that is currently being developed by Polish Echo Investment. Deloitte, of the world's top providers of audit, consulting, financial advisory, risk management, and tax services, will move into its new premises in Q2 2016, taking up 11,000 sq.m of customized office at Q22. Designed by one of Poland's most renowned architectural studios, Kuryłowicz & Associates, Q22 is a 155-mtall office building offering 50,000 sq,m of office space and 348 parking spaces in a 5-level underground garage. The project will be located at the site of the former Mercure hotel, at the intersection of Aleja Jana Pawła II and Grzybowska Streets. The general contractor of this PLN 500m development is Polish company Modzelewski & Rodek. Last week Echo Investment said it had acquired a EUR 112m loan for the project from BZ WBK and PKO BP banks. Echo Investment has recently secured a BREEAM Interim Excellent certificate of energy efficiency and environmental performance for the project. Wojciech Gepner, public relations manager at Echo Investment, has recently told Poland Today the company is now in advanced talks with several potential large tenants. Q22 is one of two skyscrapers currently under construction in Warsaw, the other one being Ghelamco's
weekly newsletter # 062 / 24th November 2014 / page 6
Warsaw Spire. A number of other high rises are at a planning stage. Echo Investment, which to-date has delivered more than 430,000 sq.m GLA in retail centers, 250,000sq.m in office buildings, 245,000 sq.m of usable housing space, and 89,000 sq.m in hotels, has another major office project under construction in Warsaw, the 34,000 sq.m Park Rozwoju in the Mokotów district. Outside of Warsaw, Echo is building offices in Kraków, Katowice, and Wrocław.
Q22 will make a welcome addition to the Warsaw skyline in 2016. Floors from 2 to 14 and 18 to 39 will offer office space while floors 14-17 will be designed for special functions, for example a conference center, fitness club and a restaurant. Image: JLL
Earlier this year Echo has acquired a 4.5ha former site of Browary Warszawskie brewery (an entire block enclosed by the Grzybowska, Krochmalna and Wronia streets, across the street from Warsaw's Hilton Hotel and the Platinum Towers complex) for EUR 42m. The Polish developer intends to build mainly offices in this
location, with some residential buildings – overall approximately 100,000 sq.m of floor space. According to the company, the capital expenditures will come in excess of PLN 1bn and the project will take some 5-7 years to complete. The recently approved zoning permit allows for the construction of three 120-140m tall towers at the site and obligates investors to preserve the historic brewery cellars located there. The developer saw its consolidated net income come to PLN 331m last year, down from PLN 373m in 2012, whereas the respective revenue totals came to PLN 528m and PLN 584m. Rumors have it that Echo's founder, billionaire Michał Sołowow is seeking buyers for his 45% stake in the company, which may be worth between PLN 1.2bn and PLN 1.5bn.
sq.m) in Konstruktorska Business Center. There were also a number of transactions involving public tenants, for instance the road transport authority GITD (new deal for 7,100 sq.m) in Equator I, and aviation ULC (renewal for 6,600 sq.m) in Flanders Business Park A. The vacancy rate in Warsaw has increased to 13.8%, indicating an ongoing upward trend. Cooling demand combined with increasing supply will soon trigger a sharper increase, JLL said. Currently, the prime headline rents in Warsaw city centre range between EUR 22 and EUR 24 / sq.m / month, whereas offices in the best non-central locations are available at EUR 14.50 EUR 14.75 / sq.m / month.
Warsaw office vacancy rate to go up Office completions, future supply, vacancy rate in Warsaw
PROPERTY & CONSTRUCTION
Office vacancy rate on the rise in Warsaw as Kraków experiences experiences a mini building boom Poland's modern office stock expanded by 130,000 sq.m in Q3 2014, amid robust supply and demand across the country's key office hubs, reports JLL in the latest edition of their quarterly market overview. In Q3, tenant demand in Warsaw stood at approximately 163,000 sq.m, raising the total for 2014 to 422,000 sq.m. Net take up (excluding renewals) amounted to almost 115,000 sq.m of leased space. The most notable transactions were signed by Raiffeisen (pre-let for 19,500 sq.m) in Prime Corporate Center; Media Saturn Holding (renewal for 8,000 sq.m) in Blue City Offices and Moneygram (new deal for 7,300
Source: JLL, WRF, Q3 2014, F-forecast
"It was a very good quarter for the office markets outside Warsaw, with approximately 117,000 sq.m of modern office space leased in Q3, and a total of 320,000 sq.m for the year so far. It is worth noting that this high demand was generated by companies from the business services sector, with examples of HP GBC and Infosys signing very large lease agreements in Wrocław and Łódź. Total demand in regional markets overall for the first three quarters of 2014 accounts for 88% of last year's demand," said Anna
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Bartoszewicz-Wnuk, Head of Research and Consultancy at JLL. The biggest transactions in regional cities in Q3 included the 21,000 sq.m renewal and expansion by Infosys in Green Horizon in Łódź, a 16,400 sq.m pre-let in Dominikański in Wrocław by HP GBC and the renewal of almost 4,400 sq.m in Diamante Plaza in Kraków by AON Hewitt. As a result, Łódź has already exceeded last year’s total take up by 95%. Kraków shows stable and strong take-up volumes, which are already greater than in the whole of 2013.
Mixed picture in regional cities Stock (sq.m) and Vacancy Rate (%) outside Warsaw
an increasingly competitive Warsaw market. At the moment, almost 60,000 sq m of office space is under refurbishment," said Anna Młyniec, Head of Office Agency and Tenant Representation, JLL. Outside Warsaw, the past quarter was particularly busy for developers in Kraków, where three new buildings: Kapelanka A (17,300 sq.m), Enterprise Park C (13,600 sq.m) and Quattro Business Park D (12,200 sq.m), were completed. "Developer activity is high in regional cities: currently more than 520,000 sq.m of office space is under active construction. Interestingly, a large proportion of this volume consists of large office buildings with an area of over 20,000 sq.m. Together Wrocław, Kraków and the Tri-City account for 64% of all projects”, Anna Bartoszewicz-Wnuk commented. Prime headline rents in regional cities currently range between EUR 11 to EUR12 / sq.m / month in Lublin and EUR 14 to EUR 15 / sq.m / month in Wrocław and Poznań. The lowest vacancy rate (6%) has been registered in Krakow, whereas the highest (17.7%) was noted in Szczecin.
Source: JLL, Q3 2014
As of end of Q3, Warsaw's modern office stock amounted to 4.365m sq.m, with a further 640,000 sq.m under construction and to be delivered in equal parts in 2015 and 2016. The final three months of 2014 are to see a further 90,000 sq.m of new space added to the capital city's modern office stock. In Warsaw, Q3 saw the completion of four office buildings: Warsaw Spire B (20,000 sq.m), Nimbus (19,000 sq.m), Małachowskiego Square (12,000 sq.m), and Garden Plaza (8,500 sq.m). "An increasingly important trend is the refurbishment of older office properties to enhance their position in
"There is no common picture for all the major cities outside of Warsaw in terms of both rents and vacancy. One large lease agreement can still change the balance on the market. Due to such a change Łódź saw one of the lowest vacancy rates in the history of the city," Anna Bartoszewicz-Wnuk summarized.
HOSPITALITY
Orbis accepts Accor's offer and buys 46 CEE hotels for EUR 142m It has come as no surprise that Poland's top hospitality group Orbis had accepted the offer of its strategic partner Accor (see BR+ No. 059 page 8) to acquire the latter's 46 hotels in Central Europe for EUR 142.3m (PLN 600m). Orbis is to sign a new Master License Agreement with the French group, which will give the Warsaw-listed operator the right to operate until 2035 the hotel business under the Accor brands in 16 countries: Bulgaria, Czech Republic, Estonia, Lithuania, Latvia, Poland, Macedonia, Romania, Slovakia, Hungary, Croatia, Slovenia, Bosnia and Herzegovina, Montenegro, Serbia and Moldova. As part of the deal, Orbis takes over Accor's current portfolio of 46 hotels in these countries, including 11 owned, 17 leased, 11 managed, and 7 franchised. All hotels operate under the Accor brands: Sofitel, Pullman, MGallery, Novotel, Mercure, ibis and ibis budget. 76% of these hotels are located in capital cities. 38 of them are operational, and 8 projects are in the pipeline, of which 3 hotels to be managed and 5 to be franchised. "The transaction perfectly matches our strategy as we have been aiming at wider development in the region for some time now. After negotiations the license has been extended from 10 to 16 countries and from a 15 to a 20-year period of time. Entering new markets gives us a great opportunity for a more robust supply growth. Accor mandates Orbis to be its management platform for this part of Europe - we see this as a great recognition for our past achievements and as a strate-
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gic step forward in our development," said Gilles Clavie, President of the Management Board of Orbis. Orbis had hired an independent advisor HVS to carry out a valuation of the portfolio in question. The EUR 142.3m price tag falls within the range recommended by the advisor, Orbis said.
Currently, the Orbis Group comprises 68 hotels (including 52 owned, 1 leased, 3 hotels under management agreements and 12 franchised) operating in 32 cities and resorts in Poland and Baltic countries.
Orbis Group's key financials R eve nues in PLNm, left ax is Ne t result in PLNm, righ t axis 1,200
200
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160
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120
600
80
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40
200
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-40 2 006 20 07 2008 2 009 2010
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PLN 124.1, while room occupancy rose by three percentage points and topped 58.8%. As of June 2014, the company's total assets were worth PLN 2.1bn. According to Orbis, the transaction will Accor will be closed in 2015 and therefore it will not impact its 2014 results.
20 13
Source: Orbis
"We firmly believe that the price is fair. It was confirmed by the in-depth analysis which we performed together with our advisors. We have a great understanding of the region and will be able to capitalize on strong brands. Significant business enlargement will also translate into value creation for our shareholders. We are very glad that the Supervisory Board shared the Management Board’s opinion. Orbis has a very good cash position today and in addition is debt free. Therefore the deal is going to be financed from our own funds, as well as from bank loans which we may replace by proceeds from bond issue in the future," said Gilles Clavie. The Warsaw-listed Orbis turned over PLN 682.6m in 2013 (down from PLN 707.4mm in 2012), while its net income came to PLN 65m (vs. 68m in 2012). Average revenue per room dropped 4.6% last year, down to
"This transaction we give a significant boost to our business. Total number of our hotels will soon exceed 110, and Orbis will be able to develop business in 16 countries. We will significantly strengthen our leading position as the key hotel operator in Central Europe. We are acquiring a healthy network, mainly located in capital cities. Orbis already has a great team working in international environment and having extensive understanding of this region. I am sure that both Orbis and the entities operating in new markets will benefit from our mutual cooperation and positive synergies will soon be effective," said Ireneusz Węgłowski, Vice President of the Management Board of Orbis.
Nestlé acquired a 14.6ha site for the project in Nowa Wieś Wrocławska near Wrocław last year. The factory, an investment of PLN 300m, will be Nestlé's 10th production unit in the country. The project, which is to be developed in six stages and spread over the time span of 10 years, will create 230 jobs in 2015 alone. Recruitment is currently underway with Nestlé offering employment opportunities for young graduates as well as experienced candidates. "With its official inauguration planned for March 2015, the factory will initially supply Felix-branded cat food to four markets: Germany, Austria, Czech Republic and Poland," Małgorzata Szlendak, CA&PR manager at Nestlé Polska tells Poland Today. According to the investor, 90% of ingredients used in production will be sourced from Polish suppliers.
FOOD
Nestlé's Nestlé's pet food plant to employ 230 staff from next year Work is well advanced on Swiss-based food giant Nestlé's pet food factory and distribution centre in Nowa Wieś near Wrocław, which is to launch operations in 2015, supplying Purina PetCare-branded products to Central and Eastern European markets.
Nestlé says it has finished the construction of buildings and now work is underway on development of auxiliary infrastructure and interior fit-out. Photo: Nestlé
"The investment supports Nestlé Purina's long term ambition to deliver total category value growth across both grocery and specialist channels to accelerate the overall pet food category value growth and our market shares in Western and Eastern Europe. Poland is the biggest pet food market in Central and Eastern Europe and was chosen for its significant potential for growth.
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The Wrocław area itself was selected for its close proximity to major roads, the availability of skilled labor, readiness of the site, as well as favorable investment climate," Giorgio Vesprini, Country Manager Nestlé Purina Poland & Head of CE Region told Poland Today last year, when the project was first announced. Nestlé has been present in Poland since 1993 and currently operates nine plants in the country. The company is known for its Nescafe coffee, ready-made foods and condiments under the brand Winiary, Gerber baby food products, confectionery brand Princessa, mineral water brand Nalęczowianka as well as Purina pet food. Its Polish portfolio includes 1,500 products and 90 brands. Nestlé in Poland currently employs 5,000 people. In 2013 Nestlé Polska generated sales revenues of PLN 3.4bn, against PLN 3.5bn in 2012 and PLN 2.7bn in 2011. Since its first entered the Polish market two decades ago Nestlé has invested in excess of PLN 1.6bn in the country. The Wrocław project will bring that total close to PLN 2bn. Last year Nestlé upgraded its foods and condiments plant in Kalisz and launched a new quality management center in Rzeszów, at a combined cost of PLN 160m. Other recent investments included expansion of the candy bar unit in Kargowa. Nestlé Purina, with its global headquarters in St. Louis, USA, produces brands such as Pro Plan, Purina One, Friskies, Darling, Beneful, Felix, Dog Chow and Cat Chow. According to Nielsen, Nestlé Purina brands have slightly less than a 10% share in Poland's pet food market. "We believe that with our investment in this new site and our brands, we will continue to grow our market share. The current level of calorific coverage in Poland [pet food industry products consumed by our pets; ed.] is very low in comparison with other markets and we
have a good opportunity to lead this evolution. In the longer term, the new facilities will enable Nestlé Purina to produce an expanded product portfolio," Mr. Vesprini said.
RETAIL
FMCG giant Eurocash merges its tobacco distribution subsidiary with Kolporter Poland's leading FMCG distributor, the Warsaw-listed Eurocash, has finalized the merger of its subsidiary KDWT, which is Poland's top distributor of tobacco products, with another major player in the sector, the Kielce-based Kolporter. As a result of the transaction, KDWT's annual revenue is to increase by more than PLN 2bn from the nearly PLN 3bn it generated in 2013.
the combined entity’s revenue should substantially exceed PLN 5bn. Thanks to a larger operational scale, we will be able to provide an even more effective and comprehensive service, to the benefit of Eurocash Group’s clients and Kolporter’s existing customers alike” said Jacek Owczarek, management board member and finance director at Eurocash. "This being a share exchange and, therefore, a noncash transaction, it did not increase Eurocash Group’s debt. As per the agreement, however, we will be responsible for the financing of Service FMCG’s working capital needs. Funds for this purpose have already been secured in the form of a revolving credit facility issued to KDWT in August this year," Mr. Owczarek added.
Tobacco is a shrinking business Legal cigarette sales in Poland, in bn units
70 65 60 55
The transaction took the form of a share swap, with Kolporter becoming a minority shareholder in KDWT, which was previously 100%-owned by Eurocash. Kolporter acquired 25% plus one share in KDWT in exchange for a contribution in the form of all shares in a newly-formed company, Service FMCG, to which Kolporter transferred its tobacco, impulse product, beverage and other FMCG distribution business. In line with competition watchdog UOKIK's recommendations, the parties have excluded certain wholesale locations and other fixed and intangible assets from the scope of the transaction. By sealing the agreement with Kolporter, we are reinforcing KDWT’s position as leader in the distribution of tobacco and impulse products in Poland. In 2015,
50 45 40 2007
2008
2009
2010
Source: Cyberserwis, Euromonitor
2011
2012
2013
*2014
*) projected
A 100% subsidiary of Eurocash, KDWT is the domestic leader in active distribution of tobacco products. Its product range covers cigarettes and other tobacco goods, coffee, tea, confectionaries, batteries, telephone cards and non-prescription medicines. KDWT has over 140 branches, many of them at Eurocash Cash&Carry wholesale locations, together with two distribution centers. In 2012, KDWT generated PLN 2.6bn in external sales.
weekly newsletter # 062 / 24th November 2014 / page 10
There are an estimated 9m smokers in Poland but cigarettes sales have been shrinking steadily over the past years, parallel to growing excise duties. Tobacco products are being retailed at an estimated 120,000 points of sale throughout the country. Tobacco producers argue that every rise in taxation (in the case of cigarettes VAT and excise already represent approximately 81% of the retail price) strengthens the shadow economy. Illegal cigarettes and tobacco are being estimated at some 15% of total sales or approximately PLN 6bn. The KDTW & Kolporter tobacco alliance was announced in December last year, shortly after British American Tobacco (BAT), one of Poland's top three tobacco producers, had decided to distribute its products directly to sales points, bypassing third-party wholesalers and distributors. According to the company, its new distribution model were to create some 700 jobs with BAT and its logistics partners.
Growing FMCG empire
Ranked as Poland's 9th largest company by revenues, with sales of more than PLN 16.5bn in 2013 and more than 12,000 employees, Eurocash operates an FMCG distribution business, cash & carry warehouses, and a franchise chain of more than 6,000 small and mediumsized convenience stores "abc", which added some 600 new locations last year alone. In June Eurocash teamed up with HDS Polska, the Polish unit of France's Lagardère Services. Together, the two companies seek to strengthen their position in the convenience sector – the fastest growing segment of Poland's retail market, currently dominated by Żabka Polska. Eurocash is to acquire from HDS Polska 51% of shares in a company that will operate the Inmedio chain, currently comprising 410 retail locations, mostly in shopping centers. At the same time, a newly-formed subsidiary of Eurocash – Eurocash Convenience – is entering into a franchise agreement
with HDS, which allows it to use the '1minute' trademark to develop a chain of convenience stores that will combine food and FMCG products in attractive locations.
RETAIL PROPERTIES
Rosehill acquires acquires large Warsaw retail project with Griffin's money Galeria Młociny, a large retail and entertainment project in the north of Warsaw, conceived by Coimpex, a joint venture of Prelios and Grove International Partners, looks one step closer to fruition after it found a new owner in the shape of Rosehill Investments. Co-owned by seasoned retail property investor Paul Kusmierz, Rosehill has reportedly purchased the 51,000 sq.m site designated for Galeria Młociny and obtained a EUR 46m loan from Griffin Group to finance the transaction as well as preparatory work on the scheme. The loan was granted through a recently created platform – Griffin Property Finance II – which has a total of EUR 200m at its disposal. The transaction with Rosehill Investments is the first deal in which the platform has been involved. Griffin Property Finance II can grant loans at both the land acquisition and construction phases of the investment process. The platform can also finance existing developments which generate cash flow, said Przemysław Krych, the CEO of Griffin Group. As of the beginning of next year, Griffin Property Finance II will be headed by Maciej Tuszyński who will join Griffin Group from Westdeutsche ImmobilienBank where he is an executive director and head of Poland.
As for Galeria Młociny, it was designed by the renowned architectural studio Kuryłowicz & Associates as a five-level structure with 67,000 sq.m of lettable area and 2,000 parking spaces. Coimpex, which obtained an environmental approval for the project last year, had estimated the total capex Galeria Młociny to reach some PLN 650m. The company also had plans for up to 200,000 sq.m of offices in the area, which were to be developed at a later stage. The local authorities have welcomed the project as Warsaw's northern district of Bielany lacks a shopping and entertainment center. Thanks to the subway and the recently completed bridge over the Vistula river the facility is likely to attract visitors from other areas of the city as well as the northern suburbs of Warsaw, which only recently got their first major shopping destination with the opening of Auchan Łomianki.
Galeria Młociny in the foreground with a new office cluster in the back, as imagined by Coimpex and Kuryłowicz & Associates. Image: Kurylowicz & Associates
Poland Today approached Coimpex spokesperson Ewa Kabata-Piekarz with questions about the Rosehill transaction, but the company does not seem to be ready to communicate any details as of yet.
weekly newsletter # 062 / 24th November 2014 / page 11
"We cannot comment on the project at the moment," she said, declining also to disclose the total size of Coimpex's land holdings in the Młociny area.
Post-industrial land of opportunity
The key problem with the area surrounding Warsaw's northernmost subway station Młociny is its direct proximity to the ArcelorMittal Warszawa steel plant. Although south of the station, residential development has been booming, authorities did not permit homes to be built closer to the steel mill. The plant has considerably modernized and scaled down its operations over the years, but according to officials a "buffer zone" should be maintained between the industrial and residential areas. The mill's previous owners, the Italian Lucchini family, sold more than 90ha of development land between the station and the factory a few years ago to Italy's Pirelli Real Estate (now operating under the Prelios brand), which sought to use it for apartment blocks. When it became clear that residential construction was not an option, and building apartments was no more the goldmine it used to be, the investors changed their concept for the area. They teamed up with private equity company Grove International Partners and set up Coimpex, which decided to build a giant shopping center and office park at the site. The investment is likely to give a much-needed boost to an area that has long lived in the shadow of a steel plant, but it will also put a pressure on authorities to implement a number of traffic improvements in the area. A portion of the cost will certainly have to be borne by the investors, but they will need support from the officials to overcome the many potential administrative hurdles.
Aggressive property player
Griffin Group was founded in 2006 as a joint-venture between Polish Cornerstone Partners and British Chelsfield Partners, as a platform to manage funds fo-
cused on real estate investment in Central and Eastern Europe, mainly in Warsaw. In March 2013 the global private equity giant Oaktree Capital Management joined the project with a view to create a long-term platform for real estate-related investments in Poland, including direct purchases of assets, development projects and lending activities. Griffin and Oaktree had been cooperating since 2010 with the private equity partner providing the Warsaw-based property investor with some EUR 150m for acquisition of several key assets, including Hala Koszyki, Meble Emilia, Renoma shopping center, office buildings in Warsaw and a land bank for residential development. Following the takeover of Chelsfield's stake in Griffin, as a shareholder, Oaktree pledged to invest a further EUR 200m into their projects.
its portfolio, for a combined PLN 200m. Recently the investor has broken ground on the EUR 80m Hala Koszyki mixed-use project in Warsaw, which is to reach completion by mid-2016 with 15,000 sq.m of offices and 6,000 sq.m of retail space at the site along with 200 parking spaces and a 600-sq.m public square. Perhaps the most publicized investment by Griffin was its 2012 acquisition of state-owned furniture retailer Meble Emilia, which owns a handful of attractive investment sites in Warsaw, including the Emilia store, sandwiched between the Warsaw Financial Center and the Intercontinental hotel. The new owner seeks to knock down the two-story socialist-era building and erect a new skyscraper at the site. Besides a number of office buildings, Griffin's assets include also the Renoma shopping center in Wrocław, which the fund acquired for EUR 117.6m from Centrum Developments&Investments. The recently expanded land-mark property includes 31,000 sq.m of retail GLA and 10,000 sq,m of office space. In downtown Katowice, Griffin is developing a 21,000 sq.m shopping centre Supersam, with 100 retail outlets, cinema, fitness center, food court and 400 parking spaces. The project, most of which has already been pre-let, is to reach completion in 2015. The company is also involved in a number of residential projects.
Griffin's Hala Koszyki project will mix upscale retail outlets and offices. Image: Kurylowicz & Associates
Earlier this year Griffin has acquired the Jupiter shopping centre, along with 2.5 hectares of land, located at Towarowa St., right by the Rondo Daszyńskiego station on the new subway line, in the heart of Warsaw's booming office district of Wola. According to market experts, the company will be able to develop more than 80,000 sq.m of offices or a large mixed-use project at this prime site. In the past few months Griffin has also added three office buildings in Warsaw to
POLITICS & ECONOMY
Industrial production sees very weak growth in October Poland's industrial output increased by 1.6% y/y in October, a result that was only slightly higher than the median forecast (1.4%), and rose by 3.5% from the pri-
weekly newsletter # 062 / 24th November 2014 / page 12
or month, the Central Statistical Office (GUS) said last week. The seasonally adjusted industrial output in October was up by 1.5% y/y and up by 0.3% m/m.
Producer prices fell by 1.2% y/y and 0.3% m/m in October. The PPI indicator has remained in the negative territory for 24 consecutive months.
"In our view, the data confirm that activity in Polish industrial sector is slowing. The main source of a slowdown is worsening external demand and lower export orders," BZ WBK analysts said in a commentary, underlining, however, that among the industry segments with the highest y/y production increases there were still many export-oriented ones (for example, furniture 16.9%, computers and electronics 10.1%, machinery and tools 9.9%, electrical appliances 9%).
"Declining oil prices will put a negative pressure on PPI in the short term. In the medium term, PPI inflation will be limited by weaker economic activity, so we expect it to remain low in the quarters to come," the analysts added.
Industrial output & producer prices Industry output, y/y change
POLITICS & ECONOMY
PO narrowly wins local elections, opposition demands demands a rerun
Producer Price Index, y/y change 8% 6% 4% 2% 0% -2% -4% Feb 13
Apr 13
Jun 13
Aug 13
Oct 13
Dec 13
Feb 14
Apr 14
Jun 14
Aug 14
O ct14
Source: GUS, the central statistical office
Production in the construction sector declined by 1%, clearly below forecasts, adding to concerns about weak growth in the final months of the year. "We were hoping to see a rebound, not only due to unusually good weather, but also thanks to higher investment activity in the private sector and higher municipal investments ahead of the local elections," BZ WBK said.
The November 16 local elections have been a huge embarrassment for Poland's State Election Commission (PKW) after problems with a new computer system used for counting votes had prevented the ballot from being tallied on time, leading to concerns about the overall validity of the vote. It took the commission nearly a full week to determine the results after technical errors jeopardized the sending and printing of totals from individual precincts. Records showed PKW had selected a company to create the vote counting system as recently as August in a tender that attracted a single bidder. Following several awkward press conferences, which made it painfully clear that PKW had very limited understanding of the workings of the very system they were responsible for, the entire commission resigned last week. Adding insult to injury, hackers broke into PKW's databases on Tuesday evening, although according to Poland's security agency ABW the attack did not affect the vote counting system. Two days later, on Novem-
ber 20, a group of right wing activists stormed the PKW headquarters in Warsaw and began to occupy the building demanding the November 16 local government elections be held again and calling for dismissal of PKW members over the vote counting fiasco. The police arrested 12 persons involved in the breakin. Despite exit polls indicating a clear win for the opposition Law & Justice (PiS), the final results showed the ruling party Civic Platform (PO) take more seats in the regional assemblies. According to PKW officials PO has secured 179 seats in regional assemblies out of 555 total, followed by PiS with 169 seats and junior coalition partner Polish People's Party (PSL) with 159 seats. Leftist opposition Democratic Left Alliance (SLD) secured a mere 28 seats. According to the results, PO won in elections to eight regional assemblies, PiS in elections to six assemblies and PSL in two. The seat counts show that PiS won outright majority only in the Podkarpackie region, while PO-PSL coalition will likely secure majority in 14 regions, but will have to seek partners in the Śląskie region. PiS won the popular vote, according to the official results, with nearly 26.85% of the votes cast, while PO won nearly 26.36%. The exit poll had the numbers at 31.5% and 27.3%, respectively The chaos that ensued in the wake of the vote prompted PiS to demand a rerun of the local election. The party's leader Jarosłąw Kaczyński said Sunday the election results were rigged and asked his supporters to pretest them at a demonstration on December 13. "What we are seeing is a threat to the democratic system, showing that in Poland the voting procedures have no real practical significance, that they serve to artificially legitimate the ruling powers," Kaczyński said.
weekly newsletter # 062 / 24th November 2014 / page 13
OPINION
France and Poland: friendly relations, opposing economic philosophies by Poland Today Editor Andrew Kureth
Poland and France have a long history of friendly relations, going at least as far back as Napoleon’s establishment of the Duchy of Warsaw in 1807. During the 19th century, Poles emigrated to France in large numbers, and some of the countries’ most famous names – from Chopin to Skłodowska-Curie – can be claimed by both countries. The cultural exchange and positive mutual feelings continue to this day and recently also the political relationship has made a resurgence. None too soon. At a moment when the European Union economy is stagnating, countries need to come together to find solutions that can be implemented continent-wide. For one, Europe needs more digital innovation, and this is an area where France and Poland can cooperate. Poland is famous for its IT know-how and can-do work ethic. It is also a budding IT start-up hub. France has the global business experience, the infrastructure, the institutions, the capital, and the connections to help multiply Polish raw talent into companies that could grow to be the European version of Google, Apple or Facebook.
That’s why I was excited to attend the French Chamber of Industry and Commerce’s “Warsaw Meetings” event last week. The conference brought together French and Polish business leaders and focused its discussions on how to take advantage of the digital revolution. But while there was broad agreement between the French and Polish presenters that Europe needs to become more innovative, ideas about how to get there were depressingly disparate. The Poles largely saw the challenges of the digital age in internal terms: Europe and Poland need to work harder to make sure that technical innovations are either business-viable or meet the needs of business. The scientific and business communities need to work harder to come together, and the government needs to aid in building a framework for encouraging them to do so. Competition from Silicon Valley was not something to protect Europe against, but rather a challenge to be embraced. The French focused on the external challenges – particularly from the United States. The French speakers frequently made reference to Google and Facebook as villains who needed to be fined, limited, and taxed. But the Poles usually spoke of the external challenges in terms of security threats: Russian hacker attacks on European government and banking systems, or terrorist groups such as ISIS finding in the internet a powerful recruiting tool. For the French, these threats weren’t even on the radar. The French should listen carefully to their Polish counterparts. As former Polish Minister of Administration and Digitization Michał Boni said at the conference: “We shouldn’t look for scapegoats. It’s not true that it is Facebook’s or Google’s fault that we are behind. It’s because of our own weakness.” But rather than seeing an area where muscle needs to be built, many of the French speakers seemed to con-
sider European weakness as an Achilles Heel to be shielded. French Member of Parliament Jérôme Chartier reiterated the familiar French call for a Europewide tax, saying that this would represent a “beautiful gesture” of solidarity within Europe. One panel discussion leader, a Pole, told me after his session was over that he was “depressed” because all of the French speakers had said they were losing to the Americans, and that the solution was to create protection through taxing American investment. The Polish view is much different. They see American dominance in the digital economy as an opportunity, not an attack. Poles are creating start-ups and investing in technology with the hopes of one day being bought by these titans, if not potentially competing with them in the future. So Poland has an important role to play in convincing its French allies that competition should be welcomed, not warded off. Cooperating together, Europe’s combined strengths can compete with those of the Americans or the Chinese. That doesn’t mean increasing taxes and creating huge government innovation slush funds that induce companies to invest more in navigating grant bureaucracy than developing innovative technologies; it comes through opening up economies, and providing the infrastructure and frameworks making it easier for European innovators to cooperate. It’s an uphill battle, but more are coming over to the Polish side. The French businesspeople living in Poland with whom I spoke generally shared the Polish view rather than that of their compatriots. Their experience here has shown them that an open economy pays more dividends than a closed one. If Poland succeeds in convincing French leaders of this, that would be its most significant contribution to the FrenchPolish exchange.
weekly newsletter # 062 / 24th November 2014 / page 14
KEY STATISTICS Consumer Prices
Inflation
0.0 +0.6
Transport
-1.0
+0.8
-5.1
-1.5
Communications +2.6
+1.2 +3.9
Gross CPI
-0.2
-0.2
-2.7
0.0 +3.6
0.0
-4.7
+1.1
-4.6 +3.4
+0.1 +0.5
+0.1 +0.5
+0.1
0.0
-1.0
-3.0
-0.8
0.0
-0.4
-0.3
0.0
-0.6
0.0
-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
Oct 14
-2.8
+0.6
-0.2
Aug 14
-4.9
Housing
0.0 +3.6
-2.2
Jun 14
Clothing, shoes
+0.1
+4.7
m/m
Apr 14
0.0 +3.8
-2,0
Jul '14
-1.1
Feb 14
Alcohol, tobacco +4.0
-1.6
Jun '14
-2.7
Oct 13
-2.1
May '14
m/m (%)
Dec 13
-1.1
Month y/y
3%
Aug 13
-1.7
y/y m/m y/y m/m
Retail Turnover
4%
Jun 13
Food & bev
y/y m/m y/y
Oct '14
Apr 13
y/y
Sep '14
Feb 13
Sector
Aug '14
Dec 12
Jul '14
Oct 12
Data in (%)
Aug '14 Sep '14
Residential Construction Dwellings
2009 2010
2011
2012
2013 Jan-Oct y/y
178.8
174.9
184.1
165.1
138.7
158.1
162.2
141.8
(in '000 units)
Producer Prices
Industrial Output Outpu t
-0.9
Permits
2014
(%)
133.6
+14.2 +15.6
Commenced
142.9
127.4
129.0
m/m (%)
-0.2
-0.2
-0.1
-0.1
+0.3
0.0
-0.3
m/m (%)
-2.3
-1.7
-0.1
+2.0
-8.5
+16.5
+3.5
U. construction
670.3 692.7 723.0
713.1 694.0
709.4
+0.1
y/y (%)
-0.7
-1.0
-1.8
-2.1
-1.5
-1.6
-1.2
y/y (%)
+5.4
+4.4
+1.7
+2.3
-1.9
+4.2
+1.6
Completed
160.0 135.7
152.5
114.2
-2.0
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
Apr'14 May'14 Jun'14 Jul'14 Aug'14 Sep'14 Oct'14
Apr '14 May '14 Jun '14 Jul '14 Aug '14 Sep'14 Oct'14
Construction Output
Construction Prices Month
Month
Apr'14 May'14 Jun'14 Jul'14 Aug'14 Sep'14 Oct'14
Month
Period
Apr '14 May '14 Jun '14 Jul '14 Aug '14 Sep '14 Oct '14
m/m (%)
-0.1
-0.1
0.0
0.0
0.0
0.0
0.0
m/m (%)
+3.2
+14.0
+16.9
+0.9
-5.4
+19.8
+7.2
y/y (%)
-1.5
-1.5
-1.4
-1.2
-0.9
-0.8
-0.7
y/y (%)
+12.2
+10.0
+8.0
+1.1
-3.6
+5.6
-1.0
2007
2008
2009
2010
2011
2012
2013
Year
2007
2008
2009
2010
2011
2012
2013
Year 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
Q3 2014
+3.3%
n/a
n/a
Q2 2014
+3.5%
413,457
-1.2%
Q1 2014
+3.4%
397,429
-1.2%
Q4 2013
+3.0%
455,528
-1.3%
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 Oct 14
138
120
Jul 14
6,061
Manufacturing
Consumer confidence (left axis) Economic sentiment (right axis)
20
Apr 14
B
Jan 14
A
B
Oct 13
A
B
Jul 13
A
Apr 13
B
Jan 13
A
Oct 12
Q2 2014
Jul 12
Q1 2014
Apr 12
Q4 2013
Jan 12
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%
+0.6%
Producer inflation
+7.6% +3.4%
-1.3%
-1.2%
+0.7%
CA balance, % of GDP
-5.0%
-3.7%
-1.4%
-1.6%
-2.6%
Nominal gross wage
+5.2%
+3.7%
+3.4%
+3.5%
+4.0%
Unemployment**
12.5%
13.4%
13.4%
11.8%
11.5%
4.12
4.19
4.20
4.18
4.13
EUR/PLN
2013
*2014
*2015
Sources: NBP, BZ WBK, PKO BP, GUS *) projections **) year-end
weekly newsletter # 062 / 24th November 2014 / page 15
56.55 ↓
100 SEK
45.57 ↓
100 NOK
49.96 ↓
10,000 JPY
USD EUR 350
300
15.20 ↓
100 CZK 10,000 HUF
400
287.34 ↓ 138.30 ↑
Money Supply in PLN m
Jun '14
Jul '14
Aug '14
WIG Total index
PLN (up to 1 year)
4.4%
4.4%
4.5%
PLN (up to 5 y )
4.8%
4.8%
PLN (over 5 y)
4.7%
4.7%
PLN (total)
4.7%
4.7%
EUR (up to 1m EUR) 2.0%
2.0%
1.9%
1.7%
EUR (over 1m EUR) 3.0%
2.7%
3.4%
3.1%
4.4%
4.4%
4.4%
4.8%
4.7%
4.8%
4.7%
→ Alior Bank
4.7%
4.7%
4.7%
4.7%
↑ Asseco Pol.
4.7%
4.7%
4.7%
4.7%
↓ Bogdanka
1.6%
1.6%
→ BZ WBK
2.5%
2.5%
↑ Eurocash
Overnight
1 week
1 month
3 months
6 months
2.11%
2.08%
2.08%
2.06%
2.05%
Reference
Lombard
NBP deposit
Rediscount
2.00%
3.00%
1.00%
2.25%
173,096
164,008
167,008
166,104
572,376 570,507
574,529
578,485
120,828 980,090
122,209
124,986
124,389
985,769 1,003,128 1,003,354
- Time deposits
426,351
434,256
448,037
444,514
M3
996,171 1,002,137 1,020,561 1,021,824
- 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
0%
-5%
53.5
+6%
+16%
Change 1 week
107.4
-1%
-15%
Change end of '13
387.95
0%
0%
37.2
+7%
-22%
WIG-20 blue chip index
27.63
0%
-22%
21.3
-8%
-60%
2,4 2,418. 18 .26
0%
-36%
Change 1 week
0% →
↑ KGHM
127.25
+2%
+8%
Change end of '
+1% ↑
↑ LPP
0%
9,000
+2%
↑ mBank
498
+1%
0%
↓ Orange Pol.
9.43
-3%
-4%
177
-2%
-1%
20.50
-1%
+26%
55,000
4.95
-2%
-4%
54,000
45.65
0%
+11%
53,000
36.9
-1%
-6%
52,000
477.85
+1%
+6%
51,000
↓ Pekao
The financial sector's net lending in PLN bn,
↓ PGE
loan stock at the end of period
↑ PGNiG
Jun' 14
Jul' 14
Aug' 14
Sep' 14
Loans to customers
940,703
939,641
950,774
954,978
↓ PKO BP
- to private companies
276,709
274,549
277,482
280,248
↑ PZU
- to households
578,639
581,447
587,136
590,208
→ Synthos
4.29
0%
-22%
1,667,783
1,678,129
↑ Tauron
5.43
+2%
+24%
Total assets of banks
→ PKN Orlen
1,718,251 1,737,728
Source: Central Bank NBP
0% → +4% ↑
24.46
↓ JSW
Credit
Type of loan
53,215. 215.87
77.06
→ Kernel
→ Grupa Lotos
Warsaw Inter Bank Offered Rate (WIBOR) as of 21 Oct 2014
Sep '14
Monetary base
M2
WIG-20 stocks Price Change Change in alphabetical 21 Nov 14 Nov end of order '14 '14 '13
Apr '14 May '14 Jun '14 Jul '14 Aug '14 Sep '14
Central Bank (NBP) Base Rates
M1 - Currency outside banks
as of 21 November 2014
WIG Total closing index last three months 56,000
21 Nov 14
100 DKK
Warsaw Stock Exchange, rates in PLN
on loans to non-financial corporations
29 Oct 14
350.11 ↓
21 Nov 14
529.04 ↓
100 CHF
15 Sep 14
100 GBP
8 Jul 14
420.88 ↓
29 Apr 14
100 EUR
Key indices
Term / currency
450
19 Feb 14
338.27 ↓
9 Dec 13
100 USD
Stock Exchange
Average weighted annual interest rates
7 Oct 14
as of 21 November 2014
I nterest rates
15 Sep 14
100 USD/EUR against PLN
Central Bank average rates
22 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-Sep share 2014
IMPORTS in PLN bn 2013
share No
Country
Jan-Sep share 2014
2013
share
110,259 21.8% 142,161 21.7%
47,583
+4.7
10.8
69,304
10.9
32,301
+4.4
7.3
47,906
7.4
1 Germany
Beverages and tobacco
6,653
+17.4
1.5
8,624
1.4
2,752
+4.9
0.6
4,150
0.6
2 UK
31,921
6.3%
42,138
6.5%
2 Russia
56,611 11.2% 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.
31,337
6.2%
40,110
6.2%
3 China
51,722 10.2%
Fuels etc
18,587
-6.2
4.2
30,013
4.7
49,238
+1.1
11.1
75,539
11.7
4 France
28,306
5.6%
36,367
5.6%
4 Italy
Food and live animals
130,588 26.0% 162,548 25.1%
1 Germany
61,127 9.3%
27,064 5.3% 34,940 5.3%
1,303
+6.8
0.3
1,864
0.2
1,746
-0.9
0.4
2,646
0.4
5 Russia
22,273
4.4% 34,069
5.3%
5 Netherlands
18,914 3.7% 25,409 3.9%
Chemical products
40,967
+4.2
9.3
59,103
9.3
66,751
+6.5
15.0
92,917
14.3
6 Italy
22,732
4.5%
27,958
4.3%
6 France
19,371 3.8%
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
20,689
4.1%
25,707 4.0%
7 Czech Rep.
17,731 3.5% 24,054 3.7%
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
2.8%
8 USA
59,131
+10.3
13.4
82,816
13.0
43,864 +15.2
9.8
58,210
9.0
9 Sweden
14,417
2.9%
17,581
2.7%
9 UK
10 Slovakia
12,655
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
Source: Central Statistical Office (GUS)
2.6% 10 Belgium
12,109 2.4%
25,041 3.8% 17,431
2.7%
13,008 2.6%
17,184 2.6%
12,581 2.5%
15,137 2.3%
weekly newsletter # 062 / 24th November 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 Oct 10
Jun 11
Feb 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
Oct 12
james.anderson-hanney@poland-
CPI
Jun 13
Index 100 = Jan 2005. Source: GUS
Feb 14
today.pl
Oct 14
Publisher Richard Stephens Financial Director Arkadiusz Jamski Creative Director Bartosz Stefaniak New Business Consultant Tomasz Andryszczyk