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Key Sector Update


2001-08-01


Financial

After the first quarter of 2001, the net financial result of Polish banks amounted to PLN1,269 mln, down 21.1% on the previous year. Most of the profits made by banks come from interest on credits and deposits. However, due to intense competition, banks are earning more and more on commissions and fees charged for more complex services.

The revenue of brokerage houses amounted to PLN179 mln in the first quarter of 2001, 47% down on the previous year. Costs rose faster than revenues and the gross financial result was 13 times lower.

In the first quarter of 2001, the net profit of the life insurance sector was 74% down on the same period in the previous year. A 29% increase in net profit was noted in the property insurance companies. The percentage of companies recording a net loss in the life insurance and property insurance sectors was 81% and 47% respectively. The poor results of life insurance companies are due to the fact that the years when insurance companies attracted a high level of contributions has come to an end while the time for making pay outs has arrived.

Due to the market slump on the Warsaw Stock Exchange, open investment funds (OFEs) performed poorly in June 2001. The biggest losses were noted by Rodzina, Skarbiec-Emerytura, and Zurich, while Pioneer, Pekao, and AIG performed the best. During the first 24 months of investing contributions made by OFEs (June 1999 - June 2001) the highest increases in the value of accounting units were noted by Pioneer, Dom and Polsat, while OFE Bankowy, AIG and PZU ZĹota JesieĹ recorded the worst results.

During the first half of 2001 the biggest credit agent companies granted loans of over PLN3.4 bln, 17% up on the same period in 2000. The biggest credit agent is Lukas, with over PLN1.1 bln of loans, 59% more than in January-June 2000.

Factoring turnover amounted to EUR2.085 bln (PLN7.1 bln) in 2000, up on the figure of EUR605 mln recorded in 1999. The leader in this field was Pekao Faktoring with PLN2.5 bln, followed by Handlowy-Heller (PLN1.5 bln) and Polfactor (PLN1.0 bln).

Mutual insurance companies that sell property polices are developing faster than most property insurance companies that operate as join-stock companies. In the first quarter of 2001 property insurance companies saw a 3.82% increase in contributions compared to the corresponding period of 2000, while in the case of mutual insurance companies this increase amounted to 29.4%.

PTL Berlo of GdaĹsk, a leasing company, has closed its outlets and is in the process of changing its profile to that of a financial agency. Another leasing company, BG Leasing, has been declared bankrupt due to the poor quality of its receivables.

Bank Gospodarki ĹťywnoÂciowej (BGĹť) will buy Eurobank, the centralized informatics system of Apexim, a Polish IT company, for PLN150 mln. A pilot implementation of the system is expected in the fourth quarter of 2001, and its full implementation will take place by the end of 2002. BGĹť is the only large Polish bank to have chosen a Polish informatics system.

Bank Handlowy (BHW) is working on expanding its range of services for individual clients and intends to exchange its Citidirect Internet banking system for a new solution in 2001.

SEB, a Swedish bank, has increased its ownership share in Bank Ochrony Ârodowiska (BOÂ) from 39% to 45.99%. SEB is now the main shareholder in BOÂ.

The shareholders of Bank ÂlĹĄski (BSK) have decided to issue 3.75 mln shares worth PLN265 each. The entire issue will be taken by ING Bank, a strategic investor, which will now hold 85% of shares in BSK. BSK and ING Polska will merge in October 2001 and the new bankÂs name is to be ING BSK.

BSK intends to generate a much higher net profit in 2001 than the figure of PLN 138.3mln recorded in 2000. The bank will also develop its network and range of products. BSK is beginning to fight to maintain its position as the third biggest company on the retail market and its place as one of Poland's top five banks. BSK's merger with the Polish branch of ING is designed to help BSK achieve these goals.

Bud-Bank (the Bank of Residential Construction Development) needs capital worth PLN80-120 mln to expand its operations and will probably seek an investor. The bank intends to double its equity capital of PLN93 mln within 6-9 months. Bud-Bank and its owner, Bank Gospodarstwa Krajowego (BGK) intend to choose a supplier to provide them with an integrated informatics system in the fourth quarter of 2001 and to complete the systemÂs implementation in September 2002.

Cetelem Polska, a credit agent, intends to generate an operating profit in the fourth quarter of 2001. In 2000, the company saw a net loss of PLN20.5 mln due to investments in modern informatics technologies. This year, Cetelem Polska intends to grant credits of PLN300 mln. During the first half of 2001, the company signed credit contracts worth PLN100 mln, compared to PLN60 mln last year.

Hamburg-Mannheimer Auslandsbeteiligungsgesellschaft, the investor in Compensa and Compensa Ĺťycie insurance companies, is being taken over by Wiener Staedtische and HUK-Coburg. Compensa recorded a loss of PLN18.3 mln at the end of the first quarter 2001, PLN6.7 mln less than in the corresponding period of 2000. Compensa Ĺťycie saw a loss of PLN3.2 mln in January-March 2001, compared to almost PLN6 mln last year.

Deutsche Bank 24 SA (DB 24), a bank created on the foundations of BWR bank, has commenced operations. It is a retail company of Deutsche Bank, and plans to establish small electronic outlets throughout Poland. The bank intends to increase the number of its outlets to 60, and to double the number of its clients (85,000 in July 2001) by the middle of 2002. In order to meet this goal, a new share issue is planned, targeted at Deutsche Bank 24 AG, the strategic investor.

Leszek Czarnecki, the owner of a 65% stake in Europejski Fundusz Leasingowy (EFL) has decided to sell its shares to Credit Agricole (CA). CA is creating one of the biggest financial groups in Poland. After purchasing EFL, it will offer all kinds of financial services except insurance.

General Motors Acceptance Corporation (GMAC) has bought Futura Leasing (FT), a leasing company, and its subsidiary Prime Car Management, and taken over their leasing services. It is the first GMAC leasing enterprise in Eastern Europe. FT intends to lease assets, mainly cars, worth PLN 500mln within two years, and in 2001 itself plans to open branches in all voivodships. The company now has 9 such branches.

Kredyt Bank has opened two new subsidiaries of its Lithuania branch. Four other outlets are to be opened by the end of the current year, and the bankÂs share in the assets of the Lithuanian banking sector is expected to triple in the next 2-3 years. Its share now amounts to 2.3%.

LG Petro Bank has introduced an electronic personal account, LGnet. So far the bank has targeted affluent clients. Now its products will be available to a broader group of clients as the bank hopes to secure a 5% share of the retail market in the future.

Konsorcjum Biur Leasingowych OGI, an office leasing consortium, will be liquidated by the end of 2001. The decision has been taken by the companyÂs shareholders as OGI did not manage to find a strategic investor.

By the end of November 2001 Kredyt Bank (KB) intends to take over 40 of the 41 outlets of Polski Kredyt Bank (PKB), a subsidiary of KB. PKBÂs headquarters and one remaining outlet will co-operate with credit agents, take part in leasing and factoring transactions, and carry out deposit canvassing.

Uniqa, an Austrian insurance company, has taken full control of the insurance company ZuiR Polonia, paying about PLN120-150 mln for the company. Uniqa inends to increase PoloniaÂs share on the Polish property insurance market from ca. 2.3% at the end of 2000 to 5-7% in the next 5-10 years. Polonia intends to accumulate PLN 300 mln in contributions and record a net profit at the end of the year.

Vienna Life (VL), an insurance company, intends to become a universal company targeting all groups of clients. Today, VL is concentrating on developing its sales network. The company has 10 branches and hopes to open 5-10 new ones by the turn of 2001 and 2002. VL is also searching for a partner in the Polish banking sector.

IT

PTK Centertel, the Idea mobile network operator, intends to increase its market share from the mid-year figure of 24.4% to 26.4% by the end of 2001. The company expects that market shares of two other mobile telephony operators, Polkomtel and Polska Telefonia Cyfrowa will amount to 33.4% and 40.3% respectively at the end of the current year. Idea has started offering new tariffs to business clients.

Crowley Data Poland Sp. z o.o. (CDP), a company operating the DataStar Network, one of the most advanced fixed wireless broadband networks in the world, intends to invest USD30 mln in developing its network in 2001. USD100 mln will be spent by the end of 2002. DataStar Network is to be accessible to 90% of business and institutional clients in Poland.

Elektrim has accepted the offer of Vivendi to take ElektrimÂs telecommunications assets. Vivendi will gain control of the Elektrim group companies, especially Polska Telefonia Cyfrowa, for a sum of EUR589 mln.

Emax, a company operating in the IT sector, has not managed to go public. This failure was due to the poor state of the IT market and the fact that few investors were interested in purchasing Emax's shares.

NOM, a competitor of Telekomunikacja Polska SA, has started to offer long-distance calls. Netia and Energis Polska, two other telephone companies, are to launch this service, the former at the beginning of August, and the latter at the end of the third or the beginning of the fourth quarter 2001. NOM hopes to record a profit in 2002 and to secure a 10+% share of the long-distance stationary telephony market.

Softbank, an IT solutions integrator, has downsized its forecasted net profit for 2001 from PLN52mln to PLN26mln. The whole group is expected to generate a small profit. The change in the forecast is caused by the worsening situation in the banking and insurance sectors, which are SoftbankÂs clients.

Telefonia Lokalna (TL), a Lower-Silesian stationary telephony operator of the Dialog network, has over 200,000 subscribers, which makes it, after Netia, the second biggest independent operator in Poland. During the first half of 2001 TL gained 83,000 new clients.

UPC Polska, a cable TV operator, has decided to cease offering Chello Satelitarne, a fast Internet connection service via satelite antennas and telephony lines. This is due to the high costs of telephony connections, which make it difficult to attract a large number of clients.

Xtrade, a B2B electronic trade platform for big companies, and the Getin Service Provider (GSP), a company operating an e-business center for small and medium enterprises, have signed a letter of intent with regard to cooperation between the companies. Xtrade and GSP intend to make possible sale and purchase transactions on both platforms. This will create the first transaction market for the whole B2B sector.

Food And Beverages

The Ĺťywiec Group, which sold over 3.8 mln hl of beer in the first half of 2001, is the market leader in the Polish beer sector. Ranked second on the market is Kompania Piwowarska (almost 3.6 mln hl). The third biggest market player, Okocim, sold 860,000 hl of beer in the same period.

The Irish concern BakkavĂśr, specialising in the production, sale, and distribution of fresh fish and frozen and chilled fish products, has decided to commence construction of a cold store in Poland. The investment will cost USD3 mln and will be completed in 2003. Then, the plant will be able to process 200-300 tones of fish a month and provide employment to 100 people.

Ekodrob, a poultry producing company of the Animex group, intends to increase production and sales by over 20% in 2001 and to generate a revenue of PLN130-140 mln. It intends to achieve its goals with the help of a loan from Smithfields, the owner of Animex. Ekodrob recorded revenues of PLN27.6 mln in the first quarter of 2001. The company hopes to generate a profit in 2002, after a long period of making a loss.

Kamis, the biggest Polish producer of spices, intends to choose a foreign investor from the branch to cooperate in a joint venture by the end of 2001. The new company will serve food manufacturers. Kamis intends to take control of half of the food industry's supplies. The investment will amount to PLN50 mln.

The German company Pfeifer & Langen has bought 51% shares in the sugar plants of Gniezno, GosĹawice, Witaszyce, Zbiersk, and Zduny. All five plants are in the koniĹsko-kaliska group.

The management of Wawel, a sweets manufacturer, intends to increase its market share from 2-3% to 5-6% within 2-3 years. Wawel recorded a net profit of PLN3 mln in 2000 compared to a loss of PLN16.2 mln in 1999.

The Ministry of Treasury has sold 80% of shares in Polmos PoznaĹ (PP), a vodka producer, to the Pernod Ricard (PR) concern. The shares were bought by Santa Lina. PR owns 100% of this company's shares. PPÂs employees will receive 15% of the shares. The Ministry of Treasury claims that in the following months other Polmos companies are to be privatised. PR hopes to merge PP with PR Polska of WrocĹaw, the Polish branch of Seagram, and Agros Trading.

Automotive

By the end of May 2001 158,600 passenger cars were sold in Poland, 31.19% down on the same period last year. Sales of delivery vehicles with a gross weight of no more than 3.5 tons fell by 31.8%. In May, 3,900 more vehicles were sold than in April. During the last few months there has been an increase in the sales of used cars.

During the first half of 2001 586 buses were sold in Poland, 34% down on last year. In the opinion of producers, this fall is due to late orders for school-buses and the poor financial situation and privatization of the PKS car transport companies. The biggest decrease was noted in the Zasada group. On the other hand, Kapena and Mercedes recorded an increase in bus sales.

During the first five months of the current year 2,310 trucks were sold in Poland, 21.3% down on the same period in 2000. The situation is worst in the sector for trucks over 16 tones in gross weight. 21.9% fewer units were sold in this sector. In this segment, Volvo enjoyed the best sales (358 vehicles in I-V 2001 compared to 331 vehicles in I-V 2000), while Jelcz recorded the worst figures (38 vehicles in I-V 2001 compared to 93 vehicles in 2000).

The FIAT group has launched its Business Solutions (BS) in Poland. BS is new sector of services, both for the FIAT group enterprises, and other companies. Business Solutions is composed of four companies: Business Solutions Polska, ITS/GSA Polska, Ingest Segim Polska, and SADI Polska.

Krzysztof Olszewski, President of Neoplan Polska (NP), a bus manufacturer from Bolechowo, has bought back a 30% stake in NP from Gottlob Auwärter, thereby regaining total control over NP, and expects to sell Neoplan in the EU. The first contracts to supply buses to Western Europe have been signed.

ZS Jelcz of the Zasada group, a company which produces trucks and buses, has set up two subsidiary companies: Jelcz Samochody CiÄĹźarowe (Jelcz Trucks) and Jelcz Komponenty (Jelcz Components). This move is intended to increase the companyÂs profitability and decrease costs by 20%. Jelcz is searching for investors for these new companies. Its next step is to sell or rent superfluous assets.

Construction

The merger of Energobudowa of Warsaw with Polnord of GdaĹsk, which has been planned for over a year, is expected to take place by the end of the current year. The new company, Energobudowa-Polnord, will probably be listed on the Warsaw Stock Exchange in the first quarter 2002.

In 2001, EnergomontaĹź PĂłĹnoc intends to decrease the share of developer contracts in its portfolio from 40% to 30%. The companyÂs plans are to cooperate with companies in the energy sector and other sectors of industry.

Espebepe of Szczecin noted a loss of PLN2.5 mln in 2000, and a loss of PLN3.6 mln in the first quarter of 2001. Marek Diering, the newly appointed president of the company, intends to carry out restructuring, sell superfluous real estate, have receivables paid, and conclude new contracts.

Exbud-Skanska intends to secure a 5-8% share of the Polish construction market by 2004. The company plans to conclude a number of road and bridge construction contracts. The structure of the group is also to undergo change. Exbud-Skanska is to specialize in general and industrial construction, GPRD: in road construction, Hydrotest Skanska: in engineering construction, and Exbud Skanska Development: in developer activity.

Two construction companies, Mostostal Zabrze (MZ) and PIA Piasecki, have signed a merger agreement. The merger is to be completed by the end of 2001. MZ and PIA Piasecki together will form PIA Mostostal Holding SA, the third biggest construction group in Poland.


Source: Rzeczpospolita, Puls Biznesu


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