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Key Sector Update


2001-06-01

Financial

In 2000, the number of commercial banks operating in Poland decreased from 77 to 73. The majority of the capital in 46 of these banks was foreign capital. 69.9% of total assets in the Polish banking sector was foreign capital. (In 1999 this figure was 47.2%). Cooperative banks had 4.2% of total assets in the sector.

In the first quarter of 2001, the bank sector recorded an increase in the growth rate in the number of deposits, and a decrease in the growth rate in the number of credits. The development of the sector was less dynamic than in the first quarter of 2000. In the first quarter of 2001 the net profit of commercial banks amounted to PLN 1.22 bln, 19.6% down on the corresponding period of 2000.

In the first quarter of 2001 the three biggest card transaction clearing centers carried out almost 18 million transactions worth PLN 2.8 bln. There are four such clearing centres operating in Poland, of which PolCard is the biggest, serving over 63,000 commerce and service outlets.

In 2000, investment fund companies recorded a loss of PLN 38.6 mln, while pension funds reported a loss of PLN 847.8 mln. The total assets of investment funds amounted to PLN 9.45 bln, and the total assets of pension funds amounted to PLN 1.06 bln at the end of 2000.

Mutual insurance companies are the smallest participants on the Polish insurance market. Their importance, however, has been increasing. In the first quarter of 2001 mutual insurance companies recorded a 30% increase in contributions. The highest number of contributions were received by TUW Cuprum (PLN 14.77 mln), while the highest growth in contributions was recorded by TUW Wielkopolska during the first quarter of the current year.

Allianz, an insurance company that had significantly increased its contributions up till 2000, does not intend to continue focusing on increasing its market share. Allianz plans to concentrate on developing health insurance, and to increase its profitability and standard of services.

At the beginning of 2002 Bank Gospodarstwa Krajowego will issue bonds to the value of PLN 150-200 mln e.g. to finance the operations of the National Housing Fund (Krajowy Fundusz Mieszkaniowy). In 2001 the bank intends to generate a gross profit of PLN 70 mln compared to PLN 130 mln in 2000. The decline in the bank's profits is due to, among other things, granting more preferential credits.

At the end of the first quarter of 2001 BEST, a credit agent, recorded losses of almost PLN 9.2 million, while last year the company recorded a net profit of PLN 570,000. According to BEST's new president, the company has not calculate its risk accurately over the past 2-3 years.

Bank Ochrony Ârodowiska (BOÂ) intends to concentrate on granting services to ecology undertakings, small and medium-sized firms, and Scandinavian corporations. BOÂ also plans to specialize in financing agrotourism.

Cetelem, a company specializing in consumer credits, recorded a loss of over PLN 20 mln in 2000. This was more than the sum of the bank's reserve capital and 1/3 of its initial capital. The company's shareholders, however, have decided to continue operating in Poland. This loss is due to investments in new technologies providing automatic credit service in the on-line system.

Following the strategy of Hamburg-Mannheimer, the main shareholder of the Compensa group, the market share of the property insurance firm Compensa is decreasing while the market share of Compensa Ĺťycie, a life insurance company, is increasing. Within the next two years both Compensa companies are to acquire equal importance.

Invest-Bank is willing to buy the bankrupt Bank Staropolski (BS). In such a case, Invest-Bank would have to pay back all the deposits located in BS that have not been payed so far. However, Invest-Bank would like to issue new shares and offer them to BS clients, instead.

Kredyt Bank intends to invest PLN 150 mln in retail network development and in the start-up of new distribution channels in 2001. The bank plans to have about 350 outlets by the end of the current year.

PKO BP, one of Poland's biggest banks, recorded a net profit of PLN 275 million after the first quarter of 2001. This is almost 65% more than in the corresponding period in 2000.

The tender for PKO BP privatization adviser has been declared invalid. This will make it impossible to privatize the bank in 2001.

Softbank Emerging Markets Poland (SEMP), an investment fund belonging to Japanese Softbank, has opened an office in Warsaw. It is to become the company's headquarters in Central and Eastern Europe. The fund intends to invest in high-tech companies, as well as bring in the best companies from its portfolio.

As of 1 June 2001 Wielkopolski Bank Kredytowy (WBK) and Bank Zachodni (BZ) will merge and operate as Bank Zachodni WBK. The new bank will have an approximate 8% share in the retail banking sector.

IT

The consolidated results of Elektrim for the first quarter of 2001 were worse than expected. The company's revenues stood at PLN 1.35 bln while its net loss was PLN 94.8 mln. During the same period Netia noted lower than expected consolidated revenue (PLN 122.9 mln), and reported a consolidated operating loss of PLN 38.7 mln. The consolidated revenue of Telekomunikacja Polska SA (TP SA) stood at PLN 4.2 bln, while its consolidated net profit amounted to PLN 300.3 mln, 27.7% down on last year.

Permission has been given to list 21 million shares in Arena.pl, a portal, on the Warsaw Stock Exchange. The opening date for subscriptions is planned for 4 June 2001. Resources obtained from this share issue will be spent on ISP technology development, and on telecommunication services development. Arena hopes to earn PLN 100-150 mln on shares issued. After the first quarter of 2001 Arena recorded revenue to the value of PLN 400,000 and losses worth PLN 2.7 mln.

On 14 May 2001 Compaq signed a letter of intent with the PC Factory of Vobis company, concerning the production of PC computers in Poland. By the end of the current year 30,000 PCs are to be produced by the PC Factory and distributed by Techmex.

e-Katalyst, a Warsaw-based incubator of technology and Internet companies, is to launch two new portals: HydePark of Gamma Promotion and eAces of eAces. The first portal will be targeted at young people willing to exchange views, while the other will offer financial services. So far, eKatalyst has pracuj.pl, a career information portal, and serio.pl, a portal allowing contacts between buyers and sellers, in its portfolio.

Expander.pl, a financial portal created by Softbank, has set itself a target of 100,000 permanent users and plans to generate over PLN 2 mln in revenue in 2001. In mid-April this portal had 60,000 registered permanent users.

ChemiskĂłr, a media market investor, wants Internet Operator, its subsidiary company, to be listed on the Warsaw Stock Exchange. An Internet group is being created and is to comprise 7 firms, the shares of which are to be transferred to Internet Operator SA.

As of the beginning of July 2001 Netia 1 will offer long-distance telecommunication services. At first, the service will undergo a trial run, before being launched commercially in mid-August.

Polska Telefonia Cyfrowa (PTC), the operator of the Era mobile network, noted a net profit of PLN 73.1 mln in the first quarter of 2001. In the current year, the company will spend EURO 512 mln on network investments and client base development.

Polska Telefonia Cyfrowa is going to launch a service which will send advertisements to Era subscribers. A minute of such a connection will comprise 15 seconds of advertisement and 45 seconds of conversation, and will cost 50% of the standard call price. The company is also planning to launch a video streaming service which will make it possible to transmit sounds and images by means of mobile telephones.

Polska Telefonia Cyfrowa has launched a big promotion campaign targeted at the individual clients of telecommunication services. Because Telekomunikacja Polska SA, the main stationnary telephone operator in Poland, has increased its subscription fees (to PLN 42.7 gross value), PTC will offer a subscription price of PLN 24 (gross value).

Telekomunikacja Polska S.A., the main Polish telecommunication company, recorded a net profit of PLN 2 bln in 2000, 86.1% up on 1999. Such high profits are mainly a result of good exchange rates. The share of stationary telephone revenue in the company's sales structure is growing and amounts to over 80.7% of total revenue.

Food And Beverages

In 2000, about 830 million litres of fruit juice and drinks were sold in Poland. This is several times higher than 10 years ago, but still much less than in Western Europe. Last year, the market grew by 10%, which is regarded as a case of market stagnation. The market leaders are Maspex and Hortex Holding SA.

Pernod Ricard (PR), a wines and spirits company, is planning to acquire a 100% stake in Agros, a company operating in the food industry. Nowadays, Agros is undergoing fundamental restructuring, which is strengthening the market positions of the strongest brands.

Animex intends to increase production and sales by 20% in 2001, and hopes to make a profit this year after making a loss in the previous three years . The restructuring of the sales system, better contact with supermarket networks and cooperation with SBS of France, another Smithfield Foods company, will help Animex achieve its goals.

Carlsberg Breweries (CB), the owner of 50.01% shares of Okocim, has called on other Okocim shareholders to sell shares to CB. The aim of Carlsberg is to obtain 75% voting rights at the Okocim Shareholders Meeting. Carsberg would like Okocim to have a 10-15% stake on the Polish beer market, up from the current 7%. After the first quarter of 2001 Okocim reported a loss of PLN 6.98 million.

ZPC Mieszko of RacibĂłrz, a confectionery company, reported a profit of PLN 0.5 mln in the first quarter of 2001, and its sales revenues were 37% up on the corresponding period of 2000. This was a result of broadening its product line and an increase in exports. In 2000 Mieszko spent PLN 1.1 million on investments.

Danone has purchased a 50% stake in Ĺťywiec ZdrĂłj, a mineral water producer. With a 15% share on the market, Ĺťywiec ZdrĂłj is the market leader.

Automotive

During the first four months of 2001 123,900 new passenger cars were sold in Poland, 34% down on the corresponding period in 2000. The curb in imports of wrecked cars has not increased demand for new cars. In April, Daewoo was in a worse situation - with sales of 2,900 cars - than Âkoda, which sold 3,600 vehicles, and Fiat - 8,400.

By the end of March 2001 1277 trucks with a gross weight of over 16 tonnes were sold in Poland. This is 22% less than during the first quarter of 2000. In the 6-10 tonne weight sector, truck sales were 27.5% lower than in the January - March period of 2000. The truck sector statistics were dragged down by Daewoo, which sold only 1 truck in the first quarter of 2001.

As of the end of March 2001 sales of delivery vehicles were 32% down on the year before. This was due to a sharp fall in demand for Daewoo Motor Polska (DMP) vehicles. Other producers (Fiat, KIA, Volkswagen) recorded lower, but stable sales. The demand for delivery vehicles is now growing.

In 2001 Fiat intends to keep its leading position on the Polish automotive market and increase its share in the market from 26.4% to 30%. Because of a decline in demand, Fiat plans to dismiss 16% of its employees in 2001.

Samochody UĹźytkowe WschĂłd (SUW) is to begin the assembly of delivery and off-road vehicles in the Starachowice Special Economic Zone. Another company will make up the cars by the time SUW has completed construction of its plant. The plan is to produce a minimum of 1000 cars by the end of 2001.

Volkswagen PoznaĹ is commencing operations in its varnish plant in Antoninek. It is the third biggest varnish plant in Europe, and intends to increase the company's production capacity by 80,000 body-work units a year.

Construction

The situation in the construction sector has deteriorated. The market has shrunk causing lower margins, and, in certain cases, lower market share and revenue. In the first quarter of 2001 the highest net profits were recorded by Mostostal Warszawa (PLN 14.9 mln) and Mitex (PLN 12.9 mln), while ElektromontaĹź Export reported a loss of PLN 2.6 mln, and Budimex's losses were as high as PLN 16.4 mln due to the holding's restructuring process. Analysts estimate that the performance of construction companies may significantly worsen during the second quarter of the current year.

Budimex is in the process of restructuring. One recent stage of the process has been to increase the capital of Budimex Budownictwo (BB), which now manages the general contractor companies. BB is one of the three most important pillars of the holding. The two others are Budimex NieruchommoÂci, a developer, and a company that is in the process of being established and is to be involved with other kinds of activities.

In the next few weeks Budimex plans to begin laying off administrative and assistant post employees. The entire holding is to be served by one financial department, one staff department, and one legal and administration department. Superfluous assets are to be sold.

ElektromontaĹź-Warszawa intends to pay out dividends for the year 2000 (PLN 0.24 per share). The company's total net profit amounted to PLN 2.67 mln in 2000, and was lower than in 1999 (PLN 2.98 mln). In the first quarter of 2001 the company's net profit equaled PLN 1.1 mln. The profit recorded by ElektromontaĹź Warszawa in the first quarter of 2001 was almost 10 times lower than in the corresponding period in 1999.

EnergomontaĹź PĂłĹnoc (EMP) is undergoing restructuring, and this process is to be accelerated. The main features of restructuring work include a cut back in development activity (from 40% of revenue in 2001 to 30% in 2002), the development of services for the energy sector, the cessation of steel frame construction and a reduction in commercial operations. EMP plans to lay off a few hundred employees. The restructuring process is designed to reduce costs by 10-20%.

Espebepe of Szczecin intends to merge with SPBO TrĂłjka, its subsidiary company, in June 2002. The merger will help the company to compete with other construction firms. In 2000, Espebepe recorded a net loss of PLN 2.4 mln, while in the first quarter of 2001 the company's losses amounted to PLN 3.6 mln.

On 8 May 2001, Exbud changed its name to Exbud Skanska. In 2000, Exbud reported a loss of PLN 103.6 mln. This was a result of creating high reserves. In the first quarter of 2001 the company reported a net profit of PLN 1.6 mln.

Mostostal PoznaĹ (MP) is looking for a strategic investor and is talking to two potential investors - companies of the construction branch. MP is undergoing internal restructuring, which is to be completed by the end of 2001. This process includes a reduction in employment levels and the sale of superfluous assets.

In the first quarter 2001, Mostostal Zabrze noted renenues of PLN 77.4 mln, while its net profit was at PLN 3.1 mln. Compared to the sector as a whole, the company has performed well.

E - business

Inteligo, the third virtual bank, has been operating in Poland. It is the Polish retail branch of Bankgesellschaft and Inteligo Financial Services. The bank has been operating since the beginning of May 2001, when it started offering personal accounts to individuals.

Voyager.com, a Katowice-based technology company operating on the market for Internet application producers, intends to launch Polska Platforma Handlu Elektronicznego (PPHE), an e-commerce platform. The investment will cost PLN 1.5 mln. PPHE is to comprise firms engaged in commerce which are willing to sell their products via the Internet.

Source: Rzeczpospolita, Puls Biznesu



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