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Key Sector Update


2001-04-01

Financial

The Polish Monetary Policy Council has lowered basic interest rates due to a fall in inflation. From 29 March 2001 the basic rates of the Polish National Bank are 21% (lombard rate), 19.5% (discount rate) and 17% (intervention rate).

The Banking Supervisory Commisssion has given permission for ING Bank to take control shares in Bank ÂlĹĄski (BSK) that will give it 75% of voting rights at the BSK general shareholders' meeting. ING Bank intends to merge Bank ÂlĹĄski with its Polish branch. The ING financial group is shooting for 15% share of the market.

BMP/CEEV, a venture capital fund, has become an investor in Bankier.pl, a financial portal, by purchasing a 20% share in Bankier for EUR 850,000. The main owner of the portal is MCI, a fund listed on the Warsaw Stock Exchange.

More and more companies have left or will leave the Warsaw Stock Exchange (WSE) in the immediate future. In 1998 Wedel exited, in 1999: Dom-Plast, and in 2000: GĂłraĹźdĹźe, Polifarb DÄbica, Brok and Zasada. There are now over 20 companies listed on the WSE that are owned by strategic investors with over 90% of the voting rights at the shareholders' meetings.

Bank Zachodni and Wielkopolski Bank Kredytowy (WBK) are to merge in June 2001. The majority of the shares of both banks are held by Allied Irish Bank (AIB). In 2000 Bank Zachodni reported a loss of PLN 89.9 mln, while WBK generated a PLN 224 mln net profit.

Of the ten main property and personal insurance companies operating in Poland, PZU had an almost 60% share in the market, and collected PLN 7.1 bln on gross contributions in 2000, i.e. almost 5 times more than second place Warta. Among the ten main life insurance companies, PZU Ĺťycie had a market share of over 50% and collected PLN 4.5 bln in gross contributions, almost three times more than ÂCU Na Ĺťycie', the second biggest. Ergo Hestia has taken over TU PBK (both are insurance companies). As of 1 March 2001 all units of TU PBK are operating under the name of Ergo Hestia.

In 2000 Cigna STU, an insurance and reinsurance company, collected PLN 100.44 mln in contributions. This year, the company intends to collect about PLN 115 mln on contributions and generate a net profit of PLN 3.2 mln. The company plans to develop medical insurance, and is the only Polish insurance company to offer breast cancer insurance.

Zurich TU, an insurance company, has started to offer home insurance polices via the Internet. This way of purchasing insurance is estimated to be 20% less expensive than using a company agent. The Zurich Internet offer covers simple cases that do not require a visit from a representative.

The management team at Bank CzÄstochowa has lowered the bank's equity capital. The nominal value of a share is now PLN 4.83, down from PLN 10. The strategic investor in Bank CzÄstochowa is BRE Bank.

In 2000 the value of new leasing contracts was lower than in 1999. This was the first time a decrease had been noted in the Polish leasing market. Last year leased assets were valued at a total of PLN 7.1 bln, while in 1999 their total value was PLN 7.45 bln. In 2000 the biggest leasing firm operating in Poland was EFL.

The new strategic investor of the insurance company Daewoo TU is Polskie Konsorcjum Finansowe. The company has been set up in order to carry out the restructuring of Daewoo TU and has taken over shares worth PLN 105 mln. Rabobank Polska generated a net profit of PLN 5.3 mln in 2000, up 341% on 1999. In 2001 the bank's net profit is to increase by a further 50%. Efficiency ratios are also to be improved, as in 2000 the bank's return on capital ratio amounted to 6.5%. Rabobank concentrates on financing the food processing industry.

D.A.S. Ubezpieczenie Ochrony Prawnej, an insurance company of the German D.A.S. insurance group, hopes to generate a profit by 2004. It estimates that it will collect around PLN 2 mln in contributions in 2001. The company has been operating in Poland since the end of December 2000 and offers car owners insurance against the high costs of vindicating compensation.

IT

Szeptel, a local telecommunication operator, has changed the date of its institutional investor IPO. The offer will take place on 27 and 28 April this year, two months later than was previously announced. Polkomtel, the second biggest Polish mobile telephony operator, generated over PLN 200 mln net profit in 2000, about 60% up on 1999. At the end of December last year the company had almost 2.5 million subscribers. By the end of 2000 Netia, the biggest private telephony operator in Poland, had 321,073 subscribers, 37% up on 1999. In 2000 the company spent over PLN 750 mln on capital investments, while Telekomunikacja Polska SA, the main Polish telephony operator, spent PLN 5.7 bln. Netia revenues in 2000 amounted to PLN 429 mln and its net loss was PLN 498 mln.

PolCard, the main Polish payment card authorisation and clearing centre, launched a programme for monitoring payment card transactions in mid-February 2001. The system allows transactions to be monitored while they are being carried out.

As of 1 May 2001 Telekomunikacja Polska SA is reducing the prices of long-distance calls by 8.5% and raising the price of line leasing by 40%. Moreover, the company is offering lower line lease costs for people who make very few telephone calls.

ChemiskĂłr, which is in the process of building up a media group, intends to buy 99.99% of the shares in TMS Poland, the owner of the Internet portal Ahoj.pl. The present owner of TMS Poland is The Mothership (Poland) Holdings of Cyprus.

Food And Beverages

Retail sales of beef have decreased considerably in Poland. At present customers are buying from 30% to 60% less beef than they did before the threat of BSE. Experts estimate that the surplus supply of beef is growing although it is 20% down on last year.

ZPC Mieszko SA, a confectionery company, generated PLN 4.9 mln net profit in 2000 and intends to increase this figure by up to 55% in 2001. Last year the company's revenues on exports amounted to PLN 8 mln, which was 7.5% of sales revenues. During the current year, Mieszko wants to see it grow to at least 10.5%.

Automotive

On 8 March 2001 an agreement was signed between Fiat Auto Poland and its trade unions concerning the dismissal of 750 employees. On 1 April 580 of Fiat Auto Poland's 4692 employees and 170 of Powertrain's 1150 employees received a month's notice of dismissal.

ZS Jelcz, a car manufacturing company of the Zasada S.A. Group, intends to fire up to 581 people, i.e. 35.5% of all employees. The reason for the redundancies is the reducion of the level of employment to the level of production.

Inter Groclin Auto, a company producing automotive equipment and accessories, estimates that its 2001 revenues will amount to PLN 304 mln, and its net profit will be PLN 19 mln. In 2000 the company generated PLN 7.1 mln net profit and PLN 159.6 mln sales revenues. One of the reasons for the optimistic forecast is an order received from Faurecia of France for the production and supply of car upholstery elements. In mid-March 2001 the management of DELFO, a Fiat company, announced the dismissal of 310 of its 1300 employees between May and July 2001.

Construction

The consolidated net profit of Budimex in 2000 amounted to PLN 33 mln. The group's sales revenues were PLN 2.42 bln, an improvement on the 1999 figure of PLN 1.37. The takeovers of Dromex and Mostostal KrakĂłw resulted in increased sales but at the same time reduced the group's net profit.

National road no.19 from BiaĹystok to RzeszĂłw is to be repaired. The investment is to be financed from the central budget and regional funds. Three sections are to be privatised. Repairs to the sections in the worst condition are to begin in 2001.

E-Business

On 21 February this year elimar.net, the Elimar Brokerage House Internet transaction site, was launched. Elimar.net provides access to the stock exchange. It intends to gain 900 Internet clients by the end of the year and 9,000 Internet clients within three years. In 2001 the share of Elimar's e-investors in the company's turnover is to amount to 0.3%, and this figure is to surge to 30% in 2003.

Source: Rzeczpospolita



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