In H1 2005 enterprises spent close to PLN 25bn (€6.1bn) on investments, i.e. 4.5% more than in the corresponding period of the previous year, according to data from the Central Statistics Office (GUS). Among the main sectors of the economy, mining noted the biggest increase in investment outlays (up 53.5%), followed by construction (52.3%), transport, warehouse management and communications (up 15.9%), i.e. areas which have seen a sharp decline in investment outlays in the last few years. In turn, investment outlays in manufacturing were down 3.6%, although in certain sectors (basic metals, leather products, pulp and paper, metal products, furniture and other manufacturing, and products from non-metallic raw materials) growth in the region of several dozen percent was observed. On the other hand, the biggest falls were noted in the manufacture of motor vehicles, radio and television equipment, wood and wicker products, and textiles.
Enterprises employing over 1,000 people noted the most pronounced increase in investment spending, i.e. 7.9%, while in enterprises employing 50-249 workers expenditure climbed 5.5%. Meanwhile, firms with between 250 and 1,000 people on their payrolls saw investment outlays decrease 2.5%. In the first half of 2005 more than 46,000 investment projects were launched, i.e. 24% more than a year before. Entities with foreign capital accounted for 40% of total sums spent on investment.


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The Ministry of Finance has prepared a draft regulation which lifts the excise tax for used cars imported to Poland from EU countries. According to Rzeczpospolita, the regulation would come into force at the beginning of 2006, and is also to affect other goods, for instance cosmetics. The newspaper quotes Wieslaw Czyzewicz, the deputy Minister of Finance, as saying that the government hoped that parliament would pass the bill before the election in September.
The excise tax on imported used cars was in breach of EU regulations. The fact that the European Commission has started a lawsuit against Poland was not, however, the reason for lifting the tax. According to Rzeczpospolita, the Ministry of Finance wants to leave the decision, which will result in decrease of budget’s revenues, for the new government, as until now it has fought to keep the tax.
Another issue which could provoke a lawsuit for breach of the EU treaty is the act on the recycling of cars. The act imposes, from January 2006, a so-called “recycling fee” of PLN 500 (€123) on used cars imported from EU countries.


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The Treasury Ministry (MSP) has announced that in a recent dispute between Poland and Dutch insurance company Eureko the Arbitration Tribunal has ruled that by blocking Eureko’s assumption of control of PZU, the Polish government violated a number of terms in an agreement between the two countries regarding the mutual protection of investments.
Eureko filed suit against the Polish government after the latter backed out of implementation of an annex to the privatisation contract in 2002, in accordance with which the Dutch firm would buy a further 21% of shares in Poland’s largest insurer, PZU, and thereby take over control of the company. The case had been before the Tribunal in London since September 2004.
After the ruling in their favour, Eureko has announced that it is gathering documentation regarding a possible claim for compensation (unofficially, the sum of one billion euros has been mentioned), although it has not ruled out the possibility of negotiations with the Polish government. Most Polish politicians regard the existing situation as highly inconvenient and tarnishing the image of the country in the eyes of investors. They are in favour of reaching an understanding with the Dutch company. In the winter of 2004 MSP negotiated a settlement with Eureko, although the Sejm blocked its signature.


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EFG Eurobank is the first Greek bank to start operations in Poland. It plans to invest several tens of millions euro in opening 200 outlets in the next three years. Rzeczpospolita quotes the Greek newspaper Imperisia as reporting that EFG Eurobank is to begin serving customers at the beginning of 2006. Poland has been chosen by EFG as a market for expansion, as the company wants the highest profits possible from investments in the CEE region, where the loan market is growing at a greater pace than in Greece. To date, EFG Eurobank has invested in Romania, Bulgaria and Serbia. The company wanted to acquire Eurobank in Poland, which would have been very convenient because of the latter’s profile as well as the fact that the investor would not have had to change its name. Eurobank was, however, purchased by the French Societe Generale, which, according to unofficial data, paid €180-190m. Currently, EFG claims that it is more reasonable to build a network from scratch, as acquisitions of Polish banks are very expensive.
Initially, EFG Eurobank wants to offer loans and charge cards in Poland. It is also planning to co-operate with a financial intermediary.
Currently EFG Eurobank employs 13,700 people and has over 300 branches and 700 ATMs. In Greece the company serves individual as well as corporate clients. The majority shareholder is the Swiss-based EFG group, which holds a 41% stake.
 
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Lenovo, a Chinese producer of IT equipment, has decided to enter the Polish computer production market. The company has separated a board and structure from Polish branch of IBM. In May, IBM announced that it would cease producing computers and that Lenovo had acquired the company’s production operations.
Lenovo is eyeing markets that IBM had never entered, e.g. the low-priced segment, says Marek Borowka, CEO of Lenovo Polska, in Rzeczpospolita. Competitors on the market, quoted by the same source, believe that it will take time for the producer to gain a foothold, mainly because the brand is still relatively unknown.
 
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Royal Greenland, the Danish fish processor, has acquired Ustka-based Morpol, where it plans to relocate part of its smoked fish production from Denmark. Lebensmittelzeitung reports that the decision was made due to lower labour costs in Poland. Production is to commence in a few months’ time. Earlier, Royal Greenland purchased the former abattoir owned by Agros in Koszalin and plans to turn the facility into one of Europe’s most modern facilities processing seafood. The company plans to start production in Koszalin within a year. It estimates that this would require investments of around €15m in the region. The plant is to employ 350 people.
Royal Greenland’s turnover in its financial year 2003/2004 was high at €530m, while Morpol earned €80m revenues in 2004.


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Henkel Polska, the Polish subsidiary of Henkel, producer of detergents and cosmetic products, has launched a centre for storage and transport of a new detergent base for washing powder in Raciborz. The €800,000 project is said to improve Henkel’s efficiency and decrease transportation costs. Polish chemical producer, Zaklady Azotowe Pulawy, which has to date supplied Henkel with detergent, will lose its client. The new washing powder component is not being produced in Poland.
According to Puls Biznesu, in 2004 Henkel invested in Poland PLN 25m (€6.3m), over 45% more than in 2003. Around 16% of the company’s production in Poland is being exported abroad.
 
 

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Polska Grupa Farmaceutyczna (PGF), the largest Polish drug wholesaler, is planning to enter the US market via its daughter company Pharmena, in which PGF has a 47.6% stake. Pharmena created Pharmena North America in the US in August this year. It holds an 80% stake in the latter company with the rest belonging to American investors, who will provide $10m in funds for research work on a new innovative preparation against atheromatosis. The funds will suffice for several months’ research, which will be carried out in the US. According to Konrad Palka, the president of Pharmena, quoted in Puls Biznesu, the project will not be profitable for the first a dozen or so months. Future profits will depend on the success of a new drug, which is very difficult to predict as precise planning is hardly possible in the biotechnology sector. Pharmena will also sell its pharmaceutical products and cosmetics under the Dermena brand on the US market.
 
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Julius Meinl, the Austrian retailer, is to sell all of its nine Polish stores to British Tesco. The shops with an aggregated area of some 6,000 m² are located in the south of the country. A Julius Meinl representative recently said the company would not be withdrawing from the Polish market. However, the two companies have already agreed on the sale, which will come into effect by the end of 2005, following the approval of the Office of Competition and Consumer Protection (UOKiK).
Czeslaw Grzesiak, deputy president of Tesco Polska cited by Puls Biznesu, said “There are too many chains on the market and further consolidation is forecast. We want to take part in this process. (…) We maintain our declaration of launching 15 own stores in 2005. Julius Meinl’s outlets are supplementary”. >
The acquisition is in line with the company’s strategy created in 2004, for the launching of smaller stores mostly in less populated areas. The company currently operates 11 outlets with an area of up to 5,500 m², six of which cover no more than 2,000 m². This smaller size is the UK retailer’s latest store developed. The outlet, the 50^th in the retailer’s network, was lunched in Namyslow on 18 August. The cost of developing the store was PLN 10m (€2.5m).
In addition, Tesco also launched its sixth petrol station in Poland. The premises were opened on 19 August near an existing Tesco hypermarket in Gorzow Wielkopolski.




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Klippan Safety Polska, a manufacturer of car parts, has begun to build a plant in Stargard Szczecinski. The firm has been operating in Poland for 14 years, but up till now has made use of rented premises. The new factory is to be erected in the Stargard Industrial Park. Construction work is expected to be completed and the facility begin production in December 2005. The investment is worth approximately PLN 6.5m (€1.6m). For the time being the transfer of production to the new hall will not be accompanied by any plans to increase employment, with the company’s workforce remaining at 120.
Klippan Safety Polska’s new plant will manufacture products designed to improve the safety and driving comfort of drivers and passengers, i.e. seat belts and safety systems, as well as bed systems for driver’s cabins in lorries. Customers for the Swedish company’s products will include the following: Volvo Truck, MAN, Scania, Volkswagen, General Motors, Daimler Chrysler.



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The Opoczno group posted a net profit of PLN 18.2m in Q2 2005. Calculated over the last two quarters its net profit fell to PLN 16.3m as against PLN 45.7m a year earlier – the company announced in its report.
Opoczno remains the leader on Poland’s ceramic tiles market. Currently its quantitative share of that market amounts to 26.2%, which is an increase of 1.6% since the beginning of the year. Moreover, the company noted close to 50% growth in export sales. In April this year it took over control of Lithuanian firm Dvarcioniu Keramika, and in May signed a letter of intent outlining its desire to co-operate with Villeroy & Boch. In June Opoczno debuted on the Warsaw Stock Exchange.


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FSO, a Warsaw-based automobile producer, reported that it earned around PLN 900m revenues in 2004, and made PLN 31.1m net profit. Shareholders decided that part of the profit will be used to compensate for losses from the previous years, while the rest of it will increase the company’s reserves. The whole FSO group saw a net profit of approximately PLN 251m in 2004.
A general meeting of shareholders also decided to make some changes to the supervisory board – the Ministry of the Treasury recommended Oleg H. Papaszew, the former president of Ukrainian AvtoZAZ, as the new board member. AvtoZAZ has held a 19.9% stake in FSO since June 2005.
The company also reported that it had exported 100,000 cars to Ukraine.


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The upgrade of the airport in Lodz, which has cost around PLN 25m (€6.2m), is almost complete. The runway and the taxiing route have been lengthened, allowing planes like Boeing B737 or Airbus A320, the most popular machines with the low-cost carriers, to land in Lodz. New navigation equipment has also been installed and the apron has been upgraded.
The airport’s management wants to build a new terminal by 30 October, when Ryanair is to commence flights from Lodz to London. The new terminal will serve 200 passengers at a time and as many as 300,000 per annum. The cost of its construction is estimated at PLN 5-6m (€1.23-1.48m).
The airport in Lodz-Lublinek is one of the smallest in Poland. In the first half of 2005 it served 2,100 passengers, only half of the figure from the corresponding period of the previous year.
Gazeta Wyborcza quoted Mr O’Leary as saying that the low-cost air lines launched by traditional carriers (such as Centralwings owned by LOT or Germanwings set up by Lufthansa) are no competition for Ryanair, as in his opinion those carriers do not know how to do low-cost business.



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The National Broadcasting Council (KRRiTV) has granted a broadcast licence for BBC Polska, which is to launch a new radio station in Warsaw. As Gazeta Wyborcza reports, it will share the 99.5MHz frequency with a veterans’ station, Radio Jutrzenka. The BBC will broadcast its program from midnight till 12 o’clock and the station is be profiled as an information and educational one.
KRRiTV has also agreed to license the TVN group to launch a new channel. TVN Med has been described by the spokesperson for the president of the Council as a “satellite educational channel”. Malgorzata Czaplicka, responsible for investor relations in TVN, has said in Gazeta Wyborcza that the work on channel is in progress and that therefore the company does not want to reveal too many details. She stated, however, that TVN Med is to be a paid channel and is to be targeted at doctors. The channel would therefore be allowed to advertise medications that require prescription, something which is banned on open channels. TVN Med is to start broadcasting at the end of the year or at the beginning of 2006. It will be another specialised channel produced by TVN group, in addition to the existing TVN 24, TVN Meteo, TVN Turbo and TVN Style. The launch of an interactive channel, TVN Gra, is also in the pipeline.

 

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