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Friday, May 13, 2011
Warsaw Business Journal’s daily news update Tel: +48 22 257-7500, Fax: +48 22 257-7599

 Highlights

Top Story Will Brussels block shale gas extraction in Poland?
Business Close to zł.16 billion in dividends this year
Economy IMF praises Poland's fiscal consolidation plans
International Schengen zone in danger
Stocks Slovenian Krka confirms its plans to enter WSE
Domestic Poles still heavily rely on illegal software
Sports Hotels already booked for Euro 2012

 Top Story

Will Brussels block shale gas extraction in Poland?
Poland's shale gas reserves are estimated at 5.3 trillion square meters and could make the country independent from the supply of Russian gas for hundreds of years. PGNiG is ready to spend zł.100 million on shale gas exploration this year. However, French deputies' Wednesday decision to ban hydraulic fracturing, the main technology used in shale gas extraction, has caused a fear that the European Union may create regulations that will put an end on Poland's shale gas dreams. Maciej Kaliski, head of the department of oil and gas in the Ministry of Economy admits that Poland will not have many allies in the realization of the shale gas project, as there are influential groups in Brussels, which want to restrict the role of shale gas in Europe. According to Jan Krasoń, a world famous geologist, a strong nuclear lobby and Gazprom stand behind the French ban. "Some 80 percent of energy in France comes from nuclear sources. Shale gas poses competition for their energy sector," he said. Meanwhile, Poland wants shale gas extraction to be a common European project and intends to promote this source of energy during its presidency. The issue is also to be discussed during president Barack Obama's visit to Poland on May 27.(Dziennik Gazeta Prawna, p.1, A15) AS


 Business

Close to zł.16 billion in dividends this year
An average dividend paid out this year may reach 3.7 percent and more companies will share profits with their shareholders in 2011. A combined amount domestic companies listed on the Warsaw Stock Exchange will pay out in dividends this year may exceed a record zł.15.7 billion. The previous record was broken in 2007 when shareholders received zł.13.3 billion in dividends. The growth can be attributed to a rising number of companies that are willing to distribute profits among their shareholders and also higher average dividend. So far 80 companies have declared to pay out dividends, including the largest ones. Telewizja Polska plans to pay over zł.2 billion to its shareholders, Pekao – zł.1.78 billion and PGNiG – over zł.0.7 billion. (Parkiet, p.9) AS

Onet and "n" save TVN's revenue
After worse than predicted Q1, 2011, TVN Group expects improvement later during the year. The group hopes that paid television "n" and dynamically growing revenue from internet advertising will feed to its market growth. It was thanks to the television "n" and the internet that TVN Group ended Q1, 2011 with revenue 7 percent higher than before. TVN may also enjoy further increase in revenue as Onet.pl, a portal which belongs to the group eyes joining a fast expanding market of group purchases. Meanwhile, profits from TV commercials – still the group's main source of revenue – grow slower than earlier estimated, with the main channel, losing part of the market share to Polsat. (Dziennik Gazeta Prawna, A16) AS

Production of buses on the rise after slow last year
With exports and domestic demand shrinking, last year wasn’t great for Polish producers of buses. However this year they are starting to increase production and have already recorded better results in Q1, 2011. In the first three months of the year Polish manufacturers of buses made 785 new vehicles, i.e. 14 percent more than in the same period last year. Still, though, they haven’t reached the production levels from before the recession, when 1157 buses were manufactured in Poland in Q1, 2009, opines JMK, an analytical firm. “The increase in production is still good news, and we owe it to higher domestic demand,” points out Aleksander Kierecki from JMK, and adds that export is also picking up. Manufacturers that benefit from better economic situation are: Volvo, MAN, Scania, and – primarily – Solaris, a company that has moved from the third to the leading position in the sector (Rzeczpospolita online) AS

Enel-Med makes plans of expansion
Private companies offering medical services are heavily investing in expansion of networks of private hospitals and clinics. Such is also the goal of Enel-Med, a company that is eying a debut on the Warsaw Stock Exchange in June. Enel-Med, which is – after Lux Med and Medicover – the third largest firm offering medical services, wants to obtain net zł.51 million from the sale of 7.1 million D-series shares. Apart from a new hospital, the company also plans to expand its network of clinics, opening two to three new ones each year. “Our investment plan will help us strengthen our position on the market of medical services,” said Adam Rozwadowski, Enel-Medu CEO. (Parkiet, p.8) AS

PGNiG is waiting for URE's decision on prices
The financial results of PGNiG, the Polish Oil and Gas Mining, have surprised the market. The gas giant made zł.1.02 billion in Q1, 2011 with prognosis indicating a result zł.300 million smaller. However, good quarterly numbers don't come from the sale of gas, which generated only zł.259 million in operational profit, i.e. 42 percent less than a year ago. Therefore the company is pressing for permission to increase its prices. Sławomir Hinc, PGNiG's finance vice-CEO, explains that the sale of gas brought smaller profits because of higher costs of imported fuel. The costs of importing gas increased 22 percent. PGNiG wants to charge its customers more starting in June (although the company has not revealed yet how much more) but it is still waiting for a decision from the Energy Regulatory Office (URE). The regulator's decision is expected to have a major impact on PGNiG's profits in 2011.(Parkiet, p.4) AS

Centrum Klima to build a new factory
A producer of AC and ventilation systems, Centrum Klima, is planning a zł.45 million investment – a new factory in Wieruchów, where it already built one facility last year. The company has signed a preliminary contract on the purchase of a lot for zł.6 million. The construction of the factory, which Centrum Klima will finance with a loan, is to start in January of 2012 and end at the beginning of 2014. Marek Perendyk, Centrum Klima CEO does not reveal what will be manufactured in the new facility. "I can say it will be a competitive and highly profitable product, which is manufactured by only three producers elsewhere in the world. We will be the first ones to produce it in Poland," Perendyk said, adding that launching a new production line will increase Centrum Klima's revenue from its own production by some 80 percent.(Parkiet, p.6) AS

Bogdanka's results worry investors
Bogdanka, a Lublin mine has this time disappointed its investors. Analysts knew that the company's results for Q1, 2011 would be worse than a year earlier, but they didn't expect them to be so low. Bogdanka's net profit fell in the first three months of the year from zł.53 million to zł.35.9 million, in spite of the fact that its revenue was 5.4 percent higher y/y and amounted to zł.309.96 million. Mirosław Taras, Bogdanka's CEO points out that Q1 results are presented now in comparison with an unusually profitable period, i.e. Q1, 2010, when the miner tested a new technology, which increased its productivity. "The first three quarters of 2011 will be worse than the corresponding periods last year, however, Q4 will be time to catch up," said Bogdanka's CEO. On Thursday, disappointing financial news spurred investors to get rid of Bogdanka's shares. Their price went down 6.79 percent to zł.108.4.(Parkiet, p.4) AS

PKP Cargo attracts a lot of int'l attention
Polish, Czech, French and Italian companies, as well as private equity funds want to buy the Polish railroad carrier – PKP Cargo. "We have received over a dozen offers from companies and investment funds, from Poland and other countries," said Łukasz Kurpiewski, spokesman of PKP, owner of PKP Cargo. However, he declined to reveal any further details. "At the beginning of June we will invite the interested parties to due diligence," he added. Rzeczpospolita reports after its own sources that the group of potential investors includes companies from the same sector – a French SNCF, Ceske Drahy and an Italian cargo company; and funds such as – CVC Capital Partners, Bridgepoint (owner of CTL Logistic) and Penta Oak Tree. An estimated market value of PKP Cargo is calculated at zł.4 billion. The Treasury wants to sell 50 percent of the stakes plus one share.(Rzeczpospolita, p.B1) AS


 Economy

IMF praises Poland's fiscal consolidation plans
The International Monetary Fund (IMF) praised Poland's fiscal consolidation plans in a report released on Thursday, at the end of a week-long visit of IFM’s experts in Poland. "Poland has returned on the path of stable growth in 2010,” IMF wrote in the report. According to IMF experts Poland’s fiscal deficit will fall to 5.6 percent GDP in 2011 and 3.6 percent in 2012. The report authors also predicted Poland's GDP growth at 4 percent in 2011 and 3.8 in 2012 and praised Poland's plans to meet convergence criteria before announcing its Euro introduction date. (Dziennik Gazeta Prawna, p.5; Rzeczpospolita online) AS


 International

Schengen zone in danger
The wave of immigrants from Africa and the Middle East may lead to restriction of free travels in Europe. French police have introduced train controls on the border with Italy, while Danish custom officers control cars entering their country from Germany. They say that they want to inspect the transported goods but in fact they plan to check passports. “Not only the Schengen zone, but also the idea of free migration in the European Union is in question now,” said Yves Pascouau, expert from the European Policy Center in Brussels. “Free movement of persons is one of our major achievements. We need to protect it,” said Sandor Pinter, Hungarian minister. Mr. Pinter chaired a meeting of internal affairs ministers, who convened in Brussels to discuss French-Italian proposal to officially revoke border checks. The proposal was forwarded in connection with the raised influx of North African refugees to their countries. (Rzeczpospolita, p.1) AS

Economic situation in Greece may harm Polish exports
Debt restructuring that looms over Greece may affect the markets in Germany, France and Great Britain – Poland's main trade partners. That's why Poland should start looking around for new markets: in Asia, Africa or South America – countries that have managed to maintain over 4 percent growth of GDP, opined economists that took part in the Country Risk Conference 2011. Marek Kłoczko, secretary general of the National Economic Chamber says that Poland wrongly perceives China, Vietnam, Brazil and India as suppliers of cheap products. "These countries enjoy stable GDPs. They grow fast and need more food and other goods," Kłoczko says, pointing out that Germany has already saw the potential and has made China its fifth largest export market.(Dziennik Gazeta Prawna, A9) AS


 Stocks

Slovenian Krka confirms its plans to enter WSE
Just like Parkiet previously reported, Krka, a Slovenian pharmaceutical group, is considering a debut on the Warsaw Stock Exchange, informed its CEO Joze Colaric at a conference devoted to the presentation of the group's financial results. Krka's CEO pointed out that the group will not issue new shares, but it will circulate on the Polish market part of the shares traded in Ljubljana. Colaric did not indicate the date for the debut. Krka is one of the largest companies listed on the Slovenian stock exchange. Its market value is €2.07 billion (zł.8.1 billion). In Q1, 2011, Krka's revenue grew by 5 percent to €136 million, while its net profit increased by 2 percent to €48 million. The Slovenian producer of pharmaceutical products is already known in Poland as it operates a factory in Warsaw. The group wants to further expand in the East and plans to build another production facility near Moscow. (Parkiet, p.9) AS

JSW moves closer to the WSE debut
Waldemar Pawlak, deputy Prime Minister and Minister of Economy, has permitted submitting the prospect of Jastrzębska Spółka Węglowa (JSW) to the Polish Financial Supervision Authority (KNF). The permission on company's debut on the Warsaw Stock Exchange depended on ending of a conflict with the workers' union. Minister Pawlak said that, although the final agreement with the union had not been reached yet, the collective agreement regarding 10 year employment contract, which was signed on May 5, is sufficient. He said he hoped that JSW would be able to enter the WSE, as previously planned, on June 30. The Treasury will sell some 34 percent of its shares to investors, retaining over 50 percent of its stake in JSW. The public offer may be worth up to zł.4 billion, Parkiet estimates. It will be the first Silesian mining company listed on the WSE.(Parkiet, p.4) AS

Wittchen to debut in the fall
Wittchen, a seller of leather products, is going to be listed on the WSE in H2, 2011. The company's founder, Jędrzej Wittchen, said that he had already submitted its prospect to the Polish Financial Supervision Authority (KNF) a couple of weeks ago. The funds obtained from the public emission Wittchen wants to invest in new salons and further takeovers. At the end of 2010, the company took over VIP Collection, a multi-brand network of distributors of leather goods and accessories, now it plans to expand its network. Wittchen also plans to acquire one more brand from the sector, but has not revealed names of companies it is interested in.(Parkiet, p.5) AS


 Domestic

Poles still heavily rely on illegal software
After a couple of years of small but regular decreases in software piracy in Poland, the phenomenon has stopped diminishing. Over 50 percent of computer programs used in Poland are illegally copied, exactly as much as last year, reports Business Software Alliance (BSA), an international organization for software producers that fight illegal computer programs. Krzysztof Janiszewski, who manages a department of intellectual property rights in the Polish branch of Microsoft, says that using illegal software causes huge losses to manufacturers. BSA points out that illegally copied computer programs are very often used in small and medium-size companies, which are dynamically expanding. (Puls Biznesu, p.3) AS

An IT specialist and a teacher will be in demand
In the next three to five years, graduates of computer and technical studies as well as teachers will be in high demand in the Polish job market, estimates employment agency Work Service. “In five years the IT specialists deficit may reach 30 percent in Poland. The most jobs will be waiting for current high school seniors who graduate from college with degrees in IT, education and technical studies,” said Tomasz Hanczarek, Work Service CEO. Meanwhile, according to the Central Statistical Office in the academic year 2009/2010 the most popular majors were administrative economics, but only 4.3 percent of students studied computers. There times more young people were learning to be teachers. (Rzeczpospolita online) AS

Polish universities meet needs of corporate world
Universities in Poland increasingly cooperate with the business world and create specialized post-graduate programs tailored to the needs of concrete corporations. For example, Kraków-based University of Science and Technology (AGH) is educating employees of Tauron, KGHM and PGNiG; Rzeszów University of Technology tightly cooperates with companies from the Aviation Valley, such as WSK "PZL-Rzeszów" SA and Zakłady Azotowe Tarnów, while Lubin-based copper giant KGHM is negotiating new majors with the Wrocław University of Technology. "The core of our staff are specialists in mining, metallurgy and geology. They are great experts in their fields, but sometimes they lack knowledge in economics or management, that's why we want to give them an opportunity to make up for the knowledge gaps," said Dariusz Wyborski, head of the department of Public Relations at KGHM, which offers university programs even to foremen managing small groups of workers. Tauron, on the other hand, an energy company that wants to cooperate with PGE in building of the nuclear energy plant, educates it workers in nuclear energy.(Dziennik Gazeta Prawna, p.1, A4) AS

Internet shopping more affordable
Goods purchased on the internet are, on average, 25 percent cheaper compared to these purchased in regular stores. The biggest differences are on prices of cosmetics, home appliances and electronics. After we account for shipping, an average shopper saves 15 percent on purchases made online, indicates a report "Internet Poland" prepared by Boston Consulting Group (BCG). "A Polish e-consumer is unusually pragmatic. The price is the first and major element of his online purchase decision," said Paweł Lipiec, CEO of eCommerce.edu.pl portal. "We don't acknowledge it yet, but online shopping also saves time and allows for more convenience," he adds. Last year Poles spent a record zł.16 billion while shopping online, which constitutes 3 percent of all retail market spending. According to BCG, with the current pace of growth in online shopping, by 2015 Polish consumers are likely to spend close to zł.50 billion a year.(Dziennik Gazeta Prawna, A8) AS


 Sports

Hotels already booked for Euro 2012
A full year before Euro 2012 Poland's hotels located close to where the games are going to be held, are almost fully booked. Dziennik Gazeta Prawna reports that four- and five star hotels in Warsaw, Poznań, Gdańsk and Wrocław – Euro 2012 host cities are in 80 percent booked out. In the coming weeks, hotel operators expect another wave of reservations from at least half of 550,000 sports fans, who have put off booking a hotel till they have secured tickets to the games. Meanwhile, all 2,000 Polish hotels offer barely 190,000 beds, with less than 50 percent of them located in voivodeships where games will not be held.(Dziennik Gazeta Prawna, p.1, A4) AS

 

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