Polish Business Survey
LOT boss sees no lay-offs
Jan Litwiński, MD of Polish national airline LOT told Puls Biznesu that further privatisation will depend on the State giving up its golden share which gives it the right to 51 percent of voting stock. SAir Group bought a 37.6 percent share in the company last year, LOT could go completely public within the next two to three years.
The company is going through restructuring which includes further development of the Warsaw hub which started last December. At the same time no job losses are planned, on the contrary Litwiński sees more employment opportunities occurring.
The LOT boss does not see many chances of making a profit this year owing to the doubling of fuel prices last year, the Kosovo conflict, Russian and Asian crises, the earthquake in Turkey and the drop of the value of the Polish currency.
German-Italian insurance not to be
The German insurer Gerling is reported to be considering breaking its agreement with FIAT insurance which was due to begin in July. This company was to insure all FIAT cars sold in Poland.
Luxury car sales up
In the first four months of this year there were 262 luxury cars sold with a total price tag of PLN70m. This was despite a fall in the sale of cars in general. Volvo hit first position with 68 cars sold. DaimlerChrysler was next with 62 S class Mercedes finding their way onto the roads. The biggest increase was however for Toyota Motor Poland who managed to sell 53 Lexuses compared to five in the same period last year.
Wojciech Korszyński, MD of Jaguar Polska. thinks that following the fall in sales in January and February that sales have returned to what he calls normal. He intends to try more sales of the S-Type in Warsaw, Gdańsk, Poznań and Kraków.
Growth in sales may not be possible without a change in the current leasing structure. Clients pay VAT twice, once when the car is bought and the second time when leasing payments are made. On top of that the purchase of a new car cannot be deducted as a business expense.
An unexpected twist to the luxury car market has come with a number of potential clients operating for four wheel drive vehicles. They do this as they are frightened of theft which effects the luxury market to a great extent and in buying a four wheel drive they can show how successful they are.
According to motor analysts Samar the average cost of a luxury car in Poland is PLN260,000.
Merchant expands
Next year Polish - German builders merchant Comex/Baustoff+Metall Polen is planning to buy a distribution company and increase its sales network to include the largest cities in Poland as well as to build a new HQ at a cost of around PLN10m.
The new HQ will contain office space and 2,000sqm of warehousing.
This investment is being financed from its own resources and credits. Further investments are also planned.
The company has presently only one distribution point which is in Warsaw. Next year new branches are planned in Kraków, Katowice, Wrocław and Gdańsk.
Jan Socha of Comex/Baustoff + Metal Polen observes that as the world building materials market is going through globalisation only the strongest companies will survive. He has therefore earmarked PLN1.5m for the purchase of a distribution company which already has an established sales network.
Amongst other things, Comex is a producer and distributor of aluminium construction materials, freight carrier and sells ceramics used in building. A part of the company specialises in suspended ceilings, partition, wall and isolation materials.
State attacks perks
The new taxation bill is looking for ways to attack perks and so make it unworthwhile for employers to give them to their staff. In Poland, like in many countries, perks are given as a way to reducing employment costs. They can include such things as travel, training, company s phones and cars, Christmas gifts and coupons which are redeemable in shops. No national insurance contributions, which are around fifty percent of earnings, are made on these perks.
The bill proposes to eliminate store coupons as a form of payment. Furthermore it will only be possible to give a present to one employee and the value of that present cannot be greater than the value of the national minimum wage earned in the previous December. In December 1999 the national minimum wage was PLN670.
As far as cars are concerned distances travelled for business travel must be accurately logged and backed up with reasons for the journey.
Tax experts have criticised the bill saying that the State will not get any more money from the proposed changes. Not only is the Adam Smith Institute against it so is the Finance Ministry as it has no information on how much could be obtained from the elimination of perks.
The bill will face its first parliamentary reading before long.