Polish Business Survey
Stock market still bored
Friday s stock market session produced nothing new. For two weeks nothing has happened to wake investors out of their state of lethargy. Changes in the prices of shares and the index is nothing other than cosmetic and the low volume traded only reinforces the opinion of a sluggish market. Analysts consider that even if the recently published macro-economic figures did nothing to liven up the exchange floor, one should not automatically consider that stocks are heading for another fall.
Vodka bill on Presidential desk
President Aleksander Kwaśniewski has 15 days in which to decide on who will have the right to export almost 20 vodka brands. The long running saga of the fight between Agros and Polmos could now come to an end in Poland. If the President signs the bill then Agros will have to surrender the rights to export from Poland to Polmos. Agros has had the rights to export since 1971 and has registered these trademarks abroad. Pernod Ricard, the strategic investor in Agros will claim that the price it paid for the company in the mid 1990s included the Polmos brands and will certainly demand compensation if the President signs the bill. This compensation could be even higher than the extra value added to Polmos on privatisation. Polmos has been long slated for privatisation although the fact that no solution has been found to the foreign trademark ownership problem has frightened investors. If Kwaśniewski agrees to sign the bill, Polmos could face long drawn out legal action in every country where Agros has registered the trademark.
Too many people, too little gas
Andrzej Lipko, MD of fuel concern PGNiG, stated that he intends to invest PLN5bn within the next five years, largely for the construction of storage facilities. PGNiG intends to increase its gas storage capacity from 1.1bn cubic metres to 3bn cubic metres. The company also intends to reduce employment from 48,000 to 37,000.
Uniontex near privatisation
Łódź based Uniontex, producer of woollen goods, could be privatised before the end of the year. The treasury owns 97 percent of the shares of the company. Uniontex is heavily in debt to the social security and local authority and still is paying a loan fixed at a high rate of interest. It is therefore no surprise that the company is unable to afford USD5m for new machinery which is essential for production. Its main competitors are Bielawa, Bielbaw, Pomotex, Silesia and Fasty.
Steel supplier to be sold off
The ownership of Katowice based steel industry supply organisation CZH may be changed. It is currently owned by the state and managed by the Silesian provincial office. According to Grzegorz Pucher heading the Silesian provincial office privatisation team the company is slated for the private sector this autumn. Two privatisation options are open, either to convert the company to a State owned limited company and then sell it or to privatise it directly. Last year the company lost PLN25.7m on a turnover of PLN220.3m.
Cadbury concentrating on chocolate
Simon Baldry, MD of Cadbury Wedel for the past six weeks, has announced that he intends to concentrate on chocolate and develop export markets in Central Europe using the Cadbury trademark only. Henceforth Wedel will only appear in Poland.
Two years ago Cadbury Schweppes purchased the Wedel factory from PepsiCo for USD76.5m. Since then it has run two competing brands. Central Europe is currently supplied from the Warsaw and Wrocław factories as well as one in Russia.
Since purchasing the company Cadbury has made few changes other than trying to build up the Wedel brand on the Polish market. Baldry has said that in six months time a completely new strategy will be announced based on the sale of chocolate. The Cadbury factory in Wrocław has got a lot of unused capacity and the Wedel brand accounts for most chocolate sales. Cadbury has a 28.3 percent share of the chocolate market, the Wedel brand by itself has a 26 percent share. The market however has a lot of room for expansion, the average Pole consumes 3.5kg of chocolate per year, three times less than his counterpart in Western Europe.
Train strike again threatened
PKP engine drivers are again threatening to strike. Last month peace was achieved with a government promise to subsidise passenger services by PLN800m annually, now the unions are unhappy about how it is to be paid. Therefore it looks as though the cash is going to have to come out of the public coffers. If a solution is not found by the end of this month, then strikes could occur in August — just in time for the busiest month of the year for PKP.