Polish Business Survey
Bourse: no signals
Yesterday almost all the stock indexes went up, especially high tech. Nonetheless water was thrown on the flames of any enthusiasm in the form of falling turnover and greater supply than demand. Thursday s session showed nothing about what can be expected in the next few days. Unless some upturn is seen on stock markets throughout the world then there is no reason to hope that the Warsaw trend is upwards.
Stagnation hits auto credits
The fall in new car sales has meant that those banks, controlled by the major auto concerns themselves, providing credits for purchases have noted a decline, or at best stagnation, in the number of new contracts signed this year. Nonetheless the number of concerns hoping to enter this business is still growing with Citroen for example announcing its intention to go into the loans sector. To the end of May 230,600 new cars were sold, a large majority of which were on credit. Fiat Bank Polska took the leading position with 22,600 credit contracts made up until the end of June.
Citroen to open bank
Citroen has announced that it is to open its own bank in Poland to support new car sales. It s financial partner could well be bank PKO BP or EFL leasing company. At the same time the French are known to be considering closing their assembly plant at Nysa in south west Poland which is producing C10 delivery vehicles. A number of companies such as Ford have already closed their assembly operations due to changes in import duties.
Beer queue
The Austrian Brau-Union has been waiting for a permit to buy shares in Warsaw brewers BW for three months due to government stalling. Okocim, controlled by the Danish Carlsberg could also be interested in the company.
Navy to buy seven corvettes
The Polish navy is likely to announce its biggest ever contract this autumn which will be the construction of seven corvettes. The military shipyard in Gdynia is about to finish design work on the ships in conjunction with a German yard.
PŻB looking for cash
Kołobrzeg based shippers Polska Żegluga Bałtycka is looking for an investor who would increase the capitalisation of the company from the current PLN104m to PLN254m. The number of potentially interested parties includes the Gdańsk Ship Repair Yard, insurers Hestia and PBK bank. However as the former is about to be privatised and has withdrawn the other two companies have refused to go it alone.
The government is prepared to give both Hestia and PBK a free hand in finding other investors amongst the 30 domestic and 70 foreign potential partners who have already signalled willingness to place funds in the company.
PŻB needs money to reduce debt and modernise its fleet. Two of its ferries, the Rogalin and Nieborów are about to be withdrawn. The company is expecting to be fully privatised next year.
Polenergia born
The concern Polenergia came into being yesterday. It is made up of the national grid - PSE, PreussenElektra (which from today is called EON) and the Polish Kulczyk Holding. The company has already signed its first contract to export energy from Russia and Poland to Germany.
VAT increases to hit developers
An increase in VAT from seven to twelve percent on building materials and labour could mean an increase of 15 percent in the price of flats and a fatal blow to smaller developers in the opinion of industry analysts. The increase in price will clearly hit the market and lead to less demand.
Around 80,000 flats are built each year. The shortfall of accommodation is currently estimated to be around 1.5m units, mainly in the large cities. It is suggested that 300,000 units should be built on an annual basis.
One of the ways the government tried to stimulate the market was to offer tax breaks for those buying new flats and houses, this break was to have been discontinued at the end of last year and is almost certain to go at the end of 2000, thus depressing the market.
In the first quarter of this year 28,500 flats were handed over and new construction was started on 21,000. This development will be severely hit by these proposed VAT increases.
Within three years the government plans to increase the VAT rate to 22 percent on all building materials, whilst the EU average is around 15 percent.