Polish Business Survey

Alan Heath
31-08-2000, 00:00

Polish Business Survey

IT boom in banks

Six of the largest Polish banks will have spent at least PLN1.25bn before the end of the year on IT. Analysts see this boom continuing with increases of spending by as much as 40 percent on an annual basis. This spending is not only on new technologies connecting the bank with its clients such as internet and WAP but also management such as call center, CRM (customer relationship management) and centralisation. As banks seek to offer the latest technological innovations then the programmers will be kept busy.

What this has to do with the price of coal

Economy Minister Andrzej Karbownik stated in an interview in today s Puls Biznesu that he intends to speeden the privatisation of the mining sector. A decision will be made in October on whether or not to amalgamate the coal companies into western and eastern companies. Timing of the privatisation of the sector will largely depend on when privatisation advisors, PricewaterhouseCoopers, finish their work. Karbonik also sees this years results for the sector as being satisfactory. The price of coal has increased to PLN2.07 per ton and now only two of the seven companies are still losing money on sales. Costs are being reduced and employment has gone down by 78,000 people in the past two years along with the closures of the biggest loss making mines. In the first seven months of this year the sector lost PLN857m.

Return of a dinosaur

Having had years of losing money Pewex is at last in the black. The state owned company which under socialism sold western and Polish goods for hard currency only (the sale of which was illegal in communist Poland) hit a turnover of PLN26m in 1999 and a net profit of PLN12m. This year the company is expecting a turnover of PLN20m and a profit of PLN8.7m.

The company still has a number of properties left over from former times. It is now investing in this real estate. In Lublin, investments of several million złoty are being pumped in to modernising a shopping centre. In Tychy USD5m is being spent on the upgrading of its shopping centre. Work here is expected to last two years. Nonetheless it is not all fair weather, Pewex has problems finding a partner willing to join them on a PLN20m investment on its warehouses in Zakroczym.

Pewex has used its own funds and those from banks such as Fortis Bank to develop these sites. Pewex also hopes to raise several million złoty this year from the sale of up to fifteen buildings. Funds raised will be used to modernise properties the company keeps in its portfolio and for the construction of small centres (up to 2,000sqm which are for rent).

Andrzej Karczykowski, MD of Pewex, also considers that the company may go into the office and residential market some time in the future.

Big investment promise

Venture capital fund Dolphin Associates has announced that it will be adding up to USD65m in companies involved in new technologies in the next three years in Central and Eastern Europe. Despite this outstanding sum the company does not have particular reason to be proud. It was founded in 1999 and still has not made a single deal. However Marek Cichy, representing the company in Poland claims that the first announcement should be made within the next two months.

Cleaning up with the unions

Management of household electrical apparatus manufacturer Zelmer is trying to negotiate with the trade unions to reduce employment by 169. In the first seven months of this year the company has made a profit of PLN7m - some PLN5m less than in the same period last year. Sales have increased slightly by PLN3m to PLN177m. The company is facing severe competition in the vacuum cleaner market, chiefly from East Asia. Western companies are less of a threat as their products are more expensive. Unions are not only refusing to allow the loss of these jobs but they are also demanding a wage increase. Employees will receive a seven percent increase in September. For anything else they will have to wait until the financial state of the company gets better.

NetiaŐs sales improve

Netia has announced sales results for the first six months showing a 100 percent increase in sales to PLN200m. In the year ending 31 May 2000 Netia increased its client base by fifty percent to 286,300.

Netia has so far invested around PLN2.1bn in Poland. It has a fund of some PLN1.8bn for future development. Losses have stopped their dramatic increase but are still high, in the first six months of 2000 they were PLN278m, compared to PLN268m for the same period last year. Debts are now standing at PLN1.5bn.

In the next few months it has a number of priorities such as entry into the Warsaw market. It would seem that it may not meet the 4 September deadline for signing up for a long distance licence. Nonetheless a UMTS licence still remains a possibility and management will learn government conditions tomorrow. Netia would appear to place a lot in obtaining this licence

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Podpis: Alan Heath

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Inspiracje Pulsu Biznesu

Puls Biznesu

Puls Inwestora / Polish Business Survey