poland today business review+ no. 57

No. 057 / 20th October 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter

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MANUFACTURING & PROCESSING

Norway's Tritec opens new production unit in Słupsk page 2

Chinese shoe sole maker Fenghua eyeing Warsaw IPO page 2

Heat treatment firm Bodycote to set up new plant near Wrocław page 3

BANKING & FINANCE

GE analyzing sale of Polish BPH Bank; the latter's share price soars on the news page 3

ENERGY & RESOURCES

Tauron awards 18MW wind farm contract to Spain's Iberdrola page 4

PROPERTY & CONSTRUCTION

Deutsche AMW add the Met-ropolitan office building to their Warsaw portfolio page 5

RETAIL PROPERTIES

Atrium acquires Bydgoszcz mall from Aviva for EUR 122m page 6

SERVICES & BPO

Teleperformance to recruit 250 staff at customer support center in Katowice page 7

TRANSPORT & LOGISTICS

P3 doubles Polish logistics portfolio page 8

MEDIA

Canal+ and ITI mulling sale of majority stake in TV broadcaster TVN page 10

POLITICS & ECONOMY

Industrial production re-bounds in September page 11 Deflation stays flat at 0.3% y/y in September page 12

MEDIA PATRONAGE

NPCC Rijsttafel event raises PLN 25,000 to help treat children in comas page 12

OPINION

Reaching for the stars page 13

KEY FIGURES

Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 14-16

The headcount at Kellogg's Kutno plant will reach 200 next year. Photo: Kellogg

Kellogg to expand Polish Pringles plantKellogg to expand Polish Pringles plantKellogg to expand Polish Pringles plantKellogg to expand Polish Pringles plant Although it's been merely four months since production began at the newly opened Pringles chips factory in Kutno, the latter's US owner Kellogg Company is already gearing up to double the plant's capacity next year with a second production line. page 9

ThyssenKrupp to employ 700 in GdańskThyssenKrupp to employ 700 in GdańskThyssenKrupp to employ 700 in GdańskThyssenKrupp to employ 700 in Gdańsk German industrial giant ThyssenKrupp has chosen the northern Polish city of Gdańsk for one of its global shared services centres. Over the coming years the facility is to create 700 jobs. page 7

weekly newsletter # 057 / 20th October 2014 / page 2


Norway's Tritec opens Norway's Tritec opens Norway's Tritec opens Norway's Tritec opens new production unit in new production unit in new production unit in new production unit in SłupskSłupskSłupskSłupsk

Norwegian investor Tritec has launched a brand new production unit in the Redzikowo section of the Słupsk special economic zone. The company, which works primarily for customers in the offshore and maritime industries, built a brand new production fa-cility in less than nine months, seeking to expand its capacity and improve operational efficiency. Tritec has spent PLN 8m on the project, creating 46 new jobs. Spread across a 1.33ha site, the new plant includes two halls, for welding and hydraulic assembly (with a combined floor space of 2,000 sq.m and indoor cranes than can lift objects of up to 10 tons) as well as offices and staff facilities. Phase two will include a testing site for devices assembled here. "This investment enables us to carry out hydraulic as-sembly of complex hydraulic systems. Additionally, we will be able to perform simulations and complete fac-tory acceptance tests of the finished product. Our next step will be to finalize the test station. This project will bring new and improved competence to the business, but in the first stage it will not create new jobs," Tritec's managing director Bjørn Kverneland tells Po-land Today. With an annual turnover of approximately NOK 50m, Tritec is a group of companies that specializes in high quality engineering and steel construction, supplying mainly the Norwegian market. It has a total of 70 em-ployees, of whom 68 are based in Poland.

"The biggest benefit of operating from Poland so far has been the cost level, but also logistics, due to Po-land's location in central Europe, and the general competence level of Polish employees," says Kverneland. "Our main product are davits [a type of crane that projects over the side of a ship or a hatch-way and are used especially for boats, anchors, or car-go; ed.] and other special constructions for the Nor-wegian maritime and offshore market. Our main cus-tomer is Vestdavit but also other Norwegian offshore and maritime customers."

Tritec's brand new plant in Słupsk with a sample of its main product in the foreground. Photo: Tritec

Tritec had been operating in Poland since 2002 and besides the manufacturing unit, which produces chief-ly various lifting devices and steel structures, the com-pany has an R&D centre in Slupsk. "We have available six engineers in Poland who are working on customer projects related to patented so-lutions. Our service covers GA drawings, FEA analy-sis, work drawings, CE marking. At the moment we are running two bigger projects. One focuses on the Rapid Purge Technology which seeks to find a solution for transport of CO2 in vessels. The other interesting project is Jack Pack, a patented special solution for

container handling on the building site. The main goal of our R&D activity is to develop products suited for our production area," says Tritec's managing director.


CCCChinesehinesehinesehinese shoe sole shoe sole shoe sole shoe sole maker Fenghua maker Fenghua maker Fenghua maker Fenghua eeeeyeing yeing yeing yeing Warsaw listingWarsaw listingWarsaw listingWarsaw listing

China's second largest sports shoe sole manufacturer, Fenghua SoleTech AG, is gearing up for a double listing at the Frankfurt and Warsaw stock exchanges. The IPO will include new shares representing a 10.7% stake in the company, which supplies soles to some of the world's leading sports shoe brands. If successfully finalized, the IPO will make Fenghua the third Chi-nese company listed in Warsaw, alongside automotive parts firm JJ Auto and diaper-making machine man-ufacturer Peixin. At its production facilities located in Jinjiang County, Fujian Province, one of the leading shoe industry hubs in China, Fenghua produces more than 40m pairs of shoe soles per year. The expected EUR 10.4-12.7m worth of net proceeds from the issue, Fenghua plans to use mainly to boost its production capacity. The com-pany seeks to further expand usable space and to in-vest in new machinery for the production of shoe soles. The expansion would nearly double the total floor space of the factory from currently 1,600 sq.m to 3,000 sq.m. Unlike most of its competitors, who offer only OEM (original equipment manufacturing) capabilities, Fenghua has its own research and development team and therefore can offer also its own designs. The soles manufactured by Fenghua are designed for perfor-


mance sports shoes as well as for leisure and casual sports-inspired shoes targeting mid to high end shoe producers in China and international brands. As of June 30, 2014, Fenghua had a workforce of 1,822 em-ployees. Fenghua's financial performance has been quite en-couraging in the past three years with operating and net margins averaging the respective 27% and 20% during the period. in 1H 2014 the company turned over EUR 42.5m (+14% y/y), while its net earnings topped EUR 9.7m (+20% y/y). The 2013 full year 2013 turnover came to EUR 90.1m with a net income of EUR 18.8m. The main shareholder in the company, which is registered in Germany, is its CEO Weijie Lin, holding 67.5% of its equity.


Heat treatment firm Heat treatment firm Heat treatment firm Heat treatment firm Bodycote to set up new Bodycote to set up new Bodycote to set up new Bodycote to set up new plant near Wrocławplant near Wrocławplant near Wrocławplant near Wrocław

British heat treatment specialists Bodycote have picked a location for their sixth Polish production site, in Siechnice near Wrocław. The 2,500 sq.m built-to-suite facility is being developed by Polish general con-tractor P.A. Nova. With 190 locations across 26 countries, Bodycote S.A. is the world's leading provider of thermal processing services to a wide range of industries, including aero-space, defense, automotive, power generation, oil and gas, construction, machine building, medical and transportation. Bodycote's key technologies include thermal processing, metal joining, hot isotactic press-ing and surface technology. Bodycote turned over GBP 620m and earned GBP 73m after tax in 2013.

In a move to better serve its clients in the Wrocław ar-ea, mainly automotive firms., the company chose an investment site near the city's eastern ring road. Sit-ting on a 1ha site, the project will include 2,250 sq.m of production space as well as 214 sq.m of office and staff quarters.

BANKING & FINANCE

GEGEGEGE mulling sale of mulling sale of mulling sale of mulling sale of Polish BPH BankPolish BPH BankPolish BPH BankPolish BPH Bank; ; ; ; tttthe he he he latter's latter's latter's latter's share price share price share price share price soars on the newssoars on the newssoars on the newssoars on the news

US giant General Electric said last week it was con-sidering the sale of its Polish banking business Bank BPH. Shares in the Warsaw-listed bank surged 23% on the news, taking BPH's valuation to PLN 3.64bn - its highest level since August 2009. BPH said in a state-ment that it had been informed by its owner that the latter was "analyzing strategic possibilities" of selling the bank's shares. The American investor holds a 90% stake in BPH through three subsidiaries. The announcement does not come as much of a sur-prise, as unlike its competitors, BPH has remained ra-ther passive in recent years, despite being Poland's 10th largest bank by assets. GE has been lacking a clear vision for the bank, which it acquired in 2007 for EUR 625.5m together with a mutual fund from Italy's UniCredit. With total assets at PLN 10.4bn, BPH saw its net earnings shrink by a quarter in Q2 2014. In fact, the bank's net income declined in five of the past six quarters. Although widely anticipated by the market, BPH's sale may face regulatory hurdles, however, as Poland's

banking supervisor KNF has been openly against any further mergers of Polish banks. Following BPH's an-nouncement, the KNF issued a statement in which it signaled it may oppose GE's plans. "KNF attaches great importance to the fulfillment of commitments by majority shareholders of banks, espe-cially those commitments that have not been fulfilled," the banking watchdog said. "Any potential unilateral actions of a shareholder, without seeking KNF's con-sent, could form a basis of supervisory action against the investor not fulfilling the commitments," KNF said. The regulator seems to be referring to the require-ment, under the Polish banking law, for all banks listed on the Warsaw Stock Exchange to maintain a free float of at least 25%. With GE controlling close to 90% of BPH, that requirement clearly has not been met. According to KNF's boss Andrzej Jakubiak, the con-centration on Poland's banking market is close to op-timal at the moment, and therefore GE should look for buyers among banks that are not yet present in the country. The new investor’s rating shouldn’t be lower than Poland’s A- rating at Standard and Poor’s, Jakubiak said, adding that KNF will "closely monitor the sale." Apart from the banking business, GE has a strong, ex-port-oriented industrial base in Poland with 10,000 employees. GE Power Controls, (part of GE Industrial) has factories in Kłodzko, Łódź and Bielsko-Biała, whereas GE Aviation operates a manufacturing unit in Dzierżoniów. With a staff of 1,300 engineers the War-saw-based GE Engineering Design Center (EDC) is one of the company's most advanced R&D units, work-ing for the Aviation, Energy, as well as Oil & Gas in-dustries. The combined turnover of GE's Polish opera-tions came to USD 1.18bn in 2012.


Consolidation continues Another large Polish bank that is seeking new owners at the moment is Alior Bank, controlled by French-Italian investor Carlo Tassara. By taking over Alior and BPH any newcomer would immediately get a solid foothold in the highly competitive Polish market. However, Poland's top lenders, Polish-owned PKO BP, UniCredit subsidiary Pekao SA and Santander's BZ WBK all signaled in recent months they would look into possible acquisitions. It seems like their ap-petites can only be curbed by KNF's tough stance on concentration. "From the point of view of systemic risks and of the safety of the financial system it is important that there are no too large banks in Poland, i.e. such whose po-tential problems could not be resolved based on do-mestic instruments of crisis management," the regula-tor said after PKO BP announced the acquisition of the Polish Nordea unit. Foreign banks control about 70% of the Polish banking sector, but several have looked for an exit to boost cap-ital positions hit by the global economic crisis, with others being keen to strengthen their foothold in an economy which has outperformed much of the euro zone in recent years. Major recent exits from Poland's banking market included Belgium's KBC and Ireland's AIB which sold their Polish units to Spain's Santander, Greek Eurobank EFG (their Polbank EFG merged with Raiffeisen Polska), Swedish Nordea (their Polish arm was acquired by Poland's largest lender PKO BP for PLN 2.83m), and Dutch Rabobank (which has just recently sold its Polish business BGŻ to France's BNP Paribas for PLN 4.2bn).

ENERGY & RESOURCES

Tauron awards 18MW Tauron awards 18MW Tauron awards 18MW Tauron awards 18MW wind farm contract to wind farm contract to wind farm contract to wind farm contract to Spain's ISpain's ISpain's ISpain's Iberdrolaberdrolaberdrolaberdrola

Iberdrola Engineering and Construction Poland and its Spanish owner Iberdrola Ingenieria y Construcción have won a tender for the expansion of the Marszewo wind farm in northwestern Poland, organized by Tauron Ekoenergia, the renewable energy arm of Poland's listed second largest energy producer Tauron. The winning consortium offered to deliver phase two of the Marszewo project, including nine windmills with a combined installed capacity of 18MW, by the end of October 2015 at the cost of PLN 124.5m gross. The competing bid, from Energal II and Aldesa Constructiones, was only a few million more expensive.

Poland's installed wind energy capacity in MW

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

*20

14

Source: URE *) as of end of H1

Iberdrola was also responsible for the construction of the initial phase of the Marszewo farm, which was launched in October 2013 as the company's 12th in Po-

land where it had commissioned facilities with a com-bined capacity of over 480 MW to date. Built at the cost of EUR 135m, the Marszewo I wind farm has an installed capacity of 82 MW and includes 41 Vestas turbines.

As for Tauron, the Polish company has recently ob-tained a PLN 295m loan from the European Invest-ment Bank to support the development of its distribu-tion network and renewable energy projects. Includ-ing the new agreement, Tauron has obtained four loans totaling PLN 1.7bn from the EIB to-date.

Phase one of the Marszewo farm was commissioned in October 2013. Photo: Iberdrola

With the support of the EIB, The Polish energy group will expand its electricity distribution networks by adding an estimated 11,000 new connections and up-grade the existing equipment, which will predomi-nantly serve to connect new customers to the distribu-tion grid. The company will also roll out a smart me-tering pilot program, which should be particularly beneficial to residential, commercial and public au-thority customers, as the program’s aim is to verify the technology, facilitate data management and provide better information flow between customers and sup-pliers. The EIB will also support the modernization and refurbishment of several of Tauron Group’s hy-


dropower plants, which will increase their efficiency and generating capacity. Tauron is the second largest energy producer in Po-land as well as the largest distributor of electricity. In 2013, the company made several investments includ-ing a modern power unit using cogeneration at its plant in Bielsko-Biała and two wind parks in Wicko and Marszewo with a combined power output of 122 MW. A 450 MW power unit is also currently being constructed in Stalowa Wola as well as a 413 MW unit in Łagisza. The latter is a PLN 1.5bn investment, of which up to PLN 750m may be contributed by Polskie Inwestycje Rozwojowe (PIR), a state investment vehi-cle (see BR+ No. 027 page 6). In recent months Tauron broke ground on a PLN 618m heat & power project in Tychy (see BR+ No. 029 page 4), and signed a long-awaited PLN 4.4bn contract with the consortium of engineering firm Rafako and builder Mostostal Warszawa for the construction of a 910 MW power block at the Jaworzno power plant (see BR+ No. 032-33 page 8). With a total capex of PLN 5.4bn, the new coal-fired unit will replace older, much less efficient facilities at Jaworzno, bringing the site up to date with stricter EU emissions limits. Despite its ambitions investment pipeline, Tauron re-ported an 11% drop in net profit in 2013, with expecta-tions of even weaker results in 2014 due to the state-controlled utility's struggle with falling energy prices and weak demand caused by the sluggish Polish econ-omy. The group posted a PLN 1.3bn profit on PLN 19.1bn revenue.

PROPERTY & CONSTRUCTION

Deutsche AMW addDeutsche AMW addDeutsche AMW addDeutsche AMW add the Metropolitan office the Metropolitan office the Metropolitan office the Metropolitan office building to building to building to building to ttttheirheirheirheir Warsaw portfolioWarsaw portfolioWarsaw portfolioWarsaw portfolio

Deutsche Asset & Wealth Management has sealed its second major purchase on Warsaw's proper-ty market this year with the acquisition of the Metro-politan office project in Warsaw. The value of the transaction was agreed to be kept confidential, but market watchers are speculating that the price tag on this prime piece of property must have been in the re-gion of EUR 190-200m. Designed by Sir Norman Foster and delivered by Hines in 2003, Metropolitan was sold to Aberdeen Asset Management Deutschland in 2006 for EUR 169m. Located on Piłsudski Square, on the edge of Warsaw's Old Town, the Metropolitan remains one of Warsaw's most prestigious addresses. Its GLA of 38,000 sq.m of (of which some 3,700 sq.m is retail) is being occupied by 45 tenants that include DZ Bank Polska, BNP Paribas, McKinsey & Company, Cushman & Wakefield and Colliers International. The property is being managed by Cushman & Wakefield and it obtained "very good" BREEAM certification last year. "Metropolitan boasts an impressive occupancy rate and is expected to continue outperforming its rivals on the Warsaw market. This is a unique investment transaction in a unique location within Warsaw’s CBD," commented Soren Rodian Olsen, Head of Of-fice & Industrial Investments at Capital Markets of Cushman & Wakefield, which brokered the deal alongside JLL.

The acquisition brings the total assets under manage-ment in Poland to over EUR 1bn making Deutsche AWM one of the largest real estate investors in the country. In April, the company acquired another icon-ic Warsaw building, the 70,000 sq.m Rondo 1 office tower, for approximately EUR 300m, in what remains one the largest deals Poland's office market has seen to-date.

Constructed in 2003 according to Sir Norman Fos-ter’s design, Metropolitan has received a number of prestigious awards, including the MIPIM Award 2004 in the Business Center category, and RIBA World-wide Award. Photo: Cushman & Wakefield

"We are pleased to add the Metropolitan to our portfo-lio. Its unique design by high profile architect Norman Forster, in addition to its location in Warsaw's city centre - one of the CEE's most vibrant and growing business centers, makes it an attractive investment opportunity. We will continue to focus on acquiring quality assets for our clients," commented Gianluca Muzzi, Head of Real Estate, Europe ex-Germany for Deutsche AWM. With EUR 923bn of assets under management (as at December 31, 2013), Deutsche Asset & Wealth Man-agement is one of the world's leading investment or-ganizations. The company offers individuals and insti-tutions traditional and alternative investments across all major asset classes. It also provides tailored wealth management solutions and private banking services to high-net-worth individuals and family offices.


EXPERT VIEW Central and Eastern European (excluding Russia)

commercial real estate investment volumes have risen

11% y/y according to CBRE’s latest report. Poland’s re-

al estate market continues to attract strong invest-

ment, with €1,8 billion invested in Q1-Q3 2014. Howev-

er, limited availability of product in prime commercial

real estate in Poland means investors are now looking

more closely at the Czech Republic, Romania and

Hungary, which have seen increases of 11%, 215% and

126% respectively. Investment into Russian commercial

real estate has dropped 45% y/y in Q1-Q3.

“Poland has the most dynamic real estate market

amongst all CEE countries. When analyzing data from

Q3 2014 we can see increased activity in the office

and industrial segments of the market. Both segments

recorded boosted interest from investors and grew by

20% y/y. Almost 60% of transactions, which were

signed in Q3 took place in Warsaw. We have ob-

served a number of new American investors entering

our market. Based on the deal pipeline, we expect the

total volume of transactions to exceed the last year

level," commented Joanna Mroczek, Director of Con-

sultancy & Research at CBRE.

RETAIL PROPERTIES

Atrium acquires Atrium acquires Atrium acquires Atrium acquires Bydgoszcz mall from Bydgoszcz mall from Bydgoszcz mall from Bydgoszcz mall from Aviva for EUR 122mAviva for EUR 122mAviva for EUR 122mAviva for EUR 122m

Retail property company Atrium European Real Estate has agreed to acquire retail center Focus Mall in Bydgoszcz from Aviva Investors for EUR 122m. The acquisition will be financed from Atrium's exist-

ing cash resources and is subject to approval by the Polish antimonopoly office, which is expected to be obtained in Q4 2014, the company announced. The acquisition is in line with Atrium’s strategy to be-come the dominant player in its core markets of Po-land, Czech Republic and Slovakia through the pur-chase of strong income producing shopping centers which complement its existing portfolio, Atrium said. As a result of the acquisition, over 55% of Atrium’s to-tal income producing portfolio by market value is in Poland.

Opened in 2008, Focus Mall offers 41,000 sq.m of re-tail GLA. Photo: Atrium

Focus Mall was originally developed in 2008 and is the dominant shopping centre in Bydgoszcz. It com-prises 41,000 sq.m of retail GLA across two storeys, which is currently 96.1% let to a number of anchor tenants including a c. 2,800 sq.m Alma supermarket, a Saturn electronics store and a Cinema City, as well as a large number of other high profile international and domestic retail fashion brands including C&A, H&M, Reserved, Cropp, House, Bershka, Pull & Bear and New Yorker. A further two floors over the shopping centre are predominantly given over to car parking for

approximately 850 cars , as well as 830 sq.m of storage and a 156 sqm office suite for the centre management.

Bydgoszcz is Poland’s eighth largest city with approx-imately 360,000 inhabitants and Focus Mall is well - located in a heavily populated city centre area, adja-cent to both the city’s main football stadium and the bus station, at the intersection with the city’s two main roads.

EXPERT VIEW “The total volume of retail transactions concluded in

Poland in Q1-Q3 2014 is estimated at €410 million, with

approximately €50 million in Q3. The most notable re-

tail transaction in Q3 2014 was the acquisition of

Galeria Piła by Immofinanz from Rank Progress, while

the biggest transaction this year is still the acquisition

of Poznań City Center by a consortium of Resolution

and ECE Fund from TriGranit, Europa Capital and PKP.

We expect increasing retail investment activity in Q4

illustrated by a preliminary sale agreement recently

signed by Atrium European Real Estate to acquire Fo-

cus Mall in Bydgoszcz from Aviva Investors for ap-

proximately €122 million. In addition, a number of oth-

er transactions in the retail sector are at advanced

stages with a likely closing by the end of 2014,” says

Adam Kiernicki, Senior Financial Analyst, JLL.

In March Atrium opened its EUR 120m retail project Atrium Felicity in the eastern Polish city of Lublin. The property offers 75,000 sq.m of gross leasable area of retail across 120 units. As of mid-2014, Atrium owned 23 properties in Poland with a gross lettable ar-ea of 0.5m sq.m and a market value of EUR 1.32bn. In the first half of the year the Polish portfolio generated a gross rental income of EUR 44.7m, representing an increase of nearly 18%, which was entirely due to the acquisition of Galeria Dominikańska and the Atrium


Felicity launch. In like-for-like terms, the revenues shrunk by more than 2%.

On the development side, besides the Lublin project, the company is expanding its Atrium Copernicus property in Toruń, which will get an additional 17,300 sq.m of GLA and 640 parking spaces by the end of the year. The company's board has also recently approved a major modernization of the Promenada shopping center in Warsaw that will see the property expand by even as much as 44,000 sq.m.

Atrium is a real estate company focused on shopping centre investment, management and development in Central and Eastern Europe. As at 30 June 2014 the Group owned 153 shopping centers and retail proper-ties, with a market value of EUR 2.5bn, diversified across seven countries with a total gross lettable area of 1.3m sq.m. In 2013, Atrium produced a gross rental income of EUR 203.5m.

SERVICES & BPO

ThyssenKrupp to ThyssenKrupp to ThyssenKrupp to ThyssenKrupp to create create create create up to up to up to up to 700 jobs at 700 jobs at 700 jobs at 700 jobs at new shared services new shared services new shared services new shared services uuuunitnitnitnit in Gdańskin Gdańskin Gdańskin Gdańsk

German industry giant ThyssenKrupp has set up a global shared services center in Gdańsk, aiming to cre-ate up to 700 positions at the new facility over the coming years. The center will handle a broad range of processes for ThyssenKrupp's units in all European countries, focusing mainly on finance and accounting, HR, real estate, and IT services. Gdańsk will be one of ThyssenKrupp's six global centers, the other ones be-

ing located in Germany (Essen & Bochum), as well as India, China and Brazil.

"SSC Gdańsk began operations in August 2014 and since the end of September financial and accounting services have been delivered directly from Gdańsk. The center will be continuously built up over five to eight years with a possible range up to 700 workplac-es," Robert Góra, Head of Shared Services Gdańsk at ThyssenKrupp tells Poland Today. "The goal of GSS is to provide high-quality, standardized services at a competitive level and thereby establish efficient ad-ministrative functions and support processes through-out the group worldwide."

The company listed the existing shared services centre environment, dynamic economic growth and educated staff in Gdańsk among the city's key pull factors, alongside its convenient location and good language skills (particularly English and German) of available candidates. The new ThyssenKrupp facility will be the largest shared services center in the Pomeranian re-gion and at the same time the largest investment pro-ject ever supported by Invest in Pomerania, the re-gional investment promotion agency.

"ThyssenKrupp Group Services Gdańsk offers also a unique opportunity for graduates, specialists and pro-fessionals to develop their skills and start a career in an international corporation. In cooperation with uni-versities a special educational offer will be created – courses and new profiles of studies will provide educa-tion focused on corporate and financial accounting, business process outsourcing, payroll and administra-tion, HR processes, SAP system and languages skills," Mr. Góra says.

There are an estimated 40 business services centers with a combined workforce of 13,000 in Gdańsk. They specialize mainly in financial services, customer ser-

vice and IT, providing jobs for graduates with lan-guage skills. Poland is ThyssenKrupp's most important sales mar-ket in Central and Eastern Europe. With sales of al-most EUR 900m in fiscal year 2012/2013, the country ranks number 10 of ThyssenKrupp's foreign markets. The largest ThyssenKrupp company in Poland is ThyssenKrupp Energostal S.A., Toruń, with about 800 employees, specializing in rolled and stainless steel, steel tubes/pipes and nonferrous metals. Besides Poznań and Warsaw, the company operates a third warehousing and service center in Dąbrowa Górnicza. With a storage area of around 70,000 sq.m, this facility is the largest warehousing and service center in East-ern Europe. ThyssenKrupp Stal Serwis Polska has also been integrated into this location to generate syner-gies. Altogether, local ThyssenKrupp companies in Po-land employ around 1,000 people. ThyssenKrupp employs more than 160,000 people across 80 countries in business areas that span steel, materials services, industrial solutions, components technology and elevator technology. In fiscal year 2012/2013 ThyssenKrupp generated sales of around EUR 39bn.

SERVICES & BPO

Teleperformance Teleperformance Teleperformance Teleperformance to to to to recruit 250 staff at new recruit 250 staff at new recruit 250 staff at new recruit 250 staff at new customer customer customer customer supportsupportsupportsupport center in Katowicecenter in Katowicecenter in Katowicecenter in Katowice

Global customer care services giant, the Paris-based Teleperformance Group, will create up to 250 jobs over the coming months at a new unit in Katowice.


The company will take up 2,300 sq.m at the Alder building in Katowice's GPP Business Park. "TPG Katowice, subsidiary of Teleperformance Ger-many, will open its unit in Katowice, which will serve as a technical and IT support center for external cli-ents. The first key areas of expertise that we will de-ploy in our Katowice-based BPO service for the Ger-man market are e-commerce and telecommunications. TPG Katowice will use integrated multimedia custom-er contact center solutions offering advanced func-tionalities such as e-mail, web chat, call-through, co-browsing and intelligent contact routing to best serve our clients," Thomas Güther, CEO of Teleperformance Germany, tells Poland Today. Asked why they chose Katowice, of all available loca-tions in Poland, Mr. Güther replies: "The key decisive factor was obviously the availability of German language skills in Silesia. However the availability of a qualified workforce, the accessibility of the area and its industrial maturity were also very important factors taken into account when we finally selected Katowice for our location in Poland. Current-ly we are recruiting a team of 250 employees who will serve our German-speaking clients from Katowice however we have intentionally chosen a location with expansion potential." The Teleperformance Group, a majoir global player in outsourced multichannel customer experience man-agement, serves companies around the world with customer care, technical support, customer acquisition and debt collection programs. In 2013, it reported con-solidated revenue of EUR 2.4bn. Listed on Euronext Paris, the group operates around 135,000 computer-ized workstations, with more than 175,000 employees across around 270 contact centers in 62 countries and serving more than 150 markets. It manages programs in 63 languages and dialects on behalf of major inter-

national companies operating in a wide variety of in-dustries. Its German division employs some 3,300 people at seven locations.

Katowice's GPP Business Park offers 25,000 sq.m across three buildings. Photo: GPP Business Park

"The actual Polish Teleperformance subsidiary is lo-cated in Warsaw and Siedlce with 370 employees. Teleperformance Polska, managed by my colleague Mariusz Odkala, the CEO of Teleperformance Polska, focuses on the Polish domestic market and also on multi-lingual programs for some of our global and in-ternational clients while the Polish subsidiary of Teleperformance Germany in Katowice is explicitly designated to serve the current German clients and under the leadership of Teleperformance Germany. Nevertheless we work closely together to provide syn-ergies and value adds for our clients," Thomas Güther says. Despite its traditional associations with mining and heavy industry, in recent years Katowice has emerged as a recognized location for business services sector projects. Attracted by the region's well-developed la-bor market and infrastructure, friendly authorities as well as incentives offered by the Katowice Special

Economic Zone, a number of leading global brands, such as Capgemini, IBM, PwC, ING, Unilever, Er-icsson or Oracle, have set up their business services units in Katowice. GPP Business Park has gained a lot of attention in the property sector after its first building obtained BREEAM certification at the "Outstanding" level and remains the only asset in the country with such im-pressive sustainability credentials. Located in the north of Katowice, at Konduktorska Street, within the boundaries of the Katowice Special Economic Zone, GPP Business Park encompasses 25,000 sq.m of mod-ern, energy-efficient office space. The Alder building, to where TPG Katowice will move this October, is the park's third office building. According to property consultancy JLL, Katowice, with total office stock of 337,000 sq.m, is the largest office market in the Silesian Agglomeration, and fifth among major Polish cities, after Warsaw, Kraków, Wrocław and Tri-City. In 2014, record levels of de-mand and developer activity are expected. In H1, lease agreements of 34,500 sq.m were signed (compared to 32,000 sq.m in H1 of 2013, and 60,500 sq.m through 2013), proving that the Katowice office market enjoys the continuing interest of tenants. At the same time, developers are aware of the trend and remain active, so the market in Katowice will gain 67,000 sq.m office space supply in 2014.

TRANSPORT & LOGISTICS

P3 P3 P3 P3 doubles Polish doubles Polish doubles Polish doubles Polish logistics logistics logistics logistics portfolioportfolioportfolioportfolio

It's been nearly a year since TPG, a leading global pri-vate investment firm and Ivanhoé Cambridge, one


of the world’s largest real estate companies, took over warehouse developer PointPark Properties (P3), pledging a more aggressive expansion in the CEE re-gion. After completing large acquisitions in the Czech Republic and Italy in recent months, last week saw P3 seal an agreement to buy two logistics parks in Poland and one in Romania with a combined total of 467,000 sq.m of lettable space, from CA Immobilien Anlagen AG. The purchase, which is still subject to contractual terms and regulatory approvals, includes also almost 165 ha of land for development, principally in Poland and Romania. The two parties decided not to disclose the financial terms of the deal.

"P3 now operates more than 2.9m sq.m of modern lo-gistics and distribution facilities and also owns one of the largest land banks for logistics development in Eu-rope. This acquisition of high quality assets produces strong cash flows that will provide attractive returns for our stakeholders," commented Ian Worboys, P3’s Chief Executive.

In Poland, P3 acquired a 177,000 sq.m park at Błonie, some 30 km west of Warsaw city centre, with links to the A2 motorway to Poznań and Berlin. Tenants in-clude Bayer, IBM, Orange, Triumph and online retail-er Allegro, reflecting the park’s appeal to large retail-ers seeking proximity to the Polish capital. This park offers 17 ha. of development land. The second park lies near Piotrków, South East of Łódź in central Poland. It provides 75,000 sq.m of space and direct road links to Warsaw, Wroclaw and Katowice. The park is on a 120 ha. plot, offering scope for development. Kühne & Nagel, FM Logistic and InPost are among the park’s largest tenants.

"After the transaction, P3 will increase warehouses in ownership in Poland from eight to 23 and lettable area from 200,000 sqm to 450 000 sq.m. We will also own almost 1m sq.m of developable land bank in Poland,"

Peter Bečár, P3’s Managing Director for Central & Eastern Europe, tells Poland Today

"Our latest investment in Poland and Romania along with other P3’s logistics centers enables us to offer our customers warehouses in a true pan-European plat-form. Poland has a perfect location for the develop-ment of the logistics market. Its location between East and West makes Poland a natural transit country for the transport of goods. Therefore we still see opportu-nities also in Poland for further expansion of our activ-ities, mainly in the southern regions of the country. We are continuously looking for opportunities in all of Europe," he adds.

P3's two existing Polish logistic parks (in Mszczonów south of Warsaw and near Poznań), are both strategi-cally located and have excellent transport connections. Once fully built-up, PointPark Mszczonów will com-prise close to 320,000 sq.m in 12 buildings. Currently its three largest tenants are Fiege, Jeronimo Martins Dystrybucja (operator of Poland's top retail chain Biedronka) and ID Logistics Polska. PointPark Poznań as a whole offers up to 195,000 sq.m of warehouse space, including more than 131,000 sq.m of zoned land for further build-to-suit developments. Key customers include Hager, DAMCO, Jeronimo Martins Dystrybucja, ND Poland, CEVA, and PF Concept. The parks have planning consents for new warehouse de-velopments, while P3 is also able to offer other loca-tions for BTS projects near key Polish cities, including Warsaw, TriCity, Wrocław, Kraków, Rzeszów, Byd-goszcz and Lublin as well as in the industrial regions of Upper Silesia and Legnica.

P3's asset base comprises 144 warehouses spread across nine countries and a land bank with zoning for more than 1.45m sq.m of potential development.

FOOD

Polish Pringles plant Polish Pringles plant Polish Pringles plant Polish Pringles plant up and running; owner up and running; owner up and running; owner up and running; owner Kellogg to double its Kellogg to double its Kellogg to double its Kellogg to double its capacity next yearcapacity next yearcapacity next yearcapacity next year

Four months after it launched production at its state-of-the-art factory in Kutno, in central Poland, US Kel-logg Company, the world’s leading cereal maker and second largest savory snacks producer, announced plans for a substantial capacity boost at the site. The company said it would install a second production line at Kutno in early 2015, boosting the plant's workforce in excess of 200 staff. Kellogg makes the popular Prin-gles chips at the Polish plant.

The US investor acquired the Kutno site in 2007 and completed a factory building of approximately 15,000 sq.m shortly after. At the time, Kellogg's focus was on breakfast cereal as the company had plans for intro-ducing its brands to Central and Eastern Europe. In the end, Kellogg gave up on that strategy, resulting in the newly-completed buildings sitting idle for nearly half a decade.

Following the USD 2.7bn acquisition of the Pringles business from P&G in 2012, which instantly made Kel-logg the world's second largest savory snack maker, the Americans returned to Kutno the following year with new plans. In early 2013 the Łódz Special Eco-nomic Zone said Kellogg's SPV UMA promised to in-vest a further PLN 225.8m (approx. EUR 54.8m) in the Kutno project that were to create a minimum of 40 new jobs. Company representatives explained the in-vestment was for a 10,000 sq.m extension to the exist-


ing building which would contain a raw material area, process, packing and warehouse.

In the first four months of its operation, Kellogg's Kutno plant produced 15m cans of Pringles chips. Photo: Kellogg

Kellogg said the Kutno plant represents one of the company’s biggest capital investments in the last 10 years, but failed to provide final figures. The facility, which is meant to fuel growth of the Pringles brand in the CEE region, started production in June this year. Since the launch, it runs in continuous operations mode, 24 hours a day, 7 days a week. Currently, the plant delivers products to the European markets as well as to Russia and Turkey. Earlier this month, Kellogg's top executives descended on Kutno to mark an official opening of the facility, which in the first four months turned out 15m cans of Pringles. They emphasized the fact that the plant was developed in little more than a year, but conveniently failed to mention that some of the infrastructure had already been in place for years. "We have ambitious plans related to the Pringles brand in Europe. Since its acquisition two years ago, it has been nothing but a dynamic growth of sales, twice as fast as the category. We intend to become the se-cond largest player in the savory snacks market in Eu-

rope," said Chris Hood, President of Kellogg Europe. "The success of Pringles in Europe was so great that we were struggling to meet the demand. With the new production facility we will be able to meet clients ex-pectation, and through the partnership with one of the biggest distributors in the region, Orbico company, we will expand the distribution network and make our product more broadly available," he added.

Stagnation in savory snacks Retail volume in '000 tons and retail value in EURm

2011 2012

'000

tons EURm*

'000

tons EURm*

Crisps/Chips 34.8 220.2 35.5 213.2

Puffed snacks 15.9 86.4 16.1 82.9

Nuts 10.8 47.6 11.0 46.1

Popcorn 1.1 4.2 1.1 4.1

Pretzels & sticks 24.7 70.3 25.0 67.4

Tortillas 0.4 3.7 0.4 3.7

Source: Euromonitor International *) at current prices

Kellogg’s facility in Kutno is the second Pringles pro-duction plant in Europe, the other one being located in Mechelen, Belgium. Based on the initial production data (4 months - 15m cans), one can estimate the site's current production capacity at some 45-50m cans. With a second production line in operation, from next year the figure is likely to go beyond 100m per annum. "Our production plant is one of the most advanced fa-cilities of its kind in the world and is offering highly modern working environment. Over 80 of our employ-ees took part in intensive training at the Pringles pro-duction facility in Mechelen, " said Bart Van Audenhove, Operation Manager, Kutno Pringles facili-ty director. "These training programs lasted from three to twelve months."

Kellogg is the world’s leading producer of snacks, ce-reals and frozen foods. The company was founded in Battle Creek, Michigan more than 100 years ago by William Keith Kellogg. The NYSE-listed company has approximately 31,000 employees at 50+ manufacturing facilities in 18 countries around the world. Its 2013 Kellogg's net sales totaled USD 14.8bn, while its net earnings topped USD 1.8bn. Prior to 2008 sales of savory snacks in Poland used to grow at a double digit pace, but market saturation and economic slowdown have since caught up with the segment. According to Euromonitor International, in 2011 and 2012 the market contracted and the research company expects little improvement in the coming years. For instance, sales of crisps/chips in Poland to-taled EUR 213m in 2012 and in 2017 Euromonitor sees the figure at EUR 214m. Other analysts are slightly more optimistic. MarketLine expects the whole savory snacks category to reach EUR 497.1m and 117,500 tons in 2016, representing a growth by 27.6% in value terms and 15.2% in volume terms from 2011 levels. The seg-ment is dominated by global producers with PepsiCo, Lorenz Bahlsen Snack World (LBS) and InterSnack controlling some 77% of all sales, with PepsiCo alone boasting a 44% market share.

MEDIA

Canal+ and ITI mullingCanal+ and ITI mullingCanal+ and ITI mullingCanal+ and ITI mulling sale of majority stake sale of majority stake sale of majority stake sale of majority stake in TV broadcaster TVNin TV broadcaster TVNin TV broadcaster TVNin TV broadcaster TVN

France's Canal+ Group and the media conglomerate ITI are contemplating a sale of their controlling stake in Polish TV broadcaster TVN, the two companies said in a joint statement last week. According to Polish business daily Puls Biznesu, Time Warner Inc., 21st


Century Fox Inc., Discovery Communications Inc, Bertelsmann SE and RTL Group SA may be among potential bidders for the TVN stake. Shares in TVN jumped on the news, boosting the market value of the Warsaw-listed broadcaster to PLN 5.2bn. "The ITI Group and Canal+ Group have been ap-proached in recent months by various strategic and fi-nancial investors expressing an interest in acquiring the controlling stake in TVN Group, should it become available. In response to such interest, both the ITI Group and Canal+ Group have decided to jointly re-view their strategic options regarding the 51% stake in TVN Group," Canal+ & ITI said. Canal Plus combined its pay-TV assets in Poland with ITI’s three years ago as part of a push to expand its in-ternational audience. Under that agreement, Canal Plus has an option to acquire ITI’s stake in TVN in 2015 or 2017. Canal Plus said it will continue to run pay-TV channel nc+ and cooperate with TVN, which owns a 32% stake in the business, regardless of the outcome of the review. "Canal+ Group will continue to maintain a strong foot-print in Poland, its second largest market after France, where it will further develop and strengthen nc+," the statement reads. "Both the ITI Group and Canal+ Group remain under any scenario fully committed to the high performance TVN investment. Should the current strategic review not result in a transaction the existing arrangement will remain in place." TVN was established in the 1990s by Jan Wejchert, Mariusz Walter and Bruno Valsangiacomo. The prem-ature passing of Jan Wejchert in 2009 triggered com-plex ownership changes that continue to this day. In 2011 TVN and Canal+ (part of the French media con-glomerate Vivendi) set up a joint venture to which each partner contributed their Polish digital-to-home business (respectively "n" and Canal+). The French

company holds a 51% stake in the JV, with TVN and cable operator UPC owning the remaining 32% and 17%, respectively. As part of the transaction, Canal+ bought from ITI (for EUR 230m) a 40% stake in N-Vision, which, in turn, has a 51% share in TVN. Canal+ were to acquire full control of that TVN stake some 3-4 years later, which essentially means this or next year.

ITI's asset sell-off included also Poland's top online portal Onet.pl (acquired by Axel Springer in 20012), cinema chain Multikino (bought last year by UK's Vue Entertainment and the Legia football club (sold earli-er this year to two of its top executives).

It appears, however, that the French may not be so ea-ger to increase their ownership level in TVN, especial-ly considering the latter's massive dues. Its bonds alone, maturing in 2018 and 2020, have a nominal val-ue of EUR 570m. Whoever takes control of the Polish broadcaster will sooner or later have to deal with this mountain of debt. Last but not least, television is not as powerful a medium as it used to be, as it keeps losing viewers and advertisers to the Internet.

POLITICS & ECONOMY

Industrial production Industrial production Industrial production Industrial production rebounds in Septemberrebounds in Septemberrebounds in Septemberrebounds in September

Poland's industrial output increased by 4.2% y/y in September, slightly above the consensus expectations for a 3.1% increase, reported Poland's stats office GUS. The improvement was partially statistical in nature, due to a higher number of working days. In the prior month, industrial production contracted by 1.9% y/y. The seasonally adjusted figures came to a positive 1.9%

in September and 0.7% in August, down on the May-July average of 2.4%. In the construction sector, where output grew by 5.6%, the positive surprise was even more pro-nounced, as the average expectations had been for a near-zero growth. According to BZ WBK economists, the Q3 GDP growth figure will most likely be lower than 3% and therefore it justifies another interest rate reduction in November.

Industrial output & producer prices

-12%

-8%

-4%

0%

4%

8%

Jan

13

Mar

13

May

13

Jul

13

Sep

13

Nov

13

Jan

14

Mar

14

May

14

Jul

14

Sep

14

Industry output, y/y change

Producer Price Index, y/y change

Source: GUS, the central statistical office

PPI inflation declined from -1.5% y/y in August to -1.6% in September. In monthly terms, prices rose 0.1%, mainly on the back of higher prices in coalmining, brought about by last month's considerable weakening of the zloty against the dollar. In the manufacturing sector, prices remained flat month-on-month. "We are expecting the PPI inflation to rise in the up-coming months, driven by the PLN depreciation. Yet, PPI is likely to stay negative until year-end," BZ WBK analysts said in an e-mailed commentary.


POLITICS & ECONOMY

Deflation stays flat at Deflation stays flat at Deflation stays flat at Deflation stays flat at 0.3% y/y in September0.3% y/y in September0.3% y/y in September0.3% y/y in September

Consumer prices continued to decrease in September, with the inflation index for the month reaching a neg-ative 0.3% y/y, the same as in August, despite wide-spread expectations for the deflation to deepen slight-ly. The figures came from GUS, Poland's central statis-tical office.

"The surprise came mainly from food prices, which rose slightly after seven consecutive months of de-cline. At the same time, prices in other categories re-mained surprisingly stable (except clothing and foot-wear, where a seasonal spike was recorded), showing lack of any significant upward pressure. According to our estimate, core inflation excluding prices of food and energy rose slightly to 0.7%y/y. We forecast that until the end of this year CPI growth will remain be-low zero and core inflation below 1%," BZ WBK ana-lysts commented on the data.

The unexpected increase in food prices seems like a one-off event however, as Russian sanctions on food imports from Europe, this year's exceptionally good harvest and sharp declines in global oil prices are all likely to keep pushing prices down over the coming months.

Despite a deeper than expected rate cut earlier this month, most analysts agree that Poland's monetary policymakers are not yet done with this easing cycle, with the only question concerning the timing of the next cut. While many economists are expecting the next rate reduction already in November, some say the

rate setters may take a one month's break before the next cut.

MEDIA PATRONAGE

NPCC Rijsttafel event NPCC Rijsttafel event NPCC Rijsttafel event NPCC Rijsttafel event raises PLN 25,000 to raises PLN 25,000 to raises PLN 25,000 to raises PLN 25,000 to help treat children in help treat children in help treat children in help treat children in comascomascomascomas

Over 300 members, partners and friends of the Neth-erlands-Polish Chamber of Commerce (NPCC) met at the organization's sixth annual Rijsttafel charity ball at Warsaw’s InterContinental hotel in late September to enjoy a night of delicious Indonesian food and help one of Poland’s most worthy causes. The event raised 25,000 złoty for the ‘Akogo?’ charity, which treats children with traumatic brain injuries and who have entered into a coma. In 2013 the founda-tion established the ‘Budzik’ (‘Alarm Clock’) clinic in Warsaw, Poland’s first medical centre for the treat-ment and rehabilitation of children in a coma. One of the highlights of the evening were the dozens of colorful, savory Indonesian dishes for the guests to enjoy. The food was prepared by by Warsaw’s fore-most expert on Indonesian cuisine, Rob Regenhardt. Guests also were treated to the musical stylings of American soul crooner Jimmie Wilson and laser-light artists MultiVisual. Media personality Monika Zamachowska hosted the event, while NPCC chair-man Geert Embrechts gave the opening speech and oversaw the raffle prize giveaway. The president and driving force behind the ‘Akogo?’ foundation, actress Ewa Błaszczyk, was in attendance,

and explained how the money raised would be used to buy more state-of-the-art equipment for the ‘Budzik’ clinic. Along with treating children in comas – work-ing to help them regain consciousness in many cases – the clinic also provides rehabilitation and helps teach parents and caregivers how to properly take care of such children. So far, the clinic has helped 12 patients regain consciousness. It works in association with Centrum Zdrowia Dziecka (the Children’s Health Centre) in Warsaw.

‘Akogo’ founder Ewa Błaszczyk thanks participants for their generosity, as Monika Zamachowska and NPCC leaders look on.. Photo: Multi

The Dutch community in Poland came up with the idea for organising the Rijsttafel in the early 1990s, due to their longing for Indonesian delicacies from the former colony. Over time, the Rijsttafel began to play an increasingly vital role in charity events. Translated from Dutch, the word ‘rijsttafel’ literally means ‘rice table’. The main sponsors of this year’s event were Philips and Ghelamco.

by Andrew Kureth


OPINION

Reaching for the starReaching for the starReaching for the starReaching for the starssss

by Poland Today Editor Andrew Kureth

What are Poles good at? The question may sound strange but it’s an important one if Poland – especially its government – is to decide on strategies about where to invest money and energy in the country’s economy. Ask your typical Poland-watcher and you’ll get some similar answers: Poles are ‘entrepreneurial’; they are well-educated; they are great at computer programming; they excel at providing business process outsourcing and shared services; they are eager, open-minded, and hard-working. As a journalist covering Poland for more than 10 years now, I’ve heard these answers over and over again. It’s all well and good. I’m glad to know that we can all agree that in general, such positive attributes can be found in abundance amongst the Polish population. Nonetheless, these answers can sometimes seem con-descending. ‘Eager, open-minded and hard-working’ might be how I describe an intern just out of college. Well-educated belies some of the real challenges Po-land faces in its educational system, especially in terti-ary education (Jan Cienski will expand on this in the next issue of Poland Today). That Poles are ‘entrepre-neurial’ seems to be shorthand for the fact that they were able to start large-numbers of businesses right out of the gate as soon as communism collapsed, but glosses over some huge gaps in Poland’s current en-trepreneurial environment. Start-up experts have told

me time and again that Poles are great at inventing new technologies, but still need much more experi-ence when it comes to marketing them and building a business around them. Not that these problems can’t be solved – they all can, and I’m confident that they will. But in today’s buzz around Poland’s penchant for BPO and its citizens’ ability to provide outstanding programming for the likes of Google and Microsoft, I worry that we are be-ginning to forget one important area where Poles have always excelled: scientific discovery. Examples abound, but the best is Marie Skłodowska-Curie, who remains the only person ever to win a No-bel Prize in multiple sciences. There’s also Jan Czochralski, who invented a process to grow single crystals and which is used in the production of semi-conductor wafers. Kazimierz Funk was the first to formulate the concept of vitamins. More recently, Poles have invented new ways of mass producing gra-phene – an ultra-thin material that could revolutionise a host of technologies. Since Copernicus, Poles have looked to the sky as an-other realm of discovery. In 1992 Aleksander Wolszczan, along with his Canadian colleague Dale Frail, was the first to discover an exoplanet – a planet outside our own solar system. And just last week a Pol-ish-led group of astronomers in the US found the most recent one. Poles are leaders in finding worlds outside our own solar system. The team that made this most-recent exoplanet discovery was led by Radek Poleski, a post-doctoral researcher at The Ohio State University. Eleven Poles from the Astronomical Observatory at Warsaw University contributed to the discovery. The observations were made using the 1.3-metre ‘Warsaw Telescope’ at Las Campanas Observatory in Chile, and part of the funding came from Poland’s Ministry of Science and Higher Education.

All of this goes to show that given the chance, Poles can make scientific discoveries that change the way we see the world – and indeed the universe – around us. But supporting such research takes money, and that means a commitment from the government. Most of Poland’s space research funding goes into the budget of the European Space Agency, of which Po-land became a full member in 2012. Poland’s 2014 con-tribution is €28.7m, a measly 0.9% of the ESA’s budget. Around 85% of that returns to Poland in the form of contracts for companies and scientific institutes who contribute technologies to ESA projects, but you’ll still find plenty of critics who believe that money could be better spent elsewhere. They are wrong. The tiny companies and university departments that do the research on things like solar panels for satellites or robotics that endure the harsh environment of space are where high-tech innovation starts. ‘Innovation’ has become a platitude in Poland – everybody agrees it is needed, but few really know where to invest in order to get it. One thing is clear: a space programme is a high-return investment on in-novation. Take the United State’s NASA: it has pro-duced over 1,650 ‘spin-off’ technologies that have been transferred to the commercial sector, including scratch-resistant lenses, aircraft anti-icing systems, and memory foam. The European Space Agency – through its business incubator programme – has also brought its technologies into the private sector. Some of these include systems for automatically adjusting traffic-light times and long-distance data transfer us-ing lasers. Surely there will be more such technologies, and Polish firms will make use of them. So what are Poles good at? Poles are great at science and they are great at discovery. Supporting those tal-ents – through spending on scientific research, includ-ing space programmes – will bring real benefits back to the Polish economy.


KEY STATISTICS

Consumer PricesConsumer PricesConsumer PricesConsumer Prices

Data in (%) Jun '14 Jul '14 Aug '14 Sep '14

Sector y/y m/m y/y y/y m/m y/y y/y m/m

Food & bev -0.9 -0.3 -1.7 -1.1 -2.1 -1.6 -2,0 +0.1

Alcohol, tobacco +4.0 +0.1 +4.0 0.0 +3.8 0.0 +3.6 0.0

Clothing, shoes -4.7 -0.8 -4.9 -2.8 -5.1 -2.7 -4.7 +1.1

Housing +1.6 -0.1 +0.6 0.0 +0.6 +0.1 +0.5 +0.1

Transport -0.6 -0.2 -1.0 +0.8 -1.5 0.0 -3.2 -1.0

Communications +1.3 +2.4 +2.6 +1.2 +3.9 +1.3 +4.0 0.0

Gross CPI +0.3 0.0 -0.2 -0.2 -0.3 -0.4 -0.3 0.0

IIIInflationnflationnflationnflation

-1%

0%

1%

2%

3%

4%

Se

p 1

2

No

v 1

2

Ja

n 1

3

Ma

r 13

Ma

y 1

3

Ju

l 13

Se

p 1

3

No

v 1

3

Ja

n 1

4

Ma

r 14

Ma

y 1

4

Ju

l 14

Se

p 1

4

y/y m/m

Retail TurnoverRetail TurnoverRetail TurnoverRetail Turnover

Month Apr '14 May '14 Jun '14 Jul '14 Aug '14

m/m (%) +2.3 -2.7 -1.1 +4.7 -1.1

y/y (%) +8.4 +3.8 +1.2 +2.1 +1.7

Year 2009 2010 2011 2012 2013

Turnover in PLNbn 582.8 593.0 646.1 676.0 685.7

y/y (%) +4.3 +5.5 +11.6 +5.6 +2.3

Residential ConstructionResidential ConstructionResidential ConstructionResidential Construction

Dwellings

(in '000 units)

2009 2010 2011 2012 2013 Jan-Sep

2014

y/y

(%)

Permits 178.8 174.9 184.1 165.1 138.7 120.3 +14.8

Commenced 142.9 158.1 162.2 141.8 127.4 114.6 +17.0

U. construction 670.3 692.7 723.0 713.1 694.0 705.7 -0.1

Completed 160.0 135.7 131.7 152.5 146.1 100.1 -2.9

Source: Central Statistical Office (GUS)

GGGGross Domestic Productross Domestic Productross Domestic Productross Domestic Product (ESA2010)

Period Growth y/y unadjusted

GDP in PLN bn current prices

Current account def. in % of GDP

Q2 2014 +3.3% 413,457 -1.2%

Q1 2014 +3.4% 397,429 -1.2%

Q4 2013 +2.7% 455,528 -1.3%

Q3 2013 +2.0% 405,554 -1.9%

2013 +1.7% 1,662,052 -1.3%

2012 +1.8% 1,615,894 -3.6%

2011 +4.8% 1,553,582 -5.0%

2010 +3.7% 1,437,357 -5.1%

Key Economic Data & ProjectionsKey Economic Data & ProjectionsKey Economic Data & ProjectionsKey Economic Data & Projections

Indicator 2011 2012 2013 *2014 *2015

GDP change +4.5% +1.9% +1.6% +3.1% +3.1%

Consumer inflation +4.3% +3.7% +0.9% +0.1% +0.8%

Producer inflation +7.6% +3.4% -1.3% -1.1% +0.9%

CA balance, % of GDP -5.0% -3.7% -1.4% -1.7% -2.6%

Nominal gross wage +5.2% +3.7% +3.4% +3.5% +4.1%

Unemployment** 12.5% 13.4% 13.4% 11.8% 11.5%

EUR/PLN 4.12 4.19 4.20 4.17 4.09

Sources: NBP, BZ WBK, PKO BP, GUS *) projections **) year-end

GrossGrossGrossGross WagesWagesWagesWages A: avg monthly wages in PLN B: indexed avg wages, 100=2005

Sector Q3 2013 Q4 2013 Q1 2014 Q2 2014

A B A B A B A B

Coal mining 6,061 138 8,615 196 6,333 144 6,382 145

Manufacturing 3,625 158 3,690 161 3,663 160 3,743 163

Energy 6,021 183 6,736 205 6,358 193 6,020 183

Construction 3,766 160 3,895 166 3,706 158 3,884 166

Retail & repairs 3,408 145 3,456 147 3,544 151 3,577 153

Transportation 3,589 127 3,913 138 3,666 130 3,650 129

IT, telecoms 6,654 173 6,695 174 6,987 181 6,835 177

Financial sector 6,109 137 6,602 148 6,747 152 6,738 151

National average 3,652 145 3,823 152 3,895 155 3,740 149


Construction OutputConstruction OutputConstruction OutputConstruction Output

Month Mar '14 Apr '14 May '14 Jun '14 Jul '14 Aug '14 Sep '14

m/m (%) +24.2 +3.2 +14.0 +16.9 +0.9 -5.4 +19.8

y/y (%) +17.4 +12.2 +10.0 +8.0 +1.1 -3.6 +5.6

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +15.5 +12.1 +5.1 +4.6 +11.8 -0.6 -12.0

Source: The Central Statistical Office of Poland, GUS

Sentiment IndicatorsSentiment IndicatorsSentiment IndicatorsSentiment Indicators

Economic sentiment and consumer confidence indicators

-40

-20

0

20

De

c 1

1

Ma

r 12

Ju

n 1

2

Se

p 1

2

De

c 1

2

Ma

r 13

Ju

n 1

3

Se

p 1

3

De

c 1

3

Ma

r 14

Ju

n 1

4

Se

p 1

460

80

100

120 C onsumer confidenc e (le ft a xis)

Economic se ntiment (right axis)

The economic sentiment (1990-2010 average = 100) is a composite made up of 5 sectoral confidence indicators, which are arithmetic means of seasonally adjusted balances of answers to a selection of questions closely related to the reference variable. Source: Eurostat

Producer PricesProducer PricesProducer PricesProducer Prices

Month Mar'14 Apr'14 May'14 Jun'14 Jul'14 Aug'14 Sep'14

m/m (%) -0.2 -0.2 -0.2 -0.1 -0.1 +0.3 +0.1

y/y (%) -1.3 -0.7 -1.0 -1.8 -2.1 -1.5 -1.6

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +2.0 +2.2 +3.4 +2.1 +7.6 +3.3 -1.3

Construction PricesConstruction PricesConstruction PricesConstruction Prices

Month Mar'14 Apr'14 May'14 Jun'14 Jul'14 Aug'14 Sep'14

m/m (%) -0.2 -0.1 -0.1 0.0 0.0 0.0 0.0

y/y (%) -1.6 -1.5 -1.5 -1.4 -1.2 -0.9 -0.8

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +7.4 +4.8 +0.2 -0.1 +1.0 +0.2 -1.8

IndustIndustIndustIndustrial Outputrial Outputrial Outputrial Output

Month Mar '14 Apr '14 May '14 Jun '14 Jul '14 Aug '14 Sep'14

m/m (%) +9.4 -2.3 -1.7 -0.1 +2.0 -8.5 +16.5

y/y (%) +5.4 +5.4 +4.4 +1.7 +2.3 -1.9 +4.2

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +10.7 +3.6 -3.5 +9.8 +7.7 +1.0 +2.2


TTTTraderaderaderade

Poland exports and imports according to commodity groups, according to SITC classification

EXPORTS in PLN bn IMPORTS in PLN bn

Jan-Jul 2014

y/y (%)

share (%)

2013 share (%)

Jan-Jul 2014

y/y (%)

share (%)

2013 share (%)

Food and live animals 42,121 +6.3 10.7 69,304 10.9 28,562 +5.2 7.3 47,906 7.4

Beverages and tobacco 5,724 +15.8 1.5 8,624 1.4 2,366 +2.8 0.6 4,150 0.6

Crude materials except fuels 9,655 +3.6 2.5 15,744 2.5 12,436 -1.6 3.2 21,585 3.3

Fuels etc 16,270 -6.1 4.1 30,013 4.7 42,903 +3.3 10.9 75,539 11.7

Animal and vegetable oils 1,115 +9.2 0.3 1,864 0.2 1,531 +04 0.4 2,646 0.4

Chemical products 36,076 +4.6 9.2 59,103 9.3 58,772 +6.5 15.0 92,917 14.3

Manufactured goods by material 78,475 +3.1 20.0 129,915 20.3 70,529 +6.5 18.0 112,392 17.3

Machinery, transport equip. 150,231 +7.5 38.3 239,434 37.5 129,867 +3.7 33.1 216,608 33.4

Other manufactured articles 51,908 +11.7 13.2 82,816 13.0 37,818 +14.8 9.6 58,210 9.0

Not classified 629 n/a 0.2 1,782 0.2 8,044 n/a 1.9 16,242 2.6

TOTAL 392,204 +6.0 100 638,599 100 392,828 +5.0 100 648,195 100

Poland's ten largest trading partners, ranked according to 2013

EXPORTS in PLNbn IMPORTS in PLN bn

No Country Jan-Aug 2014

share 2013 share No Country Jan-Aug 2014

share 2013 share

1 Germany 114,332 25.9% 162,548 25.1% 1 Germany 96,855 21.7% 142,161 21.7%

2 UK 28,057 6.4% 42,138 6.5% 2 Russia 50,762 11.4% 79,578 12.1%

3 Czech Rep. 27,311 6.2% 40,110 6.2% 3 China 44,877 10.1% 61,127 9.3%

4 France 24,906 5.6% 36,367 5.6% 4 Italy 23,545 5.3% 34,940 5.3%

5 Russia 19,751 4.5% 34,069 5.3% 5 Netherlands 16,733 3.8% 25,409 3.9%

6 Italy 19,763 4.5% 27,958 4.3% 6 France 17,139 3.8% 25,041 3.8%

7 Netherlands 18,050 4.1% 25,707 4.0% 7 Czech Rep. 15,305 3.4% 24,054 3.7%

8 Ukraine n/a n/a 18,020 2.8% 8 USA 10,635 2.4% 17,431 2.7%

9 Sweden 12,527 2.8% 17,581 2.7% 9 UK 11,431 2.6% 17,184 2.6%

10 Slovakia 11,080 2.5% 17,099 2.6% 10 Belgium 11,044 2.5% 15,137 2.3%


CurrencyCurrencyCurrencyCurrency

Central Bank average rates

as of 17 October 2014

100 USD 329.64 ↓

100 EUR 422.93 ↑

100 GBP 530.82 ↑

100 CHF 350.25 ↑

100 DKK 56.80 ↑

100 SEK 46.13 ↑

100 NOK 50.38 ↓

10,000 JPY 309.42 ↑

100 CZK 15.39 ↑

10,000 HUF 137.61 ↑

100 USD/EUR against PLN

300

350

400

450

4 N

ov 13

16 Jan 14

25 M

ar 14

3 Jun 14

11 A

ug 14

17 O

ct 14

USD EUR

MMMMoney Supplyoney Supplyoney Supplyoney Supply

in PLN m May '14 Jun '14 Jul '14 Aug '14

Monetary base 162,246 173,096 164,008 167,008

M1 557,651 572,376 570,507 574,529

- Currency outside banks 119,649 120,828 122,209 124,986

M2 975,001 980,090 985,769 1,003,128

- Time deposits 435,386 426,351 434,256 448,037

M3 991,120 996,171 1,002,137 1,020,561

- Net foreign assets 142,260 144,033 152,864 162,129 Monetary base: Polish currency emitted by the central bank and money on accounts held with it. M1= currency outside banks + demand deposits M2= M1+ time deposits (inc in foreign currencies) M3= the broad measure of money supply Source: NBP

CCCCreditreditreditredit

The financial sector's net lending in PLN bn,

loan stock at the end of period

Type of loan May' 14 Jun' 14 Jul' 14 Aug' 14

Loans to customers 930,652 940,703 939,641 950,774

- to private companies 273,360 276,709 274,549 277,482

- to households 574,800 578,639 581,447 587,136

Total assets of banks 1,660,583 1,667,783 1,678,129 1,718,251

Source: Central Bank NBP

IIIInterest ratesnterest ratesnterest ratesnterest rates

Average weighted annual interest rates

on loans to non-financial corporations

Term / currency Mar '14 Apr '14 May '14 Jun '14 Jul '14 Aug '14

PLN (up to 1 year) 4.5% 4.4% 4.4% 4.5% 4.4% 4.4%

PLN (up to 5 y ) 4.9% 4.8% 4.8% 4.8% 4.7% 4.8%

PLN (over 5 y) 4.7% 4.7% 4.7% 4.7% 4.7% 4.7%

PLN (total) 4.7% 4.7% 4.7% 4.7% 4.7% 4.7%

EUR (up to 1m EUR) 1.9% 2.0% 2.0% 1.9% 1.7% 1.6%

EUR (over 1m EUR) 3.3% 3.0% 2.7% 3.4% 3.1% 2.5%

Warsaw Inter Bank Offered Rate (WIBOR) as of 17 Oct 2014

Overnight 1 week 1 month 3 months 6 months

2.14% 2.09% 2.07% 2.02% 2.00%

Central Bank (NBP) Base Rates

Reference Lombard NBP deposit Rediscount

2.00% 3.00% 1.00% 2.25%

Stock ExchangeStock ExchangeStock ExchangeStock Exchange

Warsaw Stock Exchange, rates in PLN

WIG-20 stocks in alphabetical

order

Price 17 Oct '14

Change 10 Oct '14

Change end of '13

↓ Alior Bank 73.3 -3% -10%

↑ Asseco Pol. 44.46 +2% -3%

↑ Bogdanka 109.9 +1% -13%

↓ BZ WBK 369 -3% -5%

↑ Eurocash 34.04 +6% -29%

↓ Grupa Lotos 27.74 -4% -22%

↓ JSW 27.99 -10% -47%

↓ Kernel 22.1 -8% -42%

↑ KGHM 126.55 +1% +7%

→ LPP 9,725 0% +8%

↑ mBank 481 +1% -4%

↓ Orange Pol. 10.09 -3% +3%

↑ Pekao 180.2 +1% 0%

↑ PGE 21.33 +3% +31%

↑ PGNiG 4.88 +3% -5%

→ PKN Orlen 41.64 0% +2%

↑ PKO BP 36.59 +1% -7%

→ PZU 473.5 0% +5%

↓ Synthos 4.08 -7% -25%

→ Tauron 5.08 0% +16%

Source: Warsaw Stock Exchange

Key indices

as of 17 October 2014

WIG Total index

52,52,52,52,662662662662....90909090 Change 1 week 0% →

Change end of '13 +3% ↑

WIG-20 blue chip index

2,2,2,2,401.13401.13401.13401.13 Change 1 week 0% →

Change end of ' 0% →

WIG Total closing index

last three months

49,000

50,000

51,000

52,000

53,000

54,000

55,000

56,000

18 Jul 14

11 A

ug 14

3 Sep 14

25 Sep 14

17 O

ct 14


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New Business Consultant

Tomasz Andryszczyk

RRRRegional Dataegional Dataegional Dataegional Data

Poland's regions

(main cities indicated

in brackets)

Industrial output

Jan-Aug 2014 *

Monthly wages (PLN)

Jan-Aug 2014**

Unemploy-ment

Aug 2014

New dwellings Jan-Aug 2014

Indus-

try

Constru-

ction

Indus-

try

Constru-

ction

in '000 % Num-

ber

Index *

Dolnośląskie (Wrocław) 102.4 113.1 4,403 4,228 129.0 11.2 8,335 79.3

Kujawsko-Pomorskie (Bydgoszcz) 104.7 109.6 3,447 3,304 128.0 15.8 3,901 94.2

Lubelskie (Lublin) 102.8 82.8 3,742 3,099 115.9 12.6 3,317 84.9

Lubuskie (Zielona Góra) 115.1 106 3,483 3,081 48.3 13.1 1,811 89.6

Łódzkie (Łódź) 100.6 109.9 3,740 3,315 131.7 12.4 4,195 101.9

Małopolskie (Kraków) 100.7 107.1 3,827 3,391 139.9 10.0 10,236 99.6

Mazowieckie (Warszawa) 100.5 104.3 4,623 5,048 258.0 10.1 18,863 106.3

Opolskie (Opole) 105.9 122.3 3,649 3,549 43.7 12.3 1,168 102.8

Podkarpackie (Rzeszów) 102.9 110.8 3,425 3,124 134.8 14.5 4,231 105.8

Podlaskie (Białystok) 106.9 120.4 3,323 3,904 61.5 13.3 2,539 109.9

Pomorskie (Gdańsk-Gdynia) 108.5 121.8 4,041 3,470 96.0 11.3 6,208 85.1

Śląskie (Katowice) 100.7 109.2 4,572 3,552 181.5 9.9 6,642 94.7

Świętokrzyskie (Kielce) 108.3 100.9 3,444 3,296 77.8 14.6 1,960 122.1

Warmińsko-Mazurskie (Olsztyn) 104.5 107.1 3,293 3,153 95.2 18.4 2,681 99.1

Wielkopolskie (Poznań) 106.5 104.0 3,767 3,784 120.7 8.1 8,894 99.8

Zachodniopomorskie (Szczecin) 104.1 103.0 3,559 3,487 91.0 15.2 3,718 100.9

National average 103.4 107.2 4,016 3,831 1,853.2 11.7 88,699 97.1

*) Index 100 = same period of the previous year. ** without social taxes

Sources: Central Statistical Office GUS, NBP, C&W

Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)

Quarter Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14

in Poland 2,886 175 -3,020 1,885 -2,899 2,771

Polish DI -1,203 957 2,588 -1,449 1,575 562

Year 2008 2009 2010 2011 2012 2013

in Poland 10,128 9,343 10,507 14,896 4,763 -4,574

Polish DI -3,072 -3,335 5,484 -5,935 -607 3,684

Current Account (EUR m)Current Account (EUR m)Current Account (EUR m)Current Account (EUR m)

Period 2011 2012 2013 Q4 '13 Q1 '14 Q2 '14

Trade balance -10,059 -5,175 2,309 138 159 71

Services, net 4,048 4,642 5,249 1,941 1,684 2,013

CA balance -18,519 -14,191 -4,984 -1,324 -1,403 -553

CA balance vs GDP -5.0% -3.7% -1.3% -1.3% -1.1% n/a

Source: NBP, BZ WBK, PKO BP

UUUUnemploymentnemploymentnemploymentnemployment

Registered unemployed, in ‘000 and

% of population in working age

1,800

2,000

2,200

2,400

2,600

Q3 1

1

Q1

12

Q3

12

Q1

13

Q3

13

Q1

14

Q3 1

4

6

9

12

15 number (left axis) % (right axis)

Source: Central Statistical Office GUS

IndustrIndustrIndustrIndustrial ial ial ial PropertiesPropertiesPropertiesProperties

by region, 1H 2014

Existing stock, sq.m

Under const ruction, sq.m

Va-cancy ratio

Effective rents EUR/ sq.m/mth

Warsaw central 617,000 8,000 14.7% 1–5.0

Warsaw suburbs 2,137,000 14,000 11.3% 1.9–3.2

Central Poland 1,107,000 59,000 11.7% 1.9-3.1

Poznań 1,100,000 316,000 1.9% 2.3–2.9

Upper Silesia 1,576,000 57,000 7.9% 2.3–3.1

Wrocław 939,000 315,000 6.2% 2.4–3.0

Tri-city 215,000 45,000 4.2% 2.2–3.7

Kraków 159,000 11,000 1.9% 3.5-4.0

Homes & CHomes & CHomes & CHomes & Commercialommercialommercialommercial PropertiesPropertiesPropertiesProperties

City

New apartments* Offices 1H'14 Retail rents**1H'14

Q2 '14

PLN/sq.m

Change

y/y

Headline

rents**

Vacancy

ratio

Retail

centres

High

streets

Warsaw 7,924 -2.0% 11 -25 13.35% 100-120 148

Kraków 6,389 +6.0% 13.5-14.5 3.6% 35-40 78

Katowice 5,602 -3.7% 11.5-13.8 5.4% 35-40 50

Poznań 6,552 +3.3% 14-15 11.5% 35-40 62

Łódź 4,936 +2.6% 11.5-12.5 10.6% 35-40 78

Wrocław 6,092 +2.0% 14.15 10.9% 35-40 45

Tricity 6,092 -4.9% 12.8-13.5 11.5% 35-40 40

*avg, offer-based ** EUR/sq.m/month; Prime units 100-150 sq.m

Country Credit Country Credit Country Credit Country Credit RatingsRatingsRatingsRatings

Agency rating outlook

Fitch Ratings A- stable

Standard & Poor's A- stable

Moody's A2 stable

Source: Rating agencies

Real EarningsReal EarningsReal EarningsReal Earnings

Average gross wage vs inflation.

100

120

140

160

180

Sep11

May11

Jan12

Sep12

May13

Jan14

Sep14

Wage CPI

Index 100 = Jan 2005. Source: GUS

poland today business review+ no. 57

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