Business News from Poland with a Finnish Twist
Take a look at the main highlights from September newsletter:?
ECONOMY IN POLAND
Changes in inflation, main interest?rate & EUR/PLN exchange rate
1. Poland's CPI?inflation?fell to 10.1% y/y in August, a decrease from 10.8% y/y in July.?Polish Economic Institute predicts that in September inflation will reach approx. 9%.
The core inflation, which excludes the prices of food and energy, reached 10% y/y in August and was down from July's 10.6%.
2. Polish Monetary Policy Council (MPC) surprised the market by cutting the main interest rate from 6.75% to 6%. Most economists expected a cut of only 0.25 pp. This is the first downward move in more than three years. Since September 2022, the main interest rate have been stable at 6.75% (the highest in two decades), achieved with 11 increases in a row starting in October 2021.
3. Polish zloty has weakened, mainly as a result of increase in interest rates. After a period of stabilization below 4.50, recently EUR/PLN exchange rate has reached 4.63. This does not help in meeting the inflation target, as imported products, including key energy resources like oil and gas, become more expensive.
According to Goldman Sachs, the improvement of the economic situation in Europe could contribute to strengthening zloty. However, Polish currency also faces difficult challenges, including rising oil prices, disappointing PMI readings, and uncertainty related to October elections.
As of 28 September 2023:
1 EUR = 4.63 PLN vs 4.47 PLN in our last newsletter (28.08)
1 USD = 4.41 PLN vs 4.14 PLN.
Unemployment & salaries
1. According to the most recent data by Eurostat, Poland's seasonally-adjusted unemployment rate remained steady at 2.7% in June. This result places Poland in the second place within the European Union, tied with Czech Republic. Malta has a slightly better rate, but only by 0.1 pp.
2. Average wages and salaries in the corporate sector rose by 11.9% y/y in August, following a 10.4% increase in July. In real terms, wages in the enterprise sector increased by 1.7% y/y. Real wage growth is expected to support further recovery in real disposable income for households, which should lead to increased consumption by late 2023 or early 2024.
Polish?PMI falls further
S&P Global Poland Manufacturing PMI fell further to 43.1 in August, from 43.5 in July. It is the 16th consecutive month when reading was below the 50 mark separating contraction from growth.
Output, new orders, employment, and procurement all decreased faster than in the previous month. August is a fourth consecutive month when all five elements of the headline PMI made negative contributions.
In August, the one-year PMI forecast worsened as businesses anticipated a slowdown in the economy. While overall output expectations remained optimistic, they were at their lowest point in 2023 so far.
/BIK/
Value of housing loans applications up by 299.9% y/y in August
In August the demand for mortgages reached a record high level - potential borrowers submitted home loan applications for a value three times higher than a year ago.
According to Credit Information Bureau, one of the reasons for such a significant increase in value of applications is great interest in home loans under the "2% Safe Credit" government program. BIK estimates that approx. 60% of people applying for a mortgage in August 2023 were individuals aged up to 45 who had never taken on a home loan before, applying for up to EUR 133.8 thousand.
The increase in demand is also partly due to improved sentiment towards home loans among potential borrowers who cannot be beneficiaries of the program, but their capacity to take on a mortgage has increased. Creditworthiness is growing as a result of rising salaries, a decrease in the value of WIBOR index in anticipation of interest rates cut, and the spring reduction in interest rate buffer by the Polish Financial Supervision Authority.
FINNISH BUSINESS & CULTURE IN POLAND
/Sofigate/
Sofigate opened new center in Poland
As part of acquisition of?Xceed AB, Sofigate's Swedish Salesforce arm, the company set up a proficiency center in Poland to reinforce its Salesforce operations. The former nearshore partner of Xceed is now operating under the Sofigate brand.
This proficiency center, comprising approx. 20 skilled professionals, is contributing to our expansion in the Salesforce sector. The addition of the Polish team is a strategic enhancement to our organization, significantly boosting Sofigate's competitive edge in the Salesforce market.
“Over the next few years, we have ambitious plans to recruit 100 highly skilled employees in Poland and Hungary,“ said CEO Sami Karkkila.
Unikie launches a new office in Wroc?aw
Finnish software development company Unikie first entered Polish market in 2020 by setting up an office in Szczecin. Since then, Polish team has been involved with a number of development and R&D projects.
Unikie Poland wants to strengthen its position in Poland - just recently, the company celebrated opening of a new office in Wroc?aw.
Overview of Finnish networking events in September
During the past few weeks, you may have had the opportunity to meet with Weronika and Tuomas from our Spondeo at various networking events in Poland. Here's the overview of the most important ones:
15 September - Crayfish Party, Warsaw
It was the first time that Finnish and Swedish sections of SPCC organized traditional Kr?ftskiva / Rapujuhlat together. There was plenty of singing in both languages, good humor, paper bibs and hats, and, of course, delicious crayfish. The toastmasters were Dag Nilsson and Tuomas Asunmaa, the members of Swedish and Finnish sections.
20 September - Business Breakfast, Embassy of Finland in Warsaw The event was hosted by Ambassador of Finland P?ivi Laine and FTG Chairman Tuomas Asunmaa. Professor Miko?aj Cze?nik, the keynote speaker, delved into the main factors influencing the upcoming elections, sparking discussions among the participants.
21-22 September - COMMON FUTURE Congress for Reconstruction of Ukraine, Poznań
The keynote speaker at this event was Rafa? Brzoska, the Founder & CEO of InPost Group. He emphasized the importance of not waiting until the war is over. The time to act is NOW, and all the biggest players are already present in the Ukrainian market.
? One of the wealthiest Poles announced that he is ready to allocate EUR 100M to establish a special fund that will invigorate Polish-Ukrainian cooperation.
? According to Brzoska, companies should not only focus on construction industry, but also on drawing up plans for future sustainable development.
? He also pointed out that, while Poland will definitely be one of Ukraine's most important trading partners, Polish companies should not assume they will have a special place in the rebuilding process. We look forward to seeing you at the next events!
Ty?vene builds a dredger for Maritime Office in Gdynia
Ty?vene’s first ever trailing suction hopper dredger (TSHD) was successfully launched. The vessel will be used to maintain the depth in the Vistula Lagoon Canal and fairway in Poland.
TSHD, named Ursa, is a steel construction made to withstand a high level of wear and tear. The vessel is also tailor-made and designed to facilitate the very specific requirements put in place by the Maritime Office in Gdynia.
/Efecte/
D&A event by Efecte at Finnish Embassy
Efecte organized Digitalize and Automate event at the Embassy of Finland in Warsaw. Niilo Fredrikson, the CEO of Efecte, delivered the keynote speech.
On 19 September, annual D&A event also took place live in Helsinki, and was broadcasted across Europe. It brought together thought leaders, experts and people who want to stay at the forefront of the ongoing AI revolution.
/EskaRock/
Blind Channel will perform three times in Poland in 2024
Blind Channel,?Finnish nu metal band from Oulu, have recently announced their new album "Exit Emotions". As part of its promotion, the band will embark on a tour spanning 30 European cities, including three Polish cities (Wroc?aw, Warsaw and Gdańsk in April 2024). Blind Channel will be accompanied by Gh?stkid and Rock Band From Hell.
But wait, there's more! In the next edition of our publication, you will find exclusive interview conducted by Tuomas from Spondeo with Joonas and Olli from Blind Channel right before their concert in Poznań. Stay tuned!
/Spondeo/
20+ years in factory management in Poland: Interview with Martti Aromaa
Ready to find some insights into factory management in Poland? Martti Aromaa shared with us reflections on his 20-year tenure as the CEO of Reka Rubber.
? Why has Reka Rubber moved its production to Poznań?
? What surprised Martti the most in Poland, and what will he miss?
? Is it better to hire a Polish or Finnish factory manager?
? What do you need to know before starting a new venture in Poland?
(Kirja, Spondeo)
Looking for something to read? Here's the list of Finnish books recently translated to Polish
In 2022, 27 books were translated from Polish to Finnish, and Finnish-Polish Literary Translators’ Collective KIRJA prepared a complete list for Spondeo's latest publication.
Non-fiction, short stories, crime, fiction, romance, children's and young adult literature, or maybe a picture book? Find the list in the link below and take your pick!
POLITICS
Parliamentary elections and nationwide referendum will take place on 15 October
On October 15, 2023, Poland will hold elections for Sejm and Senate, as well as a referendum consisting of four questions.
Voters will be asked to express their opinions on privatizing state-owned businesses in the strategic economic sectors, raising the retirement age to 67 for men and women, accepting illegal immigrants through the EU relocation system, and eliminating the barrier on Poland's border with Belarus.
Drop in fuel prices
In the last weeks, prices at gas stations have been falling. Most Poles (62%) believe that this is the effect of the upcoming elections. The majority (nearly 75% of respondents) also expect increases in prices after October 15. According to the experts, pricing policy is destabilizing the market, and its impact on the election outcome is uncertain.
Opinion polls
According to opinion polls, the ruling Law and Justice (PiS) party and its coalition partners are currently in the lead, outpacing the primary opposition bloc led by center-right Civic Platform (PO), which is headed by former European Council President Donald Tusk. Interestingly, Civic Coalition received 34% of votes and won in mock primary election held in the central town of Wieruszów. PiS came second with 32%. In 2019, the results of mock elections in the same city were close to the national results.
Election promises
The PiS party has put forward several proposals, including free medication to children and the elderly, allocating EUR 29.5B for public sector pay raises, and enhancing social programs, such as a 60% increase in child benefits to PLN 800 (EUR 172) per month per child & additional support for pensioners (14th pension).
Additionally, PiS has pledged to modernize apartment buildings constructed before 1989, which accommodate more than 8 million residents. The government also plans to allocate over 4% of GDP to defense in 2024.
On the other hand, the opposition Civic Platform's agenda includes salary hikes of PLN 1,500 (EUR 323) for teachers and civil servants, along with a promise to raise the minimum wage to PLN 6,450 (EUR?1,390) starting in July 2024, up from the current PLN 4,000 (EUR 862).
A significant aspect of their plan is designed to support small businesses, a group that has been gravitating toward the nationalist and libertarian Confederation party. Civic Platform has proposed tax cuts and tax-exempt status for incomes below PLN 6,000 (EUR 1,293) per month, up from the current threshold of PLN 3,000 (EUR 646).
/EuroNews/
Cash-for-visas scandal: European Commission asks Poland for clarifications
Ylva Johansson, the European Commissioner for home affairs, has initiated an inquiry into the cash-for-visas scandal unfolding in Poland. In a letter to the Polish government, she has requested clarifications regarding the allegations surrounding a scheme operated by Poland's Ministry of Foreign Affairs and consulates, whereby migrants from Africa and Asia allegedly paid exorbitant amounts for fast-tracked visas. These visas granted access to the Schengen area, encompassing 27 European countries.
Reports suggest that approximately 250,000 visas have been issued since 2021 in exchange for bribes, costing thousands of dollars each. Some individuals purportedly used these visas as an intermediary step before reaching their ultimate destination, the United States.
The ruling Law and Justice (PiS) party has acknowledged wrongdoing but downplayed the scale of the issue. They have launched an audit of consulates abroad, terminated contracts with external visa application services, and dismissed several Foreign Affairs Ministry officials. Piotr Wawrzyk, the deputy foreign minister in charge of consular matters, faced dismissal and?reportedly attempted suicide amid the scandal. So far, the state prosecutor has charged seven individuals with corruption and involvement in the visa scheme.
INTERNATIONAL INVESTMENTS IN POLAND
领英推荐
Swedish Lyvia Group acquires Polish Arc Consulting
Lyvia Group, Swedish technology and software solutions conglomerate, has successfully acquired Arc Consulting Group, Polish firm specializing in the development of intelligent business models using modern technologies. This strategic acquisition is set to contribute EUR 3.5M in EBITDA to the group. Furthermore, it marks the third Polish company to join Lyvia Group within a single year.
This acquisition aligns perfectly with Lyvia's European strategy of seeking out entrepreneur-led companies known for their best-in-class solutions, exemplary service offerings, and robust financial performance.
Philip Morris will invest EUR 217M in Kraków
US tobacco giant Philip Morris, whose most famous brand is Marlboro, has revealed its plans to invest EUR 217M in the Polish city of Kraków.
The tobacco industry has been undergoing a technological revolution for several years, resulting in a gradual shift away from cigarettes towards the production of the so-called smokeless nicotine products. The change in the industry was initiated in 2016 by Philip Morris, which remains the only tobacco company that has committed to ending cigarette production.
Historic contract for Poland's first nuclear power plant
In a historic move, Westinghouse Electric Company, Bechtel, and Polskie Elektrownie J?drowe (PEJ) signed an Engineering Services Contract for Poland's first nuclear power plant in Pomerania. The contract covers site-specific design, Turbine Island, and more, with work beginning immediately.
This partnership aims to reshape Poland's energy landscape, drawing on the experience of the Plant Vogtle project in the U.S. It's not just a commercial venture; it's about enhancing Poland's energy and national security. Poland's first AP1000? nuclear reactor is expected to operate commercially by 2033, marking a critical step in its energy transition.
Veolia will build two gas-powered energy units in Poznań
The project will contribute to cleaner air and increased security of heat supply for the capital of Greater Poland and its residents. According to?Luiz Hanania, VP of Veolia Energia Polska, the construction of gas-powered energy units in Poznań will reduce CO2 emissions by as much as 35%.
The planned commissioning of the new units, which will have a total thermal capacity of up to 214 MW and electrical capacity of up to 114 MW, will take place in late 2024 and early 2025. They will produce 800 GWh of electricity and 3,500 GJ of heat annually.
Veolia is a generator and distributor of system heat and electricity in Poznań. The company supplies industrial plants, public institutions, and about 60% of the city's residents with heat.
Estonian company Eleport plans to install 40% of its charging network in Poland
Eleport currently has 100 electric vehicle chargers in 16 cities in Poland. By the end of 2023, the company expects to locate around 200 in 24 cities. Ultimately, by 2030, up to 40% of the company's planned 100,000 charging points are supposed to be in Poland.
Eleport, based in?Tallinn, is a company building EV charging network in Central and Eastern Europe; its shareholders include Bolt and Gren.
/Danone/
Danone invests EUR 50M in line expansion in Poland
Leading global food & beverage company Danone has announced a EUR 50M expansion of its production facility in Opole, Poland, with the goal of enhancing its medical nutrition capabilities to meet the needs of patients worldwide.
The Opole production plant is a state-of-the-art factory, awarded by the World Economic Forum for its digital transformation, and is one of the largest Danone factories in Europe, occupying a total area of almost 13ha and employing 700 people.
Unilever invests EUR 20M in Poznań factory
Unilever is making a significant investment in its food factory located in Poznań, Poland, with the aim of boosting the production of its ramen noodles brands.
The global Fast-Moving Consumer Goods (FMCG) giant is allocating approx. EUR 20M to enhance the facility by introducing a new production line dedicated to its Knorr, Unox, and Amino brands of noodles.
Unilever has highlighted that automation will be an integral part of this project, enabling the plant to manufacture up to 600,000 packs of noodles daily, destined for distribution in Poland, Hungary, the Netherlands, and other European countries.
The company's head Polish office is located in Warsaw, where it employs nearly 500 people. Besides foods factory in Poznań, Unilever has also European Operations Centre in Katowice, Ice Cream Factory in Banino, and Home and Personal Care Factory in Bydgoszcz.
Lulu Group launches operations in Poland
Lulu Group,?Emirati-based multinational conglomerate company that operates a chain of hypermarkets and retail companies, is set to establish a sourcing and export hub for Central Europe in Poland. The group has entered into two separate Memorandums of Understanding (MOUs) with the Polish government entities.
In the initial phase, the group anticipates exports worth EUR 50 million, with expectations of significant growth as additional product lines are introduced.
Hyundai E&C will establish Polish branch
Hyundai Engineering and Construction, a major South Korean construction company, is set to establish a new branch in Poland, with plans to offer small modular reactors (SMRs) that are both smaller and safer compared to traditional nuclear reactors.
This new office, located in Warsaw, will serve as a platform for expanding its nuclear reactor business into other European countries, including Lithuania, Romania, and Slovakia. Hyundai E&C intents to establish the Polish branch by the end of 2023.
In September the company also initiated partnership with Poland's national nuclear research center to undertake joint research projects in nuclear technology.
POLISH BUSINESS NEWS
First hydrogen locomotive in Poland
The first hydrogen-powered locomotive in Poland debuted on the Gdynia-Hel route. While driving, it emits only water vapor and can operate on non-electrified lines.
The locomotive is owned by Orlen Group,?Polish multinational oil refiner and petrol retailer, and was established in cooperation with PESA Bydgoszcz. This is one of the first such projects in Europe. Although the locomotive started its first journey on the Gdynia-Hel route, ultimately it will be used at the plant in P?ock.
Hydrogen may be the fuel of the future and the more expensive oil becomes, the more price competitive it becomes.
10 best startups in Poland in 2023
1. Ramp (EUR 61M, round B) - the company is developing a global payment infrastructure connecting cryptocurrencies with global financial systems.
2. Vue Storefront (EUR 18M, round A) - the platform helps e-commerce companies improve the performance of their websites across devices without imposing restrictions on their graphical interfaces and functionality.
3. ElevenLabs (EUR 17M, round A) - the company offers world's best speech synthesis technology. The solution not only allows you to generate a synthetic voice based on text, but also clone it based on available sound samples.
4. SunRoof (EUR 15M, round A) - this Polish-Swedish startup is revolutionizing home power supply and enabling decentralized energy production. The company offers roofs integrated with photovoltaic cells, facades and solar shelters.
5. Nevomo (EUR 15M, round A) - the company wants to create a fast magnetic railway using hyperloop technology and prove that traveling around Poland (and beyond) can be much more efficient.
6. Contec (EUR 10M, round A) - the company recovers industrial raw materials from used tires.
7. RedStone (EUR 7M, seed round) - the startup is building a multi-chain database that provides pricing information for smart contracts and DeFi protocols.
8. SPECTRAL Technologies (EUR 5M) - the company's device allows you to accurately image what is underground up to a depth of 75 m.
9. Oblivious (EUR 5M, round A) - thanks to this startup's services, companies can more easily enforce data confidentiality restrictions without having to get entangled in bureaucracy.
10. Pathway (EUR 4M, pre-seed round) - the company provides customers with reduced latency while reducing cloud spend.
Upcoming Trade Fairs in Poland
Looking for networking opportunities and a chance deepen your industry knowledge? As the seasons shift, Poland’s business scene gets increasingly busy with various trade shows and exhibitions. In our latest article, we’ve gathered information about the biggest events taking place in Poland in the next months to help you find the ones that match your interests. Click the button below to check the list of upcoming trade fairs in Poland!
The value of the eco cosmetics sector is decreasing
The long-term upward trend in the ecological, organic, and bio cosmetics market was interrupted a few months ago, and the downward trend still persists. Currently, the value of this sector is EUR 48M (a decrease of 9% y/y). At the same time, in overall terms the cosmetics market is growing and has exceeded EUR 2B (an increase of 8% y/y).
“The economic situation encourages Poles to save money and choose options that are more favorable not for the environment but for their wallets," said Magdalena Pac-Pomarnacka, consultant at Consumer Panel Services GfK.
Fast food and pizza places are losing customers
Pizza and fast food industry lost 13.3% customers and noted 4.1% decrease in in-store visits from June to August 2023 compared to the same period last year. Due to high inflation, some of the customers switched to grocery stores offering ready-made meals.
"Currently, as much as 90% respondents declare buying food at promotional prices. And if spending on everyday, basic purchases drains wallets to a greater extent than before, this may certainly be the case with catering services, the use of which is not the first need" - said Nikodem Sarna, co-author of the study from Proxi.cloud.
Study also shows that fast food customers invariably have a high level of loyalty. More than 90% of them are those who make at least half of their visits to restaurants of the same chain. For about one third of customers, visits to their preferred chain account for a minimum of 90% of all outings.
Spar Group exits Polish market
Dutch retail-store company Spar Group decided to exit the Polish market by disposing of its struggling Spar Poland business. The decision comes after evaluating all options and is seen as in the best interest of the company and shareholders. While specific details of the disposal process are not disclosed, Spar's share price surged more than 11% in response.
Spar Poland managed a 5% increase in turnover during the review period, but challenges persisted. This exit leaves Spar with its BWG Group in Ireland and West England and Spar Switzerland in Europe.
The decision to exit Poland is attributed to unfavorable timing and economic circumstances, compounded by the challenges posed by the COVID-19 pandemic and trust issues with retail customers following financial difficulties.
Deloitte Audyt faces three-year ban in Poland
According to Rzeczpospolita, Polish Audit Supervisory Agency had issued a decision against Deloitte Audyt, prohibiting the company from conducting financial audits in Poland for a period of three years.
The ban on conducting audit activities was imposed by the second instance authority of the Polish Audit Supervisory Agency and is not yet considered final.
The decision likely stems from the GetBack scandal, which emerged around five years ago. As a result of identified irregularities, approx. 9k bondholders suffered losses of nearly EUR 652M. Current clients of Deloitte, including companies like Orlen, are now seeking new auditors.
/UOKiK/
Poland's consumer protection authority imposed EUR 1M penalty on Natural Pharmaceuticals
The Office of Competition and Consumer Protection (UOKiK) imposed a total penalty of EUR?1.12M on the company for practices violating the collective interests of consumers.
The Office questioned seven practices that could influence consumers' decision-making process and manipulate their behavior in various ways, such as non-transparent methods of informing about participation in the annual supply program, a supposed million satisfied customers of a particular supplement, free samples that turned out to be a paid subscription etc.
Natural Pharmaceuticals is part of Natural Group AS, a Norwegian brand owner and distributor of dietary supplements. The company does not agree with the decision and will appeal it. It has been been present on the Polish market for 13 years.
CULTURE & SOCIETY
Poland wins European Volleyball Championships
Polish team defeated the hosts in Rome 3-0, playing an almost perfect match. This is the second gold medal in the history of Polish volleyball at the European Championships. The previous one was won 14 years ago. In addition to the golden medal, volleyball players received a check for EUR 500k.
51% of Poles combine public and private healthcare
In the six months leading up to the CBOS survey, 86% of respondents said they had used healthcare services. Only 24% of them relied exclusively on the public National Health Fund (NFZ), a record low, while 11% sought care solely from private providers.
The largest share, 51%, chose a combination of both public and private healthcare services. This is the highest ever recorded?result and 15 pp. increase from 2021 when the last survey was conducted. The study revealed that older, poorer, and less educated individuals were more likely to exclusively depend on public healthcare.
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