CD Projekt defies market expectations
Sales of “Cyberpunk 2077” for PlayStation 4 have helped CD Projekt post impressive revenue and profit results, surprising market analysts and boosting the company’s share price – despite ongoing niggles with the game.
CD Project defies market expectations despite unresolved issues with Cyberpunk 2077
CD Projekt S.A., a leading Polish video game developer, publisher and distributor, posted significantly higher revenue for Q2 2021 than analysts had predicted, despite 40% of the CD Projekt team reported to still be fixing glitches on its most recent video game, “CyberPunk 2077”. The improved revenue figures are due to the game’s increasing sales momentum on PlayStation and online games platform Steam. While analysts predicted profits in the region of PLN 32.3 million, the company posted profits of PLN 72.6 million on revenues of PLN 273 million, 69% higher y-y and about 50% higher than analysts expected.
CyberPunk 2077 was met with harsh criticism after it was released in December 2020 with many glitches and errors, causing the company to have to refund many customers. According to Bloomberg, the company at one point lost 56% of its share value as a result, equaling about PLN 22.6 billion, and, according to Business Insider, was said to be riven with internal disagreements. This hasn’t stopped them from surprising the market this week, with its share price rising by almost 10%, reaching its highest level since mid-July.
CD Projekt was founded in May 1994 by Marcin Iwiński and Michał Kiciński, video game retailers who initially acted as distributors of foreign video games for the domestic market before later branching into original game development when they set up CD Projekt Red in Łódź in 2002. The company achieved international success with the release in 2007 of the first ‘The Witcher’ games, based on the Wiedźmin books by Andrzej Sapkowski. The company has been at the vanguard of a Polish eminence in the international gaming market, making Poland’s gaming sector one of its standout industries.
Records tumble in Poland’s industrial market
The Polish industrial market continues its high growth rate and is setting new demand records, according to global real estate services company JLL’s Polish office. In the first half of 2021 companies leased 3.15 million sqm, over 40% more than in the same period in 2020. “Net take-up, including new leases and expansions, reached 2.3 million sqm – the fourth result in Europe after Germany, UK, and the Netherlands. The average H1 increase in new take-up for Poland was 77% above the 5-year average. In Europe as a whole, this number was 44%,” said Tomasz Mika, Head of Industrial Leasing in Poland, JLL
The ‘Big Five’ markets of Poznań, Upper Silesia, Wrocław, Warsaw and Central Poland accounted for 77% of the newly-leased space in the first six months of 2021. Poznań set an industrial take-up record with 500,000 sqm of new leases and gross take-up of 626,000 sqm. The mature markets outside the ‘Big Five’ – Tri-City, Szczecin, Lubuskie, Kraków and Kujawy – also performed well. Emerging locations were less active.
The continued growth of the e-commerce sector is reflected in the interest shown in warehouse space. Logistics operators and couriers (38%) and retail chains (33%) accounted for over 70% of net take-up in the first half of the year – these sectors accounted for 14 of this year’s largest new leases totaling 840,000 sqm. The largest deal was signed by DHL for Zalando (109,000 sqm.). Manufacturing companies were also active, accounting for 24% of new leases.
SUPPLY: The first half of the year was also record-breaking in terms of construction in the pipeline. From January to the end of June, more than 1.14 million sqm was delivered to the market – another record. As a result, the total modern industrial stock in Poland reached 21.8 million sqm, maintaining the country’s sixth position in the European Union in terms of market scale. Upper Silesia and Warsaw accounted for most of the new supply (a total of nearly 500,000 sqm). Supply under construction exceeded 3 million sqm for the first time in Poland’s industrial market. Poland currently ranks second in Europe, after Germany, in terms of development activity, according to JLL. Approximately 40% of the warehouses under construction are not secured by lease agreements. At the end of June, the majority of new warehousing space, totaling more than 2.5 million sqm, was under construction in Poznań, Upper Silesia, Wrocław, Lubuskie Voivodeship, Warsaw and Central Poland. Interestingly, as much as 400,000 sqm will be delivered in Tri-City, Szczecin, and Bydgoszcz.
RENTS: Rental rates remain stable. Urban locations continue to be the most expensive, with base rents in Warsaw ranging between EUR 4.2 and EUR 5.25 sqm/month. The most attractive financial conditions are offered by big-box facilities located in Central Poland (EUR 2.6-3.5 sqm/month). Currently, 6.7% of existing industrial space in Poland remains vacant.
INVESTMENT: Investor interest in Poland’s industrial market remains high. From January to the end of June facilities worth a total of EUR 855 million changed hands, the second-best H1 result in the market’s history. “An interesting phenomenon and a good prognosis for further development of the sector is the emergence of new players who have not previously had any industrial properties in their portfolios,” said Sławomir Jędrzejewski, Head of Industrial Investment, JLL. The largest industrial investment transaction in the first half of the year was the acquisition of a portfolio of four logistics parks in Wrocław, Poznań, Tri-City and Upper Silesia by the Ares Group from Panattoni. Also of note was the sale of a portfolio of five projects by AEW to a fund created by Reino Capital, IO Asset Management and Grosvenor Group.
Yields for prime multi-let warehouse properties with an average 5-year lease length, range from 5.25% – 5.5%. Despite the temporary lack of specific examples, a progressive compression can be observed, even down to around 4.5% in the case of ongoing negotiations in the Warsaw City market. Rates for parks with long leases (10 years) were below 4.5%, while exceptional projects leased for more than 15 years hit 4% with potential for further compression.
UBM & Accor open new Mercure hotel in Katowice
The 8-floor, 268-room Mercure Katowice Centrum hotel, Austrian developer UBM Development’s 7th hotel in Poland, has opened in the centre of Katowice, the capital of Silesia, close to the city’s main train and bus station.
“To enter Katowice – the centre of Silesian business and a cultural hub – was a great decision by UBM and part of our urban hotels strategy. Through fantastic cooperation with the city hall throughout the entire project, we succeeded in regenerating a huge city zone just in front of the main railway station. Katowice’s hotel market has been continuously developing in recent years and we remain very optimistic about the future. Strong domestic demand, office developments, and the overall efforts of the entire Silesian region with tourist promotions and events at places like MCK (Katowice International Conference Centre) make the city a great all-week destination,“ said Marta Abratowska-Janiec, who is responsible for Asset Management and Development Hotels Poland, at UBM.
“By opening a hotel in one of the largest industrial centres in Poland, we want to consciously and actively participate in the green transformation of Katowice. (The hotel) uses environmentally-friendly technologies at every step – from the plant wall on the facade of the building, through ecological solutions inside the hotel, including the use of renewable energy sources, rainwater and an advanced water and energy management monitoring system,” said Andrzej Kleeberg, Mercure Katowice Centrum General Manager.
The Mercure Katowice Centrum includes an adjacent office element of 2800 sqm leasable space and was pre-sold to Union Investment in 2019. The German investor also bought an Ibis Styles-branded hotel in Kraków – and also next to the city’s main train station – from UBM as part of the same deal, worth c. EUR 86 million. Both leases run for 25 years.
Mercure is a brand of Accor, the France-based hospitality group which operates more than 5000 properties in 110 countries. Accor is present in over 40 locations in Poland.
PLN to EUR strongest since July in spite of rising inflation
The zloty to euro exchange rate reached PLN 4.50 this week in spite of rising inflation, reports Business Insider. According to the title, the meaning of this is ambiguous, with many analysts wondering whether the zloty is weaker – due to inflation – or in fact stronger from the currency market point of view.
“The zloty clearly remains under the influence of (Wednesday’s) inflation reading, which turned out to be quite a surprise,” said Arkadiusz Trzciołek, a Fixed Income Strategist at PKO Bank Polski, in conversation with PAP Biznes. “Maybe the deviation from forecasts was not that big, but this is another noticeable rise in inflation after the one we had in July. Some economists point out that it’s not necessarily this year’s peak in inflation. This is a factor that significantly raised expectations for an interest rate hike. The market is pricing in one of the steepest rate hikes in the coming months and this translates into a strengthening of the zloty. In the group of emerging markets, we are slowly becoming an exception – the MPC (Monetary Policy Council) is one of the few so far that has not decided on hikes, but also does not talk about them. Rate hikes are a global trend, and inflation in Poland is already well above the NBP target and may require a reaction from the council,” he said.
Foreign businesses criticize the new “Polish citizen tax” (podatek od polaka)
More than a dozen international chambers of commerce in Poland have written to the Minister of Finance, Tadeusz Kościński, to criticize the ministry’s plan to introduce the so-called “Polish citizen tax” (podatek od Polaka), whereby foreign companies with at least one ‘tax resident of Poland’ as a board member would be required to pay taxes in Poland – in a story reported by RMF24. The plan is part of the “Polish Deal” (Polski ład) economic and social recovery programme announced by the Polish government over the summer. The international chambers argue that the new regulation is too broad – covering companies that don’t even conduct business in Poland – and that it conflicts with international agreements. In the letter, the chambers argued that this tax should apply only to foreign companies in which a person living in Poland has a majority share.
Business news compiled by Poland Today from Polish daily media and original sources