LOT halts Belarus flights, Budimex bought, Pepco shares up on debut

LOT Polish Airlines by Oskar Kadaksoo
Belarusian activist journalist Roman Protasevich was arrested when the Ryanair flight he was on was forced to land in Minsk. As a result, LOT Polish Airlines has suspended flights to the country for the foreseeable future

The following news items appeared in PT Daily, Poland Today’s daily business newsletter, on Monday 26 May – free to register here

LOT suspends flights to Belarus due 

Poland’s flagship airline LOT Polish Airlines has suspended all flights to Belarus, and has re-routed its flights crossing Belarusian airspace, the airline informed Polish Press Agency (PAP) on Tuesday. The move comes as a sanctioning measure against the Belarusian authorities after the Sunday arrest of opposition journalist Roman Protasevich. Protasevich was on board a 23 May Ryanair flight from Athens to Vilnius that was forced to land in Minsk because of a phony bomb threat organized by the Belarus authorities. 

Poland, which has called Protasevich’s arrest “an act of state terrorism”, has appealed to the EC to retaliate with sanctions against the Belarusian government, including the suspension of all air links between Belarus and the EU states. On Monday, the EU summit in Brussels agreed to the sanctions.


Budimex residential development company bought by Cornerstone & Crestyl

Cornerstone Partners, the corporate and real estate private equity investment manager, together with Crestyl, the Czech real estate developer and investor, has finalized the acquisition of Poland’s residential developer, Budimex Nieruchomości, according to the company.

The Budimex Nieruchomości transaction, valued at PLN 1.51 billion, is the largest real estate deal in Central and Eastern Europe since the outbreak of the Coronavirus pandemic, the company said in a press release. Since it was founded in 1999, Budimex Nieruchomości has built over 18,600 units in five major cities in Poland and currently has 19 construction projects underway. “Together with Crestyl, we would like to establish the company as a significant player in the area of residential real estate sales and rentals in the CEE region. This acquisition is the first step towards achieving that goal,” said Paweł Dębowski, managing partner at Cornerstone Partners, which was founded by Przemsław Krzych in 2001. Omar Koleilat, Crestyl Group CEO, said: “There’s a bright long-term future ahead for the Polish real estate market. Despite its constant growth, the number of dwellings per capita is still significantly lower than the EU average. Additionally, there’s still a lack of cohesion in the Polish residential sector, and we see great opportunities ahead. Cornerstone also announced the signing of a strategic partnership with one of Europe’s leading residential real estate firms, Heimstaden Bostad, to acquire 2,500 flats for rent over the next 5-year period. 


State oil refiner to build new production facility in Płock

Oil refiner PKN Orlen plans to launch a production facility for the Olefin III Complex in the Polish city of Płock, where it is based, that will contribute to an EBITDA growth of an estimated PLN 1 billion annually. The total cost of the investment is estimated at about PLN 13.5 billion. The project’s construction phase is to be completed by Q1 2024, while production launch is scheduled for early 2025. The company will seek state aid “to reach the acceptable economic efficiency level for the project,” PKN Orlen said in a statement. The implementation of the project was approved by the Orlen management board on 18 May. The project is a part of an investment programme announced back in 2018.


Turów mine dispute continues

Czech Prime Minister Andrej Babis said there is no agreement yet that would end the legal dispute over the environmental impact of the Turów open pit coal mine in southwest Poland, and he will not withdraw his complaint against the mine yet. The mine is close to the Czech border, and Czechia has been seeking its closure. “I am glad that after many years of negotiations, Poland has recognized that mining in the Turów mine is harmful to the environment, but the problem has not yet been resolved,” Babis wrote on Twitter. Earlier on Tuesday, Polish government spokesman Piotr Muller tweeted that Poland and Czechia are finalising the agreement, and the complaint will be withdrawn afterwards.

On 21 May the European Court of Justice ruled that the extraction of lignite coal at the Turów mine must be halted immediately. The mine’s licence expired in April 2020 but was extended by the Polish government until 2026, and again in April this year, until 2044. However, Czechia has disputed the prolongation, saying the mine had been operating illegally since then.


Poland is Germany’s 3rd biggest imports partner

Poland in Q1 was Germany’s third-largest trade partner in terms of imports volume, data from Destatis, the German statistical office, showed. The value of imports from Poland amounted to EUR 16.62 bn, an increase of 14.7% y-y and higher than the U.S., Italy and France. The growth of Polish export is helped by geographic proximity, competitive costs of producing goods, and a favorable exchange rate, Destatis said. The top two places are taken by China (EUR 32.16 bn) followed by The Netherlands (EUR 24.05 bn).


Pepco shares jump on today’s WSE debut

Shares in discount retailer Pepco Group jumped on its stock market debut in Warsaw on Wednesday. In the first hours of trading, the share price grew 10% to PLN 44 versus an IPO price of PLN 40. Today’s debut may become Poland’s biggest IPO of 2021. The final offer size meant that 18% of the company – or 92,446,602 shares – would be sold. Pepco Group, which owns the Poundland chain in the UK as well as Pepco and Dealz in Europe, is owned by South African international holding company Steinhoff International Holdings. Pepco Group operates over 3000 stores in 15 countries in Europe. The first Pepco stores were established in Poland in 2004.


Poland receives latest EU employment support disbursement

On 25 May the European Commission released the latest disbursement of EUR 14.1 bn to twelve EU countries as part of the European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE), including EUR 1.56 bin for Poland. “Overall, 19 EU Member States are due to receive a total of EUR 94.3 billion in financial support under SURE, following approval by the Council of the European Union based on a Commission proposal. Countries can still submit requests to receive financial support under SURE which has an overall firepower of up to EUR 100 billion and is available until the end of 2022” stated the EC’s website. 

“SURE loans will help Member States to cope with sudden increases in public spending to retain employment after the coronavirus pandemic,” the Commission said. “It will provide financial assistance to Member States to address sudden increases in public expenditure for the preservation of employment. Specifically, the SURE instrument will act as a second line of defence, supporting short-time work schemes and similar measures, to help Member States protect jobs and thus employees and self-employed against the risk of unemployment and loss of income,” according to the EC’s website. Poland’s full proposed allocation is EUR 11.23 bn, with EUR 8.2 bn transferred so far. 


Pharmacy sales – and prices – increase in 2021

The value of sales in pharmacies in 2021 is expected to increase by 3.5% y-y to PLN 39 billion, research company PEX PharmaSequence said in a report. In April, sales in pharmacies increased by 18.0% y-y to PLN 3.287 billion, while on a monthly basis sales fell by 6.9%.

The average retail price of a drug in April amounted to PLN 23.9, an increase of 1.1% versus March and by 7.5% y-y.


Nasza Klasa creators behind free-to-play games looking to acquire

Mobile games developer Ten Square Games is in advanced talks with several firms about potentially acquiring them, said company CEO Maciej Żużałek, without giving details on companies’ names and when the transactions could be finalized. “At the moment we can only say that the talks will continue,” said Zużałek during a videoconference. He added that the market is saturated, and companies are valued “quite high”. Wrocław-based Ten Square Games, which also has studios in Berlin and Warsaw, is one of the largest producers and publishers of mobile and browser games in Poland. The company was founded in 2011 by Maciej Popowicz and Arkadiusz Pernal, the creators of the Nasza Klasa community portal (nk.pl).


Retirees to gain most from “Polish Deal”

People of retirement age, whose main sources of income are retirement or disability benefits, will gain most from the government’s recent tax change announcement as part of the “Polish Deal” programme, according to research institute Centre for Economic Analysis (CenEA). The incomes of people aged 60 + / 65 + will increase by a total of PLN 11.3 billion per year. At the same time, losses for those in the highest income bracket will amount to, on average, PLN 1,390 per month.

June 09, 2021
Polish employers give +7% rating for employment sentiment
While Poland is not in the top half of the 43 countries surveyed when it comes to future employment sentiment for Q3, the results are still positive - especially in construction and manufacturing The following news items appeared in PT Daily, Poland Today's daily business newsletter, on Wednesday 9 June - free to register here [...]
Written by: Richard Stephens