News Parkiet

Public finances

Polish debt levels may trigger new cuts

Public debt in Poland may well cross key threshold of 55 percent of the country?s GDP, several economists told PARKIET yesterday. Weaker zloty, lower than expected revenue from the sale of government assets and this year?s budget gap are the main factors that will determine the level of public debt at the end of this year, says Jacek Wiśniewski, an economist at Bank Pekao. By law, Poland has to implement drastic cuts in public spending if its debt crosses key ratio by December. Public debt in the first quarter alone rose by 28 billion zloty to just under 55 percent.

Equity markets

Hygienika falls 10 pct. on IPO

Shares of Hygienika SA closed at 13.5 zloty, down 10 percent from its IPO price of 15 zloty on the first day of trading in Warsaw despite optimistic forecasts by company officials. Hygienika, which makes diapers and feminine hygiene products raised 21 million zloty minus IPO expenses of some 1.3 million zloty selling 1.4 million new shares less than three weeks ago. According to previous IPO filings, proceeds from the sale will be used to buy new equipment. ?I?m happy?, Chief Executive Hubert Stępniewicz said when asked to comment about this year?s eleventh IPO. ?I believe our stock has great upside potential?, he added. Mr. Stępniewicz has a minor stake in Warsaw-based company. Hygienika is expecting net earnings of 3.1 million zloty versus a loss of PLN 0.8 million last year. Its market value now stands at about 42 million zloty based on Monday?s closing price. Sales are set to grow 17.3 percent to PLN 64.4 million.

Energy

Alstom in talks to build new power plant in Bełchatów

A consortium of Alstom power plant builder and Polish power industry supplier Rafako SA is now the sole bidder for a 750-million euro contract at Elektrownia Bełchatów power plant. Its only competitor, Japan?s Hitachi-Mitsui reportedly said it wouldn?t extend its offer to build a new power block there because it couldn?t match Alstom?s price. ?Hitachi-Mitsui has virtually no experience with large power industry projects in Poland. I don?t think they were ready for such a large project in this part of Europe?, one source participating in the project told PARKIET.

Industry sources say the contract may be worth as much as 170 million euros for Rafako. That compares with last year?s sales of under 100 million euros.

Completion of the new power block is scheduled for 2007.

Banking

BPH Bank to increase return on equity

HVB Group?s BPH Bank, Poland?s third largest by assets, said it plans to increase its return on equity before taxes to 22 percent by 2006 from 12 percent last year.

BPH, controlled by HVB?s Bank Austria said it wants to invest up to 100 million zloty to open new branches in more affluent parts of Poland. Its cost to income ratio, a key performance measure in banking is forecast to decline to 51 percent by the end of 2006 from 63 percent in 2003, the bank said.