Still outside of the eurozone,
Poland’s economy has avoided recession and now offers some
lucrative opportunities for lessors, writes Antonio
Fabrizio.
Go deeper with GlobalData
The strength of the Polish economy
has meant its leasing industry has been quick to emerge from the
crisis. Not only did the country avoid recession in 2009, but its
economy grew at a faster pace than many European countries in 2010,
with a 3.3% increase of GDP. For 2011, GDP is expected to increase
by another 3.5%.
Unemployment remains relatively
high and investments from Polish firms are still intermittent – it
may be too early to talk about full recovery – but lessors are
optimistic about 2011. Most have forecast a 10 to 20% increase in
new business for this year, on top of an average 17% increase in
2010.
At the peak of the financial
crisis, Polish leasing suffered particularly in the transport
sector, with a dramatic drop in demand and problems with liquidity
and deteriorated portfolios. But in 2010 it quickly rebounded,
partly due to the links with the German economy.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataSGEF Polska MD Lech Zeyer says:
“The outlook is optimistic and there are good reasons for that. The
main trading partner of Poland is Germany, and nobody doubts that
it will be a good year for the German economy. This is good news
for Polish producers, because they are selling to Germany.”
Siemens Finance CEO Christian
Foltyn confirms the importance of the link with Western European
companies.
“We have international customers,
so there is strong cooperation between our business in Germany and
Poland, and with other countries,” he says.
The Polish leasing market is also
becoming more similar to Western leasing economies in terms of
products, Foltyn says.
“In Poland, operating lease is
mainly used in transportation, and firms are more oriented to own
equipment at the end. But things are changing and operating lease
is becoming more popular,” he adds.
Domestic consumption has also
helped the recovery.
“At present, Poland is undergoing a
transition from an export-driven economy to an economy that is
increasingly supported by domestic demand,” says Andrzej
Krzeminski, CEO of Crédit Agricole-owned Europejski Fundusz
Leasingowy (EFL).
Market
characteristics
Smaller firms focusing on the
domestic market last year started to benefit from the improved
situation on the labour market and higher consumption.
Krzeminski says: “SMEs are the main
clients of leasing companies. We assume improvement will continue
in 2011.”
Pekao Leasing CEO Irene Grzybowski
also listed the robustness of the Polish banking sector as a reason
behind the good shape of leasing.
“Banks generally came through the
crisis sound, so their leasing entities were able to recover and
get liquidity quickly,” she says.
The local leasing market is
relatively fragmented. A group of about seven subsidiaries of
Western banking groups take the bulk of the market share. These
large lessors are competing with a number of smaller players, also
foreign bank-owned.
With little focus on real estate,
most of Poland’s leasing is in movables and vehicle leasing
dominates. Cars, vans and trucks account for 60%; machinery follows
at 34%; the rest is divided between IT, rail, aviation and other
assets.
According to Zwiazek Polskiego
Leasingu (ZPL, the Polish leasing association) figures, new
business in 2010 rose 16.9% to PLN 26,886m (€6,950m). Excluding
real estate, the increase was 22%.
Car leasing
Vehicles had the most
spectacular rebound compared to 2009, with a 30% increase. For some
companies, the increase in the car and LCV segment reached 100%.
This peak was in part attributable to the withdrawal of a VAT
benefit, which meant companies rushed to lease cars before it ended
(see p29).
The Polish Vehicle Rental and
Leasing Association (PVRLA), which has the special status of
collective member of ZPL, focuses on full service car leasing. It
saw an overall 10% increase in volume among its 17 members in 2010.
The association is in the process of taking on board Masterlease
Polska, the largest player in full service leasing. The top three
players are LeasePlan, Arval and ING Car Lease.
Leszek Pomorski, PVRLA chairman and
head of ING Car Lease, says: “2010 was quite good, especially if we
compare it to other European markets. We increased our business
because in 2009 most customers extended agreements, so in 2010 they
had to replace cars.”
Most PVRLA members offer both full
service leasing and fleet management, but the latter tends to be
transitional to full service leasing, which is becoming more
popular.
The fleet of PVRLA members was
roughly 100,000 in 2010. Comparing this figure with Spain, which
has a similar population to Poland and roughly 400,000 vehicles in
full service leasing, Pomorski sees significant growth
potential.
He says: “For the market to become
saturated, we would need four times as many vehicles. It will take
another five or six years before we reach that point.”
Broker-introduced business is also
on the increase. Pomorski says: “As ING Car Lease, we are trying to
involve more brokers in the market. It’s nothing like some Western
countries, but it is a potential source of business for the
future.”
Masterlease Polska has gone through
significant changes recently. The firm, which was taken over by
GMAC in 2001, was sold last year to Abris Capital, a CEE-focused
private equity fund.
Masterlease Polska CFO Jakub
Kizielewicz says: “Despite the recent changes, the top 10 managers
of the company are still the same as at the beginning in 1995,
including myself.”
The company offers full service
leasing and finance leasing, has a fleet of 23,600 vehicles, and a
network of 17 regional offices. About 65% of contracts involve a
service element.
Last year, it delivered 6,998
vehicles to customers, up from 5,976 in 2009. It won new clients,
including the two main petro-chemical producers in Poland, Orlen
and Lotos, adding another 400 vehicles to its fleet. Profit is
expected to be about zero because of the transaction costs from the
GMAC sale.
Like Pomorski, Kizielewicz believes
that there are huge opportunities to be seized in car leasing.
“The Polish market is one that has
the best perspectives because of the low penetration of full
service leasing. Of the total purchase of vehicles, only 10% are
purchased on full service leasing; the remainder is still loans and
cash,” he says.
Company
initiatives
Alongside vehicles,
other assets did well last year. The machinery sector had a 13%
increase, although a 6.5% drop in IT partially offset the
improvement.
At EFL, vehicles rose 24% to PLN
2.3bn, while machinery was up 10% to PLN 790m. The company’s
performance closely matched that of the Polish market as a whole,
although in terms of IT, it outperformed the market with a rise of
18.2%. Bigger ticket assets also enjoyed a significant jump, rising
to PLN 13.3m, compared to PLN 2.3m in 2009.
SGEF Polska posted a new business
volume of €280m, 20% up on 2009. It signed 4,200 contracts, mostly
mid-sized transactions between €500,000 and €1m.
SGEF differs slightly from the
market in terms of assets it finances. Machinery represents 49%,
vehicles 30% and IT, aviation and other assets are the remainder.
It is a strong player in printing, construction, metal and plastic
processing equipment. It also increased heavily its involvement in
the agricultural sector last year, and claims to be one of the few
specialists in Poland in aviation financing. Big ticket business is
roughly 10% of its portfolio.
Pekao Leasing also had a positive
2010. Following the rebranding process of the UniCredit Leasing
network, it has retained its original name which is strong in the
market, but there are plans to introduce the UniCredit brand in the
future. It will follow the rebranding strategy of the whole group,
one of the largest players in the Polish corporate banking
market.
The lessor reported new business of
€450m, a 14.5% increase from 2009. Grzybowski says: “The increase
might not be as spectacular as other players, but it proves we were
active in 2009 and have continued in 2010, whereas some players
became almost absent from the marketplace in 2009.”
Pekao Leasing’s volume breakdown is
in line with the overall market, with 65% in vehicles, 25% in
machinery, and 5% in real estate, IT, and rolling stock.
Grzybowski expects to become one of
the top three most profitable Polish lessors, a sign that the
company is focusing less on volume. “We do not really want to
compete on margins. We know that we aren’t the least expensive
lessor in the market, but that is consistent with our
strategy.”
Pekao Leasing has a three channel
strategy, with the bank representing 40% of business originations,
while vendor business is 35%. The other 25% comes from the 26
branches across the country.
A specialist in transport and
machinery, Millennium Leasing, grew total new business by 28% to
PLN 1,673m in 2010. Of its two specialist asset classes, transport
accounts for 52% and machinery for 41%.
The company is owned by Bank
Millennium, a subsidiary of Portugal’s Millennium Bcp. The lessor’s
chairman Wojciech Rybak says: “We have positive trends both in
profits and asset quality after Q3 2010.”
Millennium originates 60% of its
business from the bank network, while direct channel accounts for
the rest.
“Our strategy is to focus on the
relationship with the bank customers. We have one of the highest
repurchase rates in leasing in Poland,” Rybak says.
He expects the market to grow as
much as 30% in 2011, driven by heavy transportation and investments
in equipment.
Other lessors expect growth and
have planned a number of initiatives for this year.
Siemens Finance developed a
web-based tool, which is expected to speed up the process from
quotation to credit decision. “It was implemented for our sales
people, and now we are rolling it out to selective vendors,” Foltyn
says.
Siemens Finance, based in Warsaw,
focuses on three niche sectors: health care (where it had 57.3% of
the market at the end of June 2010), machinery and equipment (where
it had a 9.6% share) and agriculture. It plans to continue
developing its vendor and captive channels and to increase
renewable energy business in 2011. It is already working on two
captive-related energy projects.
SGEF, which has 14 offices in
Poland, will focus on increasing efficiency and profitability. MD
Lech Zeyer says: “After the crisis, it is important for us to
increase efficiency and squeeze everything out of our network and
structure. It will be a year of consolidation.”
Zeyer anticipates a rise in
investment in equipment. “We know that SMEs are keeping a lot of
money on their accounts, and that banking financing for SMEs is
still low. But there are signals of change, with more demand and
more credit granted.”
Polish lessors are also opening up
to non-leasing products. Pekao is introducing additional insurance
products, like GAP insurance, liability insurance and credit
protection insurance. It will try to increase its share in the
medical sector, as well as boosting energy and real estate
business.
EFL has introduced a loan for the
medical and agricultural markets.
“It is financially and fiscally
competitive, especially for the medical sector, because the rate of
tax on medical equipment is lower in loan than leasing,” CEO
Krzeminski says.
“The loan is also a favourable solution for farmers, who can get
easier access to financial aids from EU funds.”
See also:
