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Commentary on the results of Polish leasing after the first half of 2008

We showed data concerning the whole leasing active portfolio first time when we published the results of the trade after the first quarter of 2008. At that time a value of active portfolio in the movable market amounted to PLN37,8bn and PLN11,1bn in the real estate market. In the first half of 2008 a value of leased assets in the movable market grew by 16,2 %.
Leasing of vehicles is currently the most dynamically developing segment of leasing as a whole. In the first half of 2008 a value of the segment was up by PLN4,2bn to PLN29,1bn. A second main group of leased assets is machinery and industrial equipment. A value of assets being in turnover increased by PLN 1,6 bn in the last 6 months.

Such results is an effect of current sale, that is the objects handed over to use in that period, as well as contracts  which deadline of realization expired at the same time.
In the first half of 2008 a value of leased assets amounted to PLN17,9bn. Movable leasing made 91% of that with leased assets for PLN16,2bn, that is 15,6% more then in the same period of 2007. These results first of all were affected by two groups of objects: vehicles and industrial equipment. If taking into consideration the whole leasing active portfolio, vehicles are the most dynamically developing segment of the market but development of  a new portfolio of that product’ group is slowest and if that trend continues in the long run, it can cause a lower dynamics of active contracts. Passenger cars and tractors with trailers and semi trailers dominate in that market. Although the passenger car leasing market grew by 30%, a grow of the second group was almost three times lower. The passenger car market is still relatively new one, that develops very dynamically for a few years, using both growth of sale in the automotive market we deal with from the beginning of the year and increasing leasing popularity as a source of companies’ cars financing. About 67% of them is leased. Meanwhile leasing of heavy means of road  transport is the oldest and most mature leasing market in Poland but it’s harder to get a long-lasting growth in it. The approximate share of vehicles in the European market was 20,3% in 2007, 15,5% in Germany and 40% in Poland. In the first half of 2008 it was down by 31% but still above the approximate European level, not to mention our west neighbors.

One can assume that beside objective factors like an increase of fuel prices, work costs and strengthen of the zloty which negatively affect financial results of transportation, there are some general tendencies of the mature markets that also influence on the market structure. Leasing strengthens its position in the vehicle segment, first of all in financing of the passenger cars purchases (a share of passenger cars in vehicle market is 35% approximately in Europe, 47% in Germany and 25% in Poland).

The second segment of movable leasing market, that is leasing of machinery and industrial equipment keeps a good pace of development, securing its stronger position. A one third of all leased objects in the machinery and industrial equipment market is construction and road equipment. It’s worth to note that a share of agricultural machines in the market doubled to 8%, therefore it achieved result of printing business, which leasing is connected with from the very beginning of its functioning.

In the real estate market there was a growth of leased assets’ value by 21%. But as we repeatedly emphasized
it’s difficult to point at a real and durable tendencies of development of the market, owing to a relatively small number of transactions as well as a strong diversification of unit values. But you may observe European-wide tendencies of balancing the structure of leased assets by objects (industrial, retail, offices). The retail objects still dominate in a new portfolio of the Polish market but a share of them in the market successively decreases.
In the first half of 2007 it amounted to 43 %, was up to 46 % within next 6 months, and decreased to 35 % after the first half of 2008 in favor of leasing of the offices.

As to forecast for the next few months, it seems that nothing heralds special changes in the transport business for the moment, therefore a share of heavy road transportation means will be decreasing in favor of the passenger cars as well as industrial machinery and equipment. The dynamics of leasing development we deal with recently, probably will stay similar in the second half of 2008 and allow the trade to get an increase of leased objects value to PLN 38-40 bn.

Andrzej Sugajski