POLAND Polish chemicals giant spreads its wings

LUDWIK KLINKOSZ President of chemicals conglomerate CIECH

Poland’s biggest chemicals conglomerate, Ciech, is the perfect example of the Warsaw government’s new privatization policy of making state enterprises that are earmarked for sale stronger and more competitive, so they can meet the challenges of a global economy once they are in the hands of private investors.
Ciech President Ludwik Klinkosz says the company’s plan is to cut production costs by 20% by increasing productivity–not through layoffs–and by the selective sale of some subsidiaries that are not considered core assets and therefore do not strengthen its position in the chemical market.

If all goes according to plan, Mr. Klinkosz says, the 55-year-old chemical giant Ciech–which is involved in the production, distribution and trade of pharmaceuticals, fertilizers, fuels and other oil-based products and synthetic fibers–will be trading on the Warsaw Stock Exchange (WSE) within three years.
"Today, Ciech’s capital group consists of over 20 domestic and foreign companies. In several cases they could be consolidated so as to reduce costs and raise operational capacities," Mr. Klinkosz explains. "We want Ciech to enter the capital market in two to three years. We also want to play an active role in the privatization of the chemical industry in Poland. Of course, introducing Ciech into the stock exchange will have to be connected with presenting a long-term strategy."

Already armed with an impressive portfolio, the Ciech group is looking to pick up a few profitable chemical companies as the industry privatizes and has even planned to expand production into Eastern Europe, where the company already has a large share of the market.
"At this stage we are looking for financial investors, but we cannot exclude the possibility that a branch investor may emerge at the WSE that will be interested in buying the whole company," Mr. Klinkosz notes. "To execute the long-term strategy we will need capital. The chemical sector is one of the last ones to be privatized in Poland. In order to take advantage of the opportunities in the Polish market, we may need a larger inflow of funds and perhaps at this stage we will have to search out a branch investor interested in making a larger investment."