State-Owned Companies in Poland See Profits Plummet by 30%: A Closer Look at Q3 2024 Financial Results

WARSAW: In the third quarter of 2024, 24 companies listed on the Polish stock exchange and controlled by the State Treasury reported a combined profit of PLN 7.4 billion. This marks a significant decline of 30% compared to the profits recorded during the previous administration of the Law and Justice Party (PiS).

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Financial Sector Leads the Way

The financial performance of state-controlled companies (SSPs) was detailed on Wednesday by Dziennik Gazeta Prawna (DGP). The report highlighted that the majority—approximately three-quarters—of these profits stem from the financial sector, with banks and insurance companies taking the lead.

Banks and the insurance giant PZU, along with modest contributions from the Warsaw Stock Exchange (GPW), collectively earned PLN 5.6 billion for their shareholders in Q3 2024. However, this represents an 8% drop compared to last year, when the sector recorded its highest profits ever.

PKO BP stood out with stellar performance, maintaining its status as the top earner among all state-controlled companies for the second consecutive quarter. Notably, Alior Bank and Pekao, part of the PZU Group, achieved record profits during this period, further cementing the financial sector’s dominance.

Energy Sector Shows Growth, But Challenges Persist

Energy conglomerates under state control posted a combined profit of nearly PLN 2.5 billion, an increase of 8% year-over-year. However, this growth was not enough to offset the broader challenges facing state-owned companies.

DGP’s analysis revealed that the non-financial sector continues to drag down the overall performance of state-controlled entities. For the seventh consecutive quarter, the total profits of these companies were lower than the same period in the previous year.

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Political Commentary: A Divisive Debate

The decline in profits has sparked sharp criticism from opposition figures. Former Minister of State Assets Jacek Sasin attributed the downturn to the new government, which he refers to as the “Smiling Coalition.”

Sasin took to social media to voice his discontent, highlighting the 30% drop in SSP profits under the current administration. He also linked the current leadership’s policies to broader issues, such as the halting of major infrastructure projects like the Central Communication Port (CPK), nuclear energy development, and port expansion.

„Poles see what is happening, and they will hold you accountable. Expect a red card in the May elections,” Sasin declared.

Audits Reveal Extensive Irregularities

Adding to the financial woes, the Ministry of State Assets has uncovered significant irregularities during audits of state-controlled companies. The ministry has filed nearly 50 reports with the prosecutor’s office, citing suspected violations and mismanagement.

During a press conference, Minister of State Assets Jakub Jaworowski emphasized the severity of the findings.

„The scale of irregularities exceeded our worst expectations. Today, we know that these missteps have caused losses amounting to several billion zlotys,” Jaworowski stated. He added that while the primary phase of audits has been completed, ongoing investigations are still uncovering new issues.

The reported losses, estimated in the tens of billions of zlotys, have cast a shadow over the governance of SSPs and prompted calls for greater accountability and reform.

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Implications for the Future

The financial decline of state-controlled companies poses significant challenges for the Polish economy. The underperformance of the non-financial sector highlights the need for strategic interventions to bolster profitability and efficiency. Moreover, the findings of widespread irregularities have raised questions about corporate governance and the oversight mechanisms in place.

As political tensions mount, the performance of SSPs is likely to remain a focal point in Poland’s political and economic discourse. The upcoming elections could further intensify the debate, with parties vying to present their visions for revitalizing these critical economic assets.