No Time to Waste! Growth Opportunities in the Polish and Russian Waste Management Markets

No Time to Waste! Growth Opportunities in the Polish and Russian

Waste Management Markets

Emilia Jelenska, Research Analyst

Suchitra Padmanabhan, Programme Manager

Environment & Building Technologies

March 31st, 2011

2

Functional Expertise

• Over six years of research and consulting expertise, with a focus on market research and strategic consulting. Particular expertise in:

- Competitive intelligence and benchmarking

- New market entry and diversification strategies

- Technology / product road-map

Industry Expertise

� Experience base covering a broad range of sectors, leveraging long-standing working relationships with leading industry participants’ Senior Executives in

- Water and wastewater treatment market

- Waste management industry

What I Bring to the Team

• Understanding of the environmental markets and identification of key growth trends

• Market research and consulting for the environment market

• Extensive client management, business development and presentation skills

• Project management and delivery to clients including Top OEMs and Tier 1 suppliers

Career Highlights

• Extensive expertise in environmental research and analysis and worked with M.S. Swaminathan Research Foundation, Chennai for two years as a policy analyst covering biodiversity issues in pockets of Orissa and Tamil Nadu

Education

• MSc in Social Policy and Planning in Developing Countries, London School Of Economic, UK

• B.A. Political Science (Hons), Delhi University, India

Suchitra Padmanabhan

Suchitra PadmanabhanProgramme Manager

Environmental and Building Technologies

Frost & SullivanEuropeLondon, UK

3

Functional Expertise

• 3 years of market research and consulting expertise. Particular expertise in:

- Market research – primary and secondary and Forecasting

- Competitive Analysis and Growth Opportunities Assessment

Industry Expertise

� Experience base covering broad range of sectors:

- Electronics & Security (physical security), Energy & Power Supplies (renewable energy)

- Environment & Building Technologies (fire safety equipment, tunneling machinery, waste management), Information & Communication Technologies (smart cards)

What I bring to the Team

• Strong analytical skills, Fluency in English, Polish and French, Understanding of CEE markets

Career Highlights

• Extensive expertise in market research.

• Worked directly with several leading companies:

- Tyco International, Russia

- GE Security, Russia

- Gemalto, France

- Herrenknecht, Germany

Education

• MSc in European Political Economy from London School of Economics (London, UK)

• BA in International Affairs, International Economics from American University of Paris (Paris, France)

Emilia Jelenska

Emilia JelenskaResearch Analyst

Frost & SullivanCentral & Eastern EuropeWarsaw

Place photo hereShadow Background

for effect

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Coverage

OverviewOverview

Presentation details an understanding of key growth regions in waste management

This section presents an analysis of the current trends in regional markets of Western Europe. It also discusses future growth markets covering Poland and Russia in detail

ConclusionConclusion

Russian Market Analysis

Russian Market Analysis

Polish Market Analysis

Polish Market Analysis

Presents a summary of critical success factors essential for covering these new markets as well as a summary of key findings. In addition, growth prospects for key segments are presented across both regions

This section covers market analysis of trends in the Russian waste management market. Forecasts of current market size as well as details on projected growth opportunities

This section covers market analysis of trends in the Polish waste management market. Forecasts of current market size as well as details on projected growth opportunities

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Growth Options in the EU Waste Management Market

1. Markets mature in Western Europe as key regions & companies look for outward expansion

2. Poland is poised for future activity due to the need for compliance with EU legislation

3. Russia presents significant opportunity due to the current over-reliance on landfill

- Waste management remains of key investment & environmental priority

- Market rebound has already demanded strategic profiling and investment decisions

- Markets with long-term support in the form of strong legislation and govt. support will flourish

6

Regional Market Analysis of the European Waste Management Market

GermanyA key leader in the EU market but is approaching maturity as capacity exceeds current requirements for incineration for e.g.

United KingdomOne of the worst hit economies by the economic slowdown but EU and national legislation maintains an overall momentum for growth

Spain & PortugalOverall need for compliance with EU legislation considering how far behind the region is with many targets maintains pressure and need for compliance

PolandFocus shifts to the CEE region which constitutes a growth region for the waste management market due to the need to manage rising volumes of waste as per EU legislation

Maturing markets

Maintaining growth potential

Future growth prospects

7

Market Hot Spots

Poland is of immediate relevance due to:

1. EU accession dictates requirements

2. Requirements of environmental legislation

3. Closeness to the EU has assisted regional

players to access the region such as

Remondis, Veolia, Sita, Alba

Russia

Russia is significant because:

• Large land area with a market still relatively

uncovered for waste management

• Transition away from landfill towards waste

management solutions is inevitable

• Growing prospects for international waste

management companies focusing on the region

Poland

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Legislative requirements drive regional

markets

Service opportunities

Growth Strategies

A B

Engage in competitive strategies

D

Prioritise growth segments

C

Higher value-add solutions present growth opportunities for EU waste management companies

2011 is expected to support activity in M&As and partnerships as the economy stabilises & large players look for expansion

EU legislation and need for compliance prompts market opportunities

Focus on growth centres such as collection in Russia and MSW management in Poland

Growth Options

Regional Growth Regional Growth Regional Growth

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Russian Waste Management Market Assessment

Market Growth Prospects

10

Market Forces

Source: Frost & Sullivan

Waste Management Market: Market Drivers and Restraints (Russia), 2010-2016

Lack of Environmental

Education Among

Population

Severe Under-

Capacity of Treatment

Plants

Illegal Disposal of

Waste

Poor

Enforcement

of Waste

Regulations

Limited Financing

International Commitments Foster Positive

Business Climate

Growing Market for Recycling Services

Demand for New

Advanced Technologies

Growing Public and

Governmental Awareness

Increase in Prices for

Waste Services

11

Market Size and Forecasts: Russian MSW Segment

Market growth is at a relatively low 5.6% due to considerable restraints that dampen

the potential of this market.

2010

CAGR(2010-2017)

2017

$ 1.36 billion

5.6%

$ 1.87 billion

Time

Note: Size of bubble indicates market size

Gro

wth

($ b

illio

n)

1

2

3

12

Key Market Trends

MSW is key growth segment

MSW is key growth segment

Dependence on landfill disposalDependence on landfill disposal

Incineration: 5%Recycling: 15%

Landfill disposal: 80%

Incineration: 5%Recycling: 15%

Landfill disposal: 80%

Industrial waste is often stored in back lots of plants where it is generated.

Industrial waste is often stored in back lots of plants where it is generated.

Large informal market across all segments

Large informal market across all segments

Fragmented competitionFragmented competition

Large cities: mostly private companiesSmaller cities: public + niche private

Rural areas: public companies

Large cities: mostly private companiesSmaller cities: public + niche private

Rural areas: public companies

60% public, municipally-run companies40% are private

60% public, municipally-run companies40% are private

Service Trends Segment Trends

Low profitability of treatment and recycling services

Low profitability of treatment and recycling services

Little demand for formal services for non-MSW waste types

Little demand for formal services for non-MSW waste types

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Market Segmentation: MSW Segment

Russian MSW Market

Public

Service Type

LocalRussian

Waste Management Market: Market Shares by Tiers (Russia), 2010

Ownership


3% 5% 92% 85%

60% 40%

15%

Market development is hindered by the overreliance on landfill disposal.

RecyclingSorting

&Separation

Landfill (including

Collection &Transportation)

International

Private

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Competitive Landscape: MSW Segment


Number of Companies +1000

Public vs. Private Proportion 60% Public, 40% Private

Tiers of Competition There are two tiers of competition in the MSW segment.

Waste Management Market: Competitive Structure (Russia), 2010

Tier 2: 85%Clean City, Ecotrans, Safe Technologies Inc.

UC AGHZO, PromGroup, Rosa-1, Ecoservice Prim, Moydodyr, Ecotrom, Perm Recycling

Tier 1: 15%Promotkhody, Remondis, Ecotechprom,

NEC, Ecosystem, TDF Ecotech

Competition in Russia is relatively high due to the market’s early stage of

development, and presence of large number of local market participants.

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Polish Waste Management Market Assessment

Market Growth Prospects

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Market Forces


Waste Management Market: Market Drivers and Restraints (Poland), 2010-2017

Social Disapproval

of MSW Incineration

Facilities

Informal Sector in Most

Segments Thwarts Growth

Slow Pace of Adoption of

EU Directives

Frequent

Legal

Changes

Hinder

Development

Differing Regional Paces of

Investments

Inflow of EU Funds into the Environmental

Sector

Increased Public

Awareness of Environmental

Concerns

Compliance with EU

Directives

Closure of Landfills Directs

Waste to Treatment

Plants

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Total Market Size and Forecasts

CAGR(2011-2016)

6.3%

MSW segment has a higher CAGR (at 8%) than other non-MSW segments due to

large opportunities present in treatment, recycling and sorting services.

$2.96 billion

$4.62 billion

2010 2017 Time

Gro

wth

($ b

illio

n)

Note: Size of bubble indicates market size

1

2

3

4

5

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Key Market Trends

Significant shift away from

landfill disposal

Significant shift away from

landfill disposal

EU directives drive shift toward technologically-driven treatment

methods

EU directives drive shift toward technologically-driven treatment

methods

Many private companies providing incineration service for non-MSW types

Many private companies providing incineration service for non-MSW types

Substantial EU funds available to municipally-run companies

Substantial EU funds available to municipally-run companies

Limited market opportunities in non-MSW services due to in-house waste

treatment

Limited market opportunities in non-MSW services due to in-house waste

treatment

80% of non-MSW stems from the mining, metallurgy and chemicals

industries

80% of non-MSW stems from the mining, metallurgy and chemicals

industries

MSW facilities require better infrastructure for sorting, treatment and

recycling purposes

MSW facilities require better infrastructure for sorting, treatment and

recycling purposes

MSW landfill closures till end of 2011MSW landfill closures till end of 2011

Strong need to invest in waste facilities in less industrialized regions

Strong need to invest in waste facilities in less industrialized regions

Decreasing size of informal market across all segments

Decreasing size of informal market across all segments

Service Trends Segment Trends

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Total Market Segmentation

Polish Waste Management Market

Landfill (including

Collection andTransportation)

Recycling and

Treatment Services

Other Services

Public

Service Type

Private

Local International

Waste Management Market: Market Shares by Tiers (Poland), 2010

Ownership

51% 42% 7%

40%

40%60%

60%

As the market develops, waste management services will shift to more technology-

oriented solutions, and private companies will increase their market presence.


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Competitive Landscape: MSW Segment


Waste Management Market: Competitive Structure of MSW Segment (Poland), 2010

Tier 3: 70%Baj-Pros Eko, Eko Serwis, AG Complex, Almax, PUM, Art-Eko, Sanikom,

Biosystem, and all other MPO (municipal firms) in medium-sized or small cities

or villages

Tier 2: 20%Alba, PHP Transformers, Elana PET, Krynicki Recykling, ASA,

Polowat, Conkret, Quercus

Tier 1: 10%Remondis, SITA Polska, and all municipal

firms in major ten cities of Poland

Number of Companies 1000+

Public vs. Private Proportion 55% Public, 45% Private

Three Tiers of Competition There are three tiers of companies offering MSW management services.

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Key Take-Aways

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Critical Success Factors

Critical Success Factors

High Quality of Service &Price Competitiveness

High Quality of Service &Price Competitiveness

Technical ExpertiseTechnical Expertise

Strong Local PartnershipsStrong Local PartnershipsPositive Relations with

Local Government

Positive Relations with Local Government

Availability of FundsAvailability of Funds

Obtaining Funding from EU or National Funds

Obtaining Funding from EU or National Funds

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Market remains heavily linked towards EU

legislative support and financial backing

Market remains heavily linked towards EU

legislative support and financial backing

Little demand yet for technical advancement as

landfills for e.g. in Russia dominate market

space

Little demand yet for technical advancement as

landfills for e.g. in Russia dominate market

space

Competition is based on forging effective local

partnerships which can assist in uncovering

market opportunities

Competition is based on forging effective local

partnerships which can assist in uncovering

market opportunities

Poland is closer to Western European

standards for effective waste management

although Russia comprises a bigger market

potential in the long-term

Poland is closer to Western European

standards for effective waste management

although Russia comprises a bigger market

potential in the long-term

LegalLegal

TechnologicalTechnological

CompetitiveCompetitive

Market Dynamics

Market Dynamics

Key Findings

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Segment Prospects

Biological

Sorting & Separation

Collection • Increase in waste volumes collected as the grey market zone reduces and markets comply with requirements of environmental legislation

• Rise in demand as the market is legalised and landfill disposal is increasingly restricted for more advanced treatment processes.

• Stable growth prospects due to ongoing emphasis in Poland on composting & anaerobic treatment

• Steady decline as other advanced waste management techniques gain prominence due to legislative backing

Landfill

Waste to Energy

• Presents long-term growth prospect as the market moves away from dumping waste to managing ‘waste as a resource’

Growth

Prospects

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And Going Forward

Market Dynamics

Focus is on current news for e.g. growth opportunities through economic recovery & key segments such as WEEE

Opportunity Analysis

Regional Focus

Growth Segments

Steady focus on recycling, reuse and value recoveryEvolving hot-spots as

traditional pockets in Western Europe approach maturity

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Waste Management Research Areas

European Waste Management Market

Focus Areas for 2010

• Global Biological Waste to Energy Plants Market• European Recycling Services Market• Opportunities in the Russian Waste Management

Market• Opportunities in the Polish Waste Management

Market

Focus Areas for 2011

• Strategic Opportunities in the Romanian Waste Management Market (Q2)

• Global Opportunities in the WEEE Recycling Services Market (Q2)

• Growth Opportunities in the EU Industrial Waste Management Market (Q1)

• Opportunities in Paper and Plastics Recycling (Q3)• EU Medical Waste Management (Q1)

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– 18 May 2011

(www.gil-global.com)

� Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep

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For Additional Information

Name: Chiara Carella

Corporate Communications

Environment, Energy and Building Technologies

Direct: +44 (0) 207 3438314

[email protected]

Name: Suchitra Padmanabhan

Programme Manager

Waste Management Market

Direct: +91 44 61606666

Email: [email protected]

Name: Juliet Shaw

Sales Director

Energy & Environment

Direct: +44 (0) 20 7343 8363


Name: Emilia Jelenska

Research Analyst

Energy and Building Technologies

Direct: +48 222 44 08 95
