{"id":154533,"date":"2021-07-26T06:39:44","date_gmt":"2021-07-26T06:39:44","guid":{"rendered":"https:\/\/bdm-stg.mda.pl\/informacje-prasowe\/financial-results-of-the-budimex-group-after-six-months-of-2021-commentary-by-artur-popko-president-of-the-management-board-of-budimex\/"},"modified":"2024-06-07T11:19:14","modified_gmt":"2024-06-07T11:19:14","slug":"financial-results-of-the-budimex-group-after-six-months-of-2021-commentary-by-artur-popko-president-of-the-management-board-of-budimex","status":"publish","type":"press","link":"https:\/\/bdm-stg.mda.pl\/en\/press\/financial-results-of-the-budimex-group-after-six-months-of-2021-commentary-by-artur-popko-president-of-the-management-board-of-budimex\/","title":{"rendered":"Financial results of the Budimex Group after six months of 2021 – commentary by Artur Popko – President of the Management Board of Budimex"},"content":{"rendered":"\n
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26.07.2021<\/p>\n

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Financial results of the Budimex Group after six months of 2021 – commentary by\u00a0Artur Popko – President of the Management Board of Budimex<\/h2>\n

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Share article<\/p>\n

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We\u00a0are very pleased with the results of the Budimex Group in\u00a0the first half of 2021. Despite difficult market conditions, we\u00a0recorded a\u00a0significant increase in\u00a0the Group\u2019s gross profit in\u00a0continuing operations (i.e. construction and services) from PLN 91 million in\u00a0the first half of 2020 to\u00a0PLN 260 million in\u00a0the first half of 2021, with a\u00a0simultaneous increase in\u00a0the profitability from 2.6% to\u00a08.0% \u2013 says Artur Popko \u2013 President of the Management Board of Budimex SA.<\/p>\n

Such a\u00a0good result is the result of an improvement in\u00a0the result of the construction and service segments, as\u00a0well as\u00a0the settlement of the result on\u00a0transactions between the construction and development segments in\u00a0the amount of PLN 68 million in\u00a0connection with the sale of Budimex Nieruchomo\u015bci. The transaction, finalised at\u00a0the end of May, closes the process of reviewing strategic options for the development segment in\u00a0the Budimex Group. The final sale price did not change compared to\u00a0the original assumptions, and the total impact of the transaction on\u00a0the Group\u2019s net profit amounted to\u00a0PLN 542 million.<\/p>\n

\n \"Budimex\n <\/p>\n

We\u00a0recorded a\u00a0slight decrease in\u00a0the Group\u2019s sales revenues, with revenues in\u00a0the services segment increasing by\u00a029.9% and in\u00a0the construction area decreasing by\u00a010.4%.<\/p>\n

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In\u00a0the 1. Half of 2021 construction and assembly production <\/strong>(in\u00a0current prices) amounted to\u00a0PLN 45.4 billion <\/strong>and was at\u00a0the level of the previous year. In\u00a0the buildings segment, sold production decreased by\u00a02.8%, while in\u00a0the residential construction area an increase of 3.8% was recorded, and in\u00a0the non-residential part a\u00a0decrease by\u00a06.7%. In\u00a0the infrastructure area, construction and assembly production increased by\u00a03.2%.<\/p>\n

\n \"Budimex\n <\/p>\n

\n Sales of the construction segment of the Budimex Group amounted to\u00a0PLN 3,029 million (-10.4% y\/y), while recording a\u00a0significant improvement in\u00a0profitability.<\/strong>\n <\/p>\n

\n \"Budimex\n <\/p>\n

The scale of sales revenues in\u00a0the first half of the year is slightly lower than in\u00a0the corresponding period of the previous year, and the dynamics of decline is below the market indicator. This is due to\u00a0the fact that several important orders in\u00a0the road area are currently in\u00a0the design phase or\u00a0we\u00a0are waiting for a\u00a0permit for the implementation of the road investment. This means that production on\u00a0such contracts is relatively small. In\u00a0addition, we\u00a0are observing a\u00a0decline in\u00a0volumes in\u00a0the general construction segment, where, taking into account the current portfolio and contracts in\u00a0the waiting room, we\u00a0are counting on\u00a0growth in\u00a0the second half of the year.<\/p>\n

The gross margin of the construction segment amounted to\u00a04.8% and was noticeably higher than in\u00a0the first half of 2020, when it amounted to\u00a02.2%. We\u00a0are experiencing a\u00a0significant increase in\u00a0the prices of materials. However, thanks to\u00a0the mechanisms of partial indexation,
as\u00a0well as\u00a0our policy of hedging the prices of key assortments and a\u00a0prudent approach to\u00a0bidding, we\u00a0are able to\u00a0maintain the originally planned contract margin on\u00a0most projects. In\u00a0addition, due to\u00a0the completion of difficult energy contracts, we\u00a0assume that the return on\u00a0the order book will remain well profitable for at\u00a0least several quarters.<\/p>\n

\n In\u00a0the first half of 2021, we\u00a0obtained contracts worth PLN 2,923 million, while in\u00a0the \u201cwaiting room\u201d we\u00a0have further orders worth over PLN 3 billion. This is a\u00a0lower level than a\u00a0year ago, but our priority, invariably, is to\u00a0take care of the profitability of the order portfolio. The largest projects with a\u00a0chance of being signed are the E75 Bia\u0142ystok \u2013 E\u0142k railway line (PLN 587 million, selection of the most advantageous offer) and the S6 Le\u015bnice \u2013 Bo\u017cepole Wielkie expressway (PLN 584 million, selection of the most advantageous offer). <\/strong>\n <\/p>\n

In\u00a0recent days, we\u00a0have concluded an important contract for the construction of the Frito Lay Plant in\u00a0Poland, worth PLN 343 million, which will allow us to\u00a0fully use our potential in\u00a0this area.<\/p>\n

At\u00a0the end of June 2021, the value of the order book reached PLN 12,973 million. This level gives us operational comfort and ensures full use of resources this year. After taking into account the contracts in\u00a0the waiting room, which we\u00a0plan to\u00a0sign in\u00a0the coming months, we\u00a0have a\u00a0largely secured work front until the end of 2022. That is why we\u00a0are selective about new offers, reliably
and responsibly calculating cost estimates, especially in\u00a0the environment of dynamically changing prices.<\/p>\n

The Budimex Group ended the 1st half of 2021 with a\u00a0net cash position of PLN 2.8 billion. <\/strong>In\u00a0June, for the 13th year in\u00a0a\u00a0row, we\u00a0paid a\u00a0dividend of PLN 426 million, which gave PLN 16.70 converted into
Share. We\u00a0are planning to\u00a0pay an interim dividend for 2021. The standalone net profit of Budimex SA for the first half of the year amounted to\u00a0PLN 762 million. We\u00a0intend to\u00a0pay out a\u00a0maximum of half of this amount, i.e. no\u00a0more than PLN 381 million.<\/p>\n

\n In\u00a0the 1. In\u00a0the first half of 2021, the FBSerwis Group continued its upward trends, significantly increasing sales revenues and gross profit. <\/strong>\n <\/p>\n

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\n \"Budimex
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The dynamics of sales revenues in\u00a0the service segment amounted to\u00a029.9%. The revenues of the FBSerwis Group, which is a\u00a0key asset in\u00a0the services area, amounted to\u00a0PLN 359 million and increased by\u00a029.8% compared to\u00a0the previous year. This is the result of \u00a0higher volumes in\u00a0the waste management segment. Gross profit amounted to\u00a0PLN 53 million compared to\u00a0PLN 35 million in\u00a0the first half of last year.<\/p>\n

We\u00a0are optimistic about the result potential and development prospects of the FBSerwis Group in\u00a0the near future. The Group systematically improves profitability and increases the level of sales revenues.<\/p>\n

Our goal is for the FBSerwis Group to\u00a0achieve revenues of one billion PLN m.in by\u00a02025. thanks to\u00a0acquisitions. We\u00a0are currently analysing several projects, mainly those increasing the company\u2019s potential in\u00a0the area of waste management. It is possible that by\u00a0the end of this year we\u00a0will carry out one of such acquisitions.<\/p>\n

We\u00a0are entering the construction season with an order book of PLN 13 billion and we\u00a0are optimistic about the coming quarters.<\/strong> Analyzing the current portfolio, orders with a\u00a0chance of signing and our work schedule, we\u00a0expect that the second half of the year will bring an improvement in\u00a0the annual dynamics of sales revenues. The further course of the pandemic and its impact on\u00a0the functioning of the economy, including the availability of staff and continuity of supplies, is still a\u00a0big unknown. That is why we\u00a0are constantly monitoring the situation and verifying our operational assumptions on\u00a0an ongoing basis. In\u00a0the face of significant fluctuations in\u00a0material prices, we\u00a0will focus on\u00a0cost control and optimisation to\u00a0minimise the impact of negative market factors and, consequently, to\u00a0achieve profitability above market indicators.<\/p>\n

The next quarters should also bring an intensification of offerings, especially in\u00a0the infrastructure segment. According to\u00a0PKP PLK\u2019s announcements, tenders worth over PLN 10 billion will be\u00a0announced by\u00a0the end of 2021, and in\u00a0the longer term, expenditures on\u00a0the construction and modernization of railway routes are expected to\u00a0reach about PLN 10 billion per year. For several years, the Budimex Group has been consistently building its position and competence in\u00a0the area of railway contract performance. Thanks to\u00a0the knowledge and experience we\u00a0have gained, we\u00a0are currently among the largest general contractors in\u00a0this segment, achieving nearly twenty percent share in\u00a0the tender market for PKP PLK. In\u00a0recent years, we\u00a0have invested over PLN 120 million in\u00a0a\u00a0modern base of track and traction equipment, which provides us with the ability to\u00a0effectively implement the most demanding contracts.<\/p>\n

The high balance of the cash position, taking into account the funds obtained from the sale of Budimex Nieruchomo\u015bci, encourages us to\u00a0analyse the possibility of entering new ventures, including photovoltaic and wind farm projects, where we\u00a0already have experience as\u00a0a\u00a0general contractor. We\u00a0are analysing the first such projects looking at\u00a0the required capital commitment, profitability, risks and potential synergies that they would bring to\u00a0the Budimex Group. We\u00a0are consistently working on\u00a0obtaining the first contracts on\u00a0neighboring markets, and the first submitted offers are behind us. We\u00a0focus primarily on\u00a0road and rail contracts, and we\u00a0submit offers in\u00a0the first place in\u00a0Slovakia, the Czech Republic and Germany. We\u00a0are striving to\u00a0implement investments worth several hundred million zlotys per year, which will allow us to\u00a0expand and diversify our portfolio in\u00a0the construction area.<\/p><\/div>\n <\/div>\n

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