{"id":155656,"date":"2021-04-30T06:35:01","date_gmt":"2021-04-30T06:35:01","guid":{"rendered":"https:\/\/bdm-stg.mda.pl\/informacje-prasowe\/commentary-by-dariusz-blocher-president-of-budimex-sa-on-the-financial-results-of-the-first-quarter\/"},"modified":"2024-06-07T11:24:59","modified_gmt":"2024-06-07T11:24:59","slug":"commentary-by-dariusz-blocher-president-of-budimex-sa-on-the-financial-results-of-the-first-quarter","status":"publish","type":"press","link":"https:\/\/bdm-stg.mda.pl\/en\/press\/commentary-by-dariusz-blocher-president-of-budimex-sa-on-the-financial-results-of-the-first-quarter\/","title":{"rendered":"Commentary by Dariusz Blocher – President of Budimex SA on the financial results of the first quarter"},"content":{"rendered":"\n
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30.04.2021<\/p>\n

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Commentary by\u00a0Dariusz Blocher – President of Budimex SA on\u00a0the financial results of the first quarter<\/h2>\n

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Share article<\/p>\n

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We\u00a0are satisfied with the results of the Budimex Group in\u00a0the first quarter \u00a0of 2021. We\u00a0recorded an increase in\u00a0the Group\u2019s gross profit in\u00a0continuing operations (i.e. construction and services) from PLN 36 million in\u00a0the first quarter of 2020 to\u00a0PLN 55 million in\u00a0the first quarter of 2021, with a\u00a0simultaneous improvement in\u00a0profitability from 2.4% to\u00a04.4%. At\u00a0the same time, net profit increased by\u00a0PLN 47 million, which is the result of a\u00a0significant improvement in\u00a0the result under discontinued operations, i.e. the development segment. We\u00a0recorded a\u00a0decrease in\u00a0the Group\u2019s sales revenues by\u00a015.3%, with revenues in\u00a0the services segment increasing by\u00a027.2% and in\u00a0the construction area decreasing by\u00a017.3%. The lower pace of construction works was mainly due to\u00a0more difficult weather conditions at\u00a0the beginning of the year and the distribution of the design work schedule on\u00a0road \u201cdesign and build\u201d contracts. <\/p>\n

\n \"Profit\n <\/p>\n

Despite the difficulties related to\u00a0the increase in\u00a0new infections, we\u00a0are fulfilling most of our contracts without significant disruptions. We\u00a0are consistently applying a\u00a0strategy of testing and preventing the spread of the coronavirus, however, as\u00a0in\u00a0the whole country, at\u00a0the end of March we\u00a0observed an increase in\u00a0the number of new infections. The scale of active cases is slightly lower than the level recorded in\u00a0autumn last year. Unfortunately, in\u00a0April, we\u00a0recorded the first 2 deaths among employees.<\/p>\n

\n \"Sector\"\n <\/p>\n

In\u00a0Q1 2021, construction and assembly production (in\u00a0current prices) fell by\u00a011.2%. In\u00a0the building segment, production shrank by\u00a014.8%, while in\u00a0the residential construction area the decline was limited to\u00a06.7% and in\u00a0the non-residential part it was deeper and amounted to\u00a019.7%. In\u00a0the engineering segment, the decrease in\u00a0construction and assembly production amounted to\u00a06.3% \u2013 it is worth noting that in\u00a0the railway part an increase of 2.1% was recorded. The sales of the construction segment of the Budimex Group amounted to\u00a0PLN 1,180 million, recording a\u00a0decrease of 17.3%.<\/p>\n

\n \"Construction\n <\/p>\n

The conditions for the implementation of contracts at\u00a0the beginning of this year compared to\u00a0the same period last year were definitely more difficult. The harsh winter slowed down construction work on\u00a0most fronts. At\u00a0the same time, in\u00a0the road area, we\u00a0are on\u00a0several important orders at\u00a0the design stage or\u00a0we\u00a0are waiting for a\u00a0permit for the implementation of a\u00a0road investment \u2013\u00a0 sales revenues under such contracts are relatively small.\u00a0 Therefore, the dynamics of the decline in\u00a0revenues of the construction part in\u00a0the Budimex Group was higher than that reported by\u00a0the Central Statistical Office for the entire sector. The gross margin amounted to\u00a03.4% and was noticeably higher than in\u00a0the first quarter of 2020, when it amounted to\u00a02.1%. The condition of the order book is stable, \u00a0we\u00a0are entering the final stage of implementation of difficult energy projects.<\/p>\n

In\u00a0recent months, however, we\u00a0have been observing worrying trends in\u00a0the prices of materials, in\u00a0particular steel, \u00a0oil and petroleum derivatives (including asphalt) or\u00a0polystyrene. As\u00a0a\u00a0consequence, with the persistently low asking prices, the profitability of the industry in\u00a0the coming quarters may be\u00a0under pressure. In\u00a0the first quarter of 2021, we\u00a0obtained contracts worth PLN 993 million, while in\u00a0the \u201cwaiting room\u201d we\u00a0have further orders worth over PLN 3 billion. The largest projects with a\u00a0chance of being signed are the E75 Bia\u0142ystok \u2013 E\u0142k railway line (PLN 587 million, the highest rated bid) and the S6 Le\u015bnice \u2013 Bo\u017cepole Wielkie expressway (PLN 584 million, the highest rated offer).<\/p>\n

In\u00a0April, we\u00a0signed a\u00a0contract for the construction of a\u00a0section of the S6 Tri-City Bypass (PLN 581 million) and a\u00a0key contract to\u00a0strengthen our position on\u00a0the hydrotechnical market \u2013 the second stage of the ditch through the Vistula Spit, worth PLN 467 million. At\u00a0the end of March 2021, the value of the order book reached\u00a0 PLN 12.8 billion.<\/p>\n

The Budimex Group closed Q1 2021 with a\u00a0net cash position of PLN 2.1 billion (including cash in\u00a0discontinued operations, it is approximately PLN 2.5 billion). Compared to\u00a0December 31, 2020, it was higher by\u00a0PLN 403 million. As\u00a0a\u00a0consequence of the comfortable and stable net cash position, a\u00a0dividend payment recommendation is PLN 426 million, which translates to\u00a0PLN 16.70 per share.<\/p>\n

In\u00a0Q1 2021, the FBSerwis Group continued its growth trends, increasing sales revenues by\u00a027.7% year-on-year.<\/p>\n

\n \"Services\n <\/p>\n

The sales revenues of the FBSerwis Group, which is the driving force of the service segment, amounted to\u00a0PLN 167 million and increased by\u00a027.7% compared to\u00a0the previous year, which resulted from higher volumes in\u00a0the waste management segment. Gross profit amounted to\u00a0PLN 22 million compared to\u00a0PLN 21 million in\u00a0the first quarter of last year. Weaker profitability in\u00a0the first quarter of 2021, which did not follow the increase in\u00a0revenues, was caused by\u00a0high winter maintenance costs on\u00a0road contracts.<\/p>\n

We\u00a0are optimistic about the prospects for the development of the FBSerwis Group in\u00a0the near future. In\u00a0the second quarter, we\u00a0started the implementation of contracts for the management of waste from Warsaw. The contracts currently under construction and those that are in\u00a0the tender procedure, under which we\u00a0submitted the most advantageous bids for 12 tasks, combined with the new contracts\u00a0 for waste management from \u0141\u00f3d\u017a, will ensure fully effective use of the resources of our municipal waste processing installations at\u00a0least until the end of 2021.<\/p>\n

The long-term development plans of the FBSerwis Group are invariably based on\u00a0further investments increasing the operational potential of FBSerwis and the search for attractive acquisition targets.<\/p>\n

In\u00a0the first quarter of 2021, pre-sales of the development segment amounted to\u00a0494 apartments and were slightly lower (47 apartments) than in\u00a0the previous year.<\/p>\n

The good pre-sales result is the result of the company\u2019s continuing wide range of housing offerings and the continuing stable structural demand for apartments in\u00a0the largest cities. Budimex Nieruchomo\u015bci customers have signed
in\u00a0the first quarter of 2021, 346 notarial deeds compared to\u00a04 notarial deeds in\u00a0the first quarter of 2020. Sales revenues amounted to\u00a0PLN 183 million, and gross profit reached PLN 31 million. Budimex Nieruchomo\u015bci consistently maintains a\u00a0high positive net cash position.<\/p>\n

On\u00a022 February, Budimex S.A. decided to\u00a0conclude a\u00a0conditional sale agreement for Budimex Nieruchomo\u015bci Sp. As\u00a0a\u00a0result, the property development segment\u2019s operations are presented in\u00a0the consolidated income statement as\u00a0discontinued operations (both for Q1 2021 and in\u00a0comparable data for Q1 2020) in\u00a0accordance with IFRS 5.<\/p>\n

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\"Development
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We\u00a0are entering the construction season with an order book of PLN 12.8 billion. Analyzing the current order book, orders with a\u00a0chance to\u00a0be\u00a0signed and our work schedule, we\u00a0expect that the next quarters should bring an improvement in\u00a0the annual dynamics of sales revenues. Our goal is to\u00a0keep profitability above market indicators, which may be\u00a0under pressure due to\u00a0the increase in\u00a0material costs.<\/p>\n

In\u00a0the coming quarters, we\u00a0will focus on\u00a0the implementation of entrusted projects, with particular emphasis on\u00a0safety, timeliness and high quality of work results. The challenge will be\u00a0to\u00a0properly manage and control costs to\u00a0mitigate the risks associated with rising material prices. In\u00a0addition, one of the goals for the coming months is to\u00a0finalize the process of reviewing strategic options in\u00a0the development segment and to\u00a0adapt the Group\u2019s business model to\u00a0the new conditions. At\u00a0the same time, we\u00a0are working on\u00a0new business projects in\u00a0Poland and abroad and developing projects in\u00a0the PPP formula.<\/p>\n

The further course of the pandemic and its impact on\u00a0the functioning of the economy, including the availability of staff and continuity of supply, is still a\u00a0big unknown. We\u00a0are counting on\u00a0a\u00a0gradual improvement in\u00a0the epidemic situation \u2013 in\u00a0the Budimex Group in\u00a0recent weeks, as\u00a0in\u00a0the whole country, the statistics on\u00a0active infections have been falling. We\u00a0are preparing to\u00a0organize vaccinations as\u00a0an employer, we\u00a0are ready to\u00a0cover approx. 7 thousand people, mainly employees with their families.<\/p><\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/section>\n

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We are satisfied with the results of the Budimex Group in the first quarter of 2021. We recorded an increase in the Group’s gross profit in continuing operations (i.e. construction and services) from PLN 36 million in the first quarter of 2020 to PLN 55 million in the first quarter of 2021, with a simultaneous improvement in profitability from 2.4% to 4.4%. …<\/p>\n","protected":false},"featured_media":150490,"parent":0,"template":"","press_type":[537,790],"acf":[],"yoast_head":"\nCommentary by Dariusz Blocher - President of Budimex SA on the financial results of the first quarter - Budimex<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Commentary by Dariusz Blocher - President of Budimex SA on the financial results of the first quarter - Budimex\" \/>\n<meta property=\"og:description\" content=\"We are satisfied with the results of the Budimex Group in the first quarter of 2021. 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