{"id":174394,"date":"2024-10-28T17:12:32","date_gmt":"2024-10-28T17:12:32","guid":{"rendered":"https:\/\/bdm-stg.mda.pl\/informacje-prasowe\/commentary-by-artur-popko-president-of-the-management-board-of-budimex-sa-on-the-financial-data-of-the-budimex-group-for-the-three-quarters-of-2024\/"},"modified":"2024-11-04T08:15:11","modified_gmt":"2024-11-04T08:15:11","slug":"commentary-by-artur-popko-president-of-the-management-board-of-budimex-sa-on-the-financial-data-of-the-budimex-group-for-the-three-quarters-of-2024","status":"publish","type":"press","link":"https:\/\/bdm-stg.mda.pl\/en\/press\/commentary-by-artur-popko-president-of-the-management-board-of-budimex-sa-on-the-financial-data-of-the-budimex-group-for-the-three-quarters-of-2024\/","title":{"rendered":"Commentary by Artur Popko, President of the Management Board of Budimex SA, on the financial data of the Budimex Group for the three quarters of 2024"},"content":{"rendered":"\n
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28.10.2024<\/p>\n

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Commentary by\u00a0Artur Popko, President of the Management Board of Budimex SA, on\u00a0the financial data of the Budimex Group for the three quarters of 2024<\/h2>\n

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A record order backlog, improved profitability and higher operating profit make us assess the end of the three quarters of 2024 very well<\/strong>. The Group’s stable condition allows us to\u00a0look to  the future with confidence.<\/p>

We improved profitability at\u00a0every level of  the income statement, with  operating profitability reaching 7% in\u00a0the first quarter, and 7.6% and 8.6% respectively in\u00a0the second and  third quarters.<\/p>

The gross profit of the Budimex Group amounted to\u00a0PLN 590 million with a\u00a0profitability of 9.1% compared  to\u00a08.5% for the nine months of the previous year. As\u00a0in\u00a0the  corresponding period of the previous year, profitability at\u00a0the level of gross profit was supported by\u00a0financing activities, which consisted mainly of interest earned on\u00a0cash held. The decrease in\u00a0sales revenues is caused by\u00a0delayed administrative procedures for some contracts implemented in\u00a0the “design and build” formula. Next year, due to\u00a0the historical order backlog, we\u00a0expect a\u00a0change in\u00a0trend and an increase in\u00a0revenues.<\/p>

\"3Q<\/p>

Construction and assembly production in\u00a0the third quarter of 2024 (current prices) fell by\u00a01.2% year-on-year from PLN 107 billion to\u00a0PLN 105.7 billion. In  the buildings segment, sold production decreased by\u00a00.3%, while in\u00a0the infrastructure area a\u00a0decrease of 2.1% was recorded.<\/p>

\"3Q<\/p>

Sales of the construction segment of the Budimex Group in\u00a0the first three quarters of 2024 amounted to\u00a0PLN 5,875 million (-7.4% y\/y), while recording an increase in\u00a0both operating profitability (from 6.7% to\u00a07.6%) and gross profitability (from 8.4% to\u00a09.0%).<\/p>

\"3Q<\/p>

The scale of sales revenues generated in\u00a0the first nine months of 2024 in\u00a0the construction segment was lower than in\u00a0the corresponding period of the previous year. The decline in\u00a0sales was mainly due to\u00a0the investment cycle of the largest contracting authorities, in\u00a0particular in\u00a0the railway area. In\u00a0addition, several important contracts in\u00a0the area of cubature construction, which last year had a\u00a0significant share in\u00a0sales revenues, were completed.<\/p>

The operating margin of the construction segment amounted to\u00a07.6% and was higher compared  to\u00a0the corresponding period of the previous year, when it amounted to\u00a06.7%. The recorded increase was due to\u00a0several factors. On\u00a0the one hand, we\u00a0are observing a\u00a0continuing trend of further price stabilization and greater availability of construction materials and subcontractors’ services. On\u00a0the other hand, we\u00a0are constantly working on\u00a0cost control and  process efficiency at\u00a0every level of the organization. The increase in\u00a0profitability on  an annual basis is also due to\u00a0the end effect
and settlement of several large and financially difficult contracts last year, which improved the average profitability of the entire order portfolio.<\/p>

The gross profitability of the construction segment in\u00a0the period under discussion amounted to\u00a09.0% and improved compared to\u00a0the corresponding period of the previous year, when it amounted to\u00a08.4%. During the first three quarters of 2024, in\u00a0addition to\u00a0an increase in\u00a0profitability at\u00a0the operating level, profitability at\u00a0the level of gross profit was supported by\u00a0a\u00a0positive result generated on\u00a0financing activities due to\u00a0interest on\u00a0deposits.<\/p>

In the first three quarters of 2024, we\u00a0signed contracts worth PLN 8.2 billion. The Budimex Group’s order book at\u00a0the end of September 2024 amounted to\u00a0PLN 15.8 billion, of which over PLN 1 billion was attributable to\u00a0construction contracts signed outside Polish. The high value of the order book secures the Group’s work front until the end of 2025. Intensive work on\u00a0the acquisition of new projects has resulted in\u00a0the value of projects awaiting signing, and those where the offer of Budimex or\u00a0the Group companies was rated the highest (as\u00a0of 30 September) to\u00a0over PLN 8 billion. In  the perspective of the coming quarters, this should translate into maintaining a\u00a0high value of the order book and will allow for responsible bidding in\u00a0 upcoming tenders.<\/p>

The Budimex Group ended the first three quarters of 2024 with a\u00a0net cash position of over PLN 2.3 billion. Fulfilling the assumptions of the adopted dividend policy. In\u00a0June 2024, Budimex SA paid a\u00a0dividend from the profit generated for 2023 in\u00a0the amount of PLN 749.6 million and retained earnings from previous years in\u00a0the amount of PLN 161.6 million, which gives a\u00a0total of PLN 35.69 per share.<\/p>

After three quarters, the FBSerwis Group recorded a\u00a0year-on-year increase in\u00a0sales revenues by\u00a0PLN 9.4 million, while maintaining good profitability.<\/strong><\/p>

\"3Q<\/strong><\/p>

The revenues of the FBSerwis Group, which is a\u00a0key asset in\u00a0the services segment (the results of the service part also include the activities of companies from the RES area, Budimex Mobility and Budimex Parking Wroc\u0142aw) amounted to\u00a0PLN 675[1]<\/a> million and were 1.4% higher compared to\u00a0the corresponding period of the previous year.  The FBSerwis Group generated an operating profit of PLN 69.2 million (  compared to\u00a0PLN 60.1 million after three quarters of 2023), at\u00a0the same time, it recorded an increase in\u00a0profitability from 9.0% to\u00a010.3%.<\/p>

The RES  area is constantly developing and focuses on\u00a0expanding its portfolio. BxF Energia is in\u00a0the process of implementing projects with a\u00a0potential future capacity of over 1100 MW. More than half of this value is wind and  hybrid (PV + wind) projects. The “Magnolia” project from September 2023. produces green energy, which we\u00a0sell to\u00a0one of the listed companies through a\u00a0PPA (Power Purchase Agreement). We\u00a0also purchased one ready-to-build project \u2013 “Azalia”, with 60 MW, and in\u00a0May 2024 we\u00a0started construction work. Our goal is to\u00a0produce the first green kilowatt hour in\u00a0the middle of next year.<\/p>

Market outlook<\/strong><\/p>

We end the third quarter of 2024 with a\u00a0record order book of over PLN 15 billion. What is particularly important to\u00a0us is that most of the orders are relatively new projects, which were offered at\u00a0current prices and contain indexation clauses. We\u00a0expect that 2024 will be\u00a0a\u00a0record year for us in\u00a0terms of contracting, hence we\u00a0are also optimistic about the level of the order book at\u00a0the end of the year. The current order book secures the work front for most of 2025. In\u00a0addition, a\u00a0significant number of orders are “design and build” contracts with completion dates of 2027-2028, which gives us the foundation of our business for the next 3-4 years.<\/p>

The last few quarters in\u00a0the Budimex Group have been a\u00a0time of hard work and preparation of the organisation for growth in\u00a0the coming years and the implementation of a\u00a0record order book. We\u00a0are adapting our implementation structures and at\u00a0the same time strengthening the area of production support. We\u00a0are also starting to\u00a0build structures and prepare the organization to\u00a0carry out orders for the construction of a\u00a0nuclear power plant. We\u00a0analyze and implement solutions on\u00a0an ongoing basis to\u00a0digitize and automate processes, also with the use of artificial intelligence, which partially helps to\u00a0solve the issue of staff shortages. Our activities are aimed at\u00a0preparing the entire organization for sustainable growth, taking into account the ambitious goals we\u00a0have set in\u00a0the ESG strategy for 2023-2026.<\/p>

On the local market, we\u00a0are constantly observing an aggressive fight for orders in\u00a0the road, rail and cubature areas. In\u00a0recently opened significant road and rail tenders, more than 10 bids are usually submitted, often with significant differences in\u00a0price levels. On\u00a0the one hand, this is a\u00a0consequence of the lower supply of tenders, and we\u00a0also see a\u00a0tightening of the level of competition from foreign entities.<\/p>

We implement our business assumptions on\u00a0an ongoing basis, adapting to\u00a0dynamically changing conditions. Recent years have shown that we\u00a0need to\u00a0carefully observe the environment and react appropriately in\u00a0a\u00a0way that will allow us to\u00a0responsibly achieve our goals in\u00a0the long term.<\/p>

Responsibility<\/strong><\/p>

In the first half of the year, Budimex entered the WIG-20 index of the largest listed companies. We\u00a0also received the Bulls and Bears award of the Parkiet stock exchange newspaper and the Forbes Diamond for our financial results. In\u00a0June, Budimex was awarded the title of the Construction Brand of the Year based on\u00a0the results of surveys conducted by\u00a0over 2 thousand subcontractors in\u00a0Poland. In\u00a0September 2024, the company was also honored with the Company of the Year 2024 award during the XXXIII Economic Forum in\u00a0Karpacz. Nine Budimex projects have also received the so-called. Construction Oscars, by\u00a0the Polish Association of Construction Engineers and Technicians. The special prize was awarded for the modernisation of the railway junction “LOT C, section Most Wis\u0142a \u2013 Czechowice-Dziedzice \u2013 Zabrzeg” carried out by\u00a0Budimex in\u00a02023.<\/p>

PKP CARGO S.A.. i\u00a0Budimex S.A. signed a\u00a0Letter of Intent on\u00a0the employment of PKP CARGO S.A employees. New employment support program for PKP CARGO S.A. employees. includes employment of up to\u00a0100 people in\u00a0professional groups in\u00a0which Budimex S.A.. conducts recruitment.<\/p>

In 2023, Budimex paid PLN 285 million in\u00a0income tax on\u00a0its operations. Thus, the company opened the list of companies from the construction sector and was among the top twenty largest individual payers in\u00a0Poland.<\/p>

In the last ten years, Budimex SA has paid a\u00a0total of PLN 1 billion 432 million in\u00a0CIT to\u00a0the state budget. In\u00a02023 alone, it was PLN 285 million \u2013 almost twice as\u00a0much as\u00a0in\u00a0the previous settlement period. Since 2013, the company has been gradually improving its position in\u00a0the ranking of companies operating in\u00a0Poland. In\u00a0the case of capital groups, it was a\u00a0promotion from 67. out of 25. place, and individual payers \u2013 from deposit 64. to\u00a0the top twenty.<\/p>

[1] Revenue excluding reclassification of contractual penalties in\u00a0accordance with IFRS 15: 689.8 million, y\/y increase 24.3 million (3.6%)<\/p><\/p><\/div>\n <\/div>\n

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