Aggregate revenue reported by nearly 20 construction groups whose stock is listed on the Warsaw Stock Exchange grew by a nominal 4.3% in 2020, which is a scant rise in real terms, given continued increases in the prices of building materials and labour costs. However, the aggregate net profit posted by these companies improved clearly as it grew by almost PLN 0.5bn over the year. Notwithstanding that, net financial performance of the listed construction companies and profit margin figures they report still pale in comparison to results delivered by property developers and suppliers of building materials and construction equipment.
The findings of “Construction market in Poland – May 2021”, the latest monthly report by research company Spectis, reveal that the aggregate net profit of the construction groups whose stock is listed on the Warsaw Stock Exchange totalled PLN 449 million in the four quarters of 2020, compared to PLN 0 million registered in the preceding year. This is roughly the same as profit margins reported in 2015-2017.
The net profit improvement is primarily the result of clear profitability improvement (by a whopping PLN 243 million) reported by the Budimex Group, which is the largest construction company in Poland. The Trakcja Group and Rafako also posted strong improvement in this respect, but these companies ended up reporting severe losses for 2020 anyway.
The net financial result generated by the contracting companies in 2020 translates into the net return on sales of 1.8%. Despite improvement, within the broadly-defined construction and real estate sector, contractors remain the only group reporting earnings well below the 5% mark. Profitability of the other two categories of companies, i.e. property developers and suppliers of building materials and construction equipment, was much better than it was in 2020 as it stood at 10.4% and 6.5%, respectively. But it should be noted that the property developers saw their profit margins shrink (from the record 25% in 2019), whereas the suppliers managed to improve their profitability (from 4.6% in 2019).
WSE-listed property developers which recorded significant improvement in terms of net financial performance during 2020 include BBI Development, Budimex Nieruchomosci, Polnord, Atal, Rank Progress, MLP Group, and Archicom. On the other hand, results delivered by Warimpex, Develia, Capital Park, Echo Investment, and Atlas Estates deteriorated.
As far as producers and suppliers of building materials and construction equipment are concerned, in 2020 the following groups recorded significant improvement in terms of net financial performance: Kety, Herkules, Selena, Decora, Pekabex, and Sniezka. And there were only three companies to see their profits go down. These included Ulma Construccion, ZPUE, and Libet.
