Polish construction companies 2016 – Major Players, Key Growth Drivers and Development Prospects
Contents
Introduction 5
Chapter 1. Financial analysis of the largest construction companies 7 1.1. List of the largest construction companies in Poland by revenue earned in 2015 8 1.2. List of the largest construction companies in Poland by operating income in 2015 10 1.3. List of the largest construction companies in Poland by net profit in 2015 12 1.4. Debt of the largest construction companies in 2015 15 1.5. Capital expenditure to sales ratio of the largest construction companies in 2015 16 1.6. Revenue of the largest construction companies by region and by type in 2015 18 1.7. 1.7. Market capitalization of the largest construction companies listed on the Warsaw Stock Exchange 26
Chapter 2. Prospects for development of construction companies in Poland 33 2.1. Introduction 34 2.2. Key growth drivers for the construction market in Poland 36 2.3. Bankruptcies in the construction sector 38 2.4. Employment in the construction sector 39 2.5. Development prospects for construction market segments in Poland 41 2.6. Market Perspective 58 2.7. Summary 61
Chapter 3. Profiles of the largest construction companies in Poland 64
Bibliography 113
Contact us 115 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Introduction
Dear Sirs and Madams, The second section comprises an analysis of the prospects for the industry’s short-term and mid-term We have the pleasure to present the fourth report growth, a discussion of possible capital expenditure entitled Polish Construction Companies 2016 – Major in individual market segments, bankruptcy figures, Players, Key Growth Drivers and Development and employment trends in the sector. At the end Prospects, analysing the condition of fifteen largest of this section, a summary of the industry’s current construction companies in Poland, as measured by condition and the key growth drivers are presented revenues, and describing market prospects for growth. from the perspective of the largest Polish construction companies and key public investors, such as PKP Having analysed the financial data for 2015, we Polskie Linie Kolejowe S.A. and the Directorate observed further improvement in revenues and General for National Roads and Motorways. profitability of top players in the Polish construction market. The total revenues of all the fifteen largest In the final part of the report, we briefly examine the companies grew by PLN 3.1 billion, i.e. 11.3% compared characteristics of the business activity of the fifteen to the 2014 figures. The revenue growth translated into most important market players in 2015. higher operating profit and net profit of the top 15. At We include the most crucial information concerning the end of 2015, market capitalization of the fifteen the scope of their activities, ownership structures largest construction companies listed on the Warsaw and detailed financial data derived from their annual Stock Exchange and included in the ranking was financial statements. considerably higher than a year before. Our report has been prepared based on publically Undoubtedly, further growth in 2015 resulted from the available financial data or information provided directly general upturn in the Polish economy and completion by entities discussed in the report. of works and projects carried out under the previous EU financial framework. As in previous years, large We hope that you will find the report: Polish infrastructure projects in the road, railway and Construction Companies 2016 – Major Players, industrial Key Growth Drivers and Development Prospects construction sectors, in particular in the energy informative and that it will give you a better market, were key drivers of the industry. understanding of the current situation in the Polish construction market, including the opportunities Still, in 2016 the construction market saw a and challenges that lie ahead of sector investors and considerable slowdown. This results from postponing construction companies. key infrastructure projects carried out under the new financial perspective to 2017 and 2018. The slowdown As always, we highly encourage you to contribute your will be particularly visible in the market of contracts for insights and suggestions concerning any issues modernization of railroads. Undoubtedly, the major discussed in the report. rescheduling of key investment projects will impede sector growth in 2016 and entail an accumulation of construction works in the following years.
The first part of our report presents a financial analysis of companies operating on the Polish construction sector, based on fifteen entities that have managed to build the strongest market position. It examines their revenues, sales profits, net profits, debt, geographical and revenue structure.
5 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
6 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Chapter 1. Financial analysis of the largest construction companies
7 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
1.1. List of the largest construction Ferrovial, with revenue totalling PLN 5.1 by PLN 463 million and PLN 446 million, companies in Poland by revenue billion, which means a 3,7% rise year-on- respectively. The most exponential increase earned in 2015 year. The Austrian Strabag is the third in percentage terms (by almost 60%) was In 2015, the combined revenue of the fifteen largest construction company in Poland, reported by Torpol Group. Consequently, largest construction companies totalled PLN whose revenue increased by 22% vs. it went up from the 15th place in 2014 31.1 billion, up by PLN 3.1 billion (11.3%) vs. 2014, reaching PLN 3.8 billion. It should to 12th position a year later. Apart from 2014. The largest players did not change be emphasised that the Strabag Group Strabag Group, a strong increase in revenue, compared to the preceding year. This year’s reported the most considerable increase exceeding 30%, was also seen by companies list is again topped by Skanska Group, whose in its revenue (PLN 693 million) in nominal that are new to the ranking, i.e. Mota - Engil revenue reached PLN 5.5 billion, up by 8.4%. terms among all the ranked companies. S.A. and Hochtief Polska S.A. It is followed directly by Budimex Group, Apart from Strabag Group, the revenue of controlled by the Spanish company Torpol Group and Polimex Mostostal Group also rose substantially in value terms,
Table 1.1: List of the largest construction companies in Poland by revenue (in PLN ‘000)
Revenue Revenue Change in nominal Change in No. Company name 2015 2014 terms percentage terms
1 Skanska Group 5 509 363 5 081 675 427 688 8.4%
2 Budimex Group 5 133 994 4 949 939 184 055 3.7%
3 Strabag Group** 3 835 846 3 142 849 692 997 22.0%
4 Polimex-Mostostal Group 2 548 575 2 102 197 446 378 21.2%
5 PBG Group 1 798 815 1 530 248 268 567 17.6%
6 Erbud Group 1 763 282 1 692 055 71 227 4.2%
7 Trakcja Group 1 329 180 1 601 674 -272 494 -17.0%
8 PORR Group*** 1 293 120 1 045 019 248 101 23.7%
9 Mostostal Warszawa Group* 1 275 431 1 509 524 -234 093 -15.5%
10 Unibep Group 1 242 860 1 079 703 163 157 15.1%
11 Elektrobudowa Group 1 242 830 1 108 316 134 514 12.1%
12 Torpol Group* 1 238 241 775 399 462 842 59.7%
13 Warbud S.A. 1 106 860 1 049 886 56 974 5.4%
14 Mota - Engil Central Europe S.A. 949 576 658 133 291 443 44.3%
15 Hochtief Polska S.A. 788 488 579 348 209 140 36.1%
Total 31 056 460 27 905 965 3 150 495 11.3%
average 2 070 431 1 860 398 210 033 11.3%
Increase Decrease No change
Note: This analysis does not take account of the revenue generated by foreign branches of construction companies operating in Poland or that of special purpose vehicles established to carry out specific projects as part of consortia, as their revenue is included in the consolidated revenue of the consortium members Source: Financial statements for 2014-2015
8 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
In 2015, the most considerable drop in report a decrease in revenue for two revenue in nominal and percentage terms consecutive years. was reported by the Trakcja Group (PLN 272 million and 17% respectively). An equally Considering the last five years, the high level large percentage drop was seen by the of revenue in 2011 was the consequence Mostostal Warszawa Group (15.5% year-on- of major infrastructure projects carried year). out in Poland before EURO 2012 and the accumulation of investments in the first In 2015, the number of companies whose financial perspective. Increases seen in revenue increased did not change as 2014 and 2015 were attributable to the compared to the preceding year (eleven). improvement of the overall economic As many as 13 companies (eleven in 2014) conditions in Poland and worldwide as well recorded growth in 2015. The Mostostal as the completion of work relating to projects Warszawa Group was the only entity to implemented in the first financial perspective (2007 – 2013).
Diagram 1.1: Change in average revenue of the ranked companies between 2011 and 2015 (in PLN ‘000)
2818 580
2266 448 2070 431 1 900 183 1 735 847
2011 2012 2013 2014 2015
Based on previous editions of reports presenting the largest construction companies in Poland (Deloitte reports: Polish Construction Companies 2011 - 2015) Source: Financial statements 2011-2015
9 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
1.2. List of the largest construction for the largest companies went up by more For Strabag Group and Hochtief which companies in Poland by operating than PLN 52 million, which is similar to the prepare their profit and loss account by margin in 2015 increase seen in 2014. As in the past year, nature of expense, operating margin takes The operating margin of the largest the Skanska Group reported the highest account of selling costs and general and construction companies, defined as the operating margin and earned operating administrative costs (as opposed to the difference between operating revenue income of PLN 664 million. Budimex Group other ranked entities) and cost of goods sold (excluding other was second, with operating margin of PLN operating revenue and expenses) shows 493 million, i.e. more than 13% more than that for the majority of the ranked entities in the previous year. Strabag Group came increases/decreases in revenue in 2015 third with operating margin of PLN 287 were correlated with increases/decreases million (more than twice as high as in the in operating income (except Warbud preceding year). and Hochtief which reported a drop in operating margin despite an increase in revenue). The average operating margin
Table 1.2 Operating profit of the fifteen largest construction companies in nominal terms (in PLN ‘000)
Operating margin Operating margin Change in nominal Change in No. Company name 2015 2014 terms percentage terms
1 Skanska Group 664 060 567 685 96 375 17.0%
2 Budimex Group 492 714 432 680 60 034 13.9%
3 Strabag Group** 287 052 114 632 172 420 150.4%
4 Trakcja Group 166 133 202 128 -35 995 -17.8%
5 Polimex-Mostostal Group 152 868 -201 623 354 491 175.8%
6 Erbud Group 121 701 99 242 22 459 22.6%
7 PBG Group 117 652 94 494 23 158 24.5%
8 Mostostal Warszawa Group* 110 274 121 104 -10 830 -8.9%
9 Elektrobudowa Group 109 201 73 218 35 983 49.1%
10 Warbud S.A. 106 123 136 033 -29 910 -22.0%
11 Torpol Group* 67 760 48 368 19 392 40.1%
12 Unibep Group 67 238 66 713 525 0.8%
13 Mota - Engil Central Europe S.A. 48 949 25 791 23 157 89.8%
14 Hochtief Polska S.A. 7 153 7 826 -673 -8.6%
15 PORR Group*** no data no data no data no data
Average 179 920 127 735
Average sales margin (%) 8.46% 6.66%
Increase Decrease No change
Source: Financial statements for 2014-2015
10 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
In 2015, ten out of the fourteen ranked The average operating margin was 8.46% As in the past year, 2015 increases in companies saw an increase in their sales in 2015. This is an almost 2 p.p. increase revenue were accompanied by further rises and four had a lower result than over vs. 2014 (6.66%). The highest operating in the operating margins of the largest the comparable period in the preceding income in percentage terms was generated construction companies. year. The most exponential increase was by Trakcja Group, whose operating margin reported by Polimex-Mostostal Group was 12.50%. Second place went to Skanska (more than PLN 354 million) and the most Group with an operating margin of 12%, noticeable drop - by Trakcja Group (more whereas Budimex occupied third position than PLN 35 million). The list also shows with an operating margin of 9.60% together that thirteen out of the fourteen ranked with Warbud, whose margin was 9.59%. companies which have made their financial Hochtief, whose operating margin equalled data available earned operating income 0.91% was at the bottom of the list. both in 2014 and 2015.
Diagram 1.2: Operating margins of the largest construction companies (%) Trakcja Group Group Trakcja Group Skanska Group Budimex Warbud S.A. Group Elektrobudowa Mostostal Warszawa Group* Strabag Group** Group Erbud PBG Group Group Polimex-Mostostal Group Torpol Group Unibep Mota - Engil Central Europe S.A. Hochtief Polska S.A. PORR Group*** Average 15.00%
12.62% 12.96% 12.50% 12.05% 11.17%
10.00% 9.60% 9.59% 8.74% 8.79% 8.65% 8.46% 8.02% 7.48% 6.61% 6.90% 6.54% 6.66% 6.18% 6.24% 6.18% 5.87% 6.00% 5.47% 5.41% 5.15% 5.00% 3.92% 3.65%
1.35% 0.91% no data 0.00%
-5.00%
-10.00% -9.59%
-15.00%
2015
2014
Source: Financial statements for 2014-2015
11 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
1.3. List of the largest construction On the other hand, PBG Group incurred companies in Poland by net profit in a net loss of PLN 201 million despite a 2015 positive operating margin. Net profit is another indicator reflecting the overall condition of the largest construction As many as thirteen ranked companies companies. On average, the fourteen reported a net profit, whereas only one largest construction companies generated incurred a loss. For comparison, in 2014 ten net profit of PLN 71 million, which means a entities posted a net profit and the average PLN 25 million increase compared to PLN net profit of all the ranked companies was 45 million in 2014. Skanska Group reported lower. Ten companies reported a net profit the highest net profit (PLN 417 million), both in 2014 and 2015. which represents a 29% increase year-on- year.
Second place went to Budimex Group, which generated a net profit of PLN 237 million. Strabag Group was third with a net profit of PLN 178 million.
Table 1.3: Net profit/loss of the largest construction companies in nominal terms (in PLN ‘000)
Net profit/loss for Net profit/loss for Change in nominal Change in No. Company name 2015 2015 terms percentage terms
1 Skanska Group 417 314 324 185 93 129 29%
2 Budimex Group 236 520 193 938 42 582 22%
3 Strabag Group** 177 987 148 981 29 006 19%
4 Polimex-Mostostal Group 68 975 -153 226 222 201 145%
5 Trakcja Group 51 758 50 391 1 367 3%
6 Elektrobudowa Group 49 965 27 015 22 950 85%
7 Warbud S.A. 35 728 48 416 -12 688 -26%
8 Mostostal Warszawa Group 32 466 -8 738 41 204 472%
9 Torpol Group* 31 954 25 009 6 945 28%
10 Erbud Group 31 689 27 892 3 797 14%
11 Hochtief Polska S.A. 29 769 22 203 7 566 34%
12 Unibep Group 23 281 20 925 2 356 11%
13 Mota - Engil Central Europe S.A. 4 540 -12 841 17 381 135%
14 PBG Group -201 104 -80 799 -120 305 -149%
15 PORR Group*** no data no data no data no data
Average 70 774 45 239
Average procentowa marża netto 3.33% 2.36%
Increase Decrease No change
Source: Financial statements for 2014-2015
12 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
In percentage terms, the average net As regards the operating income, the profit (3.33%) in 2015 was higher than in majority of the ranked companies saw an the preceding year. The list is topped by increase in their net profit margins. Thus, Skanska Group with a net profit margin events which were not directly related to of 7.57%. Second place went to Strabag their core business and the profit/loss on Group and the third to Budimex Group, financing activities did not have an adverse with a net profit margin of 4.64% and effect on their performance, although their 4.61%, respectively. These top companies margins did not increase as exponentially recorded the highest net margins both in as in the preceding year. 2014 and in 2015.
Diagram 1.3: Net profit margins of the largest construction companies (%) Skanska Group Skanska Strabag Group** Group Budimex Group Elektrobudowa Group Trakcja Hochtief Polska S.A. Warbud S.A. Group Polimex-Mostostal Group Torpol Mostostal Group Warszawa Group Unibep Group Erbud Mota - Engil Central Europe S.A. PBG Group PORR Group*** Average 20.00%
15.00%
10.00% 7.57% 6.38%
4.74% 5.00% 4.64% 4.61% 4.83% 4.61% 3.92% 4.02% 3.89% 3.78% 3.15% 3.33% 3.23% 3.23% 2.44% 2.71% 2.58% 2.55% 2.36% 1.87% 1.94% 1.80% 1.65% 0.48% no data 0.00% -0.58% -1.95%
-5.00% -5.28%
-7.29%
-10.00%
-11.18%
-15.00%
-20.00%
2015
2014
Source: Financial statements for 2014-2015
13 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Our reports presenting the performance of Parliament for years 2007 - 2013 were largest construction companies in Poland taken into account), the margins on show that 2015 was another year showing projects and the performance of the largest performance improvement, both in regards construction companies have clearly been to gross profit margin on the core business improving. (gross profitability) and net profit margin including other operating and financing activities. Since 2012, which saw a massive drop in the transaction volume (in 2012 the results on unprofitable infrastructure contracts carried out in the prior financial perspective announced by the European
Diagram 1.3.1: Change in average net and gross profit margins of the ranked companies between 2011 and 2015 (in %) 10,0%
5,0%
0,0%
-5,0%
-10,0%
-15,0%
-20,0% 2011 2012 2013 2014 2015
Gross profitability
Net profitability
Source: Financial statements for 2011-2015
14 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
1.4. An analysis of the debt ratios of As in 2014, five entities used debt capital went into bankruptcy proceedings open the largest construction companies to finance at least 75% of their assets. PBG to composition arrangements, which The debt ratios of the largest construction Group had the highest debt in percentage was finally voted for by the creditors in companies were relatively high both in terms, which did not change as compared August 2015. As regards the remaining 2014 and in 2015. The average debt to 2014. At the end of 2015, the company’s entities, Skanska Group reported the most weighted by revenue was 78% in 2015. total debt constituted 137% (that is, it was considerable increase in its debt, from 67% In the analysed period, seven companies 37% higher than the value of its assets), at the end of 2014 to 73% a year later. The increased and seven reduced the share of and it went up by 6 p.p. vs. 2014. Having debt of the other ranked companies did debt capital in their funding. lost liquidity in 2012, the company not increase by more than 5 p.p. in 2015.
Diagram 1.4: Debt ratios between 2014 and 2015
1.37 PBG Group 1.31
0.87 Budimex Group 0.86
0.83 Mostostal Warszawa Group 0.86
0.82 Warbud S.A. 0.80
Polimex-Mostostal Group 0.80 0.84
Skanska Group 0.73 0.67
0.73 Strabag Group** 0.70
0.72 Unibep Group 0.70
Erbud Group 0.71 0.73
Mota - Engil Central Europe S.A. 0.71 0.70
0.67 Torpol Group 0.73
0.66 Hochtief Polska S.A. 0.74
0.57 Elektrobudowa Group 0.63
Trakcja Group 0.45 0.53
PORR Group*** no data
0.78 Average 0.77
0.00 0.25 0.50 0.75 1.00 1.25 1.50
2015
2014
Source: Financial statements for 2014-2015
15 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
The debt ratio of Trakcja Group (45%) was 1.5. Capital expenditure to sales ratio PLN 254 million, and was PLN 54 million the lowest out of all the ranked companies. of the largest construction companies higher compared to 2014. At the end of 2015, the average debt ratio in 2015 of the largest construction companies rose Companies operating in the construction It should also be emphasized that fewer by approx. 1% year-on-year. sector typically have a relatively low ratio of than half of all the ranked companies capital expenditure (defined as investment reduced their expenditure as compared to in fixed assets and intangible assets) to the preceding year. sales, due to a high volume of sales and a relatively low level of capital expenditure necessary to provide construction services. In 2015, the combined capital expenditure of the largest companies totalled almost
Table 1.5: Capital expenditure of the fifteen largest construction companies in nominal terms (in PLN ‘000)
Capital expenditure Capital expenditure Change in nominal Change in No. Company name in 2015 in 2014 terms percentage terms
1 Budimex Group 67 915 24 072 43 843 182%
2 Trakcja Group 44 309 25 674 18 635 73%
3 PBG Group 29 214 17 125 12 089 71%
4 Torpol Group 26 280 15 046 11 234 75%
5 Mostostal Warszawa Group 18 757 8 279 10 478 127%
6 Warbud S.A. 17 220 19 187 -1 967 -10%
7 Mota - Engil Central Europe S.A. 17 182 8 328 8 854 106%
8 Elektrobudowa Group 13 838 11 489 2 349 20%
9 Erbud Group 13 318 16 077 -2 759 -17%
10 Unibep Group 2 825 3 191 -366 -11%
11 Polimex-Mostostal Group 2 480 26 869 -24 389 -91%
12 Hochtief Polska S.A. 752 450 302 67%
13 Strabag Group** no data 24 464 no data no data
14 Skanska Group no data no data no data no data
15 PORR Group*** no data no data no data no data
Razem **** 254 090 175 787 78 303 45%
Average 21 174 15 404 5 770 37%
Increase Decrease No change
**** - for the purpose of calculating the ratios of percentage and nominal change of capital expenditures, the amounts concerning Strabag Group in 2014 were excluded. Source: Financial statements for 2014-2015
16 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
In 2015, Budimex Group incurred the highest In 2015, the capital expenditure to sales capital expenditure in nominal terms (PLN 68 ratio was 1.24%, which was a 0.3 p.p. year- million up by 182% vs. 2014). Trakcja Group on-year. Trakcja Group and Torpol Group with total expenditure of PLN 44 million (a reported the highest capital expenditure 73% increase year-on-year) and PBG Group to sales ratios. Both these entities have a with expenditure of PLN 29 million (a 71% considerable share in the railway contract rise year-on-year) came second and third, market. In 2015, the lowest capital respectively. expenditure to sales ratio was reported by Hochtief Polska and Polimex-Mostostal Group.
Diagram 1.5: Capital expenditure to sales ratio (figures for 2015 and 2014)
Trakcja Group 3.33% 1.60%
Torpol Group 2.12% 1.94%
Mota - Engil Central Europe S.A. 1.81% 1.27%
PBG Group 1.62% 1.12%
1.56% Warbud S.A. 1.83%
Mostostal Warszawa Group 1.47% 0.55%
Budimex Group 1.32% 0.98%
Elektrobudowa Group 1.11% 1.04%
0.76% Erbud Group 0.95%
0.23% Unibep Group 0.95%
Hochtief Polska S.A. 0.10% 0.08%
0.10% Polimex-Mostostal Group 1.28%
no data Strabag Group** 0.78%
PORR Group*** no data
Skanska Group no data
Average 1.24% 1.03%
0.00% 0.50%1.00% 1.50%2.00% 2.50%3.00% 3.50%4.00%
2015
2014
Source: Financial statements for 2014-2015
17 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
1.6. Revenue of the largest construction group operating in Lithuania The exports of Polish construction construction companies by region and and other Baltic states, generated the companies focus on neighbouring markets, by type in 2015 highest revenue abroad. It totalled PLN 487 mainly Eastern Europe, Scandinavia and million but was 14% lower than in 2014. Germany. 1.6.1 Revenue structure by region Second place went to Polimex-Mostostal Large construction groups operating in Group (same as in the preceding year), Poland are also present on foreign markets. which reported revenue of PLN 443 million However, their sales volume generated and a 15% increase vs. 2014. The Unibep abroad is still relatively low and Poland Group, whose revenue totalled PLN 239 remains the key market on which they million, was third and reported a 25% drop provide construction services. In nominal compared to the preceding year. terms, the average revenue earned by the largest construction companies abroad was PLN 173 million, down by almost PLN 22 million as compared to 2014. This means an 11% drop year-on-year. Trakcja Group, which controls AB Kauno a large
Table 1.6.1: Revenue earned by the largest construction companies abroad, in nominal terms (in PLN ‘000)
Revenue from Revenue from Change in nominal Change in No. Company name sales on foreign sales on foreign terms percentage terms markets in 2015 markets in 2014
1 Trakcja Group 486 978 565 884 -78 906 -14%
2 Polimex-Mostostal Group 442 622 383 978 58 644 15%
3 Unibep Group 238 590 319 497 -80 907 -25%
4 Budimex Group 206 959 195 632 11 327 6%
5 Erbud Group 158 218 195 373 -37 155 -19%
6 PBG Group 128 643 226 268 -97 625 -43%
7 Elektrobudowa Group 113 134 67 336 45 798 68%
8 Torpol Group 62 243 28 507 33 736 118%
9 PORR Group*** 48 809 10 379 38 430 370%
10 Mostostal Warszawa Group 13 172 144 453 -131 281 -91%
11 Strabag Group** 8 685 8 883 -198 -2%
12 Warbud S.A. 0 0 0 0%
13 Mota - Engil Central Europe S.A. 0 0 0 0%
14 Hochtief Polska S.A. 0 0 0 0%
15 Skanska Group no data no data no data n/a
Total 1 908 053 2 146 190 -238 137 -11%
Average 173 459 195 108 -21 649 -11%
Increase Decrease No change
Source: Financial statements for 2014-2015
18 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
The average share of revenues from sales An analysis of sales by region reveals attempts to fulfil contracts on foreign on foreign markets in the total operating that a growing number of companies markets (principally on the neighbouring revenue of the ranked companies was over from the construction sector are looking markets and in Scandinavia), which should 8%, down by almost 2 p.p. as compared to for opportunities to fulfil contracts and translate into greater regional diversity of 2014. Foreign sales of one entity, namely find clients on foreign markets. In the their operations in the future. the Trakcja Group, accounted for 37% of longer term, searching for new markets their total sales revenue. and, consequently, the diversification of business risk, will be of crucial importance after the EU funds received in the 2014- 2020 perspective have been used up. A number of companies have already made
Diagram 1.6.1: Percentage share of foreign sales in total sales for the fifteen largest construction companies in 2015 40.00%
36.64% 35.33% 35.00%
30.00% 29.59%
25.00%
20.00% 19.20% 18.27% 17.37%
15.00% 14.79%
11.55%
10.00% 9.10% 9.57% 10.45% 8.97% 8.40% 6.08% 7.15% 5.03% 5.00% 4.03% 3.68% 3.95% 3.77%
0.99% 1.03% 0.23% 0.28% 0% 0% 0% 0% 0% 0% no data 0.00% Average PBG Group Warbud S.A. Erbud Group Group Erbud Torpol Group Torpol Trakcja Group Group Trakcja Unibep Group Group Unibep Skanska Group Skanska Budimex Group Group Budimex PORR Group*** Strabag Group** Hochtief Polska S.A. Elektrobudowa Group Elektrobudowa Polimex-Mostostal Group Group Polimex-Mostostal Mostostal Warszawa Group Mostostal Group Warszawa Mota - Engil Central Europe S.A.
2015
2014
Source: Financial statements for 2014-2015
19 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Diagram 1.6.2: Sales of the fifteen largest construction companies in 2015 – by region
MARKETS
TOTAL Domestic West European East European Scandinavian Asian Other (2015, in PLN ‘000)
No information about where foreign revenues are generated. Trakcja Group 842 202 1 329 180 Value of foreign revenues - 486 978
No information about where foreign revenues are generated. Polimex-Mostostal Group 2 105 953 2 548 575 Value of foreign revenues - 442 622
Unibep Group 1 004 270 29 760 76 804 131 868 158 1 242 860
Budimex Group 4 927 035 174 854 32 105 5 133 994
No information about where foreign revenues are generated. Erbud Group 1 605 064 1 763 282 Value of foreign revenues - 158 218
No information about where foreign revenues are generated. PBG Group 1 670 172 1 798 815 Value of foreign revenues - 128 643
Elektrobudowa Group 1 129 696 3 367 18 476 78 460 6 848 5 983 1 242 830
No information about where foreign revenues are generated. Torpol Group 1 175 998 1 238 241 Value of foreign revenues - 62 243
No information about where foreign revenues are generated. PORR Group*** 1 244 311 1 293 120 Value of foreign revenues - 48 809
Mostostal Warszawa Group 1 262 259 2 359 10 112 701 1 275 431
No information about where foreign revenues are generated. Strabag Group** 3 827 161 3 835 846 Value of foreign revenues - 9 685
Warbud S.A. 1 106 860 1 106 860
Mota - Engil Central Europe S.A. 949 576 949 576
Hochtief Polska S.A. 788 488 788 488
Skanska Group No data 5 509 363
TOTAL: 31 056 460
Source: Financial statements for 2014-2015
20 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Diagram 1.6.3: Sales of the fifteen largest construction companies in 2014 – by region
MARKETS
TOTAL Domestic West European East European Scandinavian Asian Other (2014, in PLN ‘000)
No information about where foreign revenues are generated. Trakcja Group 1 035 790 1 601 674 Value of foreign revenues - 565 884
No information about where foreign revenues are generated. Polimex-Mostostal Group 1 718 219 2 102 197 Value of foreign revenues - 383 978
Unibep Group 760 206 22 152 173 964 123 323 58 1 079 703
Budimex Group 4 754 307 158 085 37 547 4 949 939
No information about where foreign revenues are generated. Erbud Group 1 496 682 1 692 055 Value of foreign revenues - 195 373
No information about where foreign revenues are generated. PBG Group 1 303 980 1 530 248 Value of foreign revenues - 226 268
Elektrobudowa Group 1 040 980 9 806 21 545 17 427 10 966 7 592 1 108 316
No information about where foreign revenues are generated. Torpol Group 746 892 775 399 Value of foreign revenues - 28 507
No information about where foreign revenues are generated. PORR Group*** 1 034 640 1 045 019 Value of foreign revenues - 10 379
Mostostal Warszawa Group 1 365 071 79 701 23 090 39 959 1 703 1 509 524
No information about where foreign revenues are generated. Strabag Group** 3 133 966 3 142 849 Value of foreign revenues - 8 883
Warbud S.A. 1 049 886 1 049 886
Mota - Engil Central Europe S.A. 658 133 658 133
Hochtief Polska S.A. 579 348 579 348
Skanska Group No data 5 081 675
TOTAL: 27 905 965
Source: Financial statements for 2014-2015
21 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
1.6.2 Sales by type Sales by type reflect diversification of the operations carried out by the largest construction companies in the general, energy, road and railway sectors. A material part of their revenue is also derived from the housing construction and construction engineering sectors.
Diagram 1.6.2.1: Sales by type - fifteen largest companies in 2015
MARKETS
Road and General Housing Civil Energy Other TOTAL railroad construction construction engineering construction operations (2015, in PLN ‘000) construction
Polimex-Mostostal Group 224 165 27 504 1 801 367 495 539 2 548 575
Budimex Group 4 673 666 460 328 5 133 994
PBG Group 1 552 389 246 426 1 798 815
Elektrobudowa Group 1 047 388 195 442 1 242 830
Unibep Group 999 149 129 498 114 213 1 242 860
PORR Group*** 1 189 268 103 851 1 293 120
Trakcja Group 1 240 975 88 206 1 329 180
Mota - Engil Central Europe S.A. 138 385 708 385 41 418 61 387 949 576
Erbud Group 1 130 960 330 741 253 717 47 864 1 763 282
Torpol Group 1 222 041 16 200 1 238 241
Warbud S.A. 1 091 486 15 374 1 106 860
Mostostal Warszawa Group 272 421 1 000 384 2 626 1 275 431
Hochtief Polska S.A. 614 933 94 605 78 838 113 788 488
Skanska Group No data 5 509 363
Strabag Group** No data 3 835 846
TOTAL: 31 056 460
Source: Financial statements for 2014-2015
22 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Diagram 1.6.2.2: Sales by type - fifteen largest companies in 2014
MARKETS
Road and General Housing Energy TOTAL railroad Civil engineering Other operations construction construction construction (2014, in PLN ‘000) construction
Polimex-Mostostal Group 239 740 466 173 968 837 427 447 2 102 197
Budimex Group 4 566 628 383 311 4 949 939
PBG Group 317 063 1 188 076 342 172 1 530 248
Elektrobudowa Group 904 583 203 733 1 108 316
Unibep Group 867 258 124 871 87 574 1 079 703
PORR Group*** 1 000 093 44 926 1 045 019
Trakcja Group 1 474 086 127 588 1 601 674
Mota - Engil Central Europe S.A. 70 808 507 332 46 177 33 816 658 133
Erbud Group 1 397 537 160 185 88 885 45 448 1 692 055
Torpol Group 755 188 20 211 775 399
Warbud S.A. 1 038 747 11 139 1 049 886
Mostostal Warszawa Group 317 063 3 159 1 509 524
Hochtief Polska S.A. 417 048 92 677 69 508 114 579 348
Skanska Group No data 383 311 5 081 675
Strabag Group** No data 3 142 849
TOTAL: 27 905 965
* General and civil engineering construction Source: Financial Statements for 2014-2015 Source: Financial statements for 2014-2015
23 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Diagram 1.6.2: Other activities of the largest construction companies in 2015.
Other operations Other operations Change in nominal Change in No. Company name 2015 2014 terms percentage terms
1 Polimex-Mostostal Group 495 539 427 447 68 092 15.9%
2 Budimex Group 460 328 383 311 77 017 20.1%
3 PBG Group 246 426 342 172 -95 746 -28.0%
4 Elektrobudowa Group 195 442 203 733 -8 291 -4.1%
5 Unibep Group 114 213 87 574 26 639 30.4%
6 PORR Group*** 103 851 44 926 58 925 131.2%
7 Trakcja Group 88 206 127 588 -39 382 -30.9%
8 Mota - Engil Central Europe S.A. 61 387 33 816 27 572 81.5%
9 Erbud Group 47 864 45 448 2 416 5.3%
10 Torpol Group 16 200 20 211 -4 011 -19.8%
11 Warbud S.A. 15 374 11 139 4 235 38.0%
12 Mostostal Warszawa Group 2 626 3 159 -533 -16.9%
13 Hochtief Polska S.A. 113 114 -2 -1.7%
14 Skanska Group no data no data no data n/a
15 Strabag Group** no data no data no data n/a
Total 1 847 569 1 730 638 116 931
Source: Financial statements for 2014-2015
24 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
In nominal terms, the highest share 80% to 100%. The operations of Polimex Out of the thirteen entities analysed of other non-construction revenue in - Mostostal Group continue to show the above, which earned revenue from other total revenue in 2015 was reported by highest degree of diversification. operations, only five increased their Polimex Group and Budimex Group The scope of the Group’s non-construction percentage share of non-construction (PLN 496 million and PLN 460 million, operations includes mainly assembly and operations in total revenue in 2015 vs. respectively). As compared to 2014, manufacturing services. On the other hand, 2014. This was mainly due to a continued the average percentage share of other Budimex Group, which occupies second increase in the value of revenue generated operating revenue went down from 9.6% place, mainly derives its other operating by the largest companies on construction to 9.2%. In 2015, in most cases, the share revenue from property development. and assembly services in 2015. of construction and assembly services as a percentage of total sales ranged from
Diagram 1.6.2.3: Share of revenue from other (non-construction) operations in total operating revenue (for 2015-2014)
Unibep Group 20.0% 19.6%
Polimex-Mostostal 19.4% Group 20.3%
PBG Group* 13.7% 22.4%
Budimex Group 9.0% 7.7%
PORR Group*** 8.0% 4.3%
Trakcja Group 6.6% 8.0%
Mota - Engil CE S.A. 6.5% 5.1%
Elektrobudowa Group 3.4% 18.4%
Erbud Group 2.7% 2.7%
1.4% Warbud S.A. 1.1%
Torpol Group 1.3% 2.6%
Mostostal 0.2% Warszawa Group 0.2%
Hochtief Polska S.A. 0.0% 0.0%
Strabag Group** no data
Skanska Group no data
9.2% Average 9.6%
0% 25%
2015
2014
Source: Financial statements for 2014-2015
25 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
A relatively low share of revenue is earned 1.7. Market cap of the largest The list of companies whose shares are on non – construction related operations. construction companies whose shares traded on the Warsaw Stock Exchange This trend should reverse once projects are traded on the Warsaw Stock is topped by Budimex, whose share in receiving EU support in the second Exchange the combined market cap is almost 60%. financial perspective have been finalized. It 2015 was a period when the WIG Nevertheless, even excluding Budimex, the should be emphasised, though, that large Budownictwo (WIG BUD) index regained increase in the market cap of the remaining construction groups have already begun the trust of investors. The said index entities was 50% year-on-year. to diversify their business and invest in increased by ca. 30% year-on-year, while areas which are not directly related to the main WIG index dropped by ca. 10% At the beginning of 2016 the WIG BUD construction or property development in 2015, compared to the end of the index recorded a drop caused by the operations, such as property management, preceding year. limited volume of construction and supply and installation of specialist assembly works in the winter season and industrial equipment or construction The shares of nine out of the fifteen largest a decrease in the volume of new building advisory and consulting services. construction companies ranked in the construction projects. In May 2016, there report were traded on the Warsaw Stock was another decrease in the index and it Exchange, which was used as the basis reached its lowest value in mid-June 2016. for the market cap ranking. At the end The significant decrease of the WIG BUD of 2015, the combined market value of index in May and June was correlated with nine construction companies listed on the the general stock exchange trend, driven by Warsaw Stock Exchange was PLN 8 billion the information of the potential withdrawal and was PLN 2.4 billion higher than their of the United Kingdom from the European combined market cap at the end of 2014. Union - the withdrawal was confirmed by In percentage terms, the combined market the results of the referendum which was cap increased by 42%. arranged in the UK in June 2016. Beginning
Diagram 1.7: Changes in WIG and WIG-Budownictwo indices between 2014 and 2016 50 000 3 500
3 000 48 000
2 500 46 000
2 000
44 000
1 500
42 000 1 000
40 000 500
38 000 0 30 12 24 09 20 29 09 2- 2- 3- 5- 6- 7- 9- 15-1 16-0 16-0 16-0 16-0 16-0 16-0 20 20 20 20 20 20 20
WIG
WIG BUDOWNICTWO
Source: Deloitte analysis based on data published on the website of the Warsaw Stock Exchange.
26 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
from that date we observe a reversal of the short-term downturn and an increase of the WIG BUD index which, in September 2016, came close to the high levels observed in 2015.
This might confirm that, despite negative information about a considerable slowdown in the building construction sector in 2016 - which is well visible in the diagram below - investors take note that listed companies will soon reap the benefits linked with running large infrastructural contracts financed under the new EU perspective for 2014 - 2020.
Diagram 1.7.1: Construction and assembly market ratis in years: 2015 - 2016 (YoY) 10.00%
5.00%
0.00%
-5.00%
-10.00%
-15.00%
-20.00%
-25.00% IIIIII IV VVIVII VIII IX XXIXII IIIIII IV VVIVII VIII
2015 2016
Source: Deloitte analysis based on data published on the website of the Warsaw Stock Exchange.
27 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
The market value of none of the nine As compared with the previous year, at analysed companies decreased in 2015. the end of 2015 there was a significant Budimex, whose market cap was PLN 4,953 (42%) increase of the market cap ratio of million (up by 37% compared to 2014), has the largest construction companies. Such been the unquestionable leader since 2011. a trend is consistent with the increasing The market cap of Budimex constitutes revenue of the ranked companies, which 60% of the cap value of all the analysed was discussed above. companies. Trakcja PRKiI was ranked second and Elektrobudowa - third (their market capitalisation was PLN 650 million and PLN 617 million, respectively).
Table 1.7: Market cap of the largest construction companies listed on the Warsaw Stock Exchange as at 31 December 2015 (in PLN ‘000)
Market cap as Market cap as Change Change No. Company name at 31 December at 31 December in nominal in percentage 2015 2014 terms terms
1 Budimex S.A. 4 952 839 3 612 509 1 340 330 37%
2 Trakcja PRKiI S.A. 650 204 390 637 259 568 66%
3 Elektrobudowa S.A. 617 189 350 373 266 816 76%
4 Polimex-Mostostal S.A. 498 924 303 166 195 758 65%
5 Unibep S.A. 378 763 288 281 90 482 31%
6 Erbud S.A. 354 376 324 153 30 223 9%
7 Torpol S.A. 285 287 229 011 56 277 25%
8 Mostostal Warszawa S.A. 260 000 120 000 140 000 117%
9 PBG S.A. 25 445 23 444 2 001 9%
Total 8 023 028 5 641 573 2 381 455 42%
Increase Decrease No change
Diagram 1.7.1: Market cap share of the largest construction companies listed on the Warsaw Stock Exchange as at 31/12/2015
3.24% 0.32% Budimex S.A. 3.56% Trakcja PRKiI S.A.
4.72% Elektrobudowa S.A.
6.22% Erbud S.A.
4.42% Polimex-Mostostal S.A. Unibep S.A. 7.69% Torpol S.A.
Mostostal Warszawa S.A. 8.10% 61.73% PBG S.A.
Source: Deloitte analysis based on data published on the website of the Warsaw Stock Exchange. 28 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Based on the financial data as at 30 June In the second half of the year, the most 2016, the combined capitalisation of the considerable increase in the market cap in analysed companies fell by over 14% as percentage terms was reported by PBG, compared with the end of December 2015 which resulted from an arrangement with (the decrease is 5% higher if Budimex is its creditors and the closing of bankruptcy excluded). As indicated above, in May and proceedings. On the other hand, Torpol, June 2016 all stock exchange indices had Elektrobudowa and Polimex-Mostostal a considerable decrease connected with reported the most significant decreases in the information concerning the potential their market capitalisation. withdrawal of the United Kingdom from the European Union, which was finally confirmed in the referendum of mid-June 2016.
Diagram 1.7.1: Market cap of the largest construction companies listed on the Warsaw Stock Exchange as at 30/06/2016 (in PLN ‘000)
Market cap as at 30 Market cap as at 31 Nominal change Percentage change No. Company June 2016 December 2015 (in PLN '000) 2016 vs. 2015 (in PLN '000) (in PLN '000)
1 Budimex S.A. 4 386 071 4 952 839 -566 768 -11.4 4%
2 Trakcja PRKiI S.A. 508 856 650 204 -141 349 -21.74%
3 Elektrobudowa S.A. 446 228 617 189 -170 961 -27.70%
4 Erbud S.A. 330 418 354 376 -23 958 -6.76%
5 Polimex-Mostostal S.A. 361 200 498 924 -137 724 -27.60%
6 Unibep S.A. 339 484 378 763 -39 279 -10.37%
7 Torpol S.A. 195 934 285 287 -89 353 -31.32%
8 Mostostal Warszawa S.A. 241 400 260 000 -18 600 -7.15%
9 PBG S.A. 34 165 25 445 8 720 34.27%
Total 6 843 755 8 023 028 -1 179 273 -14.70%
Source: Deloitte analysis based on data published on the website of the Warsaw Stock Exchange.
29 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
In the first half of 2016 the companies 2015 was a successful year for the largest The delay in announcing new tenders may listed on the Warsaw Stock Exchange construction companies. In the first half of erode this trust, because investors may reported a slight increase (by almost 2016 they managed to keep the investor's decide to withdraw their capital, which in 2%) in their sales revenue year-on-year. trust and their revenues even slightly turn will result in a drop of the WIG BUD Budimex Group with revenue of PLN 2.4 exceeded the turnover obtained during a index and lower market capitalization of billion (a rise by more than 7% increase comparable period in 2015. The second the analysed companies. year-on-year) was again the major player. half of 2016 and the following years will be It should be emphasised that the average crucial from a sort-term perspective. The operating margin for the first six months of current level of the WIG BUD shows that, 2016 went up to 9.4% as compared to the despite a significant decline in contract corresponding period in 2015, when it was volume in 2016, investors still believe that 7.74%. there will be a positive impact from the infrastructure contract initiative, and that companies operating on the construction market will continue to benefit.
Diagram 1.7.2: Market cap of the largest construction companies listed on the Warsaw Stock Exchange as at 30 June 2016 (in PLN ‘000) 0% Budimex S.A. 4% 3% Trakcja PRKiI S.A. 5% 5% Elektrobudowa S.A. Erbud S.A. 5% Polimex-Mostostal S.A.
7% Unibep S.A.
Torpol S.A. 7% 64% Mostostal Warszawa S.A.
PBG S.A.
Source: Deloitte analysis based on data published on the website of the Warsaw Stock Exchange.
30 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Table 1.7.2: Revenues of companies listed on the Warsaw Stock Exchange as at 30 June 2016 and 30 June 2015.
Revenue June 2016 Revenue June 2015 Change in nominal Change in No. Company name (in PLN '000) (in PLN '000) terms percentage terms
1 Budimex Group 2 429 700 2 268 240 161 460 7.1%
2 Polimex-Mostostal Group 641 952 511 049 130 903 25.6%
3 PBG Group 788 660 771 957 16 703 2.2%
4 Erbud Group 788 168 805 820 -17 652 -2.2%
5 Trakcja Group 478 829 564 772 -85 943 -15.2%
6 Mostostal Warszawa Group 732 999 569 898 163 101 28.6%
7 Unibep Group 501 551 574 787 -73 236 -12.7%
8 Elektrobudowa Group 528 228 592 901 -64 673 -10.9%
9 Torpol Group 335 960 443 379 -107 419 -24.2%
Total 7 226 047 7 102 803 123 244 1.7%
Average 802 894 789 200 13 693.8 1.7%
Source: Deloitte analysis based on data published on the website of the Warsaw Stock Exchange.
Diagram 1.8: Revenue of construction companies listed on the Warsaw Stock Exchange in the first half of 2016 (in PLN '000) 3 000 000
2 500 000
2 000 000
1 500 000
1 000 000
500 000
0 PBG Group Erbud Group Group Erbud Torpol Group Torpol Trakcja Group Group Trakcja Unibep Group Group Unibep Budimex Group Group Budimex Elektrobudowa Group Elektrobudowa Polimex-Mostostal Group Group Polimex-Mostostal Mostostal Group Warszawa
Revenue June 2016 (in PLN million)
Revenue June 2015 (in PLN million)
Source: Financial statements as at 30 June 2016
* The financial data for 2014 were reconciled with the financial statements for 2015 after adjustments had been made to the opening balance. **Considering that consolidated financial statements of the Strabag Group are not available, for simplicity's sake, the financial data are comprised of the total revenue of companies: Strabag Sp. z o.o. and Strabag Infrastruktura Południe Sp. z o.o. The financial data of Strabag for 2014 were reconciled with the financial statements for 2015, after adjustments had been made to the opening balance. ***In 2015 PORR BAU GMBH acquired Bilfinger Infrastructure S.A.. Considering that consolidated financial statements of the are otn available, the financial data for 2015 are presented as the aggregate of the data derived from the financial statements of PORR Polska Construction S.A. and PORR Polska Infrastructure S.A. (formerly Bilfinger nfrastructureI S.A.). The data pertaining to 2014 have been derived from the financial statement of PORR Polska Construction S.A. 31 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
32 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Chapter 2. Prospects for Development of Construction Companies in Poland
33 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
2.1 Introduction Sold production in construction industry (in PLN bn) This section of the Report includes an 12.0 17.2 analysis of the factors which affect the 10.9 10.9 condition of the construction industry 10.5 as well as supporting data, such as 10.0 bankruptcies among construction companies and employment rates in the 7.7 8.0 7.3 sector. Next, key information concerning 7.0 7.0 selected segments of the construction 6.3 sector is presented along with an analysis 6.0 of their prospects for development in the short and medium term. Finally, a summary of the current conditions and the key growth 4.0 drivers in the sector are presented from the perspective of representatives of Polish 2.0 construction companies.
Following a period of decline in 2012 and 0.0 1H 2012 2H 2012 1H 2013 2H 2013 1H 2014 2H 2014 1H 2015 2H 2015 1H 2016 2013, the construction sector in Poland saw a modest recovery in 2014 and 2015.
Source: Central Statistical Office In 2015, the Polish construction sector grew by 2.9% at constant prices (growth at current prices amounted to 0.13%). In 2014, the sector grew by 4.9% in current prices (5.9% at constant prices). Considering delays in contract award procedures relating to large infrastructure projects supported Within the next few years we can expect many changes, in the new 2014-2020 EU perspective, the because the business climate in the construction upward trend observed over the past two years will not be seen this year. industry to a large extent depends on infrastructure projects. Beginning from 2018, the planned road and The effects of the said delays have already been demonstrated in data published by railway projects will be launched and most likely, they will the Central Statistical Office. In August, accumulate, which in turn may cause a price war in the production in the construction and assembly sector dropped by 20.5% (at sector. constant prices). It also went down (by Piotr Janiszewski, CEO, Skanska S.A. 14.9% at current prices) in the entire period from January to August 2016.
The latest data regarding bankruptcies Delays in inviting tenders for large The influx of funds from the European in the enterprise sector also support infrastructure projects in 2016 have had an Union will be of crucial importance to the that trend. After three consecutive years adverse effect on the current situation in the improvement of the conditions on the when construction company bankruptcies construction sector. Nevertheless, the average infrastructure construction market in Poland decreased in number, in the first half of pay in the industry rose in early 2016. It is also in the upcoming years. The EU structural 2016 they grew by 8% as compared with the anticipated that the demand for workforce will and investment funds allocated to Poland for corresponding period of 2015. increase due to the expectation of the launch 2014-2020 total EUR 86.6 billion, out of which of EU supported projects. EUR 0.8 billion (0.9% of the total allocated amount) had been disbursed by the European As the level of funding from the EU Union by May 2016. The aggregate value perspective is known but the project of applications filed under all the available timelines are still uncertain, construction operational programmes for 2014-2020 companies have refrained from investing by July 2016 exceeded PLN 143.5 billion, in modern fixed assets or innovative including PLN 88 billion of EU support. technology solutions.
34 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Representatives of the largest construction profitability of investing in deposits, along The aforementioned factors show that the companies see the new EU financial with the unfavourable situation on the conditions in the construction sector vary perspective as a great opportunity but Warsaw Stock Exchange which discourages considerably by segment. The infrastructure they also voice concerns over the delays in investors result in an increased focus on segment, which depends on public funding inviting tenders and completing the existing real property investments. Nonetheless, in and government decisions, is faced with the contract award procedures. Following the the mid-term, a slowdown in the housing most problematic situation. change in the government in October 2015, construction segment can be expected the new authorities have begun to revise in view of the finalization of the Flats for A slowdown in that segment may lead to an the key infrastructure programmes, that is the Young programme in 2018 and the end of the upward trend observed in the the National Road Building Programme and heightened restrictions of mortgage loan construction sector for the past two years. the National Railway Programme. According availability. The sector companies will have to make it to the Ministry of Infrastructure, in its through the temporary delays in the major current version the National Road Building In 2015, the supply on the office infrastructure projects, which are caused by Programme would require additional funds construction market was the highest the launch of the 2014-2020 EU perspective of PLN 90 billion so that all the objectives on record. This is evidenced by an and revision of the existing road and railway defined therein could be achieved. Such unprecedented volume of office space built programmes. In this chapter we attempt conclusions have been arrived at following (622,000 sq.m.). The demand increased as to sum up the opportunities that are now the verification of plans and costs assumed well and the overall lease transaction value available, indicate the key growth drivers in the National Road Building Programme. At was 40% higher than in 2014. According and prospects for development. the beginning of August 2016, the Ministry to Colliers International, over 1.5 million of Infrastructure and Construction held sq.m. of office space is being constructed a dialogue with road contractors, which at present, half of which is in Warsaw. It can resulted in the announcement of work on be expected though that - considering the the improvement of public procurement high demand that can be observed now and processes. Representatives of the industry that is planned for the future - the unrented emphasized that unpredictability of the space ratio for the major Polish markets will investment process was their major be going up over the next few quarters. As the Polish construction concern. On 2 September 2016, the Minister of Infrastructure, PKP PLK and the In the upcoming years, construction market is expected to Directorate General for National Roads and companies will, on the one hand, focus on shrink after the end of the Motorways presented the road and railway taking advantage of the increased volume of construction status and plans. projects (as a result of an influx of EU funds current EU perspective, and the launch of government housing Polish construction According to the Minister, the situation programmes), and on the other on ensuring in the road segment is relatively good as growth in value in the long term. In order companies should opposed to that in the railway segment, to maintain a competitive advantage after consider international where tenders that should have been the end of the 2014-2020 EU perspective, invited a year ago will only be invited this companies continue their expansion on expansion now. and next year. This was due to a lack of foreign markets, to include Western Europe, Leszek Gołąbiecki - Chairman documentation, which should have been Scandinavia or the Balkans, both through of the Management Board, prepared by the former government exports and through development of Unibep S.A. operations in other countries. They have The housing construction segment enjoys also been diversifying their business and a strong growth in the demand, which has developing new competences, such as continued uninterruptedly since 2014. modernization projects in building and In the short-term perspective this trend facility construction or maintenance in is expected to continue, considering that the infrastructure segment. Additionally, Poland has one of the lowest ratios of managers have launched operational flats per 1,000 citizens in Europe and optimisation initiatives (such as headcount that government programmes intended reduction or operational structure changes). to support housing (such as “Flats for the Young” or the “National Housing Programme”) have been launched. In addition, part of the demand is generated by investment-oriented transactions. Low interest rates, which significantly restrict the
35 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
2.2. Key growth drivers for the Increase of Poland's GDP construction market in Poland In the upcoming years, the condition 6% of the construction sector will be 5.0% determined mainly by such factors as 5% the macroeconomic situation in Poland (primarily, its economic growth) and the 4% 3.7% use of the funds allocated to infrastructure 3.6% 3.3% 3.4% 3.3% investments in the 2014-2020 EU 3.1% 3.2% 2.9% perspective, which will depend on the 3% possibilities of subsidizing infrastructure projects limited by the criterion of the public 2% debt level. 1.6% 1.3%
Economic growth 1% In 2015, the compound average growth rate in Poland was 3.6%. The growth was 0% F F F F fuelled mainly by household consumption F 13 14 12 10 19 20 2015 20 20 20 and a rise in exports that was attributable to 20 2011 20 20 2018 2017 2016 improved competitiveness of Polish goods (primarily owing to depreciation of the Polish Source: EIU, Country Forecast Poland, August 2015 update currency relative to the euro and U.S. dollar).
Early 2016 saw a slowdown in the growth rate to 2.6% (January - March) as compared to a rate of 3.8% in the corresponding Geographical diversification is the strategic objective period in the preceding year. Initial estimates by the Central Statistical Office of the Trakcja PRKiI Group. The Group is present in show that in Q2 2016 GDP went up by 3% the Lithuanian market and strives to acquire new year-on-year vs. 3.2% a year before. The slowdown results mainly from a decline in clients in markets offering many opportunities, such infrastructure investment accompanied by as Scandinavia or the Balkans. Ultimately, the Group a drop in government spending in relation to the EU funding cycle. The government's intends to generate 50 percent of its revenue from forecasts as to the planned 3.8% growth export sales. were updated in the second half of August to 3.5%. However, considering Jarosław Tomaszewski – Chairman of the Management Board, the decline in infrastructure investment Trakcja PRKiI S.A. and the uncertainty resulting from the announcement of Brexit, it may be difficult to reach GDP growth even at the reduced level.
36 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Government debt Public debt as a GDP percentage The level of government debt largely determines the possibilities of the State and 60% local governments to support infrastructure 58% projects. At the end of 2015, the government debt-to-GDP ratio was 48.4%. According 56% 53.9% to the government debt management 53.4% 54% 52.6% strategy for 2016-2019, as proposed by the Minister of Finance, in 2015 and 2016 the 52% government debt-to-GDP ratio will rise to 50% 49.0% 49.0% 48.1% 49.0% but it will gradually decrease to 47.5% 47.8% 48.4% 47.5% 48% in 2019. 46%
EU funds 44% The influx of funds from the European Union 42% in the 2014-2020 financial perspective is a key growth driver for the construction 40% market, especially in the infrastructure 2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F sector. The total funds allocated to Poland Source: Ministry of Finance – “Public Finance Sector Debt Management Strategy for 2015-2018, September 2014 under the cohesion policy is EUR 82.5 billion, including EUR 45.6 billion earmarked for grants under National Operational Allocation of EU funds under 2014-2020 perspective (in PLN bn) Programmes. Detailed allocation of funds to each Operational and National Programme was presented in the previous edition of the 1.17 1.17 Report. 1.17 1.17 1.17 1.18 Funds for infrastructure projects are derived 1.57 5.09 4.88 4.68 mainly from the Eastern Poland programme 4.47 4.27 and the Infrastructure and Environment 4.05 3.83 programme. The Eastern Poland Operational Programme covers infrastructure projects on two priority axes, namely the Modern 7.39 Transport Infrastructure and the Supra- 6.80 7.10 6.19 6.49 Regional Railway Infrastructure. 5.52 5.85
In 2015, no grant applications and no contracts were signed under the 2014 - 2014 2015 2016 2017 2018 2019 2020 2020 perspective. Likewise, no applications for payments linked with infrastructure Rural Development Programmes projects were settled under the program by the end of 2015. Regional Operational Programmes National Operational Programmes Under the Infrastructure and Environment Operational Programme (POIiŚ) 2014-2020, Source: Ministry of Development and Infrastructure grant agreements totalling EUR 615.7 million had been signed by the end of 2015 in relation to railway infrastructure projects Establishing the Polish Cluster of Construction (core network, comprehensive network and other railways) and EUR 1.9 billion for roads Exporters, an association of construction companies and motorways (the total value of grant controlled by Polish investors, will help strengthen the agreements signed under the programme as a whole was EUR 2.5 billion out of EUR 14.6 position of Polish companies in foreign markets. billion available). Leszek Gołąbiecki - Chairman of the Management Board, Unibep S.A.
37 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
The recent decision of the UK to leave the Number of bankruptcies among construction contractors between 2011 and 1H 2016 European Union may reduce the available EU funds. Needless to say, withdrawal Share of bankruptcies in the construction sector in all bankruptcy petitions from the EU is a lengthy process, which will probably take several years. However, the 20% 29% 27% 22% 20% 17% 20%
United Kingdom is one of the largest net 300 payers to the EU budget. Consequently, 273 253 its secession may lead to a reduction in 250 the number of investment projects and introduction of more stringent financing 200 184 criteria. 146 146 150 Based on the economic factors and the expected influx of EU funds we 100 66 71 may conclude that the prospects for the construction sector are good. The 50 statistical data concerning bankruptcy and employment (discussed below) well reflect 0
the current situation in the sector and its 2011 2012 2013 2014 2015 prospects for the nearest future. In addition, 1H2015 1H2016 section 2.6 of our report presents our Source: Euler Hermes forecast regarding the market situation from the perspective of companies, PKP PLK and the Directorate General for National Roads A serious challenge, from the perspective of both and Motorways. investors and general contractors, is to understand 2.3. Bankruptcies in the construction the changes to the Public Procurement law, namely sector In the first half of 2016, the number of the 40% non-price criterion. Indisputably, it is the right bankruptcies in the construction sector direction that will favour companies focused on social increased by 8% year-on-year, which was a consequence of a temporary lack of responsibility, innovation, security and sustainability. contracts. However, this does not fully Piotr Janiszewski, CEO, Skanska S.A. reflect the condition of construction companies. The real drop in construction investment is almost twice as high as the increase in the number of bankruptcies in absolute terms. Companies expect that the situation will improve once infrastructure projects have been launched in the new EU perspective. necessity to implement more stringent credit analysis criteria). The majority of entities going bankrupt are those operating in the road and water The social tenement housing programme supply system infrastructure segment, while proposed by the government may have the number of bankruptcies in the housing an impact on the market in the longer construction segment is definitely lower. At term. The major threat for companies present, the condition of companies in the operating in the infrastructure segment housing construction segment is considered is delays in contract award procedures as good. As the supply has a good correlation well as an uncertainty as to the pricing of with the demand, the problem of unsold construction materials in the case of project projects has disappeared. However, the accumulation. medium-term outlook is less optimistic as banks are planning to reduce the number of new loans (increased pressure to match the asset and liability portfolios and the
38 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
2.4. Employment in the construction Average employment and gross salary in the construction sector from 2008 to 1H2016 sector 4 300 550 In the first half of 2016, the number of employees in the construction sector 4169 488.1 4077 4043 ceased to fall for the first time since 2012. 4 100 478.2 500 According to the Polish Central Statistical 443.3 446.1 445.8 Office, in the first half of 2016, 3 900 450 the average number of employees 411.5 398.9 3 888 increased by 0.2% as compared to the 387.6 3 700 382.5 383.4 400 3 704 3 728 corresponding period in the preceding 3 702 year, although a drop by 0.3% YoY was seen 3 540 3 500 350 in the first quarter. In 2015, the average 3 464 number of employees was 387,600, which 3 359 means a 5,8% drop (in 2013 an 8.6% 3 300 300 decrease was reported, followed by a 7.6% decline in 2014). 3 100 250
With a decelerating downward trend in employment in the construction sector, the 2 900 200 2008 2009 2010 2011 2012 2013 2014 2015 1Q 2016 1H 2016 average gross monthly pay in 2015 was PLN 4,076.47, up by 4.9% year-on-year. Gross average pay [PLN]
In the first half of 2016 the average pay Average employment in year [in thousands] was PLN 4,169.37 (i.e. 2.3% more than in 2015). Considering that over the past three Source: Central Statistical Office years the average pay in the first half of the year was ca. 2% lower than the average annual pay, a further increase in pay may be Average gross pay in the first half of 2016 in specific construction sectors expected in the construction sector in 2016 4 500 as a whole.
4 400 According to a survey conducted by the Central Statistical Office among construction 4 300 companies, a shortage of qualified staff is a 4 200 growing problem in the industry. In August 4 169 2016 28.1% of companies identified this 4 100 4 393 factor as a barrier to business. The ratio was higher only between 2006 and 2008. As in 4 000 the preceding year, employment costs were 4 121 considered the heaviest financial burden. 3 900 4 018
3 800 They were identified as a barrier to business Building construction Works linked with construction of Specialized construction work by 61% of employers (vs. 62% in 2015). civil and water engineering structures
Average pay in specific segments
Average pay in construction industry
Source: Central Statistical Office Significant EU funds used for financing Polish infrastructure projects and no barriers of entry on the domestic market created fierce competition for contracts and considerably reduced margins earned by general contractors. The fact that projects under the new perspective are delayed by almost three years makes us cautious, because now it is uncertain whether all investment projects planned under the National Railway Programme will be delivered and whether the PLN 66 bn will be fully used. Jarosław Tomaszewski – Chairman of the Management Board, Trakcja PRKiI S.A. 39 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Employment outlook Key business challenges faced by construction companies The latest report entitled “Manpower 70% Employment Outlook Barometer” presents the employment outlook for the economy 62% 62% 61% for Q4 2016.1 The data contained in the 60% report shows that employers in Poland are clearly optimistic about the future. The 50% net employment outlook is positive for nine out of ten sectors surveyed. In Q4, 40% 34% 35% 15% of the respondents are planning to 31% 30% 31% 28% 28% increase the number of their employees, 30%
75% declare that no changes will be made 22% 19% in this regard and 7% expect a headcount 20% reduction. Optimism prevails also among employers in the construction sector. The 10% net employment outlook for the analysed period is +13%, which translates into a 2 p.p. 0% rise year-on-year. Employment costs Insufficient demand Cots of materials Shortage of competent staff This means that 13% more companies expect that the number of their employees will increase as opposed to fall. Before August 2014 the seasonal update, the net employment August 2015 outlook is +12%. Considering a large number of projects to be implemented August 2016 within the next 6-7 years with the support Source: Central Statistical Office of the European Union, the number of employees in the infrastructure segment may be expected to rise over the years 2014 - 2020.
Hays forecasts that the employment rate We are constantly developing our machinery stock. will increase mainly in the road and railway infrastructure segments and candidates New specialized equipment will bring us a competitive for the position of site manager, contract advantage and it will certainly be required in domestic manager and industry manager will be most frequently searched for in 2016 by general and Scandinavian contracts. Investments in specialized contractors. machinery stock and highly qualified staff are of key
importance for further growth of the Torpol Group. Grzegorz Grabowski, Chairman of the Management Board of Torpol S.A.
1 The “net employment outlook” in the "Manpower Employment Outlook Barometer" is a percentage difference between the number of employers anticipating an increase in the total number of employees and the number of employers expecting a fall in the total number of employees in their branch in the nearest quarter. 40 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
2.5. Development prospects for Structure of the construction market in Poland in 2015 construction market segments in 100% Poland
In 2015, the structure of construction and 90% assembly production was similar to that reported in the preceding year. A slight 80% 38.2% 38.6% increase was observed in infrastructure 70% construction (from 38.2% to 38.6%) and in specialist construction (from 33.5% to 34.0%), 60% to the benefit of works relating to the erection 50% of buildings. 28.3% 27.4%
40% In 2015, the Polish construction sector grew by 2.9% at constant prices (growth 30% at current prices amounted to 0.13%). 20% According to revised data published by the 33.5% 34.0%
Central Statistical Office, the growth rate 10% was considerably higher a year before, when it reached 4.9% at current prices (5.9% at 0% 2014 2015 constant prices). The 2016 figures reflect a slowdown resulting from the suspension of contract award procedures and delays in Construction of civil and water engineering structures infrastructure investments. According to the Building construction Central Statistical Office, construction and assembly production dropped by 20.5% in Specialized construction
August vs. July 2015, and between January Source: Central Statistical Office and August the decrease was 14.9% (at constant prices). Considering the anticipated acceleration of infrastructure projects due to the necessity to implement government Polish construction market divided into segments 2010 - 2015 [PLN bn] programmes and use EU funds, the construction market value may be expected to increase in the upcoming years. However, as CAGR* the completion of contract award procedures -2.3% and the selection of contractors will take more time and, due to the fact that a number of 69.1 60.6 51.4 63.2 64.1 road and railway projects are carried out in 64.1 the design-build formula, market growth will probably be seen only in 2018. 37.7 48.9 47.0 47.0 45.5 The medium term 41.0 objective of the Unibep 71.8 64.2 63.1 Group is to grow 52.9 55.5 56.4 the share of exports 2010 2011 2012 2013 2014 2015 in total revenues. Modular construction Specialized construction work in Scandinavia is a key Construction of civil and water engineering structures element of the Group's Building construction development strategy. * CAGR - Compound Annual Growth Rate Source: Central Statistical Office Leszek Gołąbiecki - Chairman of the Management Board, Unibep S.A. 41 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Despite a drop in production in the WIG BUD and WIG20 for the period 31.07.2008- 16.09.2016 construction segment, the "WIG Budownictwo" index has been rising steadily since February 2016, after a period of slight decline in the winter, which may be attributable to an expected increase in the number of contracts on the market. Taking account of the expected 2015-01-02 2015-11-02 2016-09-02 increase of employment levels in the construction industry, it may be concluded that the market expects more orders in 3500 the infrastructure sector and continued 3000 optimism in the housing construction 2500 segment. 2000 1500 1000 500 0
WIG 20
WIG Budownictwo
Source: stooq.pl
The Torpol Group plans further business growth in the Norwegian market, where it has been winning new deals.
Grzegorz Grabowski, Prezes, Torpol S.A.
42 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
2.5.1. Road construction New contract award procedures were Investment projects will In the road construction sector, 2015 was a suspended for the NRBP verification period period of transition between the 2007-2013 and resumed after the announcement accumulate primarily in perspective and the new EU 2014-2020 of the "Road and Railway Investment the railway segment - we perspective. Prior perspective projects Initiative" by the Ministry of Infrastructure were being completed and new perspective and Construction on 2 September. An expect that fewer projects projects were being planned and prepared investment budget of more than PLN will be undertaken in the at the same time. Investments supported 4 bn was opened in September with by the EU in the 2014-2020 perspective will 14 invitations to tender. Other tender road segment. be realized in accordance with the National proceedings worth PLN 8 billion will be Wojciech Trojanowski – Road Building Programme for 2014-2023 announced by the end of the year. Following (with projections by 2025) (the “NRBP”), the execution of these contracts the total Member of the Management set by the Ministry of Infrastructure and value of works would reach PLN 60-65 Board of Strabag Sp. z o.o. Development in September 2015. Detailed billion, i.e. 60% of the planned amount. assumptions underlying the programme were presented in the previous edition of Although the resumption of road the Report. investments is a positive sign, it is still questionable whether funds necessary to In 2015, funds totalling PLN 11.5 billion, implement the programme in the upcoming derived from all the available sources, were years will be secured, in particular if the total spent on road projects. In 2015, the road expenditure were to increase to PLN 198 project spending from the National Road million. In July, the Ministry of Infrastructure Fund itself went down as compared to the and Construction announced that the debt preceding year (PLN 8.4 billion in 2015 vs. of the National Road Fund exceeded PLN 40 PLN 12.8 billion in 2014), which represents billion (ca. PLN 60 billion along with interest). a drop of 34%.1 In 2015, 24.7 kilometres of expressways and motorways were made available for use and 61.8 kilometres of Investments in expressways and motorways under the National Road Building national roads were rebuilt. This is slightly Programme for 2014-2023 (with projections by 2025) – completion status after less than planned in the NRBP (36.0 and 2015 66.4 kilometres, respectively).
Changes made to the Ministry of Infrastructure and Construction after the establishment of a new government in 2015 have had an impact on the implementation of the road building programme. The NRBP was revised, specifically in terms of its financial assumptions. Initially, PLN 107 billion was to be secured under the NRBP to fulfil the tasks planned. Currently, the Ministry of Infrastructure and Construction estimates that PLN 198 billion will be necessary for that purpose2. It has not been decided yet whether additional funds will be secured to fulfil all the tasks and the NRBP will be updated or whether the list of investments will be verified in terms of priority and precedence.
Completed or in progress 1 Supreme Chamber of Control report on adherence to the government budget in 2015 (Section 39 – Transport). New investments under 2 Presentation by Jerzy Szmit, Deputy Minister of the NRBP 2014-2023 Infrastructure and Construction, at the meeting of the Parliamentary Infrastructure Committee on 11 Source: National Road Building Programme for 2014-2023 (with projections by 2025) March 2016. 43 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Before the announcement of the "Initiative", National road condition by region (as at the end of 2015) in the new EU perspective under the Infrastructure and Environment Operational Programme 2014-2020, the Directorate General for National Roads and Motorways signed an agreement whereby funding would be received for 23 projects totalling PLN 30.9 bn (funding of PLN 13.2 bn) – to be carried out in the years 2015-2020.
The technical condition of roads, which deteriorated both in 2014 and 2015 despite considerable investment, is a major problem for road infrastructure in Poland. At the end of 2015, 14.1% of roads were considered “in poor condition” (as compared to 13.2% at the end of 2014) and 25.3% were regarded as “unsatisfactory” (vs. 25.1% in 2014). According to the Report on the Technical Condition of National Roads as at the end of 2015, prepared by the Directorate General for National Roads and Motorways, the Good condition following factors affected the deterioration Unsatisfactory condition of the technical condition of national roads: Poor condition • insufficient funds considering the identified repair needs; • adverse weather conditions – Source: Report on the Technical Condition of National Roads as at the end of 2015 exceptionally low temperatures in winter and high in summer; • changes to the road condition assessment methodology – a longer list 75 percent of the domestic revenue of the Strabag of parameters and the application of innovative measurement techniques; Group come from infrastructure projects, while the • a smaller increase in the length of new remaining 25 percent - from the construction of roads (in good technical condition) in 2015 as compared to 2014. buildings and facilities. • national road condition by region (as at Wojciech Trojanowski – Member of the Management Board of the end of 2015). Strabag Sp. z o.o.
The Dangerous Road Section Management Programme (the "DRSMP") was launched the aforementioned programme. Ultimately, earlier this year with a view to improving PLN 600 million will be allocated to the the condition of the existing national roads. programme annually. The tasks defined in the programme are mainly aimed at improving the safety of unprotected traffic participants. In 2016, a total of 292 tasks are to be fulfilled, for which the amount of PLN 300 million has been allocated. The National Road Fund and the government budget allocated to the annual programmes implemented by the Directorate General for National Roads and Motorways are the sources of funding for
44 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Local government road network Polish public road categories (as at 31 December 2014) In addition to national roads (including expressways and motorways), the Polish Road Length Share Road administration Ownership public road network consists of local category [km] [%] authority* government (regional, district and municipal) Directorate General roads. National 19 293 4.6% for National Roads and State Treasury roads The Ministry of Infrastructure and Motorways Development supports local government Regional Central administration Local administration 28 593 6.9% road investments as part of the general roads authority in the region authority in the region subvention fund and the "Municipal and District Central administration Local administration District Road Development Programme" for 125 330 30.1% 2016-2019. roads authority in the district authority in the district Local administration Municipal Municipality Head The general subvention fund dates back 243 810 58.5% authority in the roads (Mayor) to 1999 and is created annually in the municipality government budget under the Act on Total 417 026 100% - - Local Government Unit Income. In 2016, PLN 336 million was allocated as part of the general subvention to support local *in district cities/towns, the mayor is the administration authority for all public roads, except motorways and expressways government road investments, with more Source: Central Statistical Office, Deloitte analysis than half earmarked for four regions, namely Mazowsze, Pomorze, Śląsk and Wielkopolska. The fund will account for 50% of the task value. Allocation of funds Division of general subvention fund resources to each task has been presented on the website of the Ministry of Infrastructure and Construction: http://mib.gov.pl/2- Rezerwasubwencjiogolnej.htm.
The aggregate value of tasks to be supported under the Municipal and District Road Infrastructure Programme for 2016- 2019 is PLN 4 billion. The list (based on priority) includes 418 projects relating to district and 938 to municipal roads. Every year ca. 2,200 km of district and municipal roads may be built, rebuilt or repaired under the programme. According to the Supreme Chamber of Control, the condition of 36% of district and municipal roads is poor as compared to only 29% whose condition is łódzkie - (1%) kujawsko-pomorskie - (6%) considered good or satisfactory3. Due to the fact that the current technical condition of dolnośląskie - (1%) podkarpackie - (6%) municipal and district roads is unsatisfactory lubuskie - (2%) lubelskie - (7%) and that the local road infrastructure will not receive any considerable support in the świętokrzyskie - (2%) zachodniopomorskie - (9%) 2014-2020, EU perspective4, the necessary warmińsko-mazurskie - (3%) wielkopolskie - (9%) funds must be provided by the State. opolskie - (4%) śląskie - (10%)
podlaskie - (4%) pomorskie - (10%)
małopolskie - (5%) mazowieckie - (21%)
3 As of March 2014, considering the effects of the Source: Ministry of Development and Infrastructure implementation of the National Programme for Local Road Rebuilding between 2008 and 2015. 4 Investments in provincial roads may be fiananced from Regional Operational Programmes. 45 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
2.5.2. Railway Construction Railway spending of PKP PLK (in PLN billion) The scope of railway construction projects includes the modernization and development 18.4 of railway and tram infrastructure. In Poland, 19,300 kilometres of railways are used at present, out of which ca. 96% are 14.3 administered by PKP PLK S.A. The technical 12.9 condition of the railway infrastructure 12.2 12.2 is unsatisfactory. However, it has been improving steadily since 2010. The condition 9.5 of 52% of the railways administered by PKP 8.6 7.7 PLK is considered good, 27% satisfactory and 7.1 7.0 21% unsatisfactory. 6.2 6.1 5.3 5.3 4.3 The railway investment framework has 3.8 3.9 3.2 3.4 2.8 2.8 3.0 been defined in two documents, namely 2.4 1.9 the Multi-Annual Railway Sector Investment 1.4 Programme by 2015 (with projections by 2020), which was adopted under a resolution 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 on 13 March 2015, the "MARSIP", and the National Railway Programme by 2023, dated 15 September 2015 (the “NRP”), Delivery which continues the MARSIP. The underlying Estimates assumptions were presented in the previous edition of the Report. Previous version NRP NRP forecast In 2015, projects of PLN 7.2 billion5 were completed under the MARSIP vs. PLN 9.0 Source: PKP PLK reports, Multi-Annual Railway Sector Investment Programme, National Railway Programme, Deloitte analysis billion planned. This shows that the plan for 2015 was 80% implemented in terms of spending but the stage of completion of the construction works was 90%, which is partly attributable to cost savings realized in contract award procedures.
Currently, the NRP is being updated. As at The updated version provides for the date of this Report, the latest version of changes in the schedule (acceleration for the draft programme was published on 11 2016-2017) and extension of the time July 2016. The time limit for the expression limit for completion of the investment of opinions on the draft programme in projects beyond 2020. The objective is to a social consultation process expired on avoid paralysis of the railway traffic and 2 September. The programme is being accumulation of investments in 2019 updated primarily with a view to making and 2020 which could lead to delays, the investment plans more flexible. They higher costs and financial problems of the previously assumed that 50% of the contract contractors, as it did in the case of road award procedures planned for a 6-year building projects. period would be completed in 2019 and 2020. Until now towns were using EU funds for purchases of
5 In 2015, the total expenditure met using individual rolling stock, but now we can expect more substantial sources of funding was PLN 7.2 billion, whereas the outlays on building tram rails. expenses paid by PKP PLK to contractors amounted to PLN 7.7 billion. The difference of ca. PLN 0.5 billion Wojciech Trojanowski – Member of the Management Board of is a refund, which will be transferred to the accounts of PKP PLK in 2016, once it has been verified by the Strabag Sp. z o.o Centre for the EU Transport Projects. 46 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
By the end of September, tenders had been Funding of NRP capital expenditures in 2016 - 2023 (in PLN billion) invited for projects with an aggregate value of PLN 18.8 billion (total investments under 1.2 the NRP estimated at PLN 66 billion). PKP 1.2 1.0 PLK has announced that further tenders will be invited by the end of 2016 with respect 0.9 0.4 to projects of PLN 6.5 billion. In 2017, 1.6 6.1 investments of PLN 5.5 billion in total are 4.8 4.6 to be realized (the additional PLN 1.5 billion 0.9 will be spent on purchases of materials and 1.3 1.8 3.1 works performed by PKP PLK itself) and 1.1 tenders will be invited for projects of ca. PLN 2.6 4.1 2.1 4.3 4.6 4.7 5.0 billion. 2.9 1.1 0.4 0.1 1.0 0.3 In addition to the volume and value of 2016 2017 2018 2019 2020 2021 2022 2023 investments financed by the State and EU funds, the condition of the railway Other construction sector is also determined by RPO 2007-2013 the local government activity in the field of repair and improvement of suburban rail. RPO 2014-2020 Such projects are financed by grants-in-aid PO PW and the Railway Fund. The annual funding limit for 2016-2019 is PLN 110 million. POliŚ 2007-2013
POliŚ 2014-2020 The scope of municipal investment plans also includes the construction and repair CEF of tram lines. In the new EU perspective, Source: PKP PLK reports, Multi-Annual Railway Sector Investment Programme, National Railway Programme, Deloitte analysis up to PLN 13 billion may be spent on the development of tram transport (infrastructure and rolling stock). It may be Railway infrastructure investments planned for 2014-2020 under the National estimated that about a half of that amount Railway Programme vs. completed MARSIP projects will be spent on infrastructure. However, the latest Multi-Annual Financial Plans for the five largest cities assume railway infrastructure spending of PLN 1.5 billion by 2020.
Time pressure related to the deadlines for completion of railway investment projects and their final settlement in the period required by the new EU perspective is one of the major sector risks. Grzegorz Grabowski, Chairman of the Management Board of Torpol S.A. Source: Draft National Railway Programme by 2023, dated 11 July 2016 47 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
2.5.3. Energy construciton6 Planned generation capacity (MW) Poland has large-scale power industry 4.5 investment plans. According to the Energy Regulatory Office power companies are 4.0 3.9 planning to make (in aggregate) almost 3.6 16 GW of new capacity available between 3.5 2016 and 2028, the major part of which 3.0 will be by the end of 2020. The total capital 3.0 2.8 expenditure on new capacity, planned for 2014-2028, is estimated at PLN 55 billion. 2.5
Wind farms were to account for the major 1.9 2.0 part of the new investments. However, in the context of the legal changes being 1.5 introduced, the investment plans will have to be revised. The Wind Farm Investment 1.0
Act published in July 2016 introduced major 0.5 changes to the wind power industry. 0.5 0.3
Some power companies had to write off 0.0 2016 2017 2018 2019 2020 2021 AFTER 2021 investment projects previously planned. Additionally, in 2017 changes will be Source: Energy Regulatory Office Newsletter No. 3 (93) of 30 September 2015 made to the taxation of property where wind farms are located. Under the new act, property tax will apply not only to the structure (foundation and tower) but also to the technical components, which account The margins on energy projects generated by for ca. 70% of the total wind farm value, technology providers and construction companies differ, and this will further reduce the return on such investments. However, the final with the former reporting much better performance. consequences of the legal changes may Antoni Józwowicz, CEO, Polimex-Mostostal S.A. not be determined at present, as new draft amendments to the act were prepared in September with a view to reducing the negative effects of such modifications to a minimum.
6 The national power industry investment plans discussed in the previous edition of the Report have not changed. 48 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Selected key investments in the power two nuclear power plants with a total There are new investment plans for the industry (by stage of completion): capacity of approx. 6000 MW net (4-8 renewable energy sector in Poland, too. nuclear power units). At present, the According to the Energy Regulatory Office, Projects in progress7: Ministry of Energy is working on a the installed capacity in the renewable 1. One Unit in Kozienice Power Plant (1075 programme for the construction of the energy sector is 82 GW (as at 30 June MW; hard coal); first nuclear power unit with a capacity of 2016). The Institute for Renewable Energy ca. 1000 MW, to be built within the next forecasts investments in new renewable 2. Two units in Opole Power Plant ( 2 x 900 decade. According to the industry, the energy sources of 15 GW (electricity) and of MW; hard coal); construction of nuclear power plants in 9 GW (heat). According to the Energy Market 3. Stalowa Wola Power Plant (450; 240 MW; Poland is not certain. The visions of the Agency, the share of renewable energy in natural gas); ministries of development and energy Poland should account for about 19% in 4. Włocławek Power Plant (463 MW; natural concerning the future of the power industry 2030.8 gas); differ and nuclear power plant investment 5. Turów Power Plant (450 MW; brown coal); requires massive expenditure. 6. Jaworzno Power Plant (910 MW; hard coal); Figure 1: Map of selected key capacity investments – in progress and planned 7. Płock Heat and Power Plant (596 MWe; natural gas; planned to be made available for use by the end of 2017). Żarnowiec
Projects planned (contract signed / Rajkowy Gąski pending contract award procedure / pre- implementation analyses): Grudziądz 1. Żerań Heat and Power Plant (420-490 MW; natural gas); Płock Włocławek 2. North Power Plant (ultimately 2 x 800 MW; Żerań hard coal; a construction permit has not been obtained yet);
3. Grudziądz Power Plant (ca. 420-600 MW; Kozienice natural gas; project suspended); Puławy 4. Puławy Power Plant (ca. 400 MW; natural Turów gas);
5. Czeczott Power Plant (ca. 1000 MW). Opole Łagisza Stalowa Wola Jaworzno Suspended projects: SourcesŹródło of energy: energii: Wola k/Pszczyny 1. Łagisza Power Plant (413 MW; natural - hardwęgiel coal kamienny gas) – the project has been suspended by Tauron Group, which was communicated - brownwęgiel coal brunatny in September 2016 when the Group's - naturalgaz gas Strategy for 2016-2025 was being - consideredrozważane locations lokalizacje of nuclear elektrowni power jądrowej announced. plant consideration
The power industry plays an important Source: Deloitte analysis role in the draft "Responsible Growth Strategy" presented by the government in August 2016. The "Polish Nuclear Power Programme" is planned to be continued. The Programme provides for the development of
8 2030 capacity forecast assuming predefined technical and economic parameters for nuclear power plants, ARE S.A., June 2013 7 Above 100 MW 49 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
In addition to capacity investments, a Table: Total agreed capital expenditure of five distribution system operators and number of projects aimed at developing the transmission system operator for 2014-2019 (in PLN million). the transmission and distribution networks are planned. Based on the plans adopted in Year 2014* 2015* 2016 2017 2018 2019 2014, total expenditure on distribution and transmission infrastructure between 2016 Expenditure 6,482 6,680 6,361 7,617 8,199 5,246** and 2019 is to reach ca. PLN 42 billion.
* - delivery ** - expenditures 5 OSD (no OSP) Source: Energy Regulatory Office
We believe that business Table: Key investments realized or planned in the field of distribution and diversification and transmission systems undertaking projects in the Project Contractor Estimated expenditure energy and road segments (in PLN billion) Baltic Pipe (Poland- Gaz-System PLN 1.6 billion maximize our chances of Denmark) development. LNG FSRU Terminal Gaz-System PLN 0.5-0.9 billion
Jarosław Tomaszewski – Natural gas storage facility PGNiG PLN 0.9 billion Chairman of the Management EFRA Project Lotos Group PLN 2.2 billion Board, Trakcja PRKiI S.A. Oil terminal construction in PERN PLN 0.4 billion Gdańsk
LNG terminal development Gaz-System PLN 0.7-1.7 billion in Świnoujście
GIPL gas pipeline (Poland- Gaz-System PLN 1.9 billion Lithuania)
North-South Gas Corridor Gaz-System PLN 4.5 billion
Construction of gas PGNiG PLN 8.4 billion pipelines across Poland
Source: "Bezpieczeństwo warte miliardy”, the Rzeczpospolita daily, 27 May 2016
50 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
According to the draft "Development plan Figure 2: Transmission network map – forecast as at the end of 2025 for the satisfaction of the current and future demand for electricity between 2016 and 2025", during the first five years PSE plans to incur capital expenditure of PLN 7.08 billion to develop the transmission network. Almost 78% of that amount will be spent on the construction of new transmission facilities, while the remaining part on modernization projects. Outlays of PLN 6.43 billion are estimated for the second half of the investment horizon.
Decisions on the implementation of projects relating to the development and modernization of transmission networks will be taken after the relevant criteria have been satisfied (to include a definition of connection conditions or execution of connection agreements).
Source: PSE, Development plan for satisfaction of the current and future demand for electricity between 2016 and 2025
51 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
2.5.4. Environmental protection Structure of the planned expenditures, according to NPMST Funds allocated under the Infrastructure and Environment Operational Programme Wastewater treatment 2014-2020 to investments in water incl. septic sludge and sewage management and in waste treatment and management total EUR 1.62 billion and management 33% EUR 0.93 billion, respectively. They will enable Poland to continue its investment programme aimed at bringing the Polish Construction infrastructure into line with the parameters of sewage system 52% defined by the European Union.
Water and sewage management Investments planned in the field of water and sewage management have Modernization of been defined in the “Master Plan for sewage system the implementation of Council Directive 15% 91/271/EEC” (the “Master Plan”) and the Source: NPMST 2015 Update “National Programme for Municipal Sewage Treatment” (the “NPMST”). In May 2016, an "Update to the Master Plan" was approved by the Ministry of Environment. Currently, the fourth version of the NPMST dated 21 April 2016 is in force. At the beginning of September, work on the fifth version of the NPMST began, to be completed in March 2017.
According to the latest version, the total estimated value of the projects implemented under the NPMST for 2015 is PLN 6 billion and the total estimated expenditure along with the amount to be spent in 2016 is PLN 23 billion, where almost PLN 17.5 billion is to be spent by the end of 2020.
In 2015, 4,862 kilometres of sewage pipes were built and 698 kilometres modernized. As a result, the number of people using sewage management services increased by ca. 606,000.
The fourth version assumes that investments will be realized in 824 treatment plants, that 16,918 kilometres of new sewage pipes will be built and a further 3,505 kilometres modernized. As a result, the number of people using sewage management services following the development and modernization of the network will increase by ca. 1.8 million.
52 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Waste management waste as a resource. The said objective is In the 2014-2020 perspective, funds of EUR The investments planned in the field of consistent with the measures defined in the 0.93 billion have been allocated to municipal waste management have been defined Infrastructure and Environment Operational waste management under the Infrastructure mainly in the National Waste Management Programme with respect to municipal waste and Environment Operational Programme. Plan 2022 (the “NWMP”). The resolution management. The planned investment to introduce the new plan was adopted projects support the plan assumptions that on 1 July 2016 and issued on 11 August 50% of municipal waste should be recycled 2016. The objectives and tasks defined in by 2020 (60% by 2025) and no more than the document concern the years 2016- 30% of such waste ought to be incinerated. 2022 and the years 2023-2030 in the long term. The key objective of the NWMP is to avoid waste production and to use
Construction of municipal waste incineration facilities – projects in progress and planned
Estimated Additional Capacity of Project project cost funds form IEOP Project Solid Waste Expected project length location (in PLN 2014-20 (in PLN formula Treatment million) million) Existing Warsaw 40 Traditional Operating Bydgoszcz 180 523 255 Traditional Operating Kraków 220 826 372 Traditional Operating Białystok 120 333 210 Traditional Operating
Konin 94 388 165 Traditional Operating
Poznań 210 720 352 PPP Operating Preparatory stage Investment approx. 80% completed. Originally, it was planned to be completed by the end of 2015. The deadline was extended until 10 Szczecin 150 666 255 Traditional December 2016, but in June 2016 the contractor (Mostostal) withdrew from the contract. The process of selecting the new contractor is MPO (City Sanitation Department) has signed an engineer's contract with the consortium Eko-Inwest, ECM Group Polska with respect to extension Warsaw 305 1 100 Traditional of the municipal waste incineration facilities in Warszawa-Targówek. The project is scheduled to be completed at the turn of The project contractor has been selected. The project is scheduled for Oświęcim 160 400 Traditional 2018. Koszalin 92 340 PPP The procedure to select the contractor is in The provisions of the PPP contract are being negotiated with 5 preselected Gdańsk 250 400-500 PPP contractors. The construction work is scheduled for 2018 - 2020. "The project is at the planning stage. The project is scheduled to be Olsztyn 100 250 PPP completed in 2020." "The construction contract has been signed. Rzeszów 100 285 Traditional The scheduled launch date is in 2018." Legnica 120 347 Traditional No decision concerning the start of the Sosnowiec 180 480 Traditional No decision concerning the start of the Ruda The stage of public consultations has ended. No decision concerning the 500 1 699 Traditional Śląska start of the investment. Project abandoned Łódź 200 1 130 PPP Project abandoned. The current capacity of waste incineration facilities 864 thousand tons per year Capacity to be achieved in 2017: 1 014 thousand tons per year Potential capacity if all projects that are being considered are to be carried out: 2 781 thousand tons per year
Source: Deloitte analysis
53 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
2.5.5. Construction in the commercial Structure of commercial space opened in 2015 by investment type and format and service sector In 2015, the commercial space market in Poland increased by almost 650,000 sq.m. A higher supply was observed in the second half of the year, when almost two-thirds of 15% new commercial space was made available 2% 1% for use. Shopping centres accounted for ca. 1% 550,000 sq.m. and commercial warehouses 3% represented 98,000 sq.m. At the end of the first half of 2016, more than 13.5 million sq.m. of modern commercial space was available in Poland. 57% 21% In 2015, 23 new commercial and service facilities were opened, the largest being "Zielone Arkady" in Bydgoszcz (51,000 sq.m.), "Sukcesja" in Łódz (46,000 sq.m.) and "Tarasy Zamkowe" in Lublin (38,000 sq.m.). New Shopping Centres Development of existing shopping Extension of Shopping Centers centres accounted for more than 25% of commercial space made available for use New Commercial Parks in 2015. Fifteen facilities were extended, Extension of Commercial Parks including "Centrum Bielany" in Wrocław (additional 35,000 sq.m. built), which thus New Outlet Centres became the largest shopping centre in Extension of Outlet Centres Poland with a total area of 145,000 sq.m. Mega Department Stores In 2015, the vacancy rate on mature markets in the eight largest cities was Source: Cushman&Wakefield Analyses 2.9% on average vs. 4.0% in regional cities. The lowest rate was recorded in Warsaw, Wrocław and Lublin (1.5%) and the highest in Bydgoszcz, Radom and Toruń (6.0%, 5.7% and 5.2%, respectively).
Currently, almost 700,000 sq.m. of rates, may check the inflow of foreign We have great competence commercial space is being built, out of capital, which in turn will lead to a decrease in the field of general and which 450,000 sq.m. is planned to be made of investment volumes in the commercial engineering construction, but available for use in 2016. real property segment. we are also looking out for new Nonetheless, the outlook for commercial areas of expertise. We plan to space construction companies is uncertain reinforce our footprint in the large due to the changes in the Polish legal project segment , which does system and the political and economic not mean that we will neglect climate in Europe. On 14 June 2016 the local investments. Our company Polish government ratified the final version of the Act on trade tax and it is estimated increasingly relies on innovation. that approx. 100 major commercial Delivering top-quality services networks operating in Poland will become and the safety of our employees liable to that levy. The increased level of at construction sites constitute uncertainty in Europe (inter alia due to our main priorities. Brexit), especially in the Context of FOREX Piotr Janiszewski, CEO, Skanska S.A.
54 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
2.4.6. Housing construction Number of flats per 1000 inhabitants in 2015 The outlook for housing construction 700 companies remains positive. The ratio of 573 flats per 1,000 citizens in Poland is lower 600 532 533 543 510 512 516 522 471 486 than in other European countries. This 500 438 448 451 455 418 436 437 means a potential for further growth and an 375 400 363 opportunity for entities active on the Polish 295 housing construction market. 300 200
In 2015, both the demand and supply 100 on the residential property market were 0 strong. Not only did the number of flats sold increase but the number of new flats made available on the market went up as well. According to REAS, 51,800 flats were sold in 2015 (vs. 43,000 in 2014), while 51,900 Source: Euromonitor International, Deloitte analysis were made available for sale (as compared to 47,500 in 2014). The first half of 2016 was also exceptionally good in this regard. The Number of flats sold in six largest Polish cities (in thousand) number of flats sold was 29,400 and flats made available for sale was 31,400, which 16 15.1 14.4 14.3 was a 21% and 28% rise, respectively, as 13.2 14 12.7 compared to the first half of 2015. 11.5 12 10.9 11 11.2 10.4 10.4 9.6 10 As regards the supply, a recovery on 8.1 7.4 the housing construction market is also 8 reflected in such statistics as the number 6 of flats for which an occupancy permit 4 was issued or the number of residential building construction permits issued (In 2 2015, 147,595,000 and 72,000, respectively). 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q This was a 3% rise in the number of new 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 flats vs. 2014 and a 10% increase in the number of issued construction permits. A Source: REAS more considerable increase in the supply was seen in the first half of 2016, when the number of flats for which an occupancy Number of flats sold in six largest Polish cities (in thousand) permit was issued went up by 15% and 180 the number of construction permits issued 160 153 160 148 increased by 14% year-on-year. 145 143 136 140 132
120
100 91 88 85 76 74 80 72 67 65
60 39 Construction and modernization 40 of hospital buildings can generate 20 higher volumes of investment 0 projects in the coming years. 2009 2010 2011 2012 2013 2014 2015 1H 2016 Wojciech Trojanowski – Number of flats placed into service Member of the Management Board of Strabag Sp. z o.o Issued housing construction permits
Source: Central Statistical Office
55 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Factors affecting the demand on the Mortgages in Poland in 2010-2015 and 1H 2016 housing construction market 2 500 000 420 In 2015, the favourable conditions on 382.9 the housing construction market were 374.1 additionally sustained by government 350.4 370 programmes supporting flat purchases and 2 000 000 330.8 the vision of more stringent requirements 313.7 316.3 for home loans. 320 1 500 000 263.6 According to the National Bank of Poland 270 2,027 report entitled "The Loan Market in Q3 1,994 1,896 1,819 2016", published in July 2016, banks 1,731 1,630 ,972
1 000 000 ,677 ,779 1,448 ,796
imposed stricter criteria for granting ,593
220 ,694
,828 home loans in Q2 2016 and announced
the establishment of more demanding 500 000 requirements with respect to collateral 170 pledged by borrowers, as a result of which a drop in the demand is expected. However, in 2015 and in the first half of 2016, the 0 120 2010 2011 2012 2013 2014 2015 1H 2016 demand was still considerable and at the end of Q1 2016 the overall number of active mortgage agreements administered by the Number of active contracts Polish banking sector exceeded 2 million for Total indebtedness (in PLN billion) the first time. Source: Central Statistical Office One of the factors fuelling the demand for home loans was the continuation of the "Flats for the Young" programme for 2014- 2018. The fact that the programme is limited The objective of the programme is to As in the past year, the attractiveness of in time and the borrowers' concerns that increase the supply of flats and their investments in flats for rent was a major the funds allocated to subsidies under the availability and to lower rents for individuals factor influencing the purchase of flats in "Flats for the Young" programme9 for 2017 who cannot afford their own flat or fail to the context of an uncertain outlook for will soon be used up contributes to good satisfy the loan granting criteria. the Warsaw Stock Exchange. On the one conditions on the housing market. hand, it is expected that foreign investors Under the programme, the spending on may return to the Warsaw Stock Exchange It should also be emphasized that currently social tenement houses should reach PLN following an outflow of investments, but on the provisions of the National Housing 157.2 million and PLN 12.8 million in 2017 the other, the possibility that open-ended Programme are being drafted. The and 2018, respectively, and PLN 4,730.4 pension funds will be done away with, the programme is also aimed at facilitating flat million between 2019 and 2025. A total of fact that opinions about Poland are not purchases. It provides for the establishment almost 200,000 flats are planned to be built particularly favourable on foreign markets of the National Housing Fund, which will (7,000 in 2017, 13,000 in 2018 and 179,000 and that the number of IPOs is decreasing enable the construction of tenement houses between 2019 and 2025). have considerably weakened the position of that may later be purchased at attractive the Warsaw Stock Exchange over the past prices, without the use of State funds. The One of the objectives of the National few years. The future of the Warsaw Stock land to be used for construction purposes, Housing Programme is to catch up with the Exchange will depend on the economic to secure funds for projects implemented average number of flats per 1,000 citizens in conditions in Poland and abroad, which may in other locations or for the provision of the European Union. It is estimated that this not be determined at present. financial support, is mainly State-owned will require the construction of 2 million flats property. in Poland by 2030.
9 Under the applicable regulations, where the down- payment may not be partially covered in 2016, an application may be filed with the planned subsidy payment date in 2017. 56 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
2.5.7. Office construction 2.5.8. Warehouse construction In 2015, the supply on the office The warehouse construction market grew construction market in Poland was the considerably both in 2015 and in Q1 2016. highest on record. The total modern office At the end of March 2016, Poland had space available in the nine largest Polish a total of 10.3 million sq.m. of modern cities (Warsaw, Kraków, Wrocław, Tricity, warehouse space. Growing demand makes Katowice, Poznań, Łódź, Szczecin and the market outlook even more optimistic. Lublin) was 8.2 million sq.m. at the end The transactions entered into in Q1 2016 of 2015. Only in 2015, 643,000 sq.m. of involved 637,000 sq.m. of warehouse space, modern office space was constructed, out which means an 8% (45,000 sq.m.) increase of which 278,000 sq.m. was in the capital year-on-year. The rise in the demand was and 366,000 sq.m. in regional markets. The accompanied by the increasing supply of demand on the office construction market warehouse space. Only in Q1 2016, the was very high last year as well. The overall warehouse space resources increased by lease transaction value was 40% higher than 447,000 sq.m., which represented almost in the preceding year. a half of the supply recorded in 2015 as a whole. Additionally, the fact that the vacancy Nonetheless, it needs to be emphasised rate has again gone down shows that the that the situation on the office construction supply has a good correlation with the market may deteriorate over the next demand. At the end of Q1 2016, the vacancy few quarters. Access to foreign funding rate was 5.9% of the existing resources, i.e. (due to low interest rates offered in ca. 0.9 p.p. less than in the corresponding developed countries), which contributed period of the preceding year. to the increase of the available space, may become restricted in the months to come. In addition, considering the anticipated high supply, it is to be expected that the unrented space ratio will go up in the largest Polish cities. Warehouse space in construction 1Q 2016 (in sq.m.) 200000 184,000 At the end of 1Q 2016 the vacancy rate in 180000 Poland equalled 12.6%, with the highest rate recorded in Szczecin (18.3%), Katowice 160000 (17.4%), Poznań (14.4%), Warsaw (14,1%) 140000 and Tricity (14%). 120000 110,000 106,000 The National Bank of Poland points out the 99,000 100000 91,000 growing imbalance on the real property 81,000 market which is a consequence of excess 80000 supply. Considering the increasing number 60,000 60000 of vacancies and the associated drop in 44,000 rents, the cost-effectiveness of investing in 40000 office space will go down, which is already 20000 reflected in the valuation of investment 8,000 certificates of closed investment funds 0 investing in real property. Warsaw Warszawa Central Upper Poznań WrocławTricity Kraków Other - the city - the suburbs Poland Silesia regions
Source: Cushman&Wakefield Analyses
57 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
2.6. Market perspective The situation in the general construction Despite delays in infrastructure projects, Construction industry companies emphasise segment is considerably better, but the the expected margin pressure and fierce that 2016 seems more challenging than continued growth of supply depends on competition in tenders, EU funds will still expected due to delays in the performance further inflow of foreign capital, which may drive investments in the coming years. of EU co-financed projects. The estimated slow down over the next few months. Contractors, however, are fully aware that revenue of entities in the infrastructure At present the commercial market reports new strategies should be implemented now construction sector in 2016 are 50% lower growth. Contractors have recognized the to ensure growth beyond 2020. than expected. potential of modernizing old shopping malls and offices and the demand for commercial The supply gap in infrastructure construction The future of the energy construction and office space in towns and smaller in 2016 results from the transition period in industry will depend on political decisions cities. The public sector is also expected EU co-financed projects and amendments on supporting selected sources of energy. to increase the demand for general to the public procurement law. Still, the shift According to contractors, simultaneous construction works in the healthcare and is more significant than anticipated following performance of three or four large projects defence sectors. the change of government in 2015 and the proves disadvantageous due to the lack suspension of public tender proceedings of a qualified workforce. Following the The residential construction market has during investment programme reviews. completion of a considerable number of seen a rapid growth. Market players contracts in 2019, considerable oversupply mention the investment boom resulting The analysis of government programmes of workers is expected. from the expected termination of the carried out by the Ministry of Infrastructure Energy projects also differ in margins Flat for the Young mortgage subsidy and Construction has shown a ca. PLN 90 generated by technology providers and programme and limited access to mortgage billion underestimation of outlays on road construction companies, with the former loans. Property companies do not believe construction and substantial delays in railway reporting much better performance. It is not that the Flat Plus Programme following projects. The shortfall for road projects will be certain, though, if this trend will continue in the government's social support policy, difficult to find, considering the National Road the long run. will considerably affect the residential Fund already had PLN 60 billion of debt. It construction market. This is because the has not been decided yet if additional funds flats under the programme will mainly (and how much) will be allocated to finance be provided to individuals with low all projects planned or if the projects will be creditworthiness. From the viewpoint reprioritized and rescheduled. of construction companies, under this assumption, the Programme should entail many new projects.
In our opinion, much weight in the tendering procedure should to be attached to the quality criterion. Ideally, the price criterion weight should not exceed 40 percent, and the non-price criteria should take on added significance. At the meetings of Investment Forum working groups, working hand in hand with contractors, we have prepared a list of non-price criteria.
Rejecting the lowest and the highest price bids also seems a reasonable approach in tender assessment. Another idea which is worth considering in the future is to extend the scope of the contract with the contractor to include maintenance services, e.g. for a period of 10 years after putting the infrastructure into operation.
We have reviewed our investment projects and updated the schedules to prevent project accumulation in the coming years. In the last quarter of the year we intend to call for tenders with a total value of PLN 6.5 billion under the new EU perspective.
Ireneusz Merchel, CEO, PKP Polskie Linie Kolejowe S.A.
58 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
According to the Directorate General for According to PKP PLK the review of the Polish construction companies, however, National Roads and Motorways all public planned investment projects and their positively assess expected changes in tender procurement projects are carried out in line timeframe will make fund allocation more proceedings. The key change is limiting the with the schedule. An investment budget realistic in the coming years and prevent price criterion weight to a maximum of 60%. of more than PLN 4 billion was opened in closing all railway lines in a given direction Experts emphasise, however, that the final September with 14 invitations to tender. at the same time. Moreover, if purchases of outcome will depend on what other non- Other tender proceedings worth PLN 8 billion materials and their financing are planned price criteria are applied. They also suggest will be announced by the end of the year. in advance, some problems with their that rejecting the lowest price bid could Following the execution of these contracts transportation when lines are closed and the prevent spoiling the market. Moreover, they the total value of works would reach PLN 60- price growth effects can be avoided. mention the Scandinavian model, where the 65 billion, i.e. more than 60% of the planned selection of the winning bidder is based on amount. The legislators are currently working The winning bid prices have been decreasing, the economic benefits produced by the offer on making the soft tender appraisal criteria which is perceived as a negative trend. Two presented. The category includes factors more detailed, but the tenders announced so years ago the winning bid price comprised ca. such as supply period, payment terms, supply far are conducted in line with the regulations 70% of the investment budget, while in 2015 terms, social and environmental impact, binding so far, which primarily rely on the the share dropped to 60% and in 2016 - to and quality. Market participants, however, price. 50%. According to construction company indicate that non-price criteria are difficult to leaders, although the railway investment measure, they require advanced knowledge According to the Directorate General for initiative announced by the Ministry and PKP and experience. What is more, such criteria National Roads and Motorways, no problems PLK encouraged companies to purchase are generally avoided by authorities in fear of with tenders for road projects are expected, equipment and employ new staff, no alleged corruption. even if additional State budget funds are investment boom occurred. allocated to increase capital expenditure A positive change was appointing the Council spent under the NRBP. Apart from the strong price pressure, of Experts on Road Construction by the increased competition has also been Ministry of Infrastructure and Construction. The situation in the railway construction observed in tenders. Recently, the number of The Council is composed of contractors, sector is more complicated, though. Tenders bidders has increased twice, and the group clients and non-government organizations. are announced with 12 month delays, which also includes companies from Western The key responsibility of the Council of implies that most investment projects may Europe (for instance from Portugal, Spain, Experts is to draw up contract templates, be carried out during the last years of the Italy and Austria), which did not operate on develop guidelines on preparing descriptions EU 2014-2020 perspective, considering the the Polish market in previous years. of the object of the contract and guidelines duration of the tendering processes and on tender proceedings. the designing stage. Sector participants emphasise that due to the accumulation of investment projects a considerable number of railroad sections may be closed at the same time, disrupting rail traffic.
They also claim that there is a serious threat that PKP PLK will not be able to consume all Still, a discussion on contract award procedures has allocated funds. According to the ProKolej Foundation, PKP PLK considers carrying started among clients and contractors. It is a positive out alternative projects involving special trend, as the dialogue may lead to developing solutions purpose vehicles and using the funds to construct railway stations and railway beneficial to the market. sidings. Construction companies claim, however, that this would imply shifting the Grzegorz Grabowski, Chairman of the Management Board of burden of contribution from central to local Torpol S.A. administration.
59 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
According to the Directorate General, for change is a more effective solution than A number of companies get involved in National Roads and Motorways non-price a ten year warranty period, which made smaller projects, i.e. the construction of local criteria should focus on the quality of works, contractors promise the maximum warranty roads or the development of buildings in and the warranty period should no longer period, as the price still remained the smaller cities and towns. constitute a selection criterion, but become decisive criterion. According to PKP PLK a requirement. Moreover, the requirement an interesting solution, which would be Many entities follow geographical to use your own human resources is worth considering, would be a ten-year diversification strategies based on growing considered a good idea. The Directorate contractual maintenance period managed exports, mergers and acquisitions and General for National Roads and Motorways by the contractor after putting the railway establishing foreign branches. Companies emphasises that, in response to the needs infrastructure into operation. PKP PLK also focus on Scandinavia, Germany, the Baltic of contractors, beginning from autumn agrees with the idea of rejecting bids with States and the Balkans, although Balkan 2013 (under the new financial perspective the lowest and the highest price. investment projects involve increased 2014 - 2023) contracts ensure contract price political risks and challenges related to adjustment using rates published by the Learning from the experience of projects economic volatility. Central Statistical Office (with the cap of 1% co-financed with EU funds from the previous of the contract value). perspective, companies carried out a number of modernisation and investment Railway construction issues are discussed initiatives aimed at mitigating operational by PKP PLK and contractors at working risk, revenue diversification, increasing group meetings of the Investment Forum. efficiency and flexibility, which are essential One of the items on the agenda are tender in the changing market environment. conditions. The list of possible soft (non- Some companies have started optimizing price) criteria as part of tender assessment processes and organizational structures has already been discussed. and follow downsizing strategies. Still, it has not resulted in a sector headcount According to PKP PLK the target price reduction. According to the data of the criterion weight could equal 40% in Central Statistical Office, in the first half of procedures related to services linked with 2016, the average headcount increased the investment process (especially the slightly (by 0.2% YoY). Moreover, companies engineer, pre-investment documentation, have diversified their portfolios in terms and project documentation). Other of operations and region. Companies gain proposed changes which are positively new competencies, such as the increasingly assessed are the introduction of advance popular construction of buildings payments, and financing purchases of (commercial and office space), real estate materials. The maximum warranty period administration or "green construction". required by PKP PLK will be 6 years. This
For the Directorate General for National Roads and Motorways, the possible increase in expenditure in the next few years will not cause any organizational problems related to processing additional tendering procedures.
Tendering procedures are performed as planned. In September 2016, contractors were invited to tenders with an aggregate value exceeding PLN 4 billion (according to investment budgets). By the end of the year, we are planning to invite contractors to tenders for another PLN 8 billion.
The warranty period will no longer constitute a selection criterion. Non-price criteria should focus on quality. Iwona Stępień – Pilipczuk - Deputy General Director, Directorate General for National Roads and Motorways
60 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
2.7. Summary and prevent the accumulation of projects 2015 was a year of stagnation for the during the final years of the 2014-2020 construction sector. Production in the perspective, which would have an adverse construction sector went up by a symbolic effect on construction companies through 0.13%. A major trend observed in 2016 a rise in the prices of materials and labour is a drop in the number of contracts in costs in addition to disturbing road and the infrastructure segment, which is the railway transport. The market players consequence of the end of the 2007- emphasize the positive aspect of the 2013 EU perspective and delays in the dialogue between the public side and implementation of government projects that contractors, considering the large-scale will receive financial support in the 2014- investment plans for the upcoming years 2020 perspective. Currently, changes to the and prior EU perspective experience. programmes are being discussed so as to improve the public procurement process
Table: Volume of selected planned investments, broken down by construction market segment
Planned investment Years Source Comments volume
Expressways and 2014-2025 PLN 97.5 bn motorways National Road Building Excluding expenditure on Ring roads 2014-2025 PLN 9.6 bn Programme for 2014- modernization of regional and 2023 (with projections municipal roads. Maintenance of the by 2025) technical standard of the 2014-2025 PLN 46.8 bn existing road network
The amount represents the financial needs related to Road elimination of the unsatisfactory construction General Directorate and poor condition of national Road repair works 2015 PLN 7,2 bn for National Roads and roads. The amount that the Motorways Directorate General for National Roads and Motorways is actually planning to spend on that purpose is not known.
Municipal and district Government budget Municipal and district road infrastructure 2016-2020 PLN 4 bn expenditure on programme roads programme for 2016- implementation 2020
National Railway The amounts planned in the Railways 2014-2023 PLN 66 bn Programme by 2023 budgets of individual cities do not represent the total capital Railway expenditure on tram networks Construction Multi-Annual Financial Trams and suburban rail 2015-2020 PLN 1,5 bn Plans for the six largest in those cities (some will be cities in Poland financed by municipal tram companies).
Transmission and Construction of new capacity 2014-2019 PLN 42 bn Energy Regulatory Office Energy distribution networks of 18 GW is planned.Excluding construction capital expenditures on nuclear Capacity 2014-2028 PLN 55 bn Energy Regulatory Office power plant construction.
2014-2015 PLN 4.1 m Sewage systems NPMST Update Environmental after 2015 PLN 15.4 m protection 2014-2015 PLN 2,7 bn Sewage treatment NPMST Update IV after 2015 PLN 7.6 bn
61 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Planned investment Years Source Comments volume
The volume of investments in progress is high in the commercial construction segment, but an increasing imbalance of the demand and supply can be observed, which may check the growth Construction dynamics. of buildings and facilities In the housing construction (commercial segment, the demand No forecasts as to and service depends mainly on the funding amounts in the longer facilities, available under government term. residential, programmes. The demand in office and the segment is expected to warehouse decline following the expiry buildings) of the "Flats for the Young" programme, which is planned to be continued until 2018. The heralded "Flat Plus Programme" will be a factor influencing the housing market but its effects are difficult to predict at present.
Source: Deloitte analysis
62
Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
64 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Chapter 3. Profiles of the largest construction companies in Poland
65 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Skanska Group
Skanska has been operating in Poland Civil engineering since the early 1970s, when it built the Skanska S.A. builds roads and bridges in first Western-standard hotels: Novotel addition to carrying out hydro-technical, Warszawa Centrum (former Forum Hotel) environmental protection, and railway and Sofitel Victoria Warszawa (former projects. Victoria Hotel) in Warsaw in addition to a dry dock for the Gdynia Shipyard. The company has a network of bituminous material production facilities, concrete In 2000 Skanska acquired Exbud Group production plants, road laboratories, and has been continuously present on the aggregate mines, equipment bases and a Polish construction market. steel structure manufacturing plant.
Skanska Group operates on the European As in the previous year, for the purpose and North American markets where it acts of this edition of the report we have only as a general contractor and developer on been provided with selected consolidated housing and office projects. It carries out financial data of Skanska Group companies PPP projects as well operating in Poland for 2015.
Skanska S.A. acts as the general contractor In 2015, the revenue earned by Skanska and thorough its units, has a footprint Group totalled PLN 5.5 billion and its all over Poland. It specialises in general operating profit amounted to PLN 470 construction and construction engineering. million. It carries out both small-scale projects for local authorities and large, nationwide In 2015, the Group employed almost 8,000 investments. Skanska has implemented people in Poland. BIM technology at the stage of offering, design, construction and post-construction measurements.
General construction The Skanska Group acts as a general contractor delivering shopping and entertainment centres, healthcare and educational facilities, offices, hotels, residential buildings, sports and industrial facilities with the accompanying infrastructure.
66 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014 2013 change (PLN '000) '15 vs. '14
Assets
Non-current assets 1 437 026 340 095 597 603 322.5%
Current assets 2 563 677 4 383 950 2 723 054 -41.5%
Total assets 4 000 704 4 724 045 3 320 657 -15.3%
Equity and liabilities
Equity 1 082 656 1 577 801 1 102 756 -31.4%
Total equity and liabilities 4 000 704 4 724 045 3 320 657 -15.3%
Profit and loss account
Revenue 5 509 363 5 081 675 4 202 767 8.4%
EBIDTA 446 174 367 908 196 253 21.3%
EBIT 469 999 396 675 159 624 18.5%
Net profit/loss 417 314 324 185 132 165 28.7%
67 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Budimex Group
Budimex S.A., previously Centrala Handlu In 2015, the revenue of Budimex Group At the end of 2015, total debt increased by Zagranicznego Budownictwa Budimex, went up by 3.7% year-on-year. Poland and 12.8% vs. 2014. In 2015, capital expenditure was founded in 1968 in order to export Germany are the key markets where the incurred by the Group on non-financial construction services, mainly to developing Group operates. non-current assets went up by 182% to markets in Asia and Africa, and to the PLN 68 million. Socialist block countries. In 2015, sales revenue generated on the German market, where Budimex acts In 2015, Budimex Group companies In the late 1980s and the early 1990s, mainly as a provider of workshop services, entered into construction contracts Budimex became a leading contractor on exceeded PLN 170 million, which means totalling PLN 7.1 billion, a PLN 0.8 billion the Polish market. a rise of more than 10% vs. 2014. Foreign increase vs. 2014. As at 31 December 2015, market sales accounted for 4% of the total the Group’s contract portfolio totalled In 1992, the enterprise was privatised revenue generated by the Group in 2015. PLN 8.4 billion, which represented a ca. and two years later it was converted into Construction and assembly works 38% year-on-year increase. The company’s a joint-stock company. Since 1995, its represented more than 91% of the total market cap increased from PLN 3.6 billion shares have been traded on the Warsaw revenue earned in 2015. As compared to at the end of 2014 to PLN 4.95 billion a year Stock Exchange. As at 31 December 2015, 2014, sales in this segment increased by later. the mainly shareholders of Budimex were 2.3% to PLN 4.6 bn. Valivala Holdings B.V. (the Netherlands) holding 59.06% of shares (a company In 2015, revenue from sales of property operating in the Spanish Ferrovial S.A. development and management services Group) and Aviva OFE Aviva BZ WBK amounted to PLN 291.4 million, which was holding 5.01% of shares. a ca. 17% year-on-year increase. In 2015, net pre-sales of new flats was 1,918 vs. Budimex Group provides broadly defined 1,685 in the preceding year. construction and assembly services acting as a general contractor, both The Group’s EBIT was PLN 292.2 million, in Poland and abroad, it is a property up by 18.2% year-on-year. The net profit developer and manager and engages in also increased by 22%. Improvement of sales, manufacturing, transport and other the Group’s performance in 2015 was activities. Apart from its construction attributable to a rise in sales revenue, operations, Budimex S.A. is an advisory, which increased by 3.7% as compared to management and financial centre in the the preceding year. capital group.
68 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014 2013 change (PLN '000) '15 vs. '14
Assets
Non-current assets 821 207 677 496 622 230 21.2%
Current assets 3 892 157 3 178 532 3 064 523 22.5%
Non-current assets held for sale 0 2 181 0 -100.0%
Total assets 4 713 364 3 858 209 3 686 753 22.2%
Equity and liabilities
Equity 603 124 522 509 645 175 15.4%
Provisions for liabilities 317 256 290 767 267 802 9.1%
Long-term liabilities 262 535 233 460 200 309 12.5%
Short-term liabilities and accruals 3 530 449 2 811 473 2 573 467 25.6%
Total equity and liabilities 4 713 364 3 858 209 3 686 753 22.2%
Profit and loss account
Revenue 5 133 994 4 949 939 4 749 459 3.7%
Domestic sales 4 927 035 4 754 307 4 198 885 3.6%
Export sales 206 959 195 632 550 574 5.8%
Construction operations 4 673 666 4 566 628 4 005 617 2.3%
Other operations 460 328 383 311 743 842 20.1%
EBIDTA 314 566 270 349 362 199 16.4%
EBIT 292 218 247 318 333 306 18.2%
Net profit/loss 236 520 193 938 301 300 22.0%
Other data
Net debt 1 697 114 1 504 048 1 382 795 12.8%
Debt/Balance sheet total 87.2% 86.5% 82.5% 0.9%
Capital expenditure/revenue 1.3% 0.5% 0.4% 164.6%
Market cap 4 952 839 3 612 509 3 369 973 37.1%
69 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Sales by type in 2015 Sales by region in 2015
3% 4% 6%
91% 96%
Construction operations Domestic sales
Property management and property development Export sales
Other activities
EBIDTA, EBIT and net profit/loss in years 2013 -2015
400 350 300 250 200
PLN million PLN 150 100 50 0 EBIDTA EBIT Net profit/loss
2015
2014
2013
70 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Strabag
STRABAG has been operating on the STRABAG SP. Z O.O. construction market since 1835. In 1985, The operations of STRABAG Sp. z o.o. the company launched its operations in focus mainly on infrastructure investments Poland, which is its third most important as well as general construction and market in Europe. In 2015, the company’s construction engineering. It also carries revenue generated in Poland amounted out projects in the field of environmental to PLN 3.8 billion, a 22% increase from protection, railway construction, preceding year. modernization and construction of wharves, industrial and power engineering The core business of the Polish construction, also in relation to renewable entities includes general construction, energy. infrastructure construction, and bridge and railway construction. STRABAG is As compared to the preceding year, the also present in other sectors, inter alia company’s revenue dropped by 24.1% to hydro-technical construction and power PLN 3.3 billion. engineering, it is also active in the property development and facility management However, the company’s EBIT was positive market. Its key companies in Poland and amounted to PLN 146 million and its are STRABAG Sp. z o.o. and Strabag profit totalled PLN 143 million. Infrastruktura Południe Sp. z o.o. The financial statements of the STRABAG The company’s net debt was similar to Group are not consolidated at the local that reported at the end of the preceding level. year and amounted to PLN 343 million at the end of 2015. It had been accumulated mainly through trade liabilities and measurement of contracts. STRABAG Group companies do not use any external sources of funding and participate in a cash pool system instead.
71 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014 2013 change (PLN '000) '15 vs. '14
Assets
Non-current assets 721 158 515 395 558 305 39.9%
Current assets 2 384 751 1 990 207 1 673 328 19.8%
Total assets 3 105 908 2 505 601 2 231 633 24.0%
Equity and liabilities
Equity 891 569 748 350 618 256 19.1%
Provisions for liabilities 649 890 511 302 315 664 27.1%
Long-term liabilities 0 0 0 0.0%
Short-term liabilities and accruals 1 564 450 1 245 949 1 297 713 25.6%
Total equity and liabilities 3 105 908 2 505 601 2 231 633 24.0%
Profit and loss account
Revenue 3 253 370 2 620 636 2 854 633 24.1%
Domestic sales 3 246 691 2 616 875 2 851 224 24%
Export sales 6 679 3 761 3 409 78%
Construction operations no data no data no data n/a
Other operations no data no data no data n/a
EBIDTA 207 640 230 188 130 125 -9.8%
EBIT 146 185 152 543 38 111 -4.2%
Net profit/loss 142 519 132 261 57 490 7.8%
Other data
Net debt 342 854 348 274 494 567 -2%
Debt/Balance sheet total 71% 70.1% 72.3% 2%
Capital expenditure/revenue no data 0.8% 1.6% n/a
72 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
EBIDTA, EBIT and net profit/loss in years 2013 -2015
350
300
250
200
150 PLN million PLN 100
50
0 EBIDTA EBIT Net profit/loss
2015
2014
2013
73 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Strabag Infrastruktura Południe Sp. z o.o.
The Company has been active on the Polish market for 20 years and its business focuses mainly on design and construction works in the road and bridges sector, as well as airfield pavements. Until the end of 2014, it operated under the name of Heilit+ Woerner Sp. z o.o. and then changed its name to STRABAG as part of a single brand initiative. The company specializes mainly in concrete pavements. The majority of its revenue is generated in Poland. The operations of Strabag Infrastruktura Południe are not particularly diversified. The company recorded an 11.5% year- on-year increase in its revenue, from PLN 522.1 million in 2014 to PLN 582.5 million in 2015. Its EBIT and net profit amounted to PLN 40.3 million (vs. PLN 18 million in 2014) and PLN 35.5 million (vs. PLN 16.7 million in 2014), respectively. The company's operations are financed mainly with cash pool loans from related parties.
74 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014* 2013* change (PLN '000) '15 vs. '14
Assets
Non-current assets 64 294 45 796 27 905 40.4%
Current assets 492 674 239 732 213 149 105.5%
Total assets 556 968 285 528 241 054 95.1%
Equity and liabilities
Equity 111 579 76 111 59 392 46.6%
Provisions for liabilities 80 650 80 118 69 655 0.7%
Long-term liabilities 0 0 0 0
Short-term liabilities and accruals 364 738 129 299 112 007 182.1%
Total equity and liabilities 556 968 285 528 241 054 95.1%
Profit and loss account
Revenue 582 476 522 213 444 121 11.5%
Domestic sales 580 470 517 091 441 985 12.3%
Export sales 2 006 5 122 2 136 -60.8%
Construction operations no data no data no data n/a
Other operations no data no data no data n/a
EBIDTA 44 241 22 260 22 836 98.7%
EBIT 40 338 17 977 18 064 124.4%
Net profit/loss 35 468 16 720 16 861 112.1%
Other data
Net debt 4 522 6 117 34 139 -26.1%
Debt/Balance sheet total 80.0% 73.3% 75.4% 9.0%
Capital expenditure/revenue no data 0.5% 0.4% n/a
*The financial data of Strabag for 2013 and 2014 were reconciled with the financial statements for 2015 and 2014, respectively, after adjustments had been made to the opening balance.
75 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Sales by region in 2015
1%
99%
Domestic sales
Export sales
EBIDTA, EBIT and net profit/loss in years 2013 -2015
50 45 40 35 30 25 20 PLN million PLN 15 10 5 0 EBIDTA EBIT Net profit/loss
2015
2014
2013
76 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Polimex-Mostostal Group
Polimex-Mostostal Group is one of In 2015, the Polimex-Mostostal Capital Currently, the portfolio of contracts the largest Polish capital groups with a Group completed the operational entered into by the Polimex-Mostostal construction and engineering profile, restructuring process. A new organizational Group, less sales to other consortium and it is an entity of strategic importance structure was developed to centralize the members, is worth ca. PLN 4.6 billion. to the national economy. The history of support functions; two segments, namely Polimex-Mostostal S.A., which is the parent petrochemicals and power engineering, In September 2015, the Polimex-Mostostal company, dates back to the early post-war were separated organizationally and Group presented its new strategy for the era. In its current form, the company was transferred to Naftoremont-Naftobudowa years 2016-2020. The growth strategy established through a merger of Polimex- Sp. z o.o. and Polimex Power Sp. z o.o., focuses on the following areas of the Cekop S.A. and Mostostal Siedlce, which which are separate commercial companies. Group's operations: took place in 2004. Polimex-Mostostal • power engineering; S.A. has been listed on the Warsaw Stock In 2015, the Group's sales revenue totalled • oil-gas-chemicals; Exchange since 1997. PLN 2.5 billion (up by 21% as compared to 2014). In 2015, 83% of the Group’s revenue • industrial construction; The Group operates in the power was generated on domestic sales and 17% • production. engineering, petrochemical and industrial on export sales, mainly to European Union construction sectors. Polimex-Mostostal is member states and Ukraine. As compared also a manufacturer of steel structures and to 2014, the group's sales went up both on products, which includes catwalk grids, and the Polish market (by 23%) and abroad (by a provider of hot-dip galvanising services. 15%). It has built the power units in the Kozienice and Opole power plants. In the preceding years, the Group reported losses but it generated a profit in 2015. Apart from the parent company, in EBIT totalled PLN 119.3 million, while the 2015, the capital group was composed net profit amounted to PLN 69 million. of Naftoremont-Naftobudowa Sp. z o.o. The aforementioned improvement in Polimex Power Sp. z o.o (these are two the Group's performance was mainly operating companies of the Group), attributable to higher contract profitability, Polimex Opole Sp. z o.o. sp.k. (former: lower costs, and fewer losses on sales and Polimex Projekt Opole Sp. z o.o.), PRInż liquidation of non-current assets, a drop – 1 Sp. z o.o., Stalfa Sp. z o.o., Polimex- in general and administrative expenses Mostostal Ukraina SAZ, Polimex Opole Sp. and a decrease in the value of provisions z o.o. (former: Polimex Projekt Kozienice Sp. recognised in 2015. z o.o.). As compared to the preceding year, the net In 2015, the number of employees in the debt of the Polimex-Mostostal Group went Group decreased by 413 to just over 5,000, up by ca. PLN 22 million, and the debt ratio which resulted from the implementation of decreased by 4 p.p. vs. 2014 and reached a restructuring plan. 80.2% as at 31 December 2015.
77 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014 2013 change (PLN '000) '15 vs. '14
Assets
Non-current assets 1 164 624 908 997 1 347 640 28.1%
Current assets 1 385 347 1 331 986 1 698 060 4.0%
Assets held for sale 177 818 450 614 97 476 -60.5%
Total assets 2 727 789 2 691 597 3 143 176 1.3%
Equity and liabilities
Equity 540 851 431 558 363 202 25.3%
Provisions for liabilities 303 378 328 455 177 401 -7.6%
Long-term liabilities 465 473 606 814 266 342 -23.3%
Short-term liabilities and accruals 1 299 696 1 058 434 2 336 231 22.8%
Liabilities directly related to assets held for sale 118 391 266 336 0 -55.5%
Total equity and liabilities 2 727 789 2 691 597 3 143 176 1.3%
Profit and loss account
Revenue 2 548 575 2 102 197 2 362 752 21.2%
Domestic sales 2 105 953 1 718 219 1 774 271 22.6%
Export sales 442 622 383 978 588 481 15.3%
Construction operations 2 053 036 1 674 750 1 755 420 22.6%
Other operations 495 539 427 447 607 332 15.9%
EBIDTA 150 903 -343 685 -105 093 143.9%
EBIT 119 351 -395 752 -173 607 130.2%
Net profit/loss 68 975 -153 226 -260 889 145.0%
Other data
Net debt 1 560 793 1 583 006 2 276 702 -1.4%
Debt/Balance sheet total 80.2% 84.0% 88.4% -4.5%
Capital expenditure/revenue 0.1% 1.3% 1.2% -92.4%
Market cap 498 924 303 166 190 758 64.6%
78 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Sales by type in 2015 Sales by region in 2015
3% 1% 7% 17% 17%
1%
83% 71%
Production Domestic sales
Industry Export sales
Power Engineering
Infrastructure Construction
Petrochemicals
Other activity
EBIDTA, EBIT and net profit/loss in years 2013 -2015
200
100
0
-100
-200 PLN million PLN -300
-400
-500 EBIDTA EBIT Net profit/loss
2015
2014
2013
79 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
PBG Group
PBG Group began its operations in 1994 At the end of 2015, Jerzy Wisniewski holding At the end of 2015, the value of PBG as a family-owned partnership under the 27.15% of interest in the share capital Group’s contract portfolio was ca. PLN name of Piecobiogaz s.c. Jerzy Wiśniewski, and 42.23% of the voting rights was the 4.92 billion, out of which contracts Małgorzata Wiśniewska. During the first key shareholder of PBG S.A. is the parent totalling ca. PLN 1.97 billion will be fulfilled years of its operations, the entity focused company in the capital group, which acts as in 2016 and the remaining part in the primarily on construction, modernization a general contractor on natural gas, oil and following years. The share of contracts and maintenance of pressure reduction fuel facility projects as well as a provider in the power engineering sector is the and metering stations, as well as the of comprehensive project services in the highest (94%). These include a contract construction of steel and polyethylene power engineering sector. for the construction of power units in the pipelines for the transmission and Jaworzno III Power Plant. The oil, gas and distribution of natural gas. In 1997, The business operations of PBG Group fuel segment is the second largest one Technologie Gazowe "Piecobiogaz" Sp. z mainly focus on the Polish market, which with a 6% share in the Group's contract o.o. was established and it took over the is considered to be the key one due portfolio. key part of the partnership’s business to current investments in the power involving the construction of gas facilities. engineering sector, planned investments Continuous growth and implementation of in the natural gas and oil sector as well as innovative projects resulted in a change of hydro-technical projects relating to flood the company's legal form and name to PBG prevention systems. S.A. (a joint-stock company). At the end of 2015, PBG Group reported an An initial public offering, which took place 18% increase in sales revenue year-on-year. in mid-2004, was another important step. The Group's revenue went up from PLN 1.5 The IPO on the Warsaw Stock Exchange billion in 2014 to PLN 1.8 billion in 2015. The enabled the company to secure funding Group's performance was worse in 2015. and establish the PBG Capital Group. EBIT was negative and amounted to PLN Since June 2012, PBG S.A. has been in 190.6 million, while the net loss totalled bankruptcy by arrangement. The vote PLN 201.1 million. on the arrangement with creditors was held in August 2015. In October 2015, the Bankruptcy Court approved the arrangement with creditors, which became final under a court judgement in June 2016.
80 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014 2013* change (PLN '000) '15 vs. '14
Assets
Non-current assets 879 473 1 072 886 1 014 080 -18.0%
Current assets 1 314 334 1 116 319 1 665 378 17.7%
Assets held for sale 2 055 75 881 3 083 -97.3%
Total assets 2 193 807 2 189 205 2 679 458 0.2%
Equity and liabilities
Equity -808 100 -672 757 -582 846 -20.1%
Provisions for liabilities 462 577 506 213 659 880 -8.6%
Long-term liabilities 188 146 139 774 135 623 34.6%
Short-term liabilities and accruals 2 351 184 2 215 975 2 466 801 6.1%
Total equity and liabilities 2 193 807 2 189 205 2 679 458 0.2%
Profit and loss account
Revenue 1 798 815 1 530 248 1 227 600 17.6%
Domestic sales 1 670 172 1 303 980 997 088 28.1%
Export sales 128 643 226 268 230 512 -43.1%
Construction operations 1 552 389 1 188 076 774 302 30.7%
Other operations 246 426 342 172 453 298 -28.0%
EBIDTA -171 625 -26 397 362 569 -550.2%
EBIT -190 638 -46 254 333 217 -312.2%
Net profit/loss -201 104 -80 799 207 512 -148.9%
Other data
Net debt 2 660 161 2 757 269 3 088 410 -3.5%
Debt/Balance sheet total 136.8% 130.7% 121.8% 4.7%
Capital expenditure/revenue 1.6% 1.1% 14.7% 45.1%
Market cap 25 445 23 444 31 592 8.5%
* The financial data for 2013 was reconciled with the financial statements for 2014 after adjustments had been made to the opening balances.
81 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Sales by type in 2015 Sales by region in 2015
1% 13% 7%
86% 93%
Natural gas, oil and fuels Domestic sales
Energy construction Export sales
Other
EBIDTA, EBIT and net profit/loss in years 2013 -2015
400
300
200
100
0 PLN million PLN -100
-200
-300 EBIDTA EBIT Net profit/loss
2015
2014
2013
82 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Erbud Group
Erbud Group is one of the five largest Przedsiębiorstwo Budownictwa Drogowo- In 2015, Erbud Group earned revenue of construction companies in Poland, with Inżynieryjnego S.A. was established. PLN 1.8 billion and reported a4.2% increase over 25 years experience in the industry. In 2012, the group purchased shares in sales year-on-year. 91% of its sales It was established by Eryk Grzeszczak in Engorem, a company providing revenue was generated in Poland, whereas and his son Dariusz Grzeszczak in 1990 comprehensive investment, repair and 9% was derived from business carried out under the name of Przedsiębiorstwo diagnostic services to the power industry. in Western Europe. Building construction Budowlane i Usług Technicznych ERBUD. Development of the business in the area of was the key source of the group's revenue, In 1993, its German subsidiary – GWI modernization, repair and maintenance of accounting for 64% of its consolidated Bauunternehmung GmbH – was founded the existing industrial and power facilities sales in 2015. to carry on the Group's business abroad. resulted in the establishment of a new In 1999, Józef Adam Zubelewicz became a entity, Erbud Industry, in 2014. Erbud In the analysed period, the Group's shareholder of Erbud – his responsibility Industry comprises Engorem. profitability increased and the consolidated as a management board member was to EBIT was PLN 51.5 million, up by 20% vs. develop the company’s business in Poland. As at 31 December 2015, Wolff&Müller 2014. The net profit totalled PLN 31.7 GmbH & Co. KG holding 32.41% of the million and was 13.6% higher than in the In 2003 Erbud received a capital injection shares was the key shareholder of the preceding year. from a strategic investor – a German company. The other shareholders are: company Wolff&Müller GmbH & Co. • Dariusz Grzeszczak and DGI Fundusz In 2015, the net debt of the Group KG. Since 2004, the company has been Inwestycyjny Zamknięty Aktywów remained at a similar level to the one developing its independent regional Niepublicznych, controlled by Dariusz reported in the preceding year: PLN 529 branches in Poland and its Western Grzeszczak (22.72% interest in total), million. At the end of 2015, the Group European expansion began in 2005, to equity financed 28.7% of its operations. • Adler Properties Sp. z o.o. controlled by include such markets as Belgium, France, Eurbud Group employs 2,044 people. Józef Adam Zubelewicz 6.56% Sweden, Ireland and England. • two Open-Ended Pension Funds (ING In 2006, Erbud was converted into a joint- and AVIVA) holding 19.12% of shares in stock company and in 2007 made its IPO the company debut on the Warsaw Stock Exchange. In 2006 Erbud took over Budlex S.A. - at Erbud Group provides general contracting present the group is in the process of and subcontracting services in the selling that entity. At the end of 2007, commercial, public utilities, power and Erbud also acquired Rembet Plus Sp. z residential sectors, as well as services in o.o., a company operating in the road and the area of road and engineering in Poland engineering sector. Przedsiębiorstwo Robót and other European countries (primarily Drogowych S.A. (PRD SA), operating in the Germany, Belgium, Luxembourg and the road sector, joined the group in 2008. In Netherlands). 2010 the road companies belonging to the group, i.e. PRD SA and Rembet Plus Sp. z One of the group’s priorities is its further o.o. were consolidated, as a result of which growth in the segment of general construction, specifically office buildings, shopping centres and public utility buildings, and in the power engineering segment in Poland and abroad.
83 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014 2013 change (PLN '000) '15 vs. '14
Assets
Non-current assets 174 585 162 161 117 755 7.7%
Current assets 924 304 889 284 678 175 3.9%
Total assets 1 098 889 1 051 445 795 930 4.5%
Equity and liabilities
Equity 315 787 287 531 266 966 9.8%
Provisions for liabilities 70 510 72 944 63 556 -3.3%
Long-term liabilities 98 106 94 425 19 913 3.9%
Short-term liabilities and accruals 614 486 596 545 445 495 3.0%
Total equity and liabilities 1 098 889 1 051 445 795 930 4.5%
Profit and loss account
Revenue 1 763 282 1 692 055 1 223 609 4.2%
Domestic sales 1 605 064 1 496 682 1 013 873 7.2%
Export sales 158 218 195 373 209 736 -19.0%
Construction operations 1 715 418 1 646 607 1 173 979 4.2%
Other operations 47 864 45 448 49 630 5.3%
EBIDTA 62 096 52 003 40 427 19.4%
EBIT 51 528 43 128 32 700 19.5%
Net profit/loss 31 689 27 892 18 079 13.6%
Other data
Net debt 528 964 554 651 404 374 -4.6%
Debt/Balance sheet total 71.3% 72.7% 66.5% -1.9%
Capital expenditure/revenue 0.8% 1.0% 1.0% -20.5%
Market cap 354 376 324 153 432 167 9.3%
84 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Sales by type in 2015 Sales by region in 2015
14% 9%
19%
64% 3%
91%
Construction - General Construction Domestic sales
Property Development Export sales
Road and engineering
Energy construction
EBIDTA, EBIT and net profit/loss in years 2013 -2015
70
60
50
40
30 PLN million PLN 20
10
0 EBIDTA EBIT Net profit/loss
2015
2014
2013
85 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Trakcja Group
Trakcja PRKiI S.A. is among the largest Its key aspect was the merger of Trakcja entities operating in the infrastructure S.A. and PRKiI S.A., as a result of which construction and railway modernization Trakcja PRKiI S.A. was established. sector in Poland. The company has been operating under this name since the end With a 28.8% interest and share in the of 2013, but in organizational terms it voting rights, Comsa S.A. remains the continues the tradition and draws on the company’s key shareholder. experience gained by its predecessors over the past 60 years (PKRE S.A., PRKiI S.A., PRK At present, the business of the Trakcja 7 S.A.). Group focuses specifically on the comprehensive design of railway and The Group fulfils a number of important road infrastructure, urban rail transport contracts related to the modernization of with associated buildings and facilities, road and railway infrastructure in Poland the construction and modernization of and abroad. It is also active in the urban railways, contact lines, underground and rail transport, roads, bridges and power overhead lines, power supply systems, engineering sectors. The core business the construction and modernization of of its subsidiaries is the preparation of roads, highways, utility infrastructure and feasibility studies and project documents, engineering structures. provision of specialist railway infrastructure maintenance services as well as general In 2015, export sales remained at a and residential construction. level similar to the preceding year and accounted for 37% of total sales, which The company's current status has been was mainly attributable to major contracts achieved in stages. First, as a state- fulfilled for Lithuanian railways. PKP PLK owned enterprise it was restructured S.A. is a key client of the Group in Poland. in 1995. Another stage of development took place in 2004, when the control of In 2015, the Trakcja Group employed 1,908 Trakcja Polska S.A., a holding company people and generated revenue of PLN 1.3 previously established, was assumed billion, down by 17% as compared to the by Przedsiębiorstwo Kolejowych Robót preceding year. The Group's EBIT in 2015 Elektryfikacyjnych S.A. The company was was PLN 76.7 million vs. PLN 85.8 million privatised in 2005 through the sale of a in 2014, a 10.6% drop. In 2015, EBITDA was minority interest to Comsa S.A. Spain. PLN 99 million and decreased by 9.6% year- on-year. The net profit for 2015 totalled At the beginning of April 2008, the PLN 51.8 million. In 2015, debt capital company made its IPO debut on the represented 45% of the Group's funding. Warsaw Stock Exchange. In 2009, the company was merged with PRK-7 S.A. and in 2011 the Tiltra Group was acquired. In 2012, the company’s name was changed to Trakcja S.A. In 2013, the company continued the organizational and legal restructuring project at the Capital Group.
86 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014 2013 change (PLN '000) '15 vs. '14
Assets
Non-current assets 704 278 719 867 721 913 -2.2%
Current assets 623 143 725 949 776 004 -14.2%
Total assets 1 327 421 1 445 816 1 497 917 -8.2%
Equity and liabilities
Equity 726 291 674 503 623 372 7.7%
Provisions for liabilities 59 505 53 939 51 204 10.3%
Long-term liabilities 106 159 119 294 80 337 -11.0%
Short-term liabilities and accruals 435 466 598 080 743 004 -27.2%
Total equity and liabilities 1 327 421 1 445 816 1 497 917 -8.2%
Profit and loss account
Revenue 1 329 180 1 601 674 1 274 222 -17.0%
Domestic sales 842 202 1 035 790 811 295 -18.7%
Export sales 486 978 565 884 462 926 -13.9%
Construction operations 1 240 974 1 474 086 1 144 184 -15.8%
Other operations 88 206 127 588 130 038 -30.9%
EBIDTA 98 992 109 518 63 277 -9.6%
EBIT 76 726 85 844 40 591 -10.6%
Net profit/loss 51 758 50 391 29 995 2.7%
Other data
Net debt 349 695 709 467 790 946 -50.7%
Debt/Balance sheet total 45.3% 53.3% 58.4% -15.1%
Capital expenditure/revenue 3.3% 1.6% 1.4% 108.0%
Market cap 650 204 390 637 530 443 66.4%
87 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Sales by type in 2015 Sales by region in 2015
3% 3% 2% 2%
36% 25%
64% 65%
Railway construction Domestic sales
Road construction Export sales
Bridge construction
Tramway construction
Production
Other
EBIDTA, EBIT and net profit/loss in years 2013 -2015
120
100
80
60
PLN million PLN 40
20
0 EBIDTA EBIT Net profit/loss
2015
2014
2013
88 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
PORR Polska Construction S.A.
Established in 1869, PORR is one of the PORR Polska Construction S.A. largest construction companies PORR Polska Construction S.A. specializes in Austria and in Europe. With numerous in the construction of buildings and offices across Central, Eastern and South- facilities as well as railway engineering. Eastern Europe, PORR has embarked on expansion in the Middle East, mainly in In 2015, PORR Polska Construction S.A. Qatar. generated revenue of PLN 626.9 million from its core operations, which was a In Poland, PORR has been carrying out 40% drop compared to the preceding construction operations since 1987 and the year. Construction and assembly services main company in the group, PORR (Polska) accounted for 95% of the said revenue S.A., (currently PORR Polska Construction and the remaining 5% was earned on S.A.) was established in 1993. PORR Polska other operations. Additionally, 97% of the Construction S.A. offers a wide range of company's revenue was generated on the construction services, specifically in the Polish market. buildings and facilities segment (hotels, office buildings, residential buildings, educational facilities, shopping centres and industrial facilities). In 2015, PORR Polska Infrastructure S.A. (formerly Bilfinger Infrastructure S.A.) joined the PORR Group. PORR Polska Infrastructure S.A. is a market leader in the scope of road infrastructure in Poland. Since 2012 it has also been involved in bridge construction projects in Norway. The financial statements of PORR Group are not consolidated at the local level.
89 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014 change (PLN '000) '15 vs. '14
Revenue 626 862 1 045 019 -40.0%
Domestic sales 608 600 1 034 640 -41.2%
Export sales 18 262 10 379 75.95%
Construction operations 592 682 1 000 093 -40.7%
Other operations 34 179 44 926 -23.9%
Sales by type in 2015 Sales by region in 2015
5% 3%
95% 97%
Construction operations Domestic sales
Other operations Export sales
90 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
PORR Polska Infrastructure S.A.
PORR Polska Infrastructure S.A. specializes in infrastructure, power engineering, civil engineering and hydro-technical construction.
In 2015 PORR Polska Infrastructure S.A. generated revenue of PLN 666.2 million from its core operations, which was an 11% decrease compared to the preceding year. Construction and assembly services accounted for 90% of the said revenue and the remaining 10% was earned on other operations. Additionally, 95% of the company's revenue was generated on the Polish market.
Percentage Key figures 2015 2014 change (PLN '000) '15 vs. '14
Revenue 666 258 600 661 10.9%
Domestic sales 635 711 570 126 11.5%
Export sales 30 547 30 535 0.
Construction operations 596 586 544 177 9.6%
Other operations 69 672 56 484 23.3%
Sales by type in 2015 Sales by region in 2015
10% 5%
90% 95%
Construction operations Domestic sales
Other operations Export sales 91 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Mostostal Warszawa Group
Mostostal Warszawa was founded in The consolidated revenue generated by 1945 and its first projects consisted of Mostostal Warszawa in 2015 amounted reconstructing post-war Warsaw buildings. to PLN 1.3 billion and was almost entirely Mostostal Warszawa launched its overseas derived from construction operations. The business in 1973. In 1991, the enterprise majority of contracts focused on general was converted into a joint-stock company construction as well as engineering and and privatised. On 14 October 1993, industrial works. The revenue earned in Mostostal Warszawa made its IPO debut on 2015 was lower than in the preceding year the Warsaw Stock Exchange. and 1% of sales revenue was generated abroad. In 2015, the Group reported a net In 1994, Mostostal Warszawa began to profit of PLN 32.5 million. In 2015, EBIT was build its own capital group, which currently positive and amounted to PLN 49 million, comprises more than ten design and which was more than double 2014 EBIT construction companies. In 1999, the (PLN 23.9 million). company was merged with the Spanish Acciona Group. In 2015, the average headcount in Mostostal Warszawa Group was 1,463, At the end of 2015, Acciona S.A. with which was a 5% drop compared to 2014. 50.09% of shares was the majority shareholder of Mostostal Warszawa. The net debt ratio in 2015 was 83% and it Otwarty Fundusz Emerytalny PZU was lower than in the preceding year, when “Złota Jesień”, an open-ended pension it was 86%. fund, and AVIVA PTE AVIVA BZ WBK S.A. also held a considerable interest of 18.33% and 5.09%, respectively
The operations of Mostostal Warszawa can be divided into two main segments, namely engineering and industrial, and general construction. The key projects completed in 2015 were a Cultural and Congress Center in Jordanki (Toruń), the Municipal Stadium in Tychy, redevelopment of the Elbląg Canal, the Power Engineering Center of the AGH University of Science and Technology in Kraków, Szymany Airport, construction of tanks for IDS-BUD in Gdańsk, construction of an IOS facility for PKN ORLEN S.A. as well as platform module assembly at Gdańska Stocznia Remontowa.
92 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014 2013 change (PLN '000) '15 vs. '14
Assets
Non-current assets 203 859 232 100 377 088 -12.2%
Current assets 1 083 276 1 135 362 1 119 610 -4.6%
Assets held for sale 0 0 113 4 43 n/a
Total assets 1 287 135 1 367 462 1 610 141 -5.9%
Equity and liabilities
Equity 223 682 193 372 212 060 15.7%
Provisions for liabilities 59 485 53 737 81 331 10.7%
Long-term liabilities 188 253 224 102 84 101 -16.0%
Short-term liabilities and accruals 815 715 896 251 1 119 211 -9.0%
Liabilities directly related to assets held for sale 0 0 113 438 n/a
Total equity and liabilities 1 287 135 1 367 462 1 610 141 -5.9%
Profit and loss account
Revenue 1 275 431 1 509 524 1 633 363 -15.5%
Domestic sales 1 262 259 1 365 071 1 219 101 -7.5%
Export sales 13 172 144 453 414 262 -90.9%
Construction operations 1 272 805 1 506 365 1 632 383 -15.5%
Other operations 2 626 3 159 980 -16.9%
EBIDTA 62 132 49 579 -205 844 25.3%
EBIT 49 062 23 931 -237 450 105.0%
Net profit/loss 32 466 -8 738 -314 380 471.5%
Other data
Net debt 710 723 971 796 1 292 591 -26.9%
Debt/Balance sheet total 82.6% 85.9% 86.8% -3.2%
Capital expenditure/revenue 1.5% 0.5% 0.8% 0.9%
Market cap 260 000 120 000 89 800 116.7%
93 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Sales by type in 2015 Sales by region in 2015
1%
21%
79% 99%
Engineering and industry Domestic sales
General construction Export sales
Other operations
EBIDTA, EBIT and net profit/loss in years 2013 -2015
100 50 0 -50 -100 -150 PLN million PLN -200 -250 -300 EBIDTA EBIT Net profit/loss -350
2015
2014
2013
94 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Unibep Group
UNIBEP S.A., whose history dates back to Unibep Group is distinguished from its 1950, is the parent company in the UNIBEP competitors through its involvement Capital Group. The company first operated in production activity. Fabryka Domów as a state-owned enterprise and in 1998 Modułowych in Bielsk Podlaski, which is the it was converted into a limited liability largest plant producing modular houses company. In 1999, the company’s name in Poland, produces modular buildings was changed to UNIBUD BEP Sp. z o.o. and which are then assembled in Scandinavia in 2004 it was converted into a joint-stock (primarily in Norway). The revenue from company. The company has been operating this segment constitutes approx. 10% of under its current name since 2006. From the overall revenue of the Group, whereas 2008 the company's shares have been the remaining 20% is derived from the traded on the Warsaw Stock Exchange. operations carried out in the roads and bridges, and property development As at 31 December 2015, the key segments. shareholders of UNIBEP S.A. were: Zofia Mikołuszko with 25.09% of the share In 2015, EBITDA amounted to PLN 31.3 capital, Zofia Stajkowska with 14.26%, Beata million (down by 36% vs. 2014). The Group's Skowrońska with 16.52%, AVIVA OFE AVIVA EBIT totalled PLN 23.5 million as compared BZ WBK S.A. with 9.75% of the share capital to PLN 25.1 million in 2014. The net profit as well as Nationale-Nederlanden OFE with for 2015 was PLN 23.3 million which was 6.11%. almost PLN 2.4 million higher than in the preceding year. The core business of the Unibep Group is general building construction - property In 2015, the share of equity in the Group’s development, construction and assembly funding was 28.3%. services, and road and bridge building. Such works are delivered both in Poland At the end of 2015, the contract portfolio and abroad. of the UNIBEP Group totalled ca. PLN 1.3 billion, up by ca. 30% year-on-year. In 2015, UNIBEP Group employed 1,129 people and its revenue from core operations amounted to PLN 1.2 billion, which was more than 15% increase compared to the preceding year. In 2015, 81% of revenue was generated in Poland, whereas the remaining part was earned on exports, mainly to Scandinavia (especially Norway), Russia, Belarus and Germany. By market segment, 70% of revenue was generated on building and facility construction.
95 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014 2013 change (PLN '000) '15 vs. '14
Assets
Non-current assets 209 803 172 281 14 4 911 21.8%
Current assets 556 920 494 353 409 183 12.7%
Assets held for sale 0 10 0 -100.0%
Total assets 766 723 666 644 554 094 15.0%
Equity and liabilities
Equity 217 203 203 046 185 820 7.0%
Provisions for liabilities 119 471 91 872 59 968 30.0%
Long-term liabilities 96 337 68 396 63 391 40.9%
Short-term liabilities and accruals 333 712 303 330 244 915 10.0%
Total equity and liabilities 766 723 666 644 554 094 15.0%
Profit and loss account
Revenue 1 242 860 1 079 703 905 553 15.1%
Domestic sales 1 004 270 760 206 676 284 32.1%
Export sales 238 590 319 497 229 269 -25.3%
Construction operations 1 128 648 992 129 623 640 13.8%
Other operations 114 213 87 574 281 913 30.4%
EBIDTA 31 349 49 299 38 773 -36.4%
EBIT 23 475 25 138 24 682 -6.6%
Net profit/loss 23 281 20 925 17 585 11.3%
Other data
Net debt 419 611 337 530 368 452 24.3%
Debt/Balance sheet total 71.7% 69.5% 57.9% 2.1%
Capital expenditure/revenue 0.2% 0.3% 1.9% 0.0%
Market cap 378 763 350 373 522 237 8.1%
96 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Sales by type in 2015 Sales by region in 2015
11% 19%
9%
10%
70% 81%
Construction of buildings and facilities Domestic sales
Road construction Export sales
Property Development
Lightweight structures
EBIDTA, EBIT and net profit/loss in years 2013 -2015
60
50
40
30
PLN million PLN 20
10
0 EBIDTA EBIT Net profit/loss
2015
2014
2013
97 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Elektrobudowa Group
The parent company – ELEKTROBUDOWA At present, ELEKTROBUDOWA S.A. Group In 2015, EBITDA amounted to PLN 77.7 S.A. – was founded in 1953 as provides comprehensive construction and million, up by 58% vs. 2014. The Group's Przedsiębiorstwo Montażu Elektrycznego assembly services for the needs of the EBIT for 2015 totalled PLN 63.1 million, "Elektrobudowa”. In 1992, this state- power engineering, petrochemical, mining compared to PLN 35.7 million in the owned enterprise was converted into a and public utility building construction preceding year. The net profit for 2015 joint-stock company, and three years later sectors. The business activity of the Group amounted to PLN 50.0 million and the company’s IPO was executed and its can be divided into the following segments: increased by 85% year-on-year. shares were traded on the Warsaw Stock • power engineering – electrical Exchange for the first time in 1996. In installations, stations and power In 2015, debt capital accounted for 57% 2000, a restructuring process was carried transmission and distribution facilities; of the Group's funding, down by 6 p.p. out, which affected employees, assets, compared to the preceding year. • construction – general construction of marketing, organizational structure and buildings (turnkey delivery) and electrical finance. The contract portfolio of installations; ELEKTROBUDOWA SA totalled PLN 1.3 At the end of 2015, the key shareholders • industry – complete electrical billion at the end of 2015. were open-ended pension funds: AVIVA installations for the industry; OFE AVIVA BZ WBK S.A. (10.75%), Nationale- • automatic control – MV and LV indoor Nederlanden Otwarty Fundusz Emerytalny switchgears. (9.89%), PKO BP Bankowy Otwarty Fundusz Emerytalny (9.74%), AXA Otwarty Fundusz In 2015, ELEKTROBUDOWA SA Group Emerytalny (9.41%), OFE PZU "Złota Jesień” employed 2,158 people and generated (9.31%), PTE Allianz Polska SA (6.31%), revenue of PLN 1.2 billion, which was a MetLife Otwarty Fundusz Emerytalny more than 12% increase compared to (6.08%), and Generali Otwarty Fundusz the preceding year. In 2015, as much as Emerytalny (5.09%). 91% of revenue was generated in Poland. The remaining part was earned on sales of products and services, inter alia, in European Union member states, Eastern Europe and Asia, and it was 68% higher than the revenue generated abroad in 2014.
98 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014 2013 change (PLN '000) '15 vs. '14
Assets
Non-current assets 188 569 174 263 199 527 8.2%
Current assets 709 258 737 303 576 137 -3.8%
Non-current assets held for sale 0 246 0 -100.0%
Total assets 897 827 911 812 775 664 -1.5%
Equity and liabilities
Equity 386 802 338 243 326 724 14.4%
Provisions for liabilities 9 212 10 422 12 482 -11.6%
Long-term liabilities 14 445 14 737 12 338 -2.0%
Short-term liabilities and accruals 487 368 548 410 424 120 -11.1%
Total equity and liabilities 897 827 911 812 775 664 -1.5%
Profit and loss account
Revenue 1 242 830 1 108 316 905 553 12.1%
Domestic sales 1 129 696 1 040 980 676 284 8.5%
Export sales 113 134 67 336 229 269 68.0%
Construction operations 1 047 388 904 583 623 640 15.8%
Other operations 195 442 203 733 281 913 -4.1%
EBIDTA 77 739 49 299 38 773 57.7%
EBIT 63 090 35 718 24 682 76.6%
Net profit/loss 49 965 27 015 17 585 85.0%
Other data
Net debt 404 974 511 330 368 452 -20.8%
Debt/Balance sheet total 56.9% 62.9% 57.9% -6.0%
Capital expenditure/revenue 1.1% 1.0% 1.9% 0.1%
Market cap 617 189 350 373 522 237 76.2%
99 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Sales by type in 2015 Sales by region in 2015
2% 9% 14%
84% 91%
Construction and assembly Domestic sales
Electrotechnical products Export sales
Other services
Sales of materials
EBIDTA, EBIT and net profit/loss in years 2013 -2015
90 80 70 60 50 40
PLN million PLN 30 20 10 0 EBIDTA EBIT Net profit/loss
2015
2014
2013
100 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Torpol Group
Torpol Sp. z o.o., the parent company, The Group's EBIT, EBITDA and the net profit was established in 1999. In 2012, it was increased considerably. converted into a joint-stock company. On 1 July 2014, the shares in Torpol S.A. were In 2015, EBIT amounted to PLN 43.3 million allocated as part of an initial public offering, (up by 33%), while EBITDA totalled PLN 55.8 when the former shareholder, Polimex million (up by 29%). The net profit increased – Mostostal sold all its shares in the by 28% from PLN 25 million in 2014 to PLN company. Torpol S.A. shares and allotment 32 million in 2015. certificates were traded on the Warsaw Stock Exchange for the first time on 8 July Debt capital accounts for 67% of the 2014. funding used by Torpol Group.
The core business of the Group involves general contractor services related to the construction of roads and railways.
The Group also provides general construction services relating to line distribution facilities – power and telecommunication lines, as well as design services.
As at 31 December 2015, the key shareholders of Torpol S.A. were: TF Silesia Sp. z o.o. (38%), PKO TFI (8.59%), and Nationale-Nederlanden OFE (6.97%).
In 2015, the Group employed more than 614 people on average. In 2015, sales revenue increased substantially (by nearly 60% compared to 2014 ) to PLN 1.2 billion. This was attributable to a rise in revenue both on the domestic and foreign markets. A major part of the Group's revenue is earned on operations carried out in the railway segment (ca. 89% of total revenue).
101 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014 2013 change (PLN '000) '15 vs. '14
Assets
Non-current assets 155 576 115 987 105 727 34.1%
Current assets 520 342 648 523 373 412 -19.8%
Total assets 675 918 764 510 479 139 -11.6%
Equity and liabilities
Equity 222 890 203 312 123 008 9.6%
Provisions for liabilities 24 288 10 262 914 136.7%
Long-term liabilities 90 223 33 415 31 718 170.0%
Short-term liabilities and accruals 338 517 517 521 323 499 -34.6%
Total equity and liabilities 675 918 764 510 479 139 -11.6%
Profit and loss account
Revenue 1 238 241 775 399 415 717 59.7%
Domestic sales 1 175 998 746 892 401 790 57.5%
Export sales 62 243 28 507 13 927 118.3%
Construction operations 1 222 041 755 188 394 033 61.8%
Other operations 16 200 20 211 21 684 -19.8%
EBIDTA 55 804 43 161 21 369 29.3%
EBIT 43 257 32 647 10 730 32.5%
Net profit/loss 31 954 25 009 4 790 27.8%
Other data
Net debt 110 169 361 949 252 306 -69.6%
Debt/Balance sheet total 67.0% 73.4% 75.2% -6.4%
Capital expenditure/revenue 2.1% 1.9% 1.7% 0.2%
IPO took place on Market cap 285 287 229 011 24.6% 08/07/2014
102 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Sales by type in 2015 Sales by region in 2015
1% 5% 10%
89% 95%
Railways Domestic sales
Tramways Export sales
Other
EBIDTA, EBIT and net profit/loss in years 2013 -2015
60
50
40
30
PLN million PLN 20
10
0 EBIDTA EBIT Net profit/loss
2015
2014
2013
103 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Warbud
Warbud has been present on the Polish In 2015, the company signed the first PPP market since 1989. Initially, the company contract with the Polish government to operated as a private enterprise. In 1992, construct Regional Court in Nowy Sącz and Warbud was converted into a joint-stock it actively participates in many PPP tender company with the participation of a French procedures. construction tycoon – now VINCI Group. VINCI Construction International Network In 2015, Warbud employed 1,042 people remains the majority shareholder of the and its revenue from core operations company with 99.76% of the share capital amounted to PLN 1.1 billion, which as at 31 December 2015. For several years was a more than 5% increase vs. 2014. now, VINCI Group has been a leader among Construction and assembly services the largest construction companies in accounted for 99% of the said revenue, Europe in terms of revenue. As it is part of and the remaining 1% was earned on other the VINCI Group, Warbud may draw on the operations. The company's revenue was international experience of its experts in generated entirely on the Polish market. addition to enjoying stability and a strong financial position. The Company's EBIT in 2015 was PLN 40.8 million, compared to PLN 48.8 million in The primary focus of Warbud is to provide 2014, a 16% decrease. services in the construction sector, mainly in the field of building and facility In 2015, EBITDA was PLN 50.6 million, a construction (shopping centres, office 10.8% decrease compared to 2014. The net buildings, housing estates), civil engineering profit for 2015 totalled PLN 35.7 million and structures (roads, bridges), healthcare dropped by 26% year-on-year. In 2015, debt facilities (hospitals, healthcare centres, capital accounted for 82% of the company's health farms), cultural facilities (theatres, funding, which was a 2.2 p.p. increase concert halls, museums), environmental compared to the preceding year. The protection projects (sewage treatment funding structure has remained virtually plants, incineration plants) as well as unchanged over the past few years. specialised construction works and concrete production.
Considering VINCI's 20-plus years experience in PPP, for several years Warbud has been popularizing public-private partnerships in respect of the development and management of public infrastructure.
104 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014 2013 change (PLN '000) '15 vs. '14
Assets
Non-current assets 79 814 80 393 79 401 -0.7%
Current assets 708 482 659 294 705 639 7.5%
Total assets 788 296 739 687 785 040 6.6%
Equity and liabilities
Equity 141 963 146 697 131 063 -3.2%
Provisions for liabilities 35 259 36 583 29 830 -3.6%
Long-term liabilities 97 690 103 581 114 017 -5.7%
Short-term liabilities and accruals 513 384 452 826 510 130 13.4%
Total equity and liabilities 788 296 739 687 785 040 6.6%
Profit and loss account
Revenue 1 106 860 1 049 886 1 121 472 5.4%
Domestic sales 1 106 860 1 049 886 1 121 472 5.4%
Construction operations 1 091 486 1 038 747 1 107 460 5.1%
Other operations 15 374 11 139 14 012 38.0%
EBIDTA 50 584 56 726 43 965 -10.8%
EBIT 40 786 48 775 37 022 -16.4%
Net profit/loss 35 728 48 416 32 555 -26.2%
Other data
Net debt 233 227 171 687 209 654 35.8%
Debt/Balance sheet total 82.0% 80.2% 83.3% 1.8%
Capital expenditure/revenue 1.6% 1.8% 1.0% -0.3%
105 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Sales by type in 2015
1%
99%
Revenue from construction and assembly
Revenue from other services
EBIDTA, EBIT and net profit/loss in years 2013 -2015
60
50
40
30
PLN million PLN 20
10
0 EBIDTA EBIT Net profit/loss
2015
2014
2013
106 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Mota-Engil Central Europe S.A.
Mota-Engil Central Europe S.A. is among Corporate social responsibility is one of the the largest construction companies major elements of the strategy adopted by in Poland. It was established through the company, expressed in its management the merger of two Polish enterprises, style, which is ethically, socially and namely Krakowskie Przedsiębiorstwo ecologically responsible. Robót Drogowych S.A. (KPRD) and Przedsiębiorstwo Budowy Mostów w The company has substantial equipment Lubartowie Sp. z o.o. (PBM), which had resources, a network of bituminous been present on the local market since material production facilities as well as its 1949. Today, Mota-Engil Central Europe is a own boarding and scaffolding division. strong construction company drawing on more than 60 years' Polish tradition in road In 2015, the revenue earned by Mota- and bridge construction and specializing Engil Central Europe S.A. totalled PLN at the same time in the construction of 950 million, up by almost PLN 300 million buildings and facilities, railways, and in versus the preceding year. power engineering. Additionally, it has a mine in Górka Sobocka, where high quality Revenue from construction services aggregate is extracted for sale. accounted for almost 94% of its total revenue in 2015. Other revenue was Mota-Engil Central Europe has built derived from sales of materials and hundreds of kilometres of roads which products (aggregate, mineral and asphalt are of crucial importance to Poland, mixtures). including the A4, A2 motorways, and the S3, S5, S8 and S17 expressways. It has also In 2015 EBITDA exceeded PLN 41 million, constructed residential and public utility compared to ca. PLN 24 million buildings and electric power stations. the year before. EBIT equalled over PLN 7 million, which was a PLN 12 million year- Acting as the general contractor on major on-year increase. In 2015, the company construction projects in Poland, Mota-Engil reported a profit of PLN 4.5 million Central Europe employs more than 1,500 compared to a loss of almost PLN 13 million people and cooperates with hundreds of in the preceding year. local businesses. Its contract portfolio totalled PLN 2.1 billion People are the key assets of Mota-Engil at the end of 2015. Central Europe. Its success on the Polish market would not be possible without respect for long-established tradition, professionalism, know-how and the capabilities of its employees – people who work on the most innovative and ambitious projects that satisfy the highest quality standards at all times.
107 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014 2013 change (PLN '000) '15 vs. '14
Assets
Non-current assets 284 190 316 977 356 896 -10.3%
Current assets 475 958 426 541 433 590 11.6%
Total assets 760 147 743 518 790 486 2.2%
Equity and liabilities
Equity 224 153 221 246 201 745 1.3%
Provisions for liabilities 113 773 81 435 83 154 39.7%
Long-term liabilities 85 005 139 983 154 202 -39.3%
Short-term liabilities and accruals 337 216 300 853 351 386 12.1%
Total equity and liabilities 760 147 743 518 790 486 2.2%
Profit and loss account
Revenue 949 576 658 133 1 166 578 44.3%
Domestic sales 949 576 658 133 1 166 578 44.3%
Export sales 0 0 0 -
Construction operations 888 188 624 317 1 140 455 42.3%
Other operations 61 387 33 816 26 122 81.5%
EBIDTA 35 480 23 252 37 971 52.6%
EBIT 7 044 -5 132 7 376 237.3%
Net profit/loss 4 540 -12 841 -11 236 135.4%
Other data
Net debt 413 610 377 356 474 001 9.6%
Debt/Balance sheet total 70.5% 70.2% 74.5% 0.3%
Capital expenditure/revenue 1.8% 1.3% 1.6% 0.5%
108 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Sales by type in 2015
6% 4%
15%
75%
Public works
Real property
Sanitary sewage and power supply systems
Sale of products and materials
EBIDTA, EBIT and net profit/loss in years 2013 -2015
60
50
40
30
PLN million PLN 20
10
0
-10
-20 EBIDTA EBIT Net profit/loss
2015
2014
2013
109 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Hochtief Polska S.A.
HOCHTIEF Polska is a company from the In 2015, the company's sales revenue multinational HOCHTIEF construction totalled PLN 788.5 million, up by 36% group. The HOCHTIEF Group has more year-on-year. The company also managed than 140 years experience and it has been to improve its performance considerably present on the Polish market since 1990. versus the preceding year. In 2015, its EBIDTA amounted to PLN 25.4 million, HOCHTIEF Polska Sp. z o. o. launched its increased from PLN 19.1 million in 2014. operations in 1996. On 31 December 2009, EBIT for 2015 totalled PLN 24.3 million the company was converted into HOCHTIEF compared to PLN 18.1 million in the Polska S.A. preceding year. The net profit for 2015 totalled PLN 29.8 million and increased by All the shares in the company are nearly PLN 7.5 million year-on-year. held by HOCHTIEF Construction Erste Vermögensverwaltungsgesellschaft GmbH, In 2015, debt capital represented 66% of a wholly-owned subsidiary of HOCHTIEF the company's funding. Infrastructure GmbH. The company employed more than 650 HOCHTIEF Polska specializes in the people in 2015. construction of buildings and facilities, as well as infrastructure construction. The scope of its services includes mainly the construction of office facilities, residential, industrial and public utility buildings, shopping and entertainment centres, civil and water engineering structures for major infrastructure projects, construction works for waste incineration plants as well as the implementation of projects for the commercial power industry. In cooperation with HOCHTIEF PPP Solutions, the entity participates in the implementation of public-private partnership projects in the social infrastructure sector in Poland. HOCHTIEF Polska operates across Poland through its branches and offices located in Warsaw, Poznań, Kraków and Katowice.
110 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Percentage Key figures 2015 2014 2013 change (PLN '000) '15 vs. '14
Assets
Non-current assets 92 291 79 731 69 280 15.8%
Current assets 290 216 381 460 374 117 -23.9%
Total assets 382 507 461 191 443 397 -17.1%
Equity and liabilities
Equity 129 058 118 523 124 795 8.9%
Provisions for liabilities 74 993 75 258 70 731 -0.4%
Long-term liabilities 0 0 0 -
Short-term liabilities and accruals 178 457 267 411 247 870 -33.3%
Total equity and liabilities 382 507 461 191 443 397 -17.1%
Profit and loss account
Revenue 788 488 579 348 631 785 36.1%
Domestic sales 788 488 579 348 631 785 36.1%
Export sales 0 0 0 -
Construction operations 788 376 579 233 631 779 36.1%
Other operations 113 114 6 -0.9%
EBIDTA 25 406 19 120 20 641 32.9%
EBIT 24 265 18 053 19 898 34.4%
Net profit/loss 29 769 22 203 20 860 34.1%
Other data
Net debt 100 071 193 754 174 602 -48.4%
Debt/Balance sheet total 66.3% 74.3% 71.9% -8.0%
Capital expenditure/revenue 0.1% 0.1% 0.3% 0.0%
111 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
Sales by type in 2015
10%
12%
78%
General Construction
Housing Construction
Energy Construction
EBIDTA, EBIT and net profit/loss in years 2013 -2015
60
50
40
30
PLN million PLN 20
10
0 EBIDTA EBIT Net profit/loss
2015
2014
2013
112 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
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114 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
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115 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
116 Polish construction companies 2016 | Major Players, Key Growth Drivers and Development Prospects
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