Business

WSE-listed construction companies see slight improvement in profit margins

Aggregate revenue reported by more than 20 construction groups listed on the Warsaw Stock Exchange grew by a nominal 9.8 per cent in 2018, a meagre rise in real terms, given soaring prices of building materials and labour. The net financial performance of the listed construction companies also improved marginally, but the figure still pales in comparison to earnings achieved by property developers and suppliers of building materials and construction equipment.

The findings of The Construction Market in Poland – May 2019, the latest monthly report from research company Spectis, reveal that the aggregate net profit of construction groups whose stock is listed on the Warsaw Stock Exchange totalled 40 million zloty (9.4 million euros) in 2018, compared to the net loss of 82 million zloty (19.2 million euros) registered the previous year.

The improvement in terms of financial results was due mainly to a one-off event, namely the fact that the Vistal Group posted a significantly lower net loss. Likewise, both Polimex-Mostostal and Mostostal Zabrze recorded strong improvements in profitability. However, financial results delivered by Budimex, Trakcja PRKiI and Elektrobudowa deteriorated sharply.

The net financial result generated by the contracting companies in 2018 translates into a net return on sales of a mere 0.2 per cent. Accordingly, within the broadly-defined construction and real estate sector, contractors remain the only group unable to achieve earnings from business operations. Profitability of the other two categories of companies, property developers and suppliers of building materials and construction equipment, remained stable, at 17.4 per cent and 4.8 per cent, respectively.

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