Budimex.pl

Commentary on financial data for the first quarter of 2016

News date: April 27, 2016
Commentary on financial data for the first quarter of 2016

Budimex Group closed the first quarter of 2016 with very good results — high sales in the construction segment, a significant improvement in profitability and an order book worth PLN 9 billion.

 

In the first quarter of 2016, the sales revenue of Budimex Group went up by 16.7%. A year-on-year improvement in sales was noticeable in both the construction and the real estate development segments.

In the first quarter of 2016, production and assembly output decreased by 13.9%, but the Group improved its result in the construction segment by 12.5%. Record-high sales in this segment (over the last four years), amounting to PLN 930 million, have been achieved owing to efficient performance of road contracts and running ahead of construction work schedules. Improved sales figures were also observed in the real estate development segment. In the first quarter of 2016, 242 flats were sold under notarial deeds, i.e. 122% more than in the same period last year. As a result, sales in the development segment increased by 128% year on year, totalling PLN 78 million.

 

In the first quarter of 2016, Budimex Group also achieved record-high results (for a first quarter), improving its gross margin, operating result and net profit by 42%, 35% and 38%, respectively, as compared with last year’s figures.

 

The value of Budimex Group’s order book stood at PLN 9.1 billion as at the end of March 2016 and was almost PLN 677 million higher than the value recorded as at the end of 2015. The value of the contracts signed in the first quarter of 2016 amounted to PLN 1.5 billion and was 43% higher than in the corresponding period of 2015. Contracts signed in the first quarter of this year are primarily those won in the previous year. The value of contracts in which Budimex’s bid was chosen as the most favourable one amounted to PLN 2 billion as at the end of 2015. As at the end of March this year, this figure amounted to PLN 1.4 billion, including only PLN 0.5 billion in the infrastructure segment. Contracts associated with construction services for the healthcare segment are worth PLN 0.5 billion, making us one of the leaders in that sector.

 

Due to a slowdown in new tenders, it will be difficult to repeat the number of contracts obtained in 2015. However, we would like to maintain or even improve our bidding effectiveness in the subsequent quarters of 2016, so as to have as many entries in our order book as possible for the coming years. We are intensifying our efforts regarding the commercial building market, as we would like to become a significant contractor in every Polish city.

 

In the first quarter of 2016, we observed a decrease in the cash level as compared with the end of last year, which is typical of this period. In spite of that, Budimex Group maintained its net cash position at the level of PLN 2.0 billion at the end of the first quarter of 2016, which represents a 15% increase as compared to the end of the first quarter of 2015.

 

Pre-sales of flats in the first quarter of 2016 fell by 36% as compared to the same period last years (317 flats pre-sold in the current period vs 499 flats pre-sold in the first quarter of last year). This decrease is not a symptom of a decline in demand but a consequence of the fact that pre-sale stage of the “Nowe Czyżyny” development project in Kraków is nearing completion. The project generated a great deal of interest due to very attractive prices. For this reason, maintaining the 2015 pre-sales level will be a considerable challenge. It will be necessary to launch new projects on a regular basis. In the first quarter of this year, we began construction as part of three new development projects, including another stage of the “Wiślany Mokotów” estate in Warsaw. We are also continuing the process of searching for attractive locations for new investment projects, to keep on expanding our offer. We are currently building more than 4,000 new flats, of which 1,370 have not been pre-sold and are on offer for our customers.

 

Despite high sales under notarial deeds, the operating result and the net profit for the development segment in the first quarter of 2016 are much lower than in the corresponding period last year. In the first quarter of 2015, the development segment recorded the sale of land at ul. Racławicka, which significantly improved its results at the time.

 

The good results achieved in 2015 and the continued high cash level prompted the Management Board to issue a recommendation on dividend payment for the eighth time, which was approved by the Shareholders’ Meeting yesterday. The dividend will be paid out in May, in the amount of PLN 208 million, i.e. PLN 8.14 gross per share.

 

In 2016, Budimex Group will focus on pursuing its selected development path, including, in particular, strengthening its competitive advantage in the railway sector through investments in a machine park.

 

The power sector, the gas and energy transmission market, road maintenance and facility management remain our primary diversification targets.

 

In 2016, we are anticipating a slight increase in the growth of sales; however, we predict that construction work will intensify in 2017–2018. Yet, today we can already observe the first symptoms of a hike in the prices of materials and subcontractor services. In order to maintain profitability, we try to enlist the key resources necessary for the implementation of contracts during the first stages of work. Our plans within the scope of our human resources policy have not changed — we intend to hire 700 employees in 2016. We want to maintain our leading position in the construction market and to continue to be seen as a company which shares its profits with the shareholders and does business in a socially responsible manner.

 

BUDIMEX Group
Financial highlights from the consolidated financial statements of Budimex Group prepared in compliance
with the International Financial Reporting Standards (IFRS) for the first quarter of 2016 and comparable data for the first quarter of 2015.

 

 

Results of reporting segments for the first quarter of 2016 (in PLN thousand):
 

  Construction segmentReal estate development segmentOther activityDerecognitioConsolidated data  
 Net revenue from sales of products, goods and raw materials929,91378,20351,730(72,192)987,654 
 Gross profit on sales
profitability (%)
90,104
9.7%
 
18,769
24.0%
 
8,528
16.5%
 
(2,412)114,989
11.6%

 
 
 Operating profit
profitability (%)
44,222
4.8%
 
11,317
14.5%
 
7,466
14.4%
 
(110)62,895
6.4%

 
 
 Gross profit
profitability (%)
48,198
5.2%
 
12,517
16.0%
 
5,536
10.7%
 
(110)66,141
6.7%

 
 
 Net profit
profitability (%)
37,607
4.0%
 
10,117
12.9%
 
4,281
8.3%
 
(88)51,917
5.3%

 
 
 Net profit attributable to shareholders of the Parent Company
profitability (%)
37,607
4.0%
 
10,117
12.9%
 
3,906
7.6%
 
(88)51,542
5.2%

 

Results of reporting segments for the first quarter of 2015 (in PLN thousand):

 

  Construction segmentReal estate development segmentOther activityDerecognitionConsolidated data 
 Net revenue from sales of products, goods and raw materials826,45834,228 36,662 (50,932)846,416     
 Gross profit on sales
profitability (%)
72,693
8.8%
 
 
8,789
25.7%
 
4,972
13.6%
 
(5,648) 80,806
9.5%

 
 
 Operating profit
profitability (%)
32,733
4.0%
 
14,603
42.7%
 
 
4,087
11.1%
 
(4,749) 46,674
5.5%

 
 
 Gross profit
profitability (%)
34,331
4.2%
 
16,278
47.6%
 
1,973
5.4%
 
(4,749)  
47,833
5.7%
 
 
 Net profit
profitability (%)
 
27,055
3.3%
 
13,157
38.4%
 
1,319
3.6%
 
(3,848) 37,683
4.5%

 
 
 Net profit attributable to shareholders of the Parent Company
profitability (%)
27,055
3.3%
 
 
13,157
38.4%
 
 
975
2.7%
 
(3,848) 37,339
4.4%

 

 

 

 


 
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