Commentary on financial data from the consolidated financial statements of Budimex Group for three quarters of 2014
The third quarter of 2014 is another quarter in which the Budimex Group recorded an improvement of sales and operating profitability as compared to the same period of the previous year. The Group maintains a high level of cash. Owing to the positive trend in the housing market, we were able to achieve a high level of pre-sales of flats, and the contracts signed in the third quarter allowed us to rebuild the order book.
The value of Budimex Group’s order book stood at PLN 4.7 billion as at the end of September 2014 and has increased by 20% over the last three months. This was possible owing to the signing of contracts for a total value of PLN 2.3 billion, including a contract for the construction of a power unit in Turów. Since the beginning of the year, the Group has signed contracts for the total value of PLN 3.7 billion. This represents an increase by 40% over the same period of the previous year.
We can see that the pace of awarding road construction contracts has increased, however, they are not signed as fast as we could expect, and this may affect the sales in 2015. As of today, 40 tenders have been awarded, with Budimex SA making the winning offer in terms of pricing in eleven of them. The total tender value as per Budimex SA currently stands at PLN 2.5 billion. In turn, the total value of contracts waiting to be signed by the Budimex Group or signed after 30 September 2014 amounts to PLN 1.9 billion, of which 89% is represented by road construction tenders announced by the General Directorate for National Roads and Motorways (GDDKiA) If these contracts are signed by the end of the current year, this will be a historically high value of orders won for the Budimex Group.
In 2014, the Budimex Group is focused on winning as many contracts as possible from the new EU perspective, in order to build a portfolio for the upcoming years. An important task is to prepare the personnel and capital background due to the expected accumulation of works in the period 2016–2018.
The Budimex Group continues to maintain a high level of the net cash position which, at the end of September 2014, amounted to PLN 1,178 million and is higher by 28% as compared to the level recorded at the end of September 2013.
Between January and September, the sales of the Budimex Group increased by 17.8%. In the same period the construction and assembly production, measured on a fixed price basis, increased by 5.5% year-on-year.
In the third quarter of 2014, the Budimex Group’s sales amounted to PLN 1,560 million and was higher by PLN 307 million, i.e. by 24.5%, as compared to the same period of 2013 – based on comparable data, i.e. excluding the revenues of Budimex Danwood sold in December 2013. Good weather conditions and the schedule of contractual road works had a significant impact on the sales in the third quarter of 2014.
Operating profit of the Budimex Group earned in the period from January to September rose by 47.2% vs the same period of the previous year, when compared to data not including results of Budimex Danwood.
Operating profitability amounted to 4.7% and improved by 25% as compared to the Group’s profitability recorded in the same period of the previous year.
The improvement of the Group’s profitability results from improved profitability in the construction segment and from a high profitability of the development segment recorded in the third quarter of 2014. The latter was positively affected by the resolution of a lengthy administration process, resulting in a reversal of a provision amounting to PLN 10.8 million. Improved profitability in the construction segment is a consequence of a drop in the prices of certain construction materials and in the cost of subcontractors’ services.
In the third quarter of 2014, Budimex Nieruchomości pre-sold 478 flats (1,031 flats since the beginning of the year). The high number of pre-sold flats is not only a result of good situation on the housing market, but also of the commencement of the Nowe Czyżyny project in Kraków which meets the criteria of the “Flats for Young People” programme.
Between January and September 2014, Budimex Nieruchomości added nearly 1,780 flats to its offer, with nearly 900 flats added in the third quarter alone. At present, the offer of Budimex Nieruchomości includes approximately 1,240 flats.
The current sales structure and its concentration on markets other than Warsaw will translate to a change in the sales structure in the future. In the period from January to September 2014, Budimex Nieruchomości sold 592 in the form of notarial deeds, of which only 39% of flats were sold in Warsaw, while in the total number of 344 flats sold in the form of notarial deeds in the same period of the previous year, the flats sold on the Warsaw market accounted for 60%. Budimex Nieruchomości is intensifying its efforts
related to the purchase of plots, with the goal of becoming one of the 3 largest developers in Poland.
Budimex Group’s other activities include the businesses of Elektromontaż Poznań and Budimex Parking Wrocław companies. The sales plan for Elektromontaż Poznań adopted at the beginning of this year has not changed.
Budimex Parking Wrocław, a company founded for the purpose of the project to build and subsequently manage a parking lot in Wrocław under the public-private partnership formula, commenced its operating activities in the third quarter. The Budimex Group is gaining experience related to contracts implemented in the PPP formula, assuming that in the future it will increase its engagement in such activities.
BUDIMEX Group
Financial highlights from the consolidated financial statements of the Budimex Group prepared in compliance with the International Financial Reporting Standards (IFRS) for three quarters of 2014 and comparable data for three quarters of 2013.
Results of reporting segments for three quarters of 2014 (in PLN thousand):
|
| Construction segment | Real estate development segment | Other activities | Eliminations | Consolidated data | ||
|---|---|---|---|---|---|---|---|
| Net revenue from sales of products, goods and raw materials | 3 511 054 | 210 656 | 120 308 | (129 261) | 3 712 757 | ||
| Gross profit on sales | 256 589 | 43 210 | 11 054 | 1 398 | 312 251 | ||
| Operating profit | 130 870 | 35 466 | 3 307 | 6 682 | 176 325 | ||
| Gross profit | 122 154 | 41 906 | 1 519 | 6 682 | 172 261 | ||
| Net profit | 95 673 | 33 826 | 1 115 | 5 414 | 136 028 | ||
| Gain (loss) attributable to shareholders of the Holding Entity | 95 673 | 33 826 | (110) | 5 414 | 134 803 |
Results of reporting segments for three quarters of 2013 (in PLN thousand):
| Construction segment | Real estate development segment | Other activities | Eliminations | Consolidated data | |||
|---|---|---|---|---|---|---|---|
| Net revenue from sales of products, goods and raw materials | 2 993 652 | 167 239 | 413 324 | (118 998) | 3 455 217 | ||
| Gross profit on sales | 212 385 | 35 772 | 40 996 | (4 114) | 285 039 | ||
| Operating profit | 91 704 | 20 886 | 19 379 | 11 758 | 143 727 | ||
| Gross profit | 89 052 | 24 618 | 16 438 | 11 758 | 141 866 | ||
| Net profit | 68 075 | 19 890 | 13 094 | 10 463 | 111 522 | ||
| Gain (loss) attributable to shareholders of the Holding Entity | 68 075 | 19 890 | 12 555 | 10 463 | 110 983 |
Additional information:
Results for three quarters (in PLN thousand) – without results of Budimex Danwood:
| 2014 | 2013 | Difference | |||
|---|---|---|---|---|---|
| Net revenue from sales of products, goods and raw materials | 3 712 757 | 3 151 071 | 17,8% | ||
| Operating profit | 176 325 | 119 797 | 47,2% | ||
| Net profit | 136 028 | 93 040 | 46,2% |
Contact: Krzysztof Kozioł, Press Officer, External Communication Office Director,
phone: (22) 62 36 164, fax: (22) 62 36 014, mobile +48 605 557 101, e-mail: krzysztof.koziol@budimex.pl