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Comments for the 1st quarter 2014

News date: July 25, 2014
Comments for the 1st quarter 2014

Budimex Group sales in the first quarter of 2014 amounted to 834 million dollars. In the first quarter of 2013 it was 853 million dollars. Comparing the sales of the first quarter 2013, not taking take into account sales earned by the company Budimex Danwood, the Budimex Group sales increased by 8%.
Sales of Budimex Danwood and, consequently, the lack of consolidation of the results of December 2013, influences on a comparative analysis of the Budimex Group year on year and is a major cause of deviations observed in the remaining segment of the Group.
Revenues from the sale of the building division remained unchanged (PLN 696 million in the first quarter of 2014 compared to PLN 694 million in the corresponding period of the previous year). Though the structure of it changed, which significantly increased the share of infrastructure contracts - from 40% to 49%.
Construction and assembly production in the first quarter of 2014 increased by 8.9% compared to the first quarter of the previous year, including the construction of roads and highways by 5.7%.
Maintaining a stable sales in the construction division of the Group in relation to the growth in construction-assembly production due to the lower value of the portfolio than a year earlier, which in turn reduces the effect of the increased production resulting from better weather conditions.
The Group reported improved profitability at every level of their business. The EBIT margin increased by 26% and profitability at the level of earnings before tax by 29% compared to the first quarter of 2013.
Improving the profitability of the Group is a consequence of the increase in margins in the construction segment.
The decline in prices of construction materials and the completion of difficult highway contracts contributed significantly to the improvement of profitability in this segment, which at the operational level and at the level of pre-tax profit in the first quarter increased by 74% compared to the same period of 2013.
Development segment profitability remains at a level similar to the first quarter of 2013.
The Group managed to maintain a very high level of net cash position, which at the end of the first quarter amounted to nearly 1.3 billion dollars.
This is an increase of 80% as compared to 0.72 billion at the end of the first quarter of 2013.
 
The Budimex Group's portfolio of orders is at the end of March 2014 at level of 4.54 billion and is higher than its value at the end of 2013, about 200 million zlotys.
The value of contracts signed in the first quarter of 2014 is 810 million and is higher of 69% compared to the same period of 2013. At the same time we look forward to signing further contracts worth nearly PLN 1.7 billion (on the basis of tenders, in which the offers of Budimex Group companies have obtained the first place).
In the first quarter there was a tender for the construction of a block in Turow, in which a consortium of Budimex obtained the first place. The signing of this contract will be an important step in the implementation of the strategy to diversify the construction portfolio of the Budimex Group.
The beginning of 2014 is a completely different point of the business cycle than the one in which the national construction segment was a year ago. The EU budget for 2014-2020 is already approved. Today begins a series of decisions in road tenders, where prequalification were announced for in 2013. The Group's objective is to obtain Budimex as many contracts from a new perspective of the EU, but not participate in the price war.
The continuity of a housing market trend was reflected in the growth of pre-sells recorded by Budimex Real Estate. In the first quarter of 2014. the company pre-sold 275 apartments, which was the highest number of flats presales in the first quarter of the year. In the same period the previous year Budimex Real Estate pre-sold 121 apartments, and respectively in 2012 and 2011 was 98, and 229 apartments.
In the first quarter of 2014 Budimex sold 394 flats (notarized) (compared to 204 units sold in the corresponding period of the previous year), maintaining over 20% yield from the sale. Notarized sales from the first quarter of 2014 was a consequence of the high pre-sale last year.
The structure of sales has changed. Nearly 58% of notarized sales in the first quarter in 2014 was accounted for an apartment in Kraków and Poznań, while in the corresponding period of the previous year 56% of sales were flats in Warsaw.


By 2014, Budimex Real Estate began presale 300 apartments on two new projects. At present Budimex Real Estate has in its offer around 540 apartments ready for sale. The aim of the company is serious improving the housing offer and to achieve it at the level of over 1000 flats.
 
After the sale of Budimex Danwood, the other activities of the Group include companies Budimex Elektromontaż Poznan and Wroclaw Parking. Elektromontaż Poznan is a company planned to be sold. The company brought in last years losses, but after going through the process of restructuring since 2013, the unit generates profits. The planned sale of the company is in line with the strategy of the Group.
On the other hand, the company Parking Wroclaw is a company incorporated in the project to build and manage parking in Wroclaw in the formula of public - private partnership. This is the first project of its kind carried out by the Group Budimex. The Group plans to develop this type of activity, that is, building and facilities management in PPP.
 
In the first quarter of 2014, Budimex remains the most valuable construction company listed on the Warsaw Stock Exchange. It is also the company that continues the policy of sharing its profits with shareholders. In May 2014, Budimex pays a dividend for 2013 of the historical value of 303 million PLN, which today puts the company at the forefront of all listed companies in terms of dividend yield.


 
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