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The divergence between contractors and other companies in the construction sector was attributed to contractors’ limited scope to pass on rising costs to their customers

Polish contractors listed on the Warsaw Stock Exchange (WSE) have shown negative profitability for the fourth consecutive quarter, according to a report by research company Spectis.

The aggregate net profit of the 22 contractors listed on the WSE came to a total of PLN 170 million (€39.58 million) in the third quarter of 2018. Although this compares to net profit of PLN 162 million (€37.72 million) registered in the corresponding period of 2017, it was said that the positive performance did not mean that the construction industry’s financial standing was robust because the companies usually deliver positive results in the third quarter of the year.

So, according to Spectis, the sector’s actual performance is more accurately reflected by a 12-month rolling total, which reveals a net loss of PLN 281 million (€65.42 million) between the fourth quarter of 2017 and the third quarter of 2018. The only good news was said to be that the aggregate loss for the companies in question remained flat.

Within the construction and real estate sector, contractors were said to be the only group to post losses. The results of property developers and suppliers of building materials and construction equipment have remained stable.

This divergence was attributed to the fact that, unlike suppliers and property developers, contractors have limited scope to pass on rising costs to their final customers, the contracting authorities, because doing so can often lead to the cancellation of tender procedures.

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Budimex positively stood out from the crowd with net profit of PLN 231 million (€53.78 million)

Between the first and third quarters of 2018, the Budimex group positively stood out among contractors listed on the WSE in terms of net profit, which came to almost PLN 231 million (€53.78 million), compared to PLN 337 million (€78.46 million) a year earlier.

Negative profitability of contractors in general was said to have been driven by results delivered by Elektrobudowa, PBG, Mostostal Warszawa and Vistal Gdynia. These companies’ core business focuses on the construction of civil engineering structures commissioned by public authorities.

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