Construction sector in Poland 

The most attractive construction segments in the years to come will include road construction, sports facilities construction and power engineering construction.

by PMR Publications Wednesday, April 29, 2009
A large fall in the optimism of Polish construction companies
A survey conducted by research and consulting company PMR for the purposes of the “Construction sector in Poland, H1 2009 – Development forecasts for 2009-2011” report reveals that the overall mood among the largest construction companies in Poland is considerably less upbeat. Concurrently, there are significant discrepancies among the construction companies as to their prediction about the situation in the coming 12 months.

A paltry 9% of major building companies operating in Poland assess the sector’s situation as positive, while a year ago, a staggering 82% of the respondents shared this view. Construction companies’ forecasts for the next 12 months vary – 31% of the surveyed companies predict that the market situation will improve, while 33% of them expect that it will continue to deteriorate.

Polish construction companies’ assessment of their portfolios of orders has deteriorated as well – 31% of the respondents provided a positive assessment of the current number of orders (compared with 80% six months earlier); 32% of the surveyed companies hold the opposite view. Furthermore, the companies are divided over the future size of their portfolios – 33% of them expect their order portfolios to grow further in the upcoming 12 months, while 38% of the major builders anticipate a fall in the volume of orders.

Financial standing of construction companies still positive
The largest construction companies continue to assess their financial situation as good – 60% of the surveyed companies believe this to be the case (compared to 86% six months ago). 28% of the major building companies in Poland forecast that at the end of 2009 the financial condition of their enterprise will be better than in 2008, while 32% of the surveyed companies take the opposite view. “Good financial situation of construction companies is first and foremost due to excellent conditions prevailing in the construction market in 2006–2007 and contracts concluded on highly advantageous terms. It should be noted that due to reduced prices of building materials, numerous contracts concluded in 2008 and scheduled for execution in 2009-2010 will be characterised by margins higher than originally planned. Therefore, the financial standing of major construction enterprises will not deteriorate significantly,” says Bartlomiej Sosna, Senior Construction Analyst at PMR and the author of the report.

Threat of deflation to the construction industry becomes more real
As demonstrated by the survey’s results, faced with the crisis, construction businesses intend to compete with each other mainly on pricing. More than half of the large companies included in the survey declare that they will seek cheaper suppliers of materials and subcontractors, with over 40% of them planning price renegotiation with the existing business partners. Based on these efforts, a steep 44% of the surveyed companies plan on winning new orders by submitting lower bids in tender procedures. A significantly lower percentage of construction companies intend to achieve savings through administrative costs reductions, workforce cuts and more efficient management of the machinery stock.

“These results show that the downward pressure on prices of building services will continue to grow in the coming months, and the inflation rate in construction, which was a paltry 1.3% in March 2009, may dip below the zero mark in H2 2009. More importantly, deflation in construction will also lead to lower construction and assembly output as the same volume of work will be performed at a lower cost,” adds Bartlomiej Sosna.

This press release is based on information contained in the latest PMR report entitled “Construction sector in Poland, H1 2009 – Development forecasts for 2009-2011”.

For more information on the report please contact:
Marketing Department:
tel. /48/ 12 618 90 00

ul. Supniewskiego 9, 31-527 Krakow, Poland
tel. /48/ 12 618 90 00, fax /48/ 12 618 90 08

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