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In Q3 2019 Budimex recorded a consolidated net profit of PLN 65m, which is 36.7% worse than in the previous year. The company stressed that the average profitability of its order portfolio is relatively good, and most of the problematic contracts have already been completed.
Worse results than in the previous year
In Q3 2019, Budimex posted consolidated net profit of PLN 65m attributable to shareholders of the parent company, compared to PLN 102.66m profit a year earlier, down by 36.7% y-o-y. Thus, the difference in profits from 2019 and 2018 is growing. The summary of the first nine months shows a decrease in results by over 40% from PLN 230.71m to PLN 137.14m, in addition to a similar level of revenues, which after three quarters of this year were at the level of PLN 5.38m.
The gross profit margin of the Budimex Group amounted to 4.0%, while in Q3 this year alone it reached the level of 4.9%. The profitability in the construction segment was 2.7% (3.8% last year), while the developer segment will achieve a very good gross profit profitability of 17.3%.
Billions in the order book
At the end of September 2019, the Budimex Group’s order book included contracts worth PLN 10.74bn, which allows the company to fully utilise its resources and secure work for the coming quarters. The value of contracts signed since the beginning of this year reached PLN 5.45bn.
According to Budimex in its press release, the average profitability of the order book is relatively good, and most of the difficult infrastructure and general construction contracts signed a few years ago have already been completed. The profitability of the energy segment remains under pressure from contracts in Turow and Vilnius.
The Company pointed to the constantly observed aggressive competition behaviour, i.e. bold bids in tenders submitted by entities that often do not have local experience in execution and are not verified by the contracting authorities. Contract conditions are not improving, so the challenge for the coming quarters is to balance the risks between contracting authorities and contractors.