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The “Construction market in Poland 2023-2030” report, the latest release of Spectis, indicates that construction companies managed to retain their margins in 2022 despite rising costs, recording an all-time high in terms of net profit. It was partly due to a partnership approach pursued by the contracting parties, allowing for price negotiation of selected contracts.

The February data on economic activity show a continued slowdown of the economy at the beginning of 2023. The value of industrial output sold dropped by 1.2% y-o-y, while retail sales shrank by a whopping 5%. As in January, the rate of construction output growth again came as a positive surprise.

19 construction groups listed on the WSE reported nominal revenue growth of 25% y-o-y over the past four quarters, which was largely driven by a continued hike in the prices of labour and building materials. However, the positive impact of previous one-off events came to an end and caused the net profit of the said group of companies to fall to just under PLN 1bn. Despite reporting an aggregate net profit, profit margins reported by the listed construction companies are still worse that the figures delivered by developers and suppliers of building materials and construction equipment.

Despite hard market conditions, the 2022 outlook for the construction sector remains moderately favourable on the back of the results generated in the first half of the year, according to findings presented in the autumn edition of our report "Construction market in Poland 2022-2029". We expect that the real growth of the market’s value will stand at 1% for all construction companies, and 2% for the major construction enterprises with more than nine members of staff. Regarding 2023, the outlook for the construction industry is not that bright, though.

The ongoing war in Ukraine is forcing the energy transition of the Polish economy to be accelerated. There has been an increase in both the number and the value of projects in the pipeline observed in the last few months. The current value of the largest 180 projects, both underway and planned, has already exceeded PLN 300bn. However, it should be noted that the top 80 power and industrial construction companies operating in Poland have a combined production capacity of PLN 20bn per year. So, the limited production capacity of the construction industry will be a bottleneck for these projects that will take at least 20 years to work itself out.

The growth potential of the Polish construction market will remain significant through 2027 (and in the long term) on the back of the necessity to accelerate energy transformation of Polish economy, the continuation of ambitious transport infrastructure projects, the influx of Ukrainian refugees, and the expected trend among companies that previously operated east off the Polish border to move to Poland. A vast majority of projects underway or planned to implemented are located in the six most economically advanced regions, which jointly account for two-thirds of the construction market’s value.

The estimated value of 270 major railway projects, both ongoing and planned, is PLN 125bn, including PLN 37bn (30% of the total amount) represented by ongoing projects, and PLN 88bn being the value of projects in the tender, planning or initial concept stages, according to the findings presented in our report entitled "Railway construction in Poland 2022-2027". The sizeable gap between the value of ongoing projects and projects in the planning stage reveals a long-term potential for the growth of this branch of the construction industry.

The value of the concrete products market grew by around 14% in nominal terms in 2021, topping the PLN 10.6bn-mark on the back above-average increases in production costs, according to the "Sector of concrete products in Poland 2022-2027" report. The outlook for 2022 is again for a double-digit growth rate in terms of the market’s value.

Our latest report "Construction market in Poland 2022-2029", indicates that following a strong start to the year, the outlook for the construction sector over the coming months of 2022 is now less bright. The expected slowdown can be indirectly caused by the ongoing war in Ukraine, which only aggravates the problems the market has been facing previously, such as soaring prices of raw materials, building materials, and energy sources or the shortage of labour.

Revenue generated by 54 manufacturers of roofing products covered in our report "Roofs and roof coverings in Poland 2022-2027", exceeded PLN 9bn in 2020, and over 40% of that figure was contributed by roof coverings. Based on preliminary data, we estimate that the value of the market of roof coverings grew by 9% in 2021. We expect slightly slower growth of the market in 2022.

Total revenue reported by 40 largest construction companies operating in Poland levelled off at PLN 47bn-48bn in 2018-2020. Given the fact that construction costs had increased in the recent years, the companies’ work volume actually shrank. 2021 is poised to see a slight nominal hike in revenue posted by the largest construction enterprises. For these companies to continue to thrive, it is necessary that EU funding for Poland (National Recovery Scheme) and a cohesion policy budget for 2021-2027 are promptly approved.

At the end of 2021 we updated our database of the largest construction companies in Poland. Available as an Excel file, the database of construction companies is a useful tool supporting the analysis of the competitive environment in the construction industry. It also comes in handy when you look for a contracting company or a subcontractor. The database is particularly useful when choosing or screening companies by revenue, profitability, or location.

19 construction groups listed on the Warsaw Stock Exchange reported nominal revenue growth of 10% y-o-y over the past four quarters, which was driven by the continued hike in prices of labour and building materials. Also, the aggregate net profit posted by companies in this group improved substantially as it grew by PLN 1.3bn over the year, though it was mostly due to one-off market developments. Notwithstanding that, the profit margin figures reported by the listed construction companies are still worse that results delivered by developers and suppliers of building materials and construction equipment.

The growth potential of the Polish construction market will remain significant through 2026 on the back of the continuation of ambitious road and railway infrastructure projects, the required power transformation of the Polish economy and the steadily robust performance of the residential construction sector. A vast majority of projects underway or planned to implemented are located in the six most economically advanced regions, which jointly account for two-thirds of the construction market’s value.

The estimated value of over 170 major projects, both ongoing and planned, is €56bn, including €6.6bn (12% of the total amount) represented by ongoing projects, and nearly €50bn being the value of projects in the tender, planning or initial concept stages, according to the findings presented in our report entitled "Power and Industrial Construction in Poland 2021-2026". The sizeable gap between the value of ongoing projects and projects in the planning stage reveals a huge potential for the growth of this branch of the construction industry.

Aggregate revenue reported by nearly 20 construction groups whose stock is listed on the Warsaw Stock Exchange grew by a nominal 4.3% in 2020, which is a scant rise in real terms, given continued increases in the prices of building materials and labour costs. However, the aggregate net profit posted by these companies improved clearly as it grew by almost PLN 0.5bn over the year. Notwithstanding that, net financial performance of the listed construction companies and profit margin figures they report still pale in comparison to results delivered by property developers and suppliers of building materials and construction equipment.

The estimated value of over 200 major railway projects, both ongoing and planned, is almost PLN 120bn, including PLN 35bn (30% of the total amount) represented by ongoing projects, and over PLN 80bn being the value of projects in the tender, planning or initial concept stages, according to the findings presented in our report entitled “Railway construction in Poland 2021-2026”. The vast gap between the value of ongoing projects and projects in the planning stage reveals substantial potential for the growth of this branch of the construction industry.

Manufacturers of facade products were successful in generating a little over PLN 3.6bn (€800m) in revenue in 2020 in spite of slower activity in the building construction sector, especially in the non-residential segment, according to the findings presented in our latest report entitled "Facades and facade materials in Poland 2021-2026".

At the beginning of 2021 we expanded our database of the largest construction companies in Poland by adding a thousand new firms. Available as an Excel file, the database of construction companies is a useful tool supporting the analysis of the competitive environment in the contracting sector. It also comes in handy when you look for a contracting company or a subcontractor. The database is particularly useful when choosing or screening companies by revenue, profitability, or location. The database presents financial data relating to sales revenue and net profit/loss going as far back as 2010.

Manufacturers of roofing products were successful in generating a little over PLN 4bn (€900m) in revenue in 2020 in spite of slower activity in the building construction sector, according to the findings presented in the report released by Spectis entitled "Roofs and roof coverings in Poland 2020-2025".

December turned out to be a good month for construction companies and producers of building materials, according to our latest monthly report “Construction market in Poland – February 2021”. However, the outlook for the construction industry in 2021 remains moderately bleak, mostly because of a high comparison base of Q1 2020. That the second half of the year could see an upturn is yet suggested by higher order books reported by the top 20 construction companies.

The Polish economy is already past the low point of the short-term economic activity downturn. However, the construction industry is not at this point yet as it responds to economic shocks after a certain time period. This is why the first half of 2021 will be marked by challenges. The market pins its hopes on the new EU financial envelope, but a tangible effect on the investment volume will not become apparent before H2 2021.

Manufacturers of concrete products in Poland will be able to generate a little over PLN 9bn in revenue in 2019 in spite of slower construction activity, according to the findings presented in our latest report "Sector of concrete products in Poland 2020-2025".

There are only four construction projects with a unit value in excess of PLN 3bn (€670m), excl. VAT, currently underway in Poland. The combined value of these projects, commonly referred to as mega-projects, is almost PLN 17bn (€3.8bn), excl. VAT. This is not a lot, given the fact that projects worth a total of nearly PLN 300bn (€67bn) are in the pipeline.

Despite a short-lasting downturn in economic activity caused by the COVID-19 pandemic, the Polish construction industry will continue to exhibit a significant potential for growth right up to 2025. Notably, the outlook for the civil engineering sector has improved compared with the previous projections. A vast majority of projects underway or planned to implemented are located in the six most economically advanced regions, which account for almost 65% of the construction market’s total value.

March was the twelfth consecutive month to see decreases in confidence in the construction sector. The seasonally-adjusted confidence index dipped into negative territory, and it plunged to a three-year low. Since the March survey does not reflect a completely new economic reality, it is expected that construction confidence will fall dramatically in April.

Business confidence among Polish construction companies tumbled early this year, with the heaviest burden, as perceived by the enterprises, coming from labour costs and tax levies. Decline in confidence is chiefly due to such factors as an over 15% increase in the minimum wage and a 10% hike in social insurance contributions faced by sole traders operating in the construction industry. On top of that, large construction businesses are required to conduct Employee Capital Schemes (PPK) or the alternative solution of Employee Pensions Schemes (PPE).

The top 40 construction companies operating in Poland posted a record aggregate revenue in 2018, breaking the previous revenue high set in 2011. Besides an improved volume of work, the revenue hike was also largely driven by rising prices of building materials and labour.

The aggregate net profit of the 30 largest commercial property developers in Poland hit an all-time high of PLN 985m (€230m) in 2018, which translated into a net profit margin of 25%. The latest data from the investment transaction market and property developers’ interim financial statements indicate that 2019 can be as good a year as 2018 was for the industry in terms of profitability.

The total value of 230 office, retail, warehouse and hotel projects, both ongoing and planned, which are conducted by top 30 property developers is estimated at nearly €10bn, according to our latest report "Property developers in Poland 2019-2023".

A record number of 200,000 flats and houses were completed in a 12-month period – the highest annual figure recorded since 1989 when Poland’s transition to democracy began – on the back of several years’ upturn in residential construction.

Total revenue reported by more than 20 construction groups listed on the Warsaw Stock Exchange grew by 7.4%, in nominal terms, in Q3 2018-Q2 2019 to almost PLN 25bn (€5.8bn). However, growing revenue figures still do not translate into improved profitability of the construction industry as a whole, which has been in the negative territory for nearly two years. The upturn in the construction sector of the past few years has benefited mostly property developers and, though to a much lesser extent, producers and suppliers of building materials and construction equipment.

The value of output generated by the Polish construction industry has reached an all-time high level on the back of several years’ investment upturn, and it is expected to come close to PLN 250bn (€59bn) in 2020. In nominal terms, the market’s value is impressive, but it is less so when one looks at the volumes of construction work being performed and building materials used. A noteworthy fact is that the growth in the market’s value is boosted by rising prices of building materials and higher labour costs.

Boosted mainly by large-scale road, railway and tunnel construction projects, the backlog of orders secured by the PORR Group in Poland has grown tremendously since the acquisition of Bilfinger Infrastructure in 2015, and its value topped PLN 6.6bn (€1.55bn) as at the end of Q2 2019. Consequently, the gap between PORR and Strabag, in terms of the current value of orders on hand, has been narrowed considerably to just a single medium-sized contract.

The latest report from Spectis, "Construction market in Poland 2019-2025 – analysis of the 20 largest cities", shows significant differences among the individual cities in terms of the present stage of the business cycle and the potential through to 2025. These observations refer to both building construction and municipal infrastructure construction segments.

According to Spectis calculations, in March 2019, cement sales on the domestic market for the first time in history exceeded the level of 20 million tonnes per year.

Despite the fact that the Polish construction market is projected to grow at a slower pace in the coming years, investment potential remains considerable for most of the regions. The total value of the 960 largest investment projects underway or planned in Poland is estimated at a staggering PLN 420bn (€100bn), i.e. nearly twice as much as the annual value of the construction market as a whole, according to the findings of our latest report "Construction market in Poland 2019-2025 – an analysis of 16 regions".

Aggregate revenue reported by more than 20 construction groups whose stock is listed on the Warsaw Stock Exchange grew by a nominal 9.8% in 2018, which is a meagre rise in real terms, given soaring prices of building materials and labour. Net financial performance of the listed construction companies also improved marginally, but the figure still pales in comparison to earnings achieved by property developers and suppliers of building materials and construction equipment.

Construction companies successfully confronted looming insolvency issues in 2018. However, this does not mean that the risks have been entirely mitigated. Loss-making contracts whose prices were set at the time of increased competition will still be pursued and billed in 2019 and 2020. Nevertheless, there will be fewer of them active, and the backlogs will start to comprise mostly contracts valued conservatively.

Low interest rates combined with an investment upturn and labour shortage result in a significant upward pressure on building material prices and labour costs. Given the monetary authorities’ lenient stance and the continued growth in the construction industry, price pressures in the construction market are expected to persist throughout 2019.

The Polish construction industry enjoyed a really strong year in 2018 as most of the key performance indicators were climbing the charts of growth throughout the year, but the start to 2019 saw a substantial downturn across practically all market segments. This, however, was due to a high comparison base registered last year.

Construction and assembly output generated by Polish construction companies in foreign markets has hit an all-time high of €1.55bn, but this is still below the potential of domestic contractors. Importantly, a considerable change to the structure of companies engaged in foreign orders took place in recent years – the centre of gravity has shifted from the biggest construction groups to smaller companies with a specialised focus.

Profitability of 22 construction groups listed on the Warsaw Stock Exchange continued in the negative territory throughout Q3 2018. Moreover, the third quarter of the year was the second consecutive quarter that profitability reported by property developers was on the decline, though it should be noted that their earnings were still fairly decent and at a sound level when compared to contractors. On the other hand, financial results delivered by manufacturers and suppliers of building materials and construction equipment were solid.

Despite unsuccessful bids to secure contracts for the construction of the Ostroleka Power Plant and the tunnel section of the S3 expressway, members of the PowerChina Group still stand a good chance of winning three orders totalling more than PLN 3bn, incl. VAT, the largest of which is the construction of the Krakow Northern Bypass.

While it is way too soon to say if expanding into the Polish market has been a successful effort, it should already be noted that if the PowerChina Group secures the three contracts, it will actually reach the top 10 of Poland’s contraction companies in terms of the order book value.

Interestingly, the company has set itself the objective of achieving the position of a leading participant of the infrastructure construction market, not only in Poland but also in Europe as a whole.

The ongoing investment upturn, which began several months ago, coupled with excellent performance towards the end of 2017 lifted Polish construction output to new heights.  Output generated by Polish construction industry is expected to further climb in 2018. However, its value as a percentage of GDP is still fairly moderate.