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Construction companies report record-high profits in 2023
05 kwi 2024
The "Construction market in Poland 2024-2031" report, the latest release of Spectis, indicates that construction companies improved their margins a tad in 2023, recording an all-time high in terms of net profit. As it was the case in both 2021 and 2022, the profits were driven by renegotiation of price contracts, in particular in the civil engineering construction segment.
Record net profit of PLN 13.7bn
Compared to 2021 and 2022, construction companies were less affected by hikes in prices of building materials in 2023. However, labour costs continued to soar, raising construction costs across the board. Notwithstanding that, as reasonable pricing policies were put in place, rising costs were accompanied by increased revenues. As a result, the construction industry had a very good year in 2023. The group comprising over 1,100 medium-sized construction firms and large construction companies generated a combined net profit of PLN 13.7bn in 2023, compared to PLN 11.4bn in the preceding year.
Higher margins for civil engineering construction
In 2023, 44% (PLN 6.04bn) of the profit was contributed by companies specialised in building construction projects, which was a slight decline compared to the preceding year (PLN 6.53bn; 57% of the sector’s profit). Lower profits reported by building construction companies were the effect of slower investment activity in the property development segment. Importantly, civil engineering companies delivered higher profits last year, for a third straight year, as they reported aggregate net profits of nearly PLN 5.9bn (compared to PLN 3.5bn in the preceding year). Specialist construction enterprises (including many companies involved in installation and finishing projects) added nearly PLN 1.8bn in net profits.
Record revenue for construction companies
The discussed group of companies reported the highest-ever revenue, amounting to a whopping PLN 173bn, as compared to PLN 160bn in the preceding year, on the back of the continued growth of construction costs in 2023. Notably, the record net profits translated into a record net sales margin, which amounted to PLN 7.6% in 2023. After conversion of the net profit into net sales margin, building construction companies reported a lower margin of 8.3% (9.4%), civil engineering construction companies posted a net margin of 7.6% (5.2% in the preceding year), and specialist construction companies’ margin was at 6.0% (4.6% in 2022).
Apparently, construction companies have had a really successful spell of a few years in terms of profitability. Many companies already hold a financial cushion to keep them afloat during the slowdown.
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