Poland Construction Report - Q1, 2014

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Poland Construction Report - Q1, 2014

The construction and assembly production index dropped by approximately 11% year on year in 2013, accelerating from the single-digit annual decline recorded in 2012. All segments of the construction market decreased on an annual basis in 2013, with the civil engineering segment recording the steepest drop. In Jan 2014, construction output further diminished by 3.9% year on year, but recovered in February, when it rose by 14.4% year on year.

The sharp decline in 2013 is mainly on high base comparison, yet the construction sector has been visibly affected by the sluggish demand since June 2012, as investments related to the Euro 2012 soccer championship and the infrastructure projects financed by the EU Cohesion Fund neared completion, while residential investments remained at low level.

The Polish construction sector is expected to start recovering at sluggish pace beginning with 2014, with prospects of new tenders for projects within the new wave of EU funding. Accordingly, the civil engineering segment is expected to perform better than the other market segments. Poland will benefit from EUR 17.5bn investment in transport infrastructure in 2014-2020, as part of an EU Infrastructure and Environment programme. Besides these funds, transport infrastructure improvement projects will also be supported by the Connecting Europe Facility, which has earmarked at least EUR 4bn for infrastructure development in the country.

The housing market might also see a revival, considering record low interest rates and a new governmental house loan programme that supports first-time buyers.
Construction gross output (measured in constant 1995 USD) is expected to inch up 2.1% year on year in 2014 and further rise by 5.4% year on year in 2015, to reach USD 43.6bn in 2020, according to QuERI forecasts.

Table of Contents

Executive summary 4
Market overview 5
Construction output y/y decline accelerates in 2013 5
Construction market value shrinks 10% y/y in 2013 6
Value of industrial construction market reaches record level in 2013 7
Railway construction market value is expected to surge by 1/3 in 2014 7
Construction sector to start recovering at sluggish pace in 2014 7
Building construction 8
Completed dwellings number drops 4.9% y/y in 2013 8
Number of building permits shrinks 16% y/y in 2013 9
Polish residential real estate market stabilises, number of transactions surges at record level in Q4/2013 10
Government enforces new subsidized home loan scheme, earmarks PLN 3.5bn under programme for 2014-2018 11
Infrastructure 11
Infrastructure construction to start recovering as EU funding picks up 11
Polands adds PLN 25bn new investments to 2011-2015 road construction programme 12
Railway projects to benefit from EUR 10.5bn EU funds in 2014-2020 12
Poland to apply for CEF funding for five major rail projects 12
Corporate news 13
Polimex-Mostostal reports shrinking revenues in 2013, amends restructuring plan 13
Strabag targets PLN 3bn revenues in 2014 14
Skanska reports rising profit, higher order book in 2013 14
Budimex to improve margins in 2014, expects overall consolidated revenue to return to growth next year 15
Warbud wins contracts for building museum, hospital extension 17
Spain's Dragados delists Pol-Aqua from Warsaw Stock Exchange 17
Erbud’s revenue drops, profit rises y/y in 2013 18
Statistical appendix 19

Table 1 Residential construction indicators in 2009-2013 (annual, number, y/y) 9
Table 2 Number of dwellings with granted permits in 2007-2014 (thou units, ytd) 10
Table 3 Transport infrastructure industry in 2012-2017f - Selective indicators (PLN bn, annual) 11
Table 4 Investments added to the 2011-2015 road construction programme (PLN bn) 12
Table 5 Polimex - Mostostal S.A.- Selected financials in 2010-2013 (PLN thou, annual) 13
Table 6 Strabag Sp. z o.o.- Selected financials in 2009-2012 (PLN thou, annual) 14
Table 7 Skanska S.A.- Selected financials in 2007-2012 (PLN thou, annual) 15
Table 8 Budimex S.A.- Selected financials in 2010-2013 (PLN thou, annual) 16
Table 9 WARBUD S.A.- Selected financials in 2009-2012 (PLN thou, annual) 17
Table 10 Pol-Aqua S.A.- Selected financials in 2010-2013 (PLN thou, annual, 9M) 18
Table 11 ERBUD S.A.- Selected financials in 2010-2013 (PLN thou, annual) 18
Table 12 Civil engineering construction output by type of works in 2003-2012 (PLN mn, annual) 19
Table 13 Sales of construction&assembly production per capita in 2007-2012 (PLN) 19
Table 14 Transport infrastructure construction output by type of works in 2012-2013 (PLN mn, quarterly) 20

Figure 1 Construction assembly production index in 2009-2013 (monthly, y/y) 5
Figure 2 Construction confidence indicator in 2003-2014 (pps) 5
Figure 3 Value of construction output by segments in 2012-2013 (PLN bn, % of total) 6
Figure 4 Construction output by type of works in 2009-2013 (PLN mn, quarterly) 6
Figure 5 Construction and assembly production value in 2003-2013 (PLN bn, annual) 6
Figure 6 Construction gross output in 2007-2020f (USD bn) 8
Figure 7 Completed dwellings in 2005-2013 (annual, number) 9
Figure 8 Selective dwelling statistics in 2007-2014 (thou units, ytd) 10
Figure 9 Dwelling stock in 2005-2010 (number of dwellings, usable floor space per person) 11

Number of pages: 20
Release Date: Thu, 03 Apr 2014