Rising optimism in the construction sector in Poland
(15/12/2009)

According to a survey conducted by PMR for the needs of the “Construction sector in Poland, H2 2009 – Comparative regional analysis and development forecasts for 2009-2012” report, there has been some improvement in the mood among the larges construction companies operating in Poland. However, construction firms are still very far from optimism levels seen in 2006-2008 regarding market situation.

After the dramatic slump in early 2009, the mood prevailing within the construction industry in Poland is starting to gradually turn more upbeat.
Construction companies are more optimistic in their assessments of the market situation and the condition of their enterprises than they were six months ago. Driven by the rising implementation of civil engineering projects, construction and assembly output will see a rise of not less than 5% in 2009, expanding to approximately 8% in 2010.

Over one-fifth of the largest construction companies assess the situation in the Polish construction sector as positive, whereas six months ago, a mere 9% of respondents shared this view. Likewise, companies’ predictions about the development of the construction market situation in the next 12 months demonstrate stronger optimism than in March 2009 – 42% of companies surveyed predict that the market situation will improve, while a paltry 14% expect that it will continue to deteriorate.

Polish construction companies’ assessment of portfolios of orders has improved to some extent as well – 39% of respondents provided positive assessment of the current number of orders (compared with 31% six months earlier); 30% of companies surveyed held the opposite view. Additionally, companies are more optimistic about the future size of their order portfolios – 49% of respondents expect the number of orders to grow in the next 12 months, while 20% of major builders anticipate falls in the number of orders.

The financial situation of the largest construction companies continues to be rated as good – 71% of companies surveyed believe this to be the case (compared to 60% six months ago). 32% of the major building companies in Poland anticipate that at the end of 2009, the financial standing of their enterprises will be better-off compared to the situation in 2008; exactly the same proportion of respondents take the opposite view.

“As a result of deflation in the construction industry, many of the contracts concluded in 2008 and executed in 2009 will carry higher-than-expected margins, which will boost financial results of the majority of large construction companies relative to the preceding year. However, soon or later, construction prices will start to rise, hence the strong competition observed recently will have an adverse impact on the financial performance of contractors,” says Bartlomiej Sosna, Senior Construction Analyst at PMR and the author of the report.