presentación de powerpoint - budimex · 1.1 market environment – top facts 1.2 macroeconomic...

Investor Presentation

1-3Q’18

Investor Presentation 3Q’18 2

Table of Contents

1. Market snapshot

1.1 Market environment – top facts

1.2 Macroeconomic forecasts for Poland

1.3 Overview of construction segment

1.4 Labour market

1.5 Prices of main materials

Budimex Group in 1-3Q’18

2.1 Budimex Group – top facts

2.2 P&L

2.3 Evolution of Net Treasury Position

2.4 Results by segment

2.4.1 Construction segment

2.4.2 Developer segment

2.4.3 Other activities

2.5 Employment

3. Budimex S.A. on WSE


1.1 Market environment – top facts

Strong GDP growth in ’18 forecasted for Poland by Eurostat 4,6%

In 09’18 S&P agency decided to increase rating of Poland from BBB+ to A-

Growth of inflation (HICP) expected ’19f: 2,6% vs. 1,3% in ’18f

Improving situation of public finances budget deficit in ’17: 1,4%* of GDP

Further inflation of materials prices and labour costs

High y-o-y dynamics of construction production 1-3Q’18: +22,9%

High pressure on margins of construction companies 1H’18: 1,6% of avg. net

profit margin

* data revised by CSO in Oct’18

Comment


3,1

4,8 4,6

3,7

2,02,4

2,1 2,0

'16 '17 '18f 19f -0,2

1,61,3

2,6

0,3

1,7 1,9 1,8

'16 '17 '18f 19f

2,2

1,4 1,4 1,41,6

1,0 0,8 0,8

'16 '17 '18f 19f

54,2 50,6 49,6 49,1

84,8 83,1 81,2 79,1

'16 '17 '18f 19f

1.2 Macroeconomic forecasts for Poland

In Oct’18 Central Statistical Office (CSO) revised GDP growth rate in ’17

(previous value: 4,6%) and budget deficit in ’17 and ’16 (previous values:

1,7% in ’17 and 2,3% in ’16)

Source: European Commission, Eurostat (Spring 2018 & Summer 2018)

GDP growth (%, y-o-y) Inflation rate (HICP, %, y-o-y)

General government deficit (% of GDP) Public debt (% of GDP) EU

Poland

*

*

*

* data revised by CSO in Oct’18

Comment


11,9 15,0

2,33,3

1-3Q'17 1-3Q'18

25,9%

45,5%

25,7 32,9

28,834,0

54,566,9

1-3Q'17 1-3Q'18

22,9%

28,1%

18,3%


Construction production noted 22,9% y-o-y increase in 1-3Q’18

The growth is driven by all segments

Production in road and railway segment noted high increase due to ongoing

execution of investments plans in infrastructure

Construction production in Poland (bn PLN)

Source: Central Statistical Office

Total construction production

Construction production in roads and railway

49,0 58,3 53,1 43,2 46,0 46,7 37,9 42,3

33,638,8 43,0

39,7 39,1 40,336,7

41,8

82,697,1 96,0

82,9 85,1 87,174,5

84,1

'10 '11 '12 '13 '14 '15 '16 '17

2,6%-1,1%17,6% -13,6% 2,3%

-7,5%

10,8%15,3% 3,0%

1,7%6,4%-18,6%-9,0%19,1%

-1,5%

-14,4%

-9,1%

-19,0%

12,9%

14,0%

11,7%

24,429,9

25,817,5 16,7 17,0 17,7 20,2

2,9

3,63,5

3,7 4,8 5,4 2,74,1

'10 '11 '12 '13 '14 '15 '16 '17

3,6%

-0,9%21,7%

11,9%

1,8%-4,1%-32,3%-13,7%22,7%

31,8% -49,8%

3,6%

52,0%

14,5%

Infrastructure

General construction

Roads

Railway

Comment


High margins High margins

Low production

Low margins

Low production High production

Low margins

High production


Construction companies entered into high production and low margins phase of the

cycle

Average net profit margin in 1H’18 amounted to only 1,6% (vs. 2,0% in 1H’17)

Construction production in Poland vs. net profit margin in construction companies (bn PLN)


74,9 80,0 82,6

97,1 96,0

82,9 85,1 87,1

74,5

84,1

6,0% 5,7%

4,3%

1,7%

-0,5%

0,9%

2,8%

7,0%

4,3%

2,9%

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18f

Comment


483

405

350

390

430

470

510

09'10 09'11 09'12 09'13 09'14 09'15 09'16 09'17 09'18

122

90

95

100

105

110

115

120

125

1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18

5,7

0,0

2,0

4,0

6,0

8,0

10,0

12,0

03'16 09'16 03'17 09'17 03'18 09'18

1.4 Labour market

Construction companies have to deal with labour shortage and

increase of labour costs


Unemployment rate (%) Employment in construction (thous. employees)

Average wage in construction (1Q’16 = 100)

Comment


132

189

60

80

100

120

140

160

180

200

3Q'10 3Q'11 3Q'12 3Q'13 3Q'14 3Q'15 3Q'16 3Q'17 3Q'18

143

132

60

80

100

120

140

160

3Q'10 3Q'11 3Q'12 3Q'13 3Q'14 3Q'15 3Q'16 3Q'17 3Q'18

143

164

60

80

100

120

140

160

180

3Q'10 3Q'11 3Q'12 3Q'13 3Q'14 3Q'15 3Q'16 3Q'17 3Q'18

131

136

60

80

100

120

140

160

3Q'10 3Q'11 3Q'12 3Q'13 3Q'14 3Q'15 3Q'16 3Q'17 3Q'18

1.5 Prices of main materials

The increase of materials prices was still observed in 3Q’18

Source: Internal data

Concrete Reinforcement steel

Asphalt Diesel oil

129

119

60

80

100

120

140

160

1Q'10 1Q'11 1Q'12 1Q'13 1Q'14 1Q'15 1Q'16 1Q'17 1Q'18

1Q'10 = 100

1Q'16 = 100


2.1 Budimex Group – top facts

Record level of 1-3Q sales 1-3Q’18: 5,4 bn PLN (+18,4% y-o-y)

Rising share of railway in construction sales 1-3Q’18: 8,2% (+4,9 p.p. y-o-y)

Sell of Elektromontaz Poznan and BIG in 3Q’18 with +44 M PLN effect on

consolidated EBIT

Visible pressure on net cash 09’18: 0,6 bn PLN (-0,1 bn PLN vs. 06’18)

Increase in value of contracts signed 1-3Q’18: 5,6 bn PLN (+24,5% y-o-y)

Slight increase of backlog 09’18: 11,0 bn PLN (+0,3 bn PLN vs. 06’18)

Improvement of market offer 09’18: 3 399 flats (+176 flats vs. 06’18)

Continuation of land purchase in developer segment 1-3Q’18: 145 M PLN

Comment


1-3Q'18 1-3Q'17 ∆ FY'17 FY'16

Sales 5 390 4 553 836 1 6 369 5 572

y-o-y dynamics 18,4% 10,5% 7,8 pp. 1 14,3% 8,5%

Gross margin 446 582 -136 0 810 751

% sales 8,3% 12,8% -4,5 pp. 0 12,7% 13,5%

SG&A -187 -178 -9 -251 -231

% sales 3,5% 3,9% -0,4 pp. -3,9% -4,2%

Other operating 53 22 30 29 -15

EBIT 312 426 -115 0 588 505

% sales 5,8% 9,4% -3,6 pp. 0 9,2% 9,1%

PBT 304 421 -117 0 580 511

% sales 5,6% 9,2% -3,6 pp. 0 9,1% 9,2%

Net profit 231 337 -106 0 464 410

% sales 4,3% 7,4% -3,1 pp. 0 7,3% 7,4%

2.2 P&L

Top line in 1-3Q’18 was in line with current market trends

In 1-3Q’18 the company faced normalization of margin vs. years ’16-’17

Comment


1 159

1 8842 056

5 099

1Q'18 2Q'18 3Q'18 1-3Q'18

17% 18%17%

211120 81

412

1Q'18 2Q'18 3Q'18 1-3Q'18

-8% 6%106%

37 37 25 100

1Q'18 2Q'18 3Q'18 1-3Q'18

9% -14%-8%

1 3391 964

2 087

5 390

1Q'18 2Q'18 3Q'18 1-3Q'18

18% 18%27%

20% -48%

-38% 14%

2.2 P&L

Better y-o-y dynamics of sales in construction in 3Q’18 vs. 2Q’18

Q-o-q drop of sales in developer segment (46% drop in notary sales)

Smaller sales in other activity vs. 3Q’18 due to sell of Elektromontaz

Quarterly sales in Budimex Group (M PLN)

Construction Developer

y-o-y dynamics Other activity Budimex Group

Comment


99 114140

353

1Q'18 2Q'18 3Q'18 1-3Q'18

-27% -28%-29%

8,6% 6,1% 6,9%

37 29 21

87

1Q'18 2Q'18 3Q'18 1-3Q'18

7% 9%85%

17,7% 24,1% 21,1%

6 5 314

1Q'18 2Q'18 3Q'18 1-3Q'18

6% -2%30%

16,8% 12,7% 13,9%

140 146 159

446

1Q'18 2Q'18 3Q'18 1-3Q'18

-23% -23%-14%

10,5% 7,4% 8,3%

6,8%

-27% -37%

25,6%

-42%

11,5%

-31%

7,6%

2.2 P&L

Further normalization of % GM in construction vs. above average margin achieved in years ’16-’17

Quarterly gross margin in Budimex Group (M PLN)

y-o-y dynamics

% of sales


Other activity Budimex Group

Comment


52 6487

203

1Q'18 2Q'18 3Q'18 1-3Q'18

-41% -43%-46%

4,5% 3,4% 4,0%

27 19 11

57

1Q'18 2Q'18 3Q'18 1-3Q'18

-7% 1%128%

12,7% 16,0% 13,9%

3 2

45 50

1Q'18 2Q'18 3Q'18 1-3Q'18

-16% 629%29%

8,9% 4,4% 50,0%

84 86

141

312

1Q'18 2Q'18 3Q'18 1-3Q'18

-38% -27%-24%

6,3% 4,4% 5,8%

-45%

4,2%

-53%

14,0%

1874%

177,1% 6,8%

-20%

2.2 P&L

Maintaining good performance in developer segment

Sell of Elektromontaz Poznan and BIG in 3Q’18 with +44 M PLN effect in

other activity segment

Quarterly EBIT in Budimex Group (M PLN)

y-o-y dynamics

% of sales


Other activity Budimex Group

Comment


143

259 237

109 144 176 199

309

426

312

5,9% 8,2% 6,2% 2,4% 4,2% 4,7% 5,3% 7,5% 9,4% 5,8%

1-3Q'09 1-3Q'10 1-3Q'11 1-3Q'12 1-3Q'13 1-3Q'14 1-3Q'15 1-3Q'16 1-3Q'17 1-3Q'18

% of sales

2 442

3 161 3 823

4 580

3 455 3 713 3 743 4 119

4 553

5 390

1-3Q'09 1-3Q'10 1-3Q'11 1-3Q'12 1-3Q'13 1-3Q'14 1-3Q'15 1-3Q'16 1-3Q'17 1-3Q'18

2.2 P&L

In 1-3Q’18 Bx achieved record sales at the level of 5,4 bn PLN

EBIT margin returned to the level achieved in years’14-’15

Sales in Budimex Group (M PLN)

EBIT in Budimex Group (M PLN)

Comment


1 562

1 293

913

1 178

1 716 1 761

1 481

1 810

2 295

2 025

1 784

2 127

2 596

2 017

1 288

1 471

2 237

1 551

734 620

12'13 09'14 09'15 09'16 09'17 09'18

2.3 Evolution of Net Treasury Position

Deterioration of net cash in 3Q’18 connected with i.a. falling balance of

advances, higher CAPEX compared to respective period of ’17 and

problems with bureaucracy on construction sites (problems with invoicing)

Net Treasury Position in Budimex Group (M PLN)

-384

+94

-168

-1 125

-1 617

Comment


2.4 Results by segment

EBIT structure in the Group was temporarily changed due to sell of

Elektromontaz Poznan and BIG

Developer segment Other activities Construction segment

1-3Q’18 sales (% Group sales)

1-3Q’18 EBIT (% Group EBIT)

5 099 M PLN 95%

203 M PLN 65%

412 M PLN 8%

57 M PLN 18%

100 M PLN 2%

Internal eliminations

-221 M PLN

-4%

+1 M PLN

+0%

50 M PLN 16%

5 390 M PLN 312 M PLN

Comment


51%

3%

46%

1-3Q'18 y-o-y dynamics

Sales 5 099 18%

Gross margin 353 -28%

% sales 6,9% -4,4 pp.

Operating profit 203 -43%

% sales 4,0% -4,3 pp.

Net profit 146 -48%

% sales 2,9% -3,7 pp.

44%

8%

48%


EBIT margin in 1-3Q’18 amounted to 4,0%

The share of sales generated in railway segment increased due to further

execution of record railway backlog

Sales and EBIT margin (M PLN)

Sales structure

1-3Q’17 1-3Q’18

General construction & other

Railway

Infrastructure

4 717 4 937 5 391 6 070

4 314 5 099

4,2% 5,0% 8,4% 8,3% 8,3% 4,0%

FY'14 FY'15 FY'16 FY'17 1-3Q'17 1-3Q'18

% of sales

Comment


25,5

7,3

24,4

15,5

7,6

9,7

10,3

8,6

6,6

6,2

2,1

4,9

6,9

5,7

7,2

2,5

1,7

3,8

3,5

3,9

39,8

24,2

43,7

31,4

24,9

'15 '16 '17 1-3Q'17 1-3Q'18

average value (M PLN)

64 31 58 155 73


Lower tender activity of GDDKiA and Bx’s selective bidding in

infrastructure generated 20,5% y-o-y decrease of value of offers

placed in 1-3Q’18

Offers placed in Budimex Group (bn PLN)

General construction Infrastructure Railway Industrial

Comment


4 649

2 3923 169

1 352

2 861

2 070

2 766

2 586

1 913

2 162

217

73

1 320

1 059

546

170

460

209

153

2

7 105

5 691

7 285

4 477

5 572

01-12'15 01-12'16 01-12'17 01-09'17 01-09'18


Several big road contracts signed in 3Q’18 i.e. S61 Wysokie – Raczki and two parts

of A1 highway

One 0,5 bn PLN railway contract (Rokietnica – Wronki) acquired in railway segment

in 3Q’18

Contracts signed in Budimex Group (M PLN)


Annual data 1-3Q data

+24%

Comment


5 491 5 051 5 337 6 045

1 894 2 594 2 726

2 838 187 136

1 223

1 439

849 1 149

1 014

718

8 421 8 930

10 300 11 041

12'15 12'16 12'17 09'18

65%

22%

2%

10%

10%

12%

26%

52%

57%

29%

2%

13%

7%

13%

26%

55%


At the end of 3Q’18 Budimex had a record backlog of 11,0 bn PLN

Current backlog is well diversified

Backlog in Budimex Group (M PLN)

Share


Comment


Contract Signing monthTotal value for Bx

(bn PLN)Sales progress

Waste treatment facility for KGHM 05-2018 0,6

Łagiewnicka route in Kraków 03-2017 0,7

Completion of reservoir in Racibórz 11-2017 0,7

Museum of Polish History in Warsaw 05-2018 0,5

Railway Rokietnica - Wronki 09-2018 0,5

S61 Wysokie - Raczki 07-2018 0,4

“Turn-key” CHP plant in Vilnius 09-2016 0,4

S3 Miękowo - Brzozów (I) 12-2017 0,3

S19 Podgórze - Kamień 08-2018 0,3

S6 Luzino - Szemud 06-2018 0,3

Railway No. 7 Otwock - Lublin (A) 06-2017 0,4

S61 Stawiski - Szczuczyn 10-2017 0,3

Turów power plant 07-2014 0,8

Residential complex Marina 2 06-2017 0,2

A1 Kamieńsk - Radomsko (part C) 09-2018 0,2

Railway Trzebinia - Krzeszowice 10-2017 0,3


Current backlog includes many high-value projects recently signed

Top projects executed by Budimex Group

Comment


9081 188

1 914

1 4881 335

'15 '16 '17 1-3Q'17 1-3Q'18

1 918

1 6151 457

1 220

810

'15 '16 '17 1-3Q'17 1-3Q'18


Sales 412 6%

Gross margin 87 9%

% sales 21,1% 0,5 pp.

Operating profit 57 1%

% sales 13,9% -0,6 pp.

Net profit 48 0%

% sales 11,6% -0,6 pp.

251 293

350

499

388 412

15,6% 16,0% 13,4% 13,0% 14,6% 13,9%

FY'14 FY'15 FY'16 FY'17 1-3Q'17 1-3Q'18

% of sales


Developer segment kept gross margin at above 20,0% level

Number of presales dropped due to no significant expansion of market

stock

Notary sales (flats) Presales (flats)


-10% -34%

Comment


1 192

2 207

3 399

Total offer

1 145

1 876

3 021

Under construction

47

331

378

Finished flats


Market offer noted slight increase vs. 06’18 due to projects launched

in Warsaw

In 09’18 land bank amounted to 9 616 flats

Market offer as at 09’18 (flats)

940 173

73

Warsaw

Cracow

Poznan

not presold

presold

6

Gdansk

Comment



Sales 100 -14%

Gross margin 14 -2%

% sales 13,9% 1,6 pp.

Operating profit 50 629%

% sales 50,0% 44,0 pp.

Net profit 36 1077%

% sales 35,9% 33,3 pp.

2.4.3 Other activities

3Q’18 results in other activities were improved by one-off (sell of Elektromontaz

Poznan and BIG)

The transaction generated additional 44 M PLN on operating profit level


Group’s other activities segment composition

environmental services

infrastructure maintenance

facility management

energy efficiency services

construction & administration of

underground car park in Wroclaw

(concession)

160 187

163 154

116 100

2,6% 4,9% 6,3% 7,9% 5,9% 50,0%

FY'14 FY'15 FY'16 FY'17 1-3Q'17 1-3Q'18

% of sales

Comment


48% 45% 42% 40% 41% 44%

52% 55% 58% 60% 59% 56%

12'13 12'14 12'15 12'16 12'17 09'18

4 009 4 3634 881

5 4196 250

7 098

12'13 12'14 12'15 12'16 12'17 06'18

2.5 Employment

In 1-3Q’18 Budimex increased employment by 848 people

In response to current market situation Budimex develops own workforce

Employment in Budimex Group

Development of qualified staff Development of own forces

Share in Bx Group’s employment*: White-collars Blue-collars

* w/o Fbserwis and Elektromontaz Poznan

4 3114 656

5 1855 708

6 539

'13 '14 '15 '16 '17 '18f '19f …

employment in Bx Group*

Comment


1,3 1,9 2,5 2,0 1,83,4 3,6

5,0 5,1 5,4

2,6

12,114,3

15,9

7,4

4,9

7,5 7,2

9,9

12,014,1

9,3

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 09'18

7,7

12,4

15,3

11,1

22,7

15,5

10,9

6,67,4 8,4

20,7

11,2

12,410,6

13,8

10,3

'11 '12 '13 '14 '15 '16 '17 09'18


Pressure on margin and bad sentiment to construction segment pushed

Budimex’s market capitalization to the level achieved in’13-’14

Budimex market value vs. WIG-Budownictwo aggregated market value (bn PLN)

P/E ratio Shareholders structure

Budimex P/E ratio

WIG_Budownictwo P/E

Budimex MV

WIG_Budownictwo MV

55,1%

9,2%

5,4%

30,3%

Aviva OFE

Ferrovial Group

NN OFE

Other

Comment


2 645

738

250 175 171 127 127 113 84 53 34

Budimex Polimex

Mostostal

Rafako Unibep Trakcja ZUE Erbud Torpol Mirbud Mostostal

Warszawa

Mostostal

Zabrze

-64%

% change vs. 31.12'17

-51% -23% -56% -50% -54% -42%-38%-51%-10% -11%

WIG-BUD.: -33%

WIG20: -7%

-46%

% change vs. 31.12'17excl. dividend payout effect

-48%-48% -53%


Budimex’s market cap has recently noted significant decline, but it

still stands out from other construction companies

Market value as at 09’18 (M PLN)

Comment


149 174

232

280

112

303

156

208

383

450

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18

5,8 6,8 9,1 11,0 4,4 11,9 6,1 8,1 15,0 17,6

Dividend

Dividend per share


For last 10 years company have allocated 100% of net profit to

dividend payment

Dividends paid (M PLN)

∑ = 2 445 M PLN

95,8 PLN per share

presentación de powerpoint - budimex · 1.1 market environment – top facts 1.2 macroeconomic...

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