The ERBUD Group, one of the five largest construction groups in Poland, has published results for the first half of 2016. The net consolidated profit from continuing operations has increased by over 183.5% in comparison to the first half of 2015 and amounted to PLN 27.5m, due to the one-off effect of transactions the Group recorded a net loss (PLN -8.2m). The profit from the business operation (EBIT) increased by 108.8%, and amounted to PLN 35.5m – of which PLN 28.1m is attributable to the Group, and PLN 7.4m is a share in the profit of the entity participating in the project i.e. GWI.
The Group’s profitability has significantly increased: the gross margin increased by 2.5 p.p. to 3.5%, the operating margin by 1.5 p.p. to 3.6%, and the net margin by 1.6 p.p. to 2.8 %. The Group has maintained a stable level of revenues (PLN 788m), i.e. a similar one to the level that was recorded last year for the same period (PLN 805.8m).
The most significant factor creating the net result in the first half of 2016 was the valuation of the sale transaction of Budlex S.A.
| Consolidated financial results of ERBUD Group according to MSSF (PLN m) | II Q 2016 | II Q 2015 | y/y change | I-II Q 2016 | I-II Q 2015 | y/y change |
| Sales revenue | 446.3 | 492.8 | -9.40% | 788.2 | 805.8 | -2.20% |
| EBIT | 19.4 | 12.1 | +50.3% | 28 | 17 | 64.50% |
| EBIT Margin | 4.33% | 2.44% | 3.60% | 2.11% | ||
| Net profit from continuing operations | 16.9 | 7.5 | 125.30% | 22.3 | 9.7 | 130.00% |
| Net profit | -16.4 | 10.8 | -251.90% | -8.2 | 16.3 | -150.30% |
| Cash at the end of the accounting period | 115.3 | 126.8 | -9% | 115.3 | 126.8 | -9% |
The selected financial results for the first half of 2016 do not include the share of the partner in the project the GWI.
Share of the GWI – 50%. Additional net profit resulting from adjustment to 100% of revenues amounts to: 8,273,798.77.
Tax: 2,468,074.17. Net profit: 5,805,724.17.
Earlier recognized valuation of the real estate in 2016 (before adjustment): 6,859,640.92.
Tax: 2,046,230.89. Net profit: 4,813,410.03
The total effect on the gross financial result: 15.134k.
Stable revenues of the ERBUD Group in the first half of 2016 are an effect of a strong position in large volume construction industry. The results from operations abroad obtained by the Group showed a record increase by 60.5% up to PLN 130m. The income level was also affected by the results of the large volume construction sector.
On the grounds of the decision of the Management Board ERBUD S.A. focuses on the basic business activity of the Group, that is broadly defined erection and construction services, performed as both a general contractor and a subcontractor. The sale transaction of shares of Budlex S.A. while being in the course of performance caused a decline in the net profit down to PLN -8.2m, however as a consequence of a carefully planned disinvestment process in the property development sector it will bring app. PLN 47.5m of a positive cash flow in the next quarters.
The Group stabilised costs of operating activity. Cost of goods sold, selling costs and costs of general management and administration amounted to a total of PLN 774,058k and were by 1% lower than in the corresponding period of the previous year (PLN 785,287k).
- We have closed the first half year with strong results. The income, the margins as well as the high level of the operating profit are satisfactory. It is mostly due to our effective operation on the Western European markets. The first half of 2016 has brought us a record result from the operations abroad. – says Dariusz Grzeszczak, the President of ERBUD S.A.
- The results of the first half year are vital in the context of a few European countries, which we observe carefully, and on markets of which we would like to play an important role. On the other hand, not taking into account the one-off resulting from the sale of Budlex, we would have also achieved a very solid net result, what is shown by the amount of the net profit from the continuing activity – adds the President of ERBUD S.A.
At the end of June 2016 the ERBUD Group’s portfolio of orders amounted to PLN 1,100m, including PLN 704.7m for 2016. For 2017 and the following years there are around PLN 395m. Additionally, between the 1st of July and the 29th of August the Group signed 27 contracts of a total amount of PLN 300.7m and also two conditional contracts: for construction of a commercial gallery GALERIA MŁOCINY (PLN 534.6m) and for construction of an office building in Łódź (PLN 103.8m).
- Such a portfolio of orders allows our Group to approach new requests for quotation selectively – explains Dariusz Grzeszczak. All the more so, because at the end of June 2016 our portfolio of domestic orders in large volume construction sector, i.e. our key sector, was achieving a result of nearly PLN 790m what makes an increase by over 12% with respect to the previous year – adds Dariusz Grzeszczak.
The Company constantly maintains its dividend policy and shares its profits with its shareholders. On the 2nd of June 2016 ERBUD paid dividends in the total amount of PLN 15.37m i.e. PLN 1.20 per share. At the end of June 2016 the Group had cash or cash equivalents in the amount of PLN 115.3m.