Making a bad year good

"Considering all the latest macroeconomic data, we can state 2002 was bad in all aspects for the whole construction sector," said Marek Majewski, analyst of BDM PKO BP

The Central Statistic Office (GUS) announced last week that the output in the construction sector had suffered an annual 10.5% drop in both December and the whole of 2002. Based on data for the first three quarters of the year, it seems that the dynamic of investment in the whole year was also negative.
The financial results of construction and development companies listed on the WSE reflect this data.
For instance, between January and September 2002, one of the biggest groups, Mostostal Export experienced a loss of PLN 46.6 mln compared to a loss of PLN 27.0 mln a year earlier, with revenue of PLN 429.4 mln compared to PLN 571.4 mln. In the case of PIA Piasecki, fighting against numerous difficulties, revenue at this time plunged to PLN 125.6 mln from PLN 290.8 mln in the first three quarters of 2001.
The Budimex Group for instance, increased its Q1-3 2002 revenue to PLN 1733.9 mln from PLN 1637.4 mln. However, its net loss was PLN 25.6 mln compared with PLN 16.4 mln net profit a year earlier.
The beginning of 2003 has also not brought any considerable changes to this sector's situation because of the seasonal stagnation in construction, added Majewski.
Any improvement in construction sector will be felt not earlier than in 2004, said BDM PKO's analyst. But economists estimate that the dynamic of investment will begin to increase in the second half of this year and will be the first symptom of a long-term economic recovery. They also predict that investment will be the major factor, which will result in 2.5% - 3.0% GDP growth.
As for construction companies, Majewski referred to housing construction because there should again be an increase in the sale of new flats. z

Contributed by: Mirosław Kuk