A few up, but more down

The WIG broad market index in the last weeks of February and early March remained at its level of mid-February, while the WIG 20 lost just under 2 pct. The Warsaw Stock Exchange moved to the rhythm of the news from Greece, as an agreement was finally struck on the restructuring of its debt and the paying out of another tranche of aid by the International Monetary Fund. Investors were focused on company results, which turned out to be better than expected in many cases, and yet were too weak an incentive to buck the global trends on the financial markets. Unfortunately, the WIG-Construction and WIG-Developers sub-indexes lapsed into their depressing habit of falling behind the main indexes - slipping by 13 pct and 10 pct respectively.
When it comes to construction companies, it is worth looking at the biggest players. In 2011 Budimex registered a net profit of nearly PLN 261 mln, with its revenue exceeding PLN 5.5 bln. Its profit dropped slightly (by PLN 7 mln), while revenue grew by over 20 pct. Shareholders can rub their hands in glee in anticipation of the generous dividend to be paid out by the construction giant. Last year this amounted to just over PLN 9 per share, but this year's management board recommendation is nearly PLN 11. Meanwhile, investors holding shares in PBG are in a rather different mood. According to analysts, the company is coping badly with its negative cash flow and debt, which amounted to almost PLN 500 mln in 2011. Meanwhile its share price has hit the lowest levels in its history. Analysts have already speculated that Polimex Mostostal might take advantage of the problems of this captain of industry when it comes to winning energy-related contracts. In actual fact, Polimex Mostostal's results were not so impressive either - a net profit of nearly PLN 103 mln, compared to PLN 119 mln a year earlier, and this was achieved with revenue higher than in 2010 (PLN 4.8 bln). To improve its profitability the firm is increasing its involvement in the energy sector.
In the development sector, Globe Trade Centre's securities have lost 35 pct in 5 weeks. Its share price has plummeted 70 pct in the course of the year. This is a consequence, among other factors, of weak 2011 results - the worst of all the companies listed on WIG 20. Its losses exceeded PLN 1 bln (EUR 338 mln). This resulted from a revaluation of its assets, which have depreciated in value by nearly EUR 296 mln. According to the developer, it was the altered situation on the Romanian, Bulgarian and Croatian markets that was to blame for this, with the revaluations reflecting lower than expected rent rates. At the same time, the company has announced an app. EUR 100 mln share issue with pre-emption rights before the end of the year. This is part of its three-year plan to finance company operations to help repay or prolong bonds that are to be redeemed within the next two years. The fluctuations in other developers' share prices can be explained by the weakness of the market, since many achieved better net profits than in 2011. However, the companies that published results worse than the previous year included J.W. Construction (PLN 31 mln, compared to PLN 92 mln) and Robyg (PLN 28.1 mln, compared to PLN 32 mln). On the other hand, those firms enjoying excellent progress in terms of results included Dom Development (a profit of PLN 82 mln in 2011, compared to PLN 40.5 mln a year earlier, combined with one of the highest gross margins in the industry of over 30 pct) and Gant (PLN 31 mln, up from PLN 8 mln). Despite recording an almost four-times higher profit, the Lower Silesian company is not going to pay a dividend from its 2011 profits. But it will be increasing the number of apartments available in its offer, unlike the Warsaw-based developer Dom Development, which is to slow down the pace of its residential development, a declaration that tallies with the predictions of a number of specialists that home prices might decrease slightly this year. The wide range of developers' plans includes takeovers - for example, Marvipol, which is looking for a company it could buy out for as much as PLN 100 mln. Last year was a good one for the company: its profits grew to PLN 49 mln, up from PLN 30 mln a year earlier.

No changes at the neighbours'
Virtually no changes could be seen on the Hungarian BUX index. Its chart closely followed that of the WIG, as both stock exchanges
were affected by the same factors. Investors continue to focus on the possible problems with obtaining international aid, which, according to analysts, might only materialise at the end of 2012. In addition to this, problems with holding the budget deficit in check could contribute to the imposition of a limit on EU funds for Hungary. Its economy grew by 1.4 pct in Q4. The government is counting on avoiding a recession in 2012 and maximum GDP growth in the region of 0.5 pct. Meanwhile, the Prague stock exchange registered a slight decrease of over 2 pct.