Budimex Sa · GPW:BDX
Budimex Sa — Investor Presentation (March 2024)
35 slides from Budimex Sa's investor presentation, March 2024
Slide 1: Investor Presentation FY’19
Investor Presentation FY’19
Slide 2: Table of Contents
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 2. Budimex Group in FY’19 2.1 Budimex Group – top facts 2.2 P&L 2.3 Evolution of Net Treasury Position 2.
Slide 3: Market snapshot
Market snapshot
Slide 4: 1.1 Market environment – top facts
1.1 Market environment – top facts ▪ In 02’20 IPAG* published the revised GDP growth forecast for Poland → ’20f: 3,4%; ’21f: 3,2% ▪ Average annual inflation rate should soon exceed 3,0% level → ’20f: 3,1% y-o-y ▪ Sejm approved State Budget Act for ’20, which assumes no budget deficit in ’20 ▪ Constr
Slide 5: 1.2 Macroeconomic forecasts for Poland
1.2 Macroeconomic forecasts for Poland ▪ Falling GDP growth is accompanied by rising inflation that will probably Comment reach the peak in 2020 GDP growth and inflation rate (%, y-o-y) 5,0 5,1 Forecasted decrease of GDP growth 4,9 4,3 Inflation (CPI) GDP growth mainly due 4,0 to insufficient level
Slide 6: 1.2 Public finances
1.2 Public finances ▪ Very low budget deficit achieved in ’18 vs. ’17 (much lower than planned Comment in Budget Act) General government deficit (% of GDP) Public debt (% of GDP) 92,2 89,8 87,9 86,4 85,1 Poland 84,1 Eurozone 54,2 50,6 48,9 47,4 45,5 44,3 2,4 1,4 1,5 0,9 1,0 0,8 0,9 0,91,0 0,5 0,2 0,
Slide 7: 1.3 Construction production by segment
1.3 Construction production by segment ▪ Construction production in ’19 grew by 6,0% y-o-y (current prices) Comment ▪ In ’20 construction production could increase slightly ▪ EU funds transitional period could result in fall of production in ’22-’23 Construction and assembly production ’10 – ’19 (bn
Slide 8: 1.3 Production vs. net profit margin in construction
1.3 Production vs.net profit margin in construction ▪ High cost inflation combined with no real indexation impacted strongly margins of Comment construction companies, but statistical data show that margins are currently improving Construction production (companies > 9 employees) vs. net profit marg
Slide 9: 1.3 EBIT margin by size of construction company
1.3 EBIT margin by size of construction company ▪ Small construction companies were able to improve their margin in ’18, while Comment profitability of big companies felt to 1,2% ▪ In 1H’19 profitability of big companies faced a recovery 11,9% 9,4% 8,7% 8,8% 8,2% 8,2% 7,1% 7,2% 7,5% 5,2% 5,1% 5,5% 4
Slide 10: 1.4 Labour market
1.4 Labour market ▪ Construction companies have to deal with labour shortage and Comment increase of labour costs Unemployment rate (%) Employment in construction (thous. employees) 12,0 510 483 10,0 470 8,0 5,2 419 6,0 430 4,0 390 2,0 0,0 350 12'15 06'16 12'16 06'17 12'17 06'18 12'18 06'19 12'19 12
Slide 11: 1.5 Prices of main materials
1.5 Prices of main materials ▪ Lower dynamics of construction production may normalize the situation Comment on materials market Concrete Reinforcement steel 180 180 160 160 160 141 140 140 129 120 140 120 130 129 100 100 112 80 120 80 60 119 60 4Q'10 4Q'11 4Q'12 4Q'13 4Q'14 4Q'15100 4Q'16 4Q'17 4Q'
Slide 12: Budimex Group FY’19 results
Budimex Group FY’19 results om FIle |) SS = B . “ita fot | Ne eam |
Slide 13: 2.1 Budimex Group – top facts in FY’19
2.1 Budimex Group – top facts in FY’19 ▪ No significant change of sales in FY’19 → FY’19: 7,6 bn PLN (+2,5% y-o-y) ▪ Decrease of % EBIT in construction segment → FY’19: 2,9% (-1,0 p.p. y-o-y) ▪ Rising share of railway in construction sales → FY’19: 16,6% (+7,6 p.p. y-o-y) ▪ Increase of net cash → 12
Slide 14: 2.2 P&L
2.2 P&L ▪ In ’19 Budimex Group achieved similar sales level as in ’18 Comment ▪ Three one-off events had an significant impact on the net profit generated in ’19 4Q'19 4Q'18 ∆ FY'19 FY'18 Sales 2 187 1 997 190 1 7 570 7 387 y-o-y dynamics 9,5% 10,0% -0,5 pp. 0 2,5% 16,0% Gross margin 198 183 14 1 55
Slide 15: 2.2 P&L - results by segment
2.2 P&L - results by segment ▪ In 07’19 Budimex SA finalized the purchase transaction of 51% stake in Comment FBSerwis and gained a sole control over the company ▪ FBSerwis financial results are presented in services segment FY’19 sales FY’19 EBIT Internal eliminations (% Group sales) (% Group EBIT)
Slide 16: 2.2 P&L - results by segment (sales)
2.2 P&L - results by segment ▪ Favorable weather conditions allowed to maintain high sales in the construction Comment segment in 4Q’19 ▪ In 07’19 Budimex began full consolidation of FBSerwis results Quarterly sales in Budimex Group (M PLN) Construction Real estate 7 152 558 1 854 2 010 2 016 1 272
Slide 17: 2.2 P&L - results by segment (gross margin)
2.2 P&L - results by segment ▪ New contracts that have been signed over last quarters improved the Comment profitability of backlog and contributed to the decent margin in 4Q’19 Quarterly gross margin in Budimex Group (M PLN) Construction Real estate 5,6% 4,3% 5,4% 7,9% 5,8% 20,6% 25,2% 26,4% 28,0%
Slide 18: 2.2 P&L - results by segment (EBIT)
2.2 P&L - results by segment ▪ Two one-off events booked in 3Q’19 and 4Q’19 improved Group’s EBIT by Comment 55 M PLN ▪ Seasonal q-o-q deterioration of EBIT margin in services segment Quarterly EBIT in Budimex Group (M PLN) Construction Real estate 1,8% 2,2% 4,5% 2,7% 2,9% 14,7% 20,4% 16,5% 33,6% 20
Slide 19: 2.2 P&L – historical results
2.2 P&L – historical results ▪ In FY’19 Budimex Group achieved record sales at the level of 7,6 bn PLN Comment ▪ Due to deterioration of profitability in construction segment, Group’s EBIT margin was under pressure Sales in Budimex Group (M PLN) 7 387 7 570 6 078 6 369 5 516 5 572 4 749 4 950 5 134
Slide 20: 2.3 Evolution of Net Treasury Position
2.3 Evolution of Net Treasury Position ▪ Seasonal increase of net cash in 4Q’19 ▪ Despite acquisition of 51% stake in FBSerwis and dividend payment, net Comment cash increased vs. 12’18 ▪ Positive impact of advances on cash balance in ’19 Net Treasury Position in Budimex Group (M PLN) 2,6 2,3 2,2 2,
Slide 21: Construction segment – FY’19 results
Construction segment – FY’19 results
Slide 22: 2.4.1 Construction segment
2.4.1 Construction segment ▪ Deterioration of EBIT margin in FY’19 Comment ▪ The share of sales generated in railway segment increased due to further execution of record railway backlog FY'19 y-o-y dynamics Sales and EBIT margin (M PLN) Sales 7 152 1% 4,2% 5,0% 8,4% 8,3% 3,9% 2,9% Gross margin 418 -
Slide 23: 2.4.1 Construction segment – offers placed
2.4.1 Construction segment ▪ Record value of offers placed reached in ’19 Comment ▪ Increase of activity on GDDKiA’s market in ’19 due to i.a. several second-hand projects launched Offers placed in Budimex Group (bn PLN) 76 64 31 58 95 120 47,4 average value 43,7 4,1 39,8 (M PLN) 2,0 40,5 2,5 8,6 3,
Slide 24: 2.4.1 Construction segment – contracts signed
2.4.1 Construction segment ▪ Record high value of contracts signed in railway, mainly due to winning two big projects: railway No. 139: Most Wisła – Zabrze & railway in Gdynia seaport Comment ▪ Value of contracts signed in road segment shrank, but few GDDKiA projects are waiting to be signed in 1H’2
Slide 25: 2.4.1 Construction segment – backlog
2.4.1 Construction segment ▪ Backlog structure has changed significantly during recent quarters in favor Comment of railway ▪ High focus on improving backlog’s profitability Backlog in Budimex Group (bn PLN) 10,8 Share 10,3 10,1 0,8 7% 1,0 10% 0,6 6% 8,9 8,4 2,4 22% 1,1 13% 2,5 25% 0,8 10% 2,7 26% 1
Slide 26: Real estate segment – FY’19 results
Real estate segment – FY’19 results
Slide 27: 2.4.2 Real estate segment
2.4.2 Real estate segment ▪ Real estate segment improved gross margin by 2,1 p.p. Comment ▪ Presales level was increased, mainly due to high sale of flats in Warsaw (+391 flats y-o-y) and launching new projects in Gdańsk and Wrocław FY'19 y-o-y dynamics Sales and EBIT margin (M PLN) Sales 558 2% 15,
Slide 28: 2.4.2 Real estate segment – market offer
2.4.2 Real estate segment ▪ Market offer in 12’19 was slightly lower than in 09’19 Comment ▪ In 12’18 land bank amounted to 8 346 flats Market offer as at 12’19 (flats) presold not presold 3 889 3 904 Gdansk 264 Poznan Warsaw 2 379 2 389 385 623 Wroclaw Cracow 107 136 1 510 1 515 15 10 5 Finished fl
Slide 29: Services segment – FY’19 results
Services segment – FY’19 results
Slide 30: 2.4.3 Services
2.4.3 Services ▪ Services results in FY’18 encompassed Elektromontaz Poznan and BIG that were disposed in 3Q’18 (+44 M PLN impact in 3Q’18) Comment ▪ Since 07’19 Budimex began full consolidation of FBSerwis Group’s results ▪ +35 M PLN one-off effect on the financial activity result level due to reva
Slide 31: 2.4.3 FBSerwis – key financial data
2.4.3 FBSerwis – key financial data ▪ Sales structure in ’19: Waste Management – 63%, Infrastructure Maintenance – 27%, Facility Management & Street Lightening – 10% Comment ▪ Intangible depreciation has a significant share in total depreciation (financial asset from PPA of M&As) Sales (M PLN) EBIT
Slide 32: 2.5 Employment
2.5 Employment ▪ The employment felt slightly in ’19, mainly due to limitation of exposure to the general construction market Comment ▪ Taking control over FBSerwis Group in 07’19 increased employment of Budimex Group by ca. 1 000 people Employment in Budimex Group* Bx Group w/o FBS FBS 7 840 7 478
Slide 33: 3. Budimex S.A. on WSE
3. Budimex S.A. on WSE ▪ Total pension funds’ share in BDX amounts to 30-35% Comment ▪ At the end of ’19 Budimex’s share prices faced a rebound Shareholders structure P/E ratio Budimex P/E ratio WIG_Budownictwo P/E 22,7 20,7 20,7 Ferrovial Group 29,5% 15,5 13,8 Aviva OFE 12,4 11,2 10,3 55,1% 7,7 15,
Slide 34: 3. Budimex S.A. on WSE – market value
3. Budimex S.A. on WSE ▪ After declines in share prices in ’18, in ’19 market value of some Comment construction companies, including Budimex S.A., faced a rebound Market value as at 12’19 (M PLN) +51% -23% +83% +103% +59% -29% -47% +13% -5% +87% +73% +59% +89% +64% 4 391 % change vs. 31.12'18 % cha
Slide 35: 3. Budimex S.A. on WSE – dividends
3. Budimex S.A. on WSE ▪ Budimex has been paying dividends for over 10 years and belongs to Comment WIGdiv index Dividends paid (M PLN) ∑ = 2 606 102,1 M PLN PLN per share 450 383 303 280 Dividend 232 208 174 161 149 156 112 Dividend 5,8 6,8 9,1 11,0 4,4 11,9 6,1 8,1 15,0 17,6 6,3 per share '09 '10