Mostostal Warszawa Capital Group with profit and good prospects despite the pandemic

Mostostal Warszawa Group in 2019 achieved sales revenues of PLN 1.3 billion. Gross profit of PLN 8.1 million, as well as a high level of cash position, combined with the preserved, despite the coronavirus pandemic, strong production potential give good prospects for the coming months.

Lower risk of currently implemented projects

During the 12 months of 2019, the Mostostal Warszawa Capital Group concluded new contracts with a total value of PLN 1,650 million. The value of the Group's order portfolio, including the contract for the construction of the Ostrołęka Power Plant, at the end of 2019 amounted to PLN 2,469.7 million, which ensures revenue in the next two years at a level similar to 2019, with the Group companies taking active part in subsequent tender procedures. The portfolio structure is increasingly balanced. It is completed by contracts from the general construction sector in 31.63%, infrastructure in 32.77% and industrial and energy in 35.60%. In recent years, the Group has expanded its offer teams and, as part of continuous portfolio diversification, has led to its sustainability, which is a strong foundation for its further development. Year-on-year, the number of contracts concluded in 2019 increased for the fourth time in a row.

Challenges of previous years facing the construction sector, which include factors such as rising costs of building materials and subcontractors' services, increasing labor costs, availability of workforce, against the background of still long tender procedures, the period between submission of an offer and settlement often reaching many months - they are still felt for the industry. In 2019, the Group companies finalized projects acquired in previous years that were susceptible to the above-mentioned factors. However, the situation with the increase in the prices of services and materials stabilized in 2019, which means that current projects are no longer as exposed to price fluctuations as those obtained in previous years.

The cash position of the Capital Group at the end of the year amounted to PLN 274 million. Generating cash from operating activities at a high level allowed repayment of some corporate loans.

Employment reached 1,454 employees, remaining at a similar level compared to the end of 2018.

Despite the pandemic, the Mostostal Warszawa Capital Group maintains its production potential

The challenge for the Mostostal Warszawa Capital Group for the coming year will be the effects of the epidemic caused by the SARS-CoV-2 coronavirus. Despite these circumstances, all Group companies maintain business continuity. Construction, plant and office work constantly, employees of the Group and subcontractors perform their duties. Difficulties in the functioning of the supply chain, so far, do not significantly affect operational activities. The production support functions are also continuously implemented, including health and safety at work, aspects of human resource management, purchases, legal aspects, claims management and administration.

Since the beginning of the epidemic, the Group companies have been fully determined to focus on business continuity, while maintaining employee protection measures, increasing remote work as far as possible, providing personal protective equipment, etc. Constant monitoring of the impact of coronavirus effects on day-to-day operations has been introduced and instructions have been implemented in the event of delays or increased costs.

The above risks have been identified and are adequately managed. Currently, they do not significantly affect the operations of the Mostostal Warszawa Group.

We forecast a temporary slowdown in new private investment, but at the same time we expect public investment to remain unchanged. The diversified offer of the Mostostal Warszawa Capital Group allows us to adapt our strategy to the dynamically changing market situation.

Despite the threats we have identified, the goal of the Capital Group for 2020 is to maintain a positive trend in the level of contracting and financial results.

The financial statement of the Mostostal Warszawa Capital Group for 2019 is available on the website of Mostostal Warszawa SA in the Periodic Reports tab.

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