2013-08-21 09:11:51 - New Construction research report from Business Monitor International is now available from Fast Market Research
We have downgraded our forecast for the Polish construction industry in 2013 from an already cautious 2.2% growth anticipated earlier to a more severe 3.5% real contraction during the year. Amid a worrying combination of high competition, poorly structured tendering processes, contract disputes and the consequent ill-repute from the EU and its European counterparts, Poland has also seen its score in BMI's Risk/Reward Ratings being reduced to 65.3 points this quarter, with further downside risk should the 2013 contraction in the industry be more severe than anticipated. Over the medium term, we expect the sector to return to positive growth territory, although it will remain well below the rate witnessed in the preceding five years.
Estimates from the National Accounts Division
and CSO indicate that the construction industry value declined by as much as 12.6% year-on-year (y-o-y) during the first quarter of 2013, marking the worst quarterly decline between Q112 and Q113. Considering that the industry suffered sharp y-o-y declines of 8.7% and 6.8% during Q312 and Q412 respectively, we see some room for the sector to benefit from the favourable base effects during the later part of 2013. As such, we have downgraded our outlook for the construction industry in 2013 a 3.5% real contraction during the year.
Full Report Details at
- www.fastmr.com/prod/670585_poland_infrastructure_report_q4_2013. ..
Key developments within the sector:
* Road building segment: The segment has dramatically shifted from a safe-haven for construction companies to a potential quagmire. Contract disputes have been growing in number over the past 12 months, with the road building agency GDDKiA having reached a stand-off with construction companies over payment of bills. The situation has spread into the political sphere, with Ambassadors from six EU countries whose construction companies are claiming lack of payment, having written a letter urging GDDKiA to explain why it had not paid its bills. GDDKiA has claimed previously that the lack of payment is related to the quality of work; however, given the reputation, level of expertise and number of companies implicated in this debacle, it is not surprising that more information has been demanded.
* Rail Expansion: As a part of Polish rail authority PKP Polskie Linie Kolejowe's broader upgrading and expansion plan, Alstaldi, in May 2013, secured a contract to improve the 11km Balice Express rail link between the Krakow Central station and John Paul II International Airport at Balice in Poland. Under the contract, the company will upgrade the double-track section between Krakow Central and Krakow Mydlniki, as well as build a second track on the section from Mydliniki to Balice. The project will also entail the relocation of the existing Balice station close to the terminal and the reconstruction of the existing intermediate station at Lobzow. Additionally, the project will include the construction of three new stations at Rolniczy University, Krakow Zakliki and Krakow Krzyzowka, respectively. The company will start the construction work in H213, with completion due in 18 months. The contract is worth PLN240mn (US$57.3mn).
* Energy & Utilities: In May 2013, The European Investment Bank (EIB) and European Bank for Reconstruction and Development (EBRD) revealed their plans to loan Poland a combined US$364mn to support the construction a highly efficient 450MW combined cycle gas turbine (CCGT) power plant. The move comes as the EU continues its to push for an end to the dominance of cheap but heavily polluting coal in Poland's energy mix - in line with continent-wide 2020 carbon reduction targets. The loans will be made directly to a joint venture comprising Polish utility Tauron and state-owned national oil and gas company PGNiG. It is hoped the facility - which has a total price tag of US$486mn and will be located in the industrial city of Stalowa Wola - will support the diversification of Poland's coal-heavy energy mix when it opens in 2015.
Poland's reign in our ratings system is well and truly over, with the country losing the top spot to Estonia. Combined with significantly lower expected industry growth over the next five years are the rising concerns over the country's ability to procure infrastructure projects. Financing is also becoming a worry following the announcement by the European Commission (the main financier of the country's road building programme) that it is suspending aid to the country due to accusations of price fixing and contract irregularities. This will only prompt further woes across the wider economy, as unemployment ticks up and economic growth slows.
About Business Monitor International
Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010
About Fast Market Research
Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.
For more information about these or related research reports, please visit our website at www.fastmr.com
or call us at 1.800.844.8156.