SUMMARY OF 1H 2023 IN THE DEKPOL GROUP: Solid results due to attention to a satisfactory level of profit margin

The DEKPOL Group, operating in the areas of general contracting, property development, and the production of buckets and construction equipment, has published its financial results for 1H 2023. The Group’s revenues in the discussed period amounted to PLN 569.6 million and were 10% lower y/y. The Group achieved an EBITDA of PLN 47.2 million (decrease by 6% y/y). The first half of 2023, the Group ended with a net profit of PLN 26.3 million – at a comparable level y/y.”

As of the end of June 2023, the cash balance in the Group amounted to PLN 227.2 million, and the net debt/EBITDA LTM ratio was at a safe level of 0.91.

General contracting segment

The general contracting segment (GW, DEKPOL Budownictwo) is the largest segment of DEKPOL Group’s business activities, accounting for 65% of revenues in 1H 2023. Revenues for the GW segment in the discussed period amounted to PLN 370 million, which was 19% lower y/y, while the operating profit amounted to PLN 25.4 million compared to PLN 30 million previous year (decrease by 15%). The decline in revenues is attributed to the project work schedule.

At the end of June 2023, the company had contracts in its portfolio for external entities with a total contractual value of over PLN 1,507 million net. Projects with a combined value of approximately PLN 885 million net were yet to be completed after reporting period, nearly double the amount compared to the end of 2022. Additionally, within the general contracting (GW) segment, the company is executing in-house development projects with a total value of PLN 413 million, with projects worth approximately PLN 113 million remaining for execution after reporting period. Most of the Dekpol Budownictwo contracts are carried out on behalf of private investors and have an average value of nearly PLN 70 million.

Industrial-logistics projects dominate the ordering portfolio, accounting for approximately 78% of the entire ordering portfolio as of the end of June 2023.

 

Property development segment

In 1H 2023, the revenues of the property development segment amounted to PLN 102.7 million (18% share in Group’s revenues), and the operating profit amounted to PLN 20.9 million (compared to PLN 59.6 million and PLN 8.8 million, respectively, in 1H 2022). In financial results for 1H 2023, the Dekpol Group recognized revenues from the property development segment for 181 units and partial revenue (recognized based on construction progress) from a project with an institutional investor in Wrocław on Braniborska Street. In the previous year, 103 units were recognized in the property development segment’s revenues. Contracting in 1H 2023 (including preliminary, real-estate development, and reservation agreements) amounted to 198 units compared to 197 units in 1H 2022.

As of the end of June 2023, Dekpol Deweloper had 609 units available for sale in its offer. The company has a positive market outlook and prospects and maintains its goal of achieving PLN 308 million in revenues in 2023.

Segment of equipment manufacturing

The construction equipment accessories segment (Dekpol Steel) accounted for over 14% of the Group’s revenues in 1H 2023. Revenues for Dekpol Steel in the mentioned period reached PLN 76.7 million (decrease of 22%), and the operating profit amounted to PLN 3.5 million (compared to PLN 10.9 million in the previous year). The first half of 2023 was a period for Dekpol Steel and Intek to further strengthen their position in new production areas and focus on initiatives aimed at improving the efficiency of their existing production profile. Both companies are focusing on acquisition of new customers who appreciate high-quality and timely production, as well as innovative solutions (an example being Dekpol Steel obtaining a license, as one of only two entities worldwide, to produce innovative buckets that reduce excavation costs by 25% – this solution is patented by SSAB from Sweden).

Commentary of Management Board with respect to results for 1H 2023

We assess the Group’s results for the first half of the year as solid and in line with our expectations. The market situation remains challenging – particularly affecting Dekpol Steel, where we have higher operating costs compared to the previous year – but we see that orders are gradually returning quarter by quarter, and the company has a plan in place and consistently implements it. At the turn of the year, amid a very volatile market situation for materials, we approached new projects for Dekpol Budownictwo with great caution and selectivity. This is now reflected in lower year-on-year revenues but also in maintaining a satisfactory margin level. At the same time, we are focused on our strong market position, but most importantly, we want the contracts we execute to translate into the expected level of results, not just turnover. After 1H 2023, the pipeline level in this largest segment is at a record high, and the

team of Dekpol Budownictwo has ambitious plans for the entire year 2023, although we must take into account that the macroeconomic situation affects business sentiment and their willingness to undertake new investments. Dekpol Deweloper is also consistently achieving its goals for 2023 – the company’s offering is broad and adapted to changing macroeconomic conditions. As a result, it meets the needs of customers in all market segments, including those who want to invest their financial surplus in properties and those who can buy their first homes thanks to the support of programs such as ‘Bezpieczny kredyt 2%’.

Summing up: the market situation is demanding, but thanks to our many years of experience, strong fundamentals, business diversification, and the continuously improving competencies of the Dekpol team, the Dekpol Group is capable of effectively operating and achieving its goals. – says Mariusz Tuchlin, President of Management Board of DEKPOL S.A.

 

The development in such variable and challenging macroeconomic conditions would not have been possible without the secure and stable financial situation of the Group, which we have been diligently building for several, if not dozens of quarters. Thanks to this, we are prepared for market challenges, and temporarily adverse economic conditions do not affect our medium- and long-term plans and ambitions. The consistent execution of the Group’s strategy, diversification that allows for stable growth in a changing environment, strong financial position, and the business agility of Dekpol are also appreciated by investors. As a result, at the turn of the first and second half of this year, within the framework of the adopted, following the completion of the previous, II Bonds Issue Programme, the Group raised PLN 70 million from sales of bonds to finance its business operations, and the offering attracted demand exceeding the offered number of bonds. – adds Katarzyna Szymczak-Dampc, Vice-President of Management Board, Financial Director of DEKPOL S.A.

 

Contact for media:

Katarzyna Sadowska

cc group

katarzyna.sadowska@ccgroup.pl

tel. +48 697-613-020

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The Dekpol Capital Group is dynamically developing in the construction and development industry and in the production of accessories for construction machinery. The company was founded in 1993. It has a modern machine park and highly qualified staff. From the beginning of its activity, it has ambition and determination to further dynamic development with the use of modern technologies. The activities of the Dekpol Capital Group are based on three main segments. General Contractor services provide the largest share of the revenues. The offer covers a very wide range of activities. The company has extensive experience in the implementation of industrial, logistic, commercial, public, sports and recreational facilities, as well as environmental protection facilities. It also carries out road, sanitary and hydrotechnical works. The company has an established leadership position in Northern Poland and is one of the largest general contracting companies for cubature facilities on a national scale. In turn, Dekpol Steel, part of the Dekpol Capital Group, is a manufacturer of buckets and accessories for construction machines. He cooperates with the world’s largest manufacturers of construction machinery. The products are sold to Norway, Sweden, Germany, the USA and Great Britain, and even to Morocco and Australia. The third dynamically developing segment of the Dekpol Capital Group is the development activity, which from the beginning of 2019 as part of Dekpol Deweloper Sp. z o.o. offers flats, apartments and commercial premises. Since January 2015, the shares of Dekpol S.A. are listed on the Warsaw Stock Exchange.

More information: https://dekpol.pl/