Solid results of the DEKPOL GROUP in H1 2022 thanks to diversified business activities

The DEKPOL Group, operating in the areas of general contracting, property development as well as production of buckets and accessories for construction machines, published financial results for the first half of 2022. The Group’s revenues in the discussed period amounted to PLN 635 million, which means an increase by 34% y/y. The Group’s operating profit in the discussed period amounted to PLN 43.4 million and was higher by 7% y/y. The Group ended the first six months of 2022 with a comparable net profit y/y, amounting to PLN 26 million.
At the end of the first quarter of 2022, the Group’s cash position amounted to PLN 168.3 million, and the LTM net debt / EBITDA ratio was at a safe level of 1.66.

General Contracting segment

The general contracting segment (GW) remains the largest segment of the DEKPOL Group’s operations, with a revenue share of over 72% in the first half of 2022. Revenues of the GW segment in the discussed period amounted to approximately PLN 459 million and were higher by 49% year-on-year, and the operating profit amounted to PLN 30 million (+ 41% y/y).

At the end of June 2022, contracts for external entities were carried out with a total contractual value of over PLN 1.4 billion net. Projects with a total value of approx. PLN 450 million net remained to be implemented after reporting period. Additionally, as a part of the GW segment, intra-group development projects are carried out with a total value of PLN 394 million, and projects with a value of approximately PLN 216 million remained to be implemented after reporting period. Most of contracts of Dekpol Budownictwo are are performed on behalf of private investors and have a value of up to PLN 50 million, and at the end of the first half of 2022, GW had 10 contracts exceeding PLN 70 million in its ordering portfolio.

Property Development segment

Revenues of the property development segment for H1 2022 amounted to PLN 59.6 million (9% share in Group’s revenues), and the operating result amounted to PLN 8.8 million (compared to PLN 91.4 million and PLN 18.1 million in 1H 2021, respectively). In the first six months of 2022, contracting in the property development segment as defined in preliminary, development and reservation agreements amounted to 197 apartments (compared to 258 apartments in 1H 2021).
Revenues of the segment in the period include sales of 103 apartments (in 1H 2021 it was 214 apartments, among others due to handing over of 180 apartments in the first stage of Osiedle Pastelowe in Gdańsk) as well as partial income (realized in line with progress of works on construction site) from implementation of investments with an institutional investor in Wrocław at Braniborska street.
As at the end of June 2022, in sales offer of the Dekpol Deweloper company were 815 apartments available.

 

Segment of production of accessories for construction machines

In H1 2022, the segment of production of accessories for construction machines (Dekpol Steel) accounted for nearly 15% of Group’s revenues and was the second segment of business activities in terms of sales contribution. Dekpol Steel’s revenues in the discussed period amounted to PLN 98 million (+ 78%), and the operating profit amounted to PLN 10.9 million (+ 57% y/y).

Thanks to usage of new production capacities in the Intek plant acquired in Q4 2021, as well as standardization and stabilization of production processes, the Company is realizing a high level of orders, while ensuring a satisfactory level of margins in an unstable environment.
Starting from May this year, by taking advantage of experience and references of the Intek plant acquired last year, it was possible to diversify production processes. The “core” business of Dekpol Steel, together with Intek, remains production of buckets and accessories for construction machines, while products for offshore industry are becoming an additional area of business activity. In addition, Dekpol Steel remains in certification process for obtaining production license for the defense industry.

 

Commentary of Management Board concerning results for 1H 2022 and the prospects for upcoming quarters

The Group’s development strategy, consisting in business operations based on three pillars: General Contracting (Dekpol Budownictwo), Production of Accessories for Construction Machines (Dekpol Steel) and the property development segment (Dekpol Deweloper), brings expected results. In difficult and extremely unstable times, their business activities balance and complement each other, which allows to generate a stable level of financial results. Dekpol Budownictwo had the highest contribution to financial results in 1H 2022, which increased revenues by 49% y/y. Thanks to flexibility and experience of the team, as well as implementation of numerous tools that allow for effective bidding in an environment of high dynamics of price changes on the market, we are prepared to effectively handle orders from our partners. We maintain a strong market position, while looking for opportunities for further business development. An example is the acquisition of the Kombet company, whose business activity focuses on production of precast concrete elements. As a result of the transaction, the Group acquired a production plant with land enabling future expansion, as needed. Kombet is also a workplace employing qualified and experienced team. Transaction was aimed at increasing the scale of segment’s operations in the field of prefabricated production, because we believe that due to the growing costs of materials and labor, industrial, logistics and property development construction will require optimization in upcoming years. Kombet will support us in this process, together with the Betpref plant owned by the Group. The segment of production of accessories for construction machines, i.e. Dekpol Steel, took advantage of the new production capacity at the Intek plant in order to implement higher level of orders observed from 2H 2021. Thanks to decisive actions and a flexible approach, the Company dealt with the market challenges better than its competitors.

Revenues of Dekpol Steel increased by 78% y/y in H1 2022, accounting for 15% of the Group’s sales. In addition to the core business, Dekpol Steel takes efforts in order to reorganize and optimize processes in the Intek plant, the company acquired last year. Using experience of the Intek company, we have also started diversification of production into the “offshore” area. Additionally, we have started activities aimed at obtaining a production license for the defense industry. The two above-mentioned segments of the Group’s business activity compensated in the last half of the year by a lower contribution from the property development segment, whose revenues are a derivative of the schedule for implementation of individual projects, hence their level may fluctuate on a quarterly basis. The completion and handing over of several investments are planned for 2H 2022. It is also worth to emphasize, that the contracting level of Dekpol Deweloper in 1H 2022 was at the assumed level thanks to the wide and diversified offer and a high share of cash customers – says Mariusz Tuchlin, President of Management Board of DEKPOL S.A.

All companies from the Group put great importance to sound business planning and resource management in the era of rising operating costs. Thanks to this, as well as mutual complementation of business activities of three segments, the margins achieved, although under pressure, allowed us to generate a comparable year-on-year net profit for the Group. At the same time, we have taken a number of steps to minimize the impact of high interest rates on Group’s financing costs. We approach the sphere of debt, the level of receivables and the broadly understood financial security with great attention and common sense – 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

 

***

Dekpol Capital Group is dynamically developing in construction and property development industry as well as in production of accessories for construction machines. The company was established in 1993. It owns a modern machine park and highly qualified staff. From the beginning of its business activities, it has ambition and determination to further dynamic development with usage of modern technologies. Business activities of the Dekpol Capital Group are based on three main segments. General Contracting services provide the largest share of the Group’s revenues. The offer covers a very wide range of activities. The company has extensive experience in 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, the part of the Dekpol Capital Group, is a manufacturer of buckets and accessories for construction machines. It 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 property development activity, which, from the beginning of 2019, as a 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 available at: https://dekpol.pl/