Financial standing of the Budimex Group in 2022 /
Factors shaping the financial result of the Budimex Group

Table 2. Consolidated profit and loss account PLN thousand

Factors shaping the financial result of the Budimex Group in 2022 PLN thousand

*In total with the share in net profits (loss) of subsidiaries measured by the equity method.

Sales revenues

In 2022, sales revenues amounted to PLN 8,619,054 thousand, i.e. they were PLN 707,862 thousand (8.9%) higher than in the previous year. In addition to increasing the scale of operations, their value was influenced by the signing of annexes to contracts by Budimex SA, indexing the value of road contracts from 5% to 10%. The main part of the sales revenues was revenues from the construction segment. Excluding consolidation eliminations, they amounted to PLN 7,820,834 thousand, i.e. they were 7.4% higher than in 2021. On the domestic market, sales in the construction segment increased by 8.0%. In 2022, the service activities segment reached PLN 821,397 thousand of revenue, which is 4.9% more than in the previous year.

Gross profit from sales and gross margin from sales

In 2022, the group’s gross profit from sales amounted to PLN 872,443 thousand, i.e. it was PLN 38,646 thousand (4.6%) higher than in the previous year. The gross margin from sales amounted to 10.1%, while in the previous year it, was at the level of 10.5%. The gross margin from sales in the construction segment amounted to 9.5% and was 0.7 p.p. higher compared to the previous year. In the conditions of a rapid increase in the prices of raw materials, it was possible thanks to the effective policy of hedging the prices of key assortments. On most projects, the Budimex Group maintains the originally assumed contract margin.

In accordance with the adopted accounting principles, if the budgeted costs of the construction contract exceed the total value of the expected revenues, the group companies, at the moment of identifying this fact, create provisions for losses presented in the consolidated statement on financial activities in the item “Provisions for losses on construction contracts.” At the end of 2022, these provisions amounted to PLN 803,263 thousand and were PLN 288,476 thousand higher than at the end of 2021.

When providing construction services, the companies of the Budimex Group are obliged to provide a guarantee for their services. As of 31 December 2021, the group had provisions for repair guarantees in the amount of PLN 635,970 thousand, i.e. PLN 18,361 thousand higher than in the previous year.

Selling and general administrative costs

In 2022, selling costs amounted to PLN 13,530 thousand, i.e. they increased by 1,797 thousand (15.3%) compared to the previous year. On the other hand, general administrative costs amounted to PLN 317,153 thousand, i.e. they were PLN 48,142 thousand (or 17.9%) higher than in 2021. The total ratio of selling costs and general administrative costs to sales revenues in 2022 was 3.8% (3.5% in the previous year).

Result of other operating activities

In 2022, the group’s result of other operating activities amounted to PLN 20,667 thousand against PLN 34,032 thousand in 2021. In 2022, the group created additional write-downs for receivables (by PLN 12,317 thousand), while in 2021, a significant part of them was reversed.

A detailed analysis of other revenues and other operating costs is presented in note 33 of the consolidated financial statements.

Result of operating activities and EBITDA

In 2022, the group’s operating result amounted to PLN 562,427 thousand, while in the previous year, it amounted to PLN 587,085 thousand, i.e. it was PLN 24,658 thousand (4.2%) lower. The EBIT margin was 6.5% and decreased by 0.9 p.p. in relation to 2021. The profitability of the construction segment measured by the operating margin was 6.0% vs 6.1% in the previous year. The profitability of the services sector was 11.2% (compared to 10.4% in the previous year).
The EBITDA result (i.e. the result of operating activities increased by depreciation) amounted to PLN 714,814 thousand, compared to PLN 733,692 thousand in the previous year (a decrease of 2.6%). Thus, the EBITDA margin reached 8.3% in 2022 (9.3% in 2021).

Income tax

The charge to the group’s result due to income tax for 2022 amounted to PLN 100,805 thousand, including: PLN 145,506 thousand was for the current part, and PLN -44,701 thousand was for the deferred part. In 2022, the effective tax rate was 15.5% compared to 16.0% in the previous year. As of 31 December 2022, the group recognised the deferred income tax assets in the amount of PLN 685,036 thousand and deferred income tax provisions in the amount of PLN 1,149 thousand, while on 31 December 2021, the group recognised assets on this account in the amount of PLN 642,373 thousand and a provision of PLN 830 thousand.
Components of the statement of the financial standing due to deferred income tax in the Budimex Group result mostly from the specificity of construction contract settlements in which the moments of classifying costs as incurred and classifying revenues as fulfilled are different in the tax and accounting context.

Basic measures of profitability in %