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2.1. Business model and value chain, 2.1.5. Financial position, About Budimex Group

2.1.5. Financial position

By on

April 25, 2024

- Category : 2.1. Business model and value chain, 2.1.5. Financial position, About Budimex Group

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[GRI 201-1]

KEY ECONOMIC AND FINANCIAL DATA 

Key economic and financial data of the Budimex Group

The financial situation of the Budimex Group in 2023 is characterized by selected items disclosed in the Statement of Financial Position and Profit and Loss Account (broken down below together with the 2022 comparative data).


Table: The main items of the Consolidated Statement of Financial Position of the Budimex Group


(all amounts in tables are expressed in PLN thousand, unless stated otherwise)

As at 31 December 2023, consolidated total assets increased by PLN 1 031 033 thousand compared to 31 December 2022, mainly due to a 10.1% (PLN 183 642 thousand) increase in non-current assets and a 15.22% (PLN 847 391 thousand) increase in current assets.

Non-current assets:

The change in the value of non-current assets as at 31 December 2023 compared to 31 December 2022 was caused mainly by the following:

  • an increase in property, plant and equipment by PLN 77 252 thousand, including an increase due to the purchase and lease of property, plant and equipment in the amount of PLN 238 517 thousand, and PLN 17 236 thousand as a result of taking control over PPUH Konstalex Sp. z o.o. and the consolidation of Budimex A Sp. z o.o., Budimex F Sp. z o.o., Budimex O Sp. z o.o., Budimex P Sp. z o.o. and Budimex R Sp. z o.o. In turn, the decrease in the balance was driven by, among other factors, depreciation of property, plant and equipment in the amount of PLN 136 653 thousand.
  • an increase in the balance of deferred tax assets by PLN 125 390 thousand due to an increased balance of negative temporary differences on items included in liabilities.

Current assets:

In the same period, current assets increased by PLN 847 391 thousand mainly due to an increase in the balance of cash and cash equivalents by PLN 650 921 thousand, generated from operating activities. Other changes in current assets were related to:

  • an increase in the balance of trade and other receivables by PLN 353 743 thousand mainly as a result of the issue of invoices by Group companies for construction work performed in the last days of 2023,
  • a decrease in the balance of inventories by PLN 135 801 thousand as a result of the integration of previously purchased materials.

Table: Equity and liabilities of the Budimex Group



Equity and liabilities:

On the side of equity capital and liabilities the changes referred to:

  • an increase in ”retained earnings” by PLN 278 910 thousand as a result of the generation of a net profit for 12 months of 2023 and the payment of dividends for 2022;
  • an increase in non-current liabilities by PLN 67 199 thousand, mainly due to:
     
    • an increase in long-term loans, borrowings and other external sources of finance by PLN 23 699 thousand as a result of, among other factors, granting a long-term investment loan to Magnolia Energy Sp. z o.o.;
    • an increase in the balance of provisions for non-current liabilities and other charges by PLN 30 071 thousand, which mainly relates to the recognition of an additional provision for warranty repairs and for reclamation,
    • an increase in the balance of retentions for construction contracts by PLN 14 233 thousand, mainly due to the larger scale of operations and thus higher retentions from subcontractors;
    • an increase in current liabilities by PLN 692 991 thousand, of which the greatest balance movements related to the following:
    • an increase in the balance of trade and other payables by PLN 265 050 thousand, which was correlated with the increase in the scale of operations and the increase in sales revenues generated,
    • an increase in the balance of valuation of construction contracts by PLN 274 472 thousand, as a result of a seasonal increase in the balance of over-invoicing, particularly on contracts performed for public customers,
    • an increase in the balance of provisions for current liabilities and other charges by PLN 219 576 thousand, mainly as a result of the recognition of provisions for penalties,
    • a decrease in the balance of deferred revenue by PLN 108 860 thousand, mainly due to the settlement of prepayments received in previous financial years.


In 2023, the Budimex Group earned sales revenues of PLN 9 801 515 thousand, which represents a 13.72% increase compared
to the revenue earned in 2022.


Table: Consolidated Profit and Loss Account of the Budimex Group



In 2023, construction and assembly output in Poland expressed in current prices increased by 15.4% year-on-year, while sales of the Budimex Group’s construction segment on the domestic market increased by 13.3% in comparable periods.

In 2023, gross profit on sales stood at PLN 1 124 581 thousand, while in the previous year it reached PLN 872 443 thousand.

The gross sales profitability in 2023 was 11.5% and in 2022 this figure was 10.1%.

In accordance with the adopted accounting policies, as soon as Group companies become aware of the fact that budgeted construction contract costs exceed the entire expected contract revenues, they create provisions for expected contract losses and recognize them in the consolidated statements of financing activities under “Provisions for construction contract losses.”

As of 31 December 2023, the balance of the provision for contract losses amounted to PLN 771 947 thousand. In 2023, the balance of the provision for contract losses was reduced by PLN 31 316 thousand. The Budimex Group companies are required to provide guarantees for their construction services. As at 31 December 2023, the balance of provisions for warranty repairs was PLN 739 910 thousand. In the 12-month period ended 31 December 2023, the balance of provisions for warranty repairs increased by PLN 103 940 thousand.

Compared to the previous year, selling expenses decreased in the twelve-month period ended 31 December 2023 by PLN 14 thousand, while administrative expenses were PLN 54 243 thousand higher than the expenses incurred in 2022. The share of the sum total of selling and administrative expenses in total sales revenue increased from 3.8% in 2022 to 3.9% in 2023. Other operating income in 2023 amounted to PLN 125 722 thousand and other operating expenses amounted to PLN 84 264 thousand. Detailed analytics of other operating income and expenses are presented in Note 32 to the consolidated financial statements.

In 2023, the Group posted an operating profit of PLN 781 127 thousand, representing 8.0% of total sales revenues. In the previous year, the Group reported an operating profit of PLN 562 427 thousand, representing 6.5% of total sales revenues. In the 12-month period ended 31 December 2023, the Group reported profit on financing activities in the amount of PLN 148 180 thousand, while in 2022 – a profit of PLN 86 372 thousand. Detailed analytics of finance income and costs are presented in Note 33 to the consolidated financial statements. In 2023, the Group reported a gross profit of PLN 929 612 thousand, while in the previous year it reported a gross profit of PLN 648 934 thousand.

Income tax expense for 2023 was PLN 183 547 thousand, of which:

  • current tax – PLN 310 553 thousand (including prior year’s corrections of PLN -18 301 thousand),
  • deferred tax – PLN (127 006) thousand.


As at 31 December 2023, the Group recognized deferred tax assets in the amount of PLN 810 426 thousand and deferred tax liabilities in the amount of PLN 1 633 thousand, while as of 31 December 2022 the Group recorded deferred tax assets of PLN 685 036 thousand and deferred tax liabilities of PLN 1 149 thousand. Items of deferred income tax asset reported in the statement of the financial position of the Budimex Group result mainly from the specific method of settlement of construction contracts, under which the moment of recognition of costs as incurred and revenue as earned is different from the tax and accounting perspective.

The net profit on continuing operations attributable to the shareholders of Budimex SA for 2023 was PLN 738 196 thousand, whereas for 2022 it amounted to PLN 534 443 thousand, representing an increase of 38.1%. Net profit attributable to non-controlling interest for 2023 amounted to PLN 7 869 thousand. In the previous year, net profit attributable to non-controlling interest stood at PLN 13 686 thousand.

Key economic and financial data of Budimex SA

The financial situation of Budimex SA in 2023 is characterized by selected items disclosed in the Statement of Financial Position and Profit and Loss Account (as below, together with the 2022 comparative data).



Statement of financial position of Budimex SA

Table: The main items of the Company’s Statement of Financial Position of Budimex SA



As of 31 December 2023, the total assets increased by PLN 906 394 thousand as compared to 31 December 2022, and amounted to PLN 7 349 333 thousand. Changes in the Statement of Financial Position were mainly related to the following events:

Non-current assets:

The most significant changes in non-current assets were as follows:

  • a decrease in the balance of retentions for construction contracts by PLN 14 349 thousand,
  • an increase in the balance of deferred tax assets by PLN 119 981 thousand due to an increased balance of negative temporary differences on items included in liabilities,
  • an increase in the balance of other financial assets resulting mainly from loans granted to subsidiaries: Magnolia Energy Sp. z o.o., Budimex F Sp. z o.o. and Fotowoltaika HIG XIV Sp. z o.o. in the total amount of PLN 22 130 thousand and an increase from the valuation of financial instruments.



Current assets:

In the same period, the value of current assets increased by PLN 758 679 thousand, mainly as a result of the following events:

  • an increase in the balance of cash by PLN 654 162 thousand, generated primarily from operating activities,
  • a decrease in the balance of inventories by PLN 112 365 thousand as a result of the consumption of materials accumulated in the previous year,
  • an increase in trade and other receivables by PLN 230 941 thousand, mainly as a result of an increase in trade receivables by PLN 253 455 thousand.


Table: Equity and liabilities of Budimex SA



Equity and liabilities:

On the side of equity and liabilities, the most significant changes referred to:

  • an increase in the balance of current liabilities by PLN 587 655 thousand, mainly due to:
  • an increase in the balance of valuation of construction contracts by PLN 260 397 thousand, representing the difference between revenues invoiced to investors and revenues recognized in the profit and loss account,
  • an increase in the balance of trade and other payables by PLN 221 082 thousand, which was mainly due to the persistence of good weather conditions for construction work and related settlements with suppliers and was correlated with the increase in the scale of operations and the increase in sales revenues generated,

    • an increase in the balance of provisions for liabilities by PLN 188 416 thousand, resulting mainly from an increase in the balance of provisions for penalties and warranty repairs,
    • a decrease in the balance of deferred revenue by PLN 128 325 thousand, mainly due to the accounting for received prepayments for performance of contracts.

  • an increase the balance in non-current liabilities by PLN 31 054 thousand, mainly due to:

    • an increase in the balance of provisions for non-current liabilities and other charges by PLN 27 212 thousand, mainly due to an increase in provisions for warranty repairs,
    • an increase in the balance of retentions for construction contracts by PLN 13 281 thousand.



Table: Profit and Loss Account of Budimex SA



Within the twelve-month period of 2023, Budimex SA generated revenues from sales in the amount of PLN 8 469 668 thousand, while in 2022 they amounted to PLN 7 507 937, i.e., a 12.8% increase.

In 2023, gross profit on sales stood at PLN 940 160 thousand, while in the previous year it reached PLN 718 372 thousand. The gross sales profitability ratio for 2023 was therefore 11.1% and was higher than in 2022, when it reached 9.6%.

Pursuant to the adopted accounting principles, the Company creates provision for contract losses if the budgeted costs exceed the total revenues under the agreement. In the subsequent periods, a part of the earlier created provision is reversed in proportion to the percentage of contract completion, after taking into account the total negative margin on the entire contract. As at 31 December 2022, the balance of the provision for contract losses amounted to PLN 791 275 thousand. In the twelve-month period ended 31 December 2023, the balance of the provision for contract losses decreased by PLN 33 039 thousand.

The selling expenses in 2023 decreased by PLN 17 thousand year-on-year, while the general administrative expenses grew by PLN 33 304 thousand. The share of the sum total of selling and administrative expenses in total sales revenue for the year under review was unchanged from 2022 at 3.6%.

Other operating income in the twelve-month period of 2023 amounted to PLN 98 931 thousand and other operating expenses – to PLN 32 569 thousand. Detailed analytics of other operating income and expenses are presented in Note 31 to the financial statements. In the twelve-month period of 2023, the Company reported profit on financing activities of PLN 199 002 thousand. Detailed analytics of finance income and costs are presented in Note 32 to the financial statements.

In 2023, the Company earned a gross profit of PLN 901 004 thousand. The comparable gross profit for 2022 amounted to PLN 543 942 thousand and was lower by 65.64% than in the current year.

Income tax for the 12 months of 2023 amounted to PLN 151 435 thousand, including:

  • current tax – PLN 271 091 thousand (including prior years’ corrections of PLN -20 158 thousand),
  • deferred tax – PLN (119 655) thousand.


In 2023, Budimex SA earned a net profit in the amount of PLN 749 569 thousand.


STATEMENT OF CASH FLOWS


Consolidated Statement of Cash Flows of the Budimex Group

“Cash and cash equivalents” included in the Statement of Cash Flows comprise cash in hand, demand deposits, and bank deposits that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.



Included in cash of restricted use are mainly cash items representing:

  • security for bank guarantees,
  • funds on split payment accounts,
  • cash in escrow accounts and current accounts in the part due to partners performing construction contracts together with a company from the Group.



The Budimex Group entered 2023 with cash in hand and cash at bank amounting to a total of PLN 3 249 369 thousand. For the purpose of the Statement of Cash Flows, this amount was reduced by the amount of restricted cash of PLN 27 959 thousand.

Net cash flow for 2023 was positive and amounted to PLN 654 933 thousand. As at 31 December 2023, the Group’s reported cash balance was PLN 3 900 290 thousand, of which restricted cash was PLN 22 396 thousand.

In 2023, the balance of cash from operating activities increased by PLN 1 312 035 thousand, mainly due to decreased financial involvement of the Group companies (and increased involvement of investors) in projects implemented.

Cash flow from investing activities came out to a negative balance of PLN 131 810 thousand, which was mainly the result of the acquisition of property, plant and equipment, as well as shares in related entities. Cash flow from financing activities for 2023 showed a negative balance, which amounted to PLN 525 292 thousand and resulted mainly from the 2022 dividend payment and payment of lease liabilities and credit.

Statement of Cash Flows of Budimex SA

The balance of cash in bank accounts and in hand at the beginning of 2023 amounted to PLN 2 830 825 thousand. For the purposes of drafting the statement of cash flows, this amount was adjusted with the value of restricted cash (in the amount of PLN 9 010 thousand), comprising mainly cash accumulated in split payment accounts and in accounts of consortia in the portion attributable to other consortium members. In the twelve months of 2023, net cash flow was positive and amounted to PLN 648 690 thousand. As at 31 December 2023, the Company reported a cash balance of PLN 3 484 987 thousand, including restricted cash of PLN 12 930 thousand.




In 2023, the balance of cash from operating activities increased by PLN 1 176 541 thousand.

The Company’s balance of cash from investing activities decreased by PLN 7 125 thousand, with the largest contribution coming from the acquisition of property, plant and equipment and the granting of loans to Group companies, including Budimex F Sp. z o.o., Mostostal Kraków SA and Fotowoltaika HIG XIV Sp. z o.o. while receiving dividends, including from FBSerwis SA, Budimex Budownictwo Sp. z o.o. and Mostostal Kraków SA.

Cash flow from financing activities for 2023 showed a negative balance of PLN 520 726 thousand. The expenses were connected with payment of the dividend made by the Company in the amount of PLN 459 286 thousand and repayment of lease liabilities.

Managing of finance

Managing of finance at the Budimex Group

The balance of cash and liquid deposits of the Budimex Group as at 31 December 2023 amounted to PLN 3 900 290 thousand and was PLN 650 921 thousand higher than as of 31 December 2022. The most important factors affecting this change in financial resources of the Budimex Group during 2023 include the following events:

  • maintaining high profitability of construction activities,
  • favorable changes in the components of net working capital in the construction segment, including an increase in the balance of inventories,
  • a significant increase in finance income from interest on cash as a result of continued high interest rates,
  • continued high profitability in the waste collection and management segment of the FBSerwis Group,
  • dividend paid by Budimex SA in the amount of PLN 459 286 thousand, which took place in June 2023.


In accordance with the Group’s policy, cash surpluses were placed as bank deposits in banks with high credit ratings. In addition, Budimex SA used cash surpluses to finance its suppliers of services and raw materials.

This had a positive effect on the financial liquidity of these suppliers.

At the same time, the Budimex Group reported an external debt in respect of bank loans, borrowings and leases, which as of 31 December 2023 amounted to PLN 236 591 thousand, including lease liabilities recognized in accordance with IFRS 16, amounting to PLN 130 153 thousand. The amount of the Group’s external debt on account of bank loans, borrowings and leases, without lease liabilities reported in accordance with IFRS 16, was PLN 106 438 thousand and was therefore PLN 12 779 thousand lower than as at 31 December 2022 (see table below). The Group’s debt is mainly composed of:

  • the debt of Budimex SA, Budimex Kolejnictwo SA, Mostostal Kraków SA and the FBSerwis Group companies under finance leases (concluded for the purpose of financing the purchase of property, plant and equipment),
  • the debt of Magnolia Energy Sp. z o.o. on account of a credit facility for financing a RES project (wind farm) – debt without recourse to Budimex SA,
  • debt of Budimex Parking Wrocław Sp. z o.o. on account of a loan for financing a concession project and a subordinated borrowing granted by a minority shareholder – debt without recourse to Budimex SA,
  • debt of FBSerwis Kamieńsk Sp. z o.o. on account of a borrowing granted by the National Fund for Environmental Protection and Water Management to finance investments related to waste management.


During 2023, Budimex SA did not draw on credit lines to which it has access. Persisting high interest rates in Poland in 2023 did not have a significant negative impact on the Budimex Group’s financial performance through rising interest expenses due to:

  • the Group’s relatively low level of financial debt: PLN 106 438 thousand (see table below),
  • a fixed interest rate on the loan from the National Fund for Environmental Protection and Water Management
  • transactions concluded to hedge interest rate risk in Budimex Parking Wrocław Sp. z o.o.


Table: Liabilities due to bank loans and borrowings and other external sources of finance of the Budimex Group




Table: Ratios showing the financing structure of the Budimex Group



At the end of 2023, compared to the end of 2022, the Group’s financing structure ratios remained roughly unchanged. The liquidity ratios (current and quick ratios) at the end of 2023 increased slightly, despite the dividend paid by Budimex SA.

Table: The liquidity ratios of the Budimex Group



Owing to the current very good financial standing of the Budimex Group, the cash resources held, access to credit at banks as well as the insignificant level of financial debt, there are no threats to the Group’s ability to finance its business activities in 2024.

Managing of finance at Budimex SA

The balance of cash and liquid deposits of Budimex SA as of 31 December 2023 amounted to PLN 3 484 987 thousand and was PLN 654 162 thousand higher than as of 31 December 2022. The most important factors contributing to this change in financial resources of Budimex SA during 2023 include the following events:

  • continued high profitability of Budimex SA’s activities,
  • favorable changes in the components of net working capital, including an increase in the balance of contract prepayments,
  • a significant increase in finance income from interest on cash as a result of rising interest rates,
  • dividend paid by Budimex SA in the amount of PLN 459 286 thousand, which took place in June 2023.


At the same time, the Company reported an external debt in respect of bank loans and borrowings and other external sources of finance, including lease liabilities, which as at 31 December 2023 amounted to PLN 103 860 thousand, including lease liabilities recognized in accordance with IFRS 16, amounting to PLN 88 757 thousand. The amount of Budimex SA’s external debt on account of bank loans, borrowings and leases understood in accordance with IAS 17, i.e., without lease liabilities, reported in accordance with IFRS 16, was PLN 15 103 thousand and was therefore PLN 16 830 thousand lower than as of 31 December 2022 and PLN 41 672 thousand lower than as of 31 December 2021 (see table below). The amount of financial debt of Budimex SA [1] comprises only liabilities under lease agreements in respect of machines and equipment required to carry out road construction projects. As at the end of 2022, the Company had no debt under bonds issued.

Table: Liabilities due to bank loans and borrowings and other external sources of finance of Budimex SA



Table: Ratios showing the financing structure of Budimex SA



At the end of 2023, the sustainability of the financing structure, as described above, improved as compared to 2022. The foregoing indicators were most significantly driven by two opposing factors: high profitability of the Company (high operating profitability and high net finance income – interest income and dividends received) resulting in an increase in equity and the dividend policy (annual payments close to the amount of net profits earned by the Company) which limits the rate of increase in equity. Liquidity ratios also improved in 2023 compared to 2022, reaching levels similar to those experienced at the end of 2021 (see table below).

Table: Liquidity ratios of Budimex SA



The Company’s situation with respect to liquidity and access to external sources of finance is currently very good, and there
are no risks to the financing of the Company’s activities in 2024.

Contingent liabilities and contingent receivables of the Budimex Group

Guarantees, sureties, and other contingent liabilities and receivables are described in Note 44 to the consolidated financial statements of the Budimex Group and in Note 44 to the financial statements of Budimex SA.The table below shows loan guarantees and sureties issued by Budimex SA or its subsidiaries as of 31 December 2023.

Table: Contingent liabilities and contingent receivables of the Budimex Group



* The surety was granted in relation to contracts executed by Budimex SA.

Differences between forecast and actual financial results of the Budimex Group

The Budimex Group did not publish any financial forecasts for 2023.


Utilization of proceeds from issues of securities
In the period covered by the report, no securities were issued either within or outside the Budimex Group.



[1] Items that do not include amounts of lease liabilities reported in accordance with IFRS 16.

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2.1. Business model and value chain, 2.1.4. Current activities and development perspectives for the Budimex Group, About Budimex Group

2.1.4 Activities of the Budimex Group and development prospects

By on

April 25, 2024

- Category : 2.1. Business model and value chain, 2.1.4. Current activities and development perspectives for the Budimex Group, About Budimex Group

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STRUCTURE OF SALES REVENUES OF THE BUDIMEX GROUP


Sales of the construction segment

 

In 2023, the construction market in Poland (measured by the value of sales of construction and assembly production) increased, according to the Central Statistical Office, by nearly 15.4%compared to 2022. A strong increase was recorded in both the infrastructure construction area (+24.1%) and the general construction sector (+6.5%). In contrast, the residential construction segment saw a slowdown in activity (-6.8%). At the same time, there was an increase in non-residential construction activity (+15.0%), driven by improvements within the construction of commercial, industrial and warehouse buildings.

In the financial year 2023, Budimex Group’s sales revenue in the construction segment increased by 13.8% over 2022.
The share of the infrastructural construction segment in total revenue from sales of the Group’s construction and assembly services increased from 38.8% in 2022 to 40.2% in 2023. The share of the railway segment in the revenue structure of the Group’s construction segment increased from 24.2% to 28.1% in 2023. The share of the general construction segment, on the other hand, dropped from 37.0% in 2022 to 31.7% in 2023.

Table: The sales structure by individual segments of the construction market




Figure: The geographical structure of revenues from sales (with respect to construction ctivities) in 2023

The main markets on which the Budimex Group operates are:

• Poland
• Germany
• Slovakia








STRUCTURE OF SALES REVENUES OF BUDIMEX SA


Sales of construction and assembly services

In 2023, sales of construction and assembly services of the Company increased by 12.2% compared to 2022. Sales of the infrastructural segment increased to PLN 3 547 thousand in 2023 from PLN 3 019 thousand in 2022 (by 17.5%). Sales in the rail area increased by 32.6% from PLN 1 877 million to PLN 2 489 million in 2023. Sales in the general construction segment decreased by 9.2% from PLN 2 555 million in 2022 to PLN 2 321 million in 2023.

Table: The structure of sales of construction and assembly work by individual segments of the construction market



Figure: The geographical structure of Budimex SA’s of revenues from sales in 2023

The main markets on which Budimex SA operates are:

• Poland
• Germany
• Slovakia









Construction activities of the Budimex Group on the German market [1]

In 2023, workshop services were rendered on the German market. Sales revenues amounted to PLN 222 556 thousand (of which Budimex SA accounted for PLN 195 127 thousand and Mostostal Kraków SA for PLN 27 429 thousand) and were lower by PLN 17 358 thousand, i.e., by 7.2% compared to 2022. A decrease was recorded in the case of prefabrication works (10.5%), while an increase was recorded for metal-related works (8.7%). The crisis in the construction market caused a drop in orders for prefabricated elements in 2023, resulting in lower sales. The operating profit on the German market amounted to PLN 20 584 thousand in 2023, while in 2022 it was PLN 28 797 thousand. Overall profitability in 2023 stood at 9.2%, while in 2022 it was 12%. Customer structure shows dispersion and only one customer exceeded 10% of total turnover (it accounted for 12% of total turnover).

In 2023, Budimex Bau GmbH, a wholly-owned subsidiary of Budimex SA, continued to develop its activities in the construction sector, in the road infrastructure segment and in the general construction segment. Revenue in 2023 stood at EUR 9 510 thousand. At the same time, the Company has secured new contracts with a total value of EUR 22 343 thousand, which will help to increase revenue in the coming years.

Budimex Group and Budimex SA development prospects in the forthcoming year

Next year the Budimex Group will continue to operate in all major sectors of the construction market in Poland, as well as on selected foreign markets.

The value of orders signed by the Budimex Group in 2023 was 5.2% higher than in the previous year. The diversified structure of the order portfolio (including long-term “design and build” contracts) largely secures the work front for the next 2 years. The Group continues to take steps to expand geographically, in particular into the German, Czech, Slovak and Latvian markets.

In 2023, the first construction contract was signed in the Czech market, worth PLN 102 million. Looking ahead to the next few years, the aforementioned markets may be a source of additional orders that will allow us to maintain a stable order portfolio, also in the long term.

The Group also plans to consistently consolidate its position in the building objects construction segment and win new contracts in the industry and energy segment, rail segment, and hydraulic engineering construction segment. Projects implemented on a public-private partnership basis are also in the area of interest.

The Budimex Group also operates in the segment of renewable energy sources – not only as a contractor of this type of installation, but also as an investor. In February 2022, the Company acquired a project for a ready-to-build wind farm located in the Wielkopolskie province with a capacity of up to 7 MW. The “Magnolia” wind farm (Magnolia Energy Sp. z o.o.), was commissioned in the second half of 2023, and electricity output from this farm exceeded 8 GWh in 2023. In addition, the Budimex Group has been developing photovoltaic projects. As part of the development of this segment, the photovoltaic farm “Kamelia” (Fotowoltaika HIG XIV Sp. z o.o.) was acquired in November 2022. The project was acquired in the form of the purchase of shares in a company that had complete documentation for the construction of a 14 MW photovoltaic farm. In 2023, work was underway to build a photovoltaic facility, but this work has not yet been completed. The energy produced by this farm should largely cover Budimex SA’s demand for electricity.

In April 2023, Budimex SA and its partner in the Ferrovial Group – Ferrovial Energy Infrastructure and Mobility – signed a partners’ agreement establishing a new joint venture company, BXF Energia Sp. z o.o. Budimex SA has a majority share (51%) in the new entity. The objective of the company is the development of renewable energy projects, their construction and operation. The company is focused on projects in photovoltaic and wind farm technology. The development has commenced by securing further sites for potential power plants with a capacity of several hundred MW. At the same time, it admits further acquisitions of projects in readiness for construction. Further efforts will be made to organically develop this type of facility in the coming years. Further growth of the FBSerwis Group is planned, particularly in the area of municipal services, both organically and through potential acquisitions of entities with an established market position.

In 2023, the Budimex Group companies signed construction contracts for a total value of PLN 8 289 576 thousand (with annexes). The value of the order portfolio of the Budimex Group as at 31 December 2023 amounted to PLN 13 139 554 thousand, which was on a par with the end of 2022.In 2023, Budimex SA in turn signed construction contracts for a total value of PLN 7 470 358 thousand (with annexes). As of 31 December 2023, the order portfolio amounted to PLN 11 943 325 thousand.

Figure: The structure of the Budimex Group’s order portfolio as of 31 December 2023






Evaluation of investment project feasibility

In 2023, the Budimex Group plans to incur capital expenditure of approx. PLN 230 million, of which approx. PLN 70 million will be incurred by Budimex SA, approx. PLN 25 million – by Budimex Kolejnictwo SA, PLN 35 million by the FBSerwis Group and PLN 35 million for the development of photovoltaic and wind farms. Key expenditure will be incurred for the purchase of construction and railway machinery and implementation of IT projects as well as investment in renewable energy sources. Capital expenditure planned by the FBSerwis Group will include investments in the area of municipal services and means of transport.

Risk factors

In the course of its activities, the Budimex Group is exposed to a number of risks, of which the most significant groups of risks affecting the Company are as follows:

  • financial risks: currency risk, price risk, credit risk,
  • technical risks,
  • legal risks.
Information concerning the financial risk management objectives and policies adopted by the Group is presented in the consolidated financial statements for the year ended 31 December 2023 (Note 4).

The inherent risk of any business activity is the credit risk of business partners. Despite implementing restrictive debt control procedures at the Group, the risk of investor insolvency has not been eliminated. Delays in timely repayment of debt may have adverse effects on the financial results of the Group and may require that receivables impairment write-downs be recognized or that current business be financed through external borrowings.

Construction contracts are executed under specific technical and economic conditions which have an effect on the level of realized margin. The Budimex Group companies rendering construction services monitor technical, organizational, legal and financial risks related to the planning and progress of contract work. Despite control and preventive measures undertaken with respect to general risks (credit, currency risks), it is possible that certain factors occur, due to which contracts will be performed with lower margins than initially planned. Such factors may include:

  • economic uncertainty related to the war in Ukraine,
  • increases in costs of subcontractor services, limited availability or bankruptcy of subcontractors,
  • increases in employment costs and limited availability of qualified employees,
  • increases in prices of construction materials, energy and oil derivatives,
  • delays in timely performance or insufficient quality of subcontracted works,
  • delays in obtaining relevant administrative decisions,
  • changes in the scope of work or technologies as agreed in the contracts,
  • unfavorable weather or land conditions.

Procurement source changes

In 2023, there were no significant changes in the procurement sources for construction sites. None of the suppliers of raw materials or services exceeded 10% of the Budimex Group’s and Budimex SA’s sales.

[1] The description of business activities does not cover all activities of the Budimex Group in Germany.
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2.1. Business model and value chain, 2.1.3. Business environment, About Budimex Group

2.1.3. Business environment

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April 25, 2024

- Category : 2.1. Business model and value chain, 2.1.3. Business environment, About Budimex Group

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General market conditions

According to a preliminary estimate, gross domestic product (GDP) in 2023 was higher by 0.2% in real terms compared with 2022, versus an increase by 5.3% in 2022 (at constant previous year’s prices). The full-year estimates show that the recovery is proceeding slowly, despite the presence of disinflationary developments. The Central Statistical Office reported that the average annual total consumer price index in 2023 was 11.4%, compared to 14.4% the year before. The final months of 2023 saw a normalization of price processes, as evidenced by December’s inflation reading of 6.2%.

In 2023, the registered unemployment rate in Poland was relatively flat compared to the previous year as evidenced by a slight decrease of 0.1 percentage points from 5.2% in December 2022 to 5.1% in December 2023. Average monthly remuneration in the economy increased by 9.6% year-on-year and exceeded PLN 8 thousand for the first time ever. In the construction industry alone, average wages rose by 6.3% year-on-year, with higher increases of 10.4% and 10.3% in engineering and specialized construction, respectively, and lower in building construction, which had a negative growth rate of 1.5%.

Gross fixed capital formation in 2023 increased by 8% year-on-year, compared with an increase by 4.9% in 2022. The investment rate in the national economy (the ratio of gross fixed capital formation to gross domestic product in current prices) in 2023 was 17.4% compared with 16.8% in 2022.

At the end of 2023, the construction business climate index was -13.2 percentage points, which suggests that more companies in the sector (20.5%) expect the industry to see a deterioration in business conditions rather than an improvement (7.4%). According to the CSO’s surveys, construction companies are experiencing a year-on-year improvement in raw material issues, with 6.1% of respondents perceiving a shortage of materials at the end of December 2023 (compared to 12.3% a year earlier) and 57.6% perceiving material costs (compared to 73.5% a year earlier) as market barriers. The trends are confirmed by the price indices for construction and assembly production, which increased by 10.2% over the year, while since the beginning of January 2023 they have exhibited decreasing dynamics, with prices going up by 7.5% in December 2023 alone. According to construction businesses, the biggest challenge for the industry is the cost of labor, which was identified by 70.2% of the companies surveyed as a barrier to the sector.



According to data from the Central Statistical Office, construction and assembly output (at constant prices) delivered in Poland by construction businesses employing more than nine people was 5% higher in 2023 than in 2022. Building construction was the only construction segment to show negative year-on-year growth of -1.3%, although it should be noted that the last quarter was characterized by a recovery, with an increase of 13.4% witnessed in December alone. The other construction sectors – civil engineering and specialized construction – were characterized by increases in constant prices of 11.3% and 2.7% respectively in 2023.

The environment of low level interest rates (and therefore a low cost of capital) observed in recent years, which was favorable for the construction market, was replaced by the reality of higher interest rates. A series of increases by the MPC pushed the reference rate to 5.75% in October 2023. The market does not expect a significant reduction in the interest rate trajectory in 2024, which is likely to continue to reduce the potential for debt-backed investment. Despite the high level of interest rates, residential construction in the ten largest cities was characterized by year-on-year increases of nearly 69% in the number of residential units sold. The reason for the increases can be attributed to the introduction of the government’s Safe 2% Loan program, which has increased the number of loan applications by leaps and bounds – rising from 214 thousand loan applications in 2022 to 365 thousand applications in 2023. Ultimately, this resulted in an upturn in residential construction, but it also produced an imbalance between demand and supply in individual metropolitan areas, which led to a negative balance of residential units on offer.

Market development prospects

Poland stands out among the countries of Central and Eastern Europe as a country with potential for GDP recovery, owing to fiscal loosening but also to the impact of inflows from the European Union and a slight potential for interest rate cuts in 2024. The expected decline in inflation is expected to be driven by the reversal of the trend of external price shocks and the strengthening of the domestic currency. According to projections by the Polish Economic Institute (PIE) published in January 2024, the domestic economy will emerge from a period of slowdown and grow by 2.3% in 2024 and 3.5% in 2025. The recovery trend in economic growth is also signalled by the Ministry of Finance and the projections of domestic commercial banks.

Recovery of GDP is expected to be driven mainly by private consumption boosted by an increase in real household disposable income. At the same time, macroeconomic forecasts suggest a deceleration in investment and a deterioration in the effect of the balance of trade with foreign partners. Investment is set to decelerate from 6.7% in 2023 to 1.2% in 2024, driven by both the economic slowdown in Europe and a decline in local government investment volumes – mainly due to the stoppages caused by the change in the outlook for cohesion funds from the European Union. Any support for funding from the National Recovery Plan (NRP) should only be noticeable in 2025, as project implementation anticipates the largest outlays to be made in a period of a dozen or so months after the launch of the initiative.

The PIE forecasts average CPI inflation of 5.1% in 2024, which would sustain the downward trend observed in 2023, but at a much lower rate. Inflation expectations among companies are still high and, according to the CSO Business Survey, the number of companies declaring price increases is still higher compared to the peak of the cycle before the COVID-19 pandemic in 2018–2019. In addition, expectations of price increases will be boosted by energy prices – the reinstatement of market prices and the expiry of the energy price freeze legislation at the end of June 2024. The continuing elevated inflation rate will also be driven by the increase in the minimum wage and the reinstatement of VAT on food from 1 April 2024.

In December 2022, the European Commission (EC) approved all Polish Cohesion Policy programs for 2021–2027, agreed on the basis of the Partnership Agreement developed. Poland remains the largest beneficiary of the Cohesion Policy, with EU contributions of EUR 76 billion. All national programs and 16 regional programs for Poland have been approved.  EUR 24.2 billion has been allocated to the FEnIKS program, compared to EUR 27.4 billion under the previous financial perspective. The expected scale of assistance in the area of infrastructure projects should ensure that EU funds will continue to play a significant role in the growth of the Polish construction sector in the coming years. The forthcoming budgetary perspective will be the first in which railway projects will have priority over road projects. The support for infrastructure projects under the Connecting Europe Facility (CEF) competitive instrument will also be important.

The last months of 2023 saw visible progress in terms of access to EU funds. In November, the European Commission (EC) approved a modified NRP budget, increasing the amount of funds linked to the REPowerEU program. The effect of the EC’s move is that 20% of REPowerEU funds can be pre-financed without the need to meet milestones – Poland has already received EUR 5 billion in pre-financing, which is important in the context of the reduction of the remaining EU funds in 2024.

The revised National Recovery Plan envisages the disbursement of EUR 59.8 billion, including EUR 25.3 billion in grants and EUR 34.5 billion in preferential loans. In line with EU targets, a significant proportion of the funding will be allocated to climate-related objectives (46.6%) and digital transformation (21.4%). In addition, at the beginning of 2024, Poland fulfilled the last three conditions necessary for the release of structural funds totaling EUR 76 billion. The structural funds include the Cohesion Fund, the European Regional Development Fund, the European Social Fund, the European Agricultural Fund for Rural Development, and the European Maritime and Fisheries Fund. According to economists’ calculations, Poland will receive a net 1.3% of GDP in grants and up to 2.7% of GDP in 2024 from EU funds, when loans are taken into account.

In 2023, the Polish construction market continued to suffer the consequences of the challenges caused by the difficult geopolitical situation. The price shocks experienced in previous years and the market’s continued anticipation of the release of EU funds have influenced further delays in the public procurement market. However, despite the demands of the market, the General Directorate for National Roads and Motorways (GDDKiA) has once again ensured the stability of the tenders announced and the dialogue on the indexation mechanism. The projected expenditure by the main contracting authority in the road market was around PLN 15 billion, the second highest figure in the last six years. In 2023, GDDKiA signed sixteen contracts for tasks with a total length of 216 kilometers and a value of around PLN 8.6 billion (against twenty-four contracts in 2022 with a length of 333.4 kilometers). The value of tenders announced increased year-on-year to forty-two sections with a total length of 530.6 kilometers (compared to twenty tenders with a total length of 226.8 kilometers in 2022). In addition, in 2023, GDDKiA finalized the signing of indexation annexes with a 15% indexation cap for ninety-seven contracts with twenty-three contractors – responding to the significant increase in contractors’ expenses resulting from the effects of Russia’s aggression against Ukraine in 2022.


In December 2023, the contracting authority signed the first contracts for EU funding under the European Funds for Infrastructure Climate, Environment (FEnIKS) program. As part of the EU-funded projects, more than 2,127 kilometers of national roads (including around 158 kilometers of motorways and 1,765 kilometers of motorways) are scheduled to be constructed. As of the end of 2023, 1,298 kilometers of national roads are under construction, another 507 kilometers are in tender proceedings and 3,306 kilometers are currently in the pipeline. The Government’s National Road Construction Program until 2030 (with an outlook until 2033), updated in 2022, with a total value of PLN 294.4 billion, accounts for most of the investment. The remaining investment will be implemented under the Program for the Construction of 100 bypasses, worth PLN 28.1 billion. In 2024, GDDKiA intends to announce tenders for 215 kilometers, of which 92.2 kilometers relate to roads under the Government’s National Road Construction Program until 2030 and 122.5 kilometers to the Program for the construction of 100 bypasses. In addition, following the replacement of executives at the main contracting authorities in the road and rail markets, the timetables for the signing of announced tenders and the publication of new tenders are expected to be extended. Consequently, this may affect the short-term supply of contracts, but the long-term outlook remains invariably optimistic.

The rail market faced another year of funding problems due to the prolonged wait for EU funds. As a consequence, the period for signing contracts for previously announced tenders was extended. PKP PLK signed nine contracts in 2023 for tenders announced back in 2022, and what is more, two of the tenders from this period are still pending. The main contracting authority has published further tenders worth more than PLN 11 billion in 2023, with five contracts worth around PLN 1.5 billion already signed. From a market perspective, it should be mentioned that at its meeting on 16 August 2023, the Council of Ministers adopted a resolution submitted by the Minister of Infrastructure on the establishment of the National Railway Program until 2030 (with an outlook until 2033). The total value of the National Railway Program 2030 is PLN 170 billion, including PLN 79 billion for the 2014–2020 perspective, PLN 80 billion for the 2021–2027 perspective and PLN 11 billion for the NRP. Some of the funds were pre-financed by the Polish Development Fund (PFR) at the end of 2023. Additional support for investment in the railway market is provided by the Local and Regional Railway Infrastructure Completion Program – Rail + until 2029, worth PLN 13.2 billion, and plans for the construction of 1,800 kilometers of railway lines by 2034 as part of the Solidarity Transport Hub Poland.



Another key project necessary for Poland’s proper energy transition is PSE’s investments. The updated program includes investments in electricity grids, which are expected to amount to nearly PLN 62 billion by 2036. The program includes, among others, the construction of 5,225 kilometers of 400 kV line tracks; 27 new substations and 775 kilometers of direct current lines. Investment objectives selected by PSE include: power evacuation from Polish offshore wind farms in the Baltic Sea; power evacuation from nuclear power plants; integration of onshore RES sources into the NPS; connection of new stable generation sources and energy storage facilities; increasing the potential of the national grid to transport energy through Poland as a transit hub; supplying electricity to new industrial customers; including in special economic zones; supporting the development of electromobility and electrification of the heating sector; and supplying power to the Solidarity Transport Hub Poland, including high-speed rail.

Poland is currently in the process of phasing out its oldest coal-fired power units. The efforts of energy companies are focused on implementing projects geared towards climate neutrality. Among other things, PGE is in the process of preparing a project for the largest offshore wind farm in the Baltic Sea and is working on the construction of two CCGT units at the Dolna Odra power plant. Another important development in the energy sector was the merger of Orlen, Lotos and PGNIG. The establishment of a multi-energy company is an unprecedented event in the domestic market that may change the balance of power on the map of Europe’s energy interests.

At the end of 2023, the Rybnik Power Plant’s two coal-fired power – units No. 3 and 4 – were shut down. These will be replaced by an 882 MW gas-fired unit at this plant. The net value of this investment is approximately PLN 4 billion.

In 2023, planning and preparatory work progressed on the Solidarity Transport Hub Poland project (CPK). Advanced design work included the airport terminal, railway station, runways, air traffic control tower and more than 450 kilometers of railway, including the section between Warsaw and Łódź. Of the almost 2,000 kilometers of lines the company plans to build, investor options have been selected and mileage consulted for more than 600 kilometers – these are the following sections: Warsaw – CPK – Łódź, Łódź – Wrocław, Sieradz – Poznań, Łętownia – Rzeszów and Katowice – Ostrava. Of those listed, design is underway for more than 450 kilometers. In addition, CPK has selected the French-Australian consortium of Vinci and IFM as a strategic investor in the proceedings. The estimated total amount needed for the airport part of the investment is around PLN 41 billion, of which more than PLN 32 billion is to be provided by contributions from private investors and debt financing. CPK has signed agreements for the design of the Warsaw – Łódź line, which will be the first section of the High Speed Railway (HSR) in Poland. The contractors were selected as part of the largest framework agreement for this type of service in Europe. Some rail projects are envisaged to be implemented under the Public-Private Partnership (PPP) formula.

A contract has also been signed with the designer of the passenger terminal and railway station (the so-called master architect) the Foster + Partners and Buro Happold consortium, and with the Master Civil Engineer (MCE), Dar Al-Handasah, a Lebanese company that has been involved in the design of airports in Doha, Dubai and Chicago, among other places. In addition, 13 companies and consortia have been selected with whom CPK will sign a framework agreement, as part of the first tender for the design of support facilities (SIE – Support Infrastructure Engineer).

CPK has already secured a total of more than PLN 400 million in EU funding from the CEF Connecting Europe Facility.

This year, the European Commission granted CPK funding of around PLN 300 million for the construction project of the strategic HSR line between Warsaw and Łódź. The company plans to apply for further funding. In the current round of the CEF program, it will apply for grants totalling at least PLN 1.7 billion.

Port investments are another important pillar of Poland’s infrastructural development. In autumn 2019, the Council of Ministers adopted a resolution identifying key investments for the program called: “Program for the development of Polish seaports until 2030.” Implementation of the program will ensure the efficient functioning and development of Polish seaports and contribute to utilizing their full potential. The implementation of the investments indicated in the program is extremely important for the further dynamic development of the ports and for maintaining and strengthening their position among European ports. The value of the program until 2030 has been estimated at around PLN 30 billion.

Projects currently underway include the upgrade and deepening of the Świnoujście-Szczecin waterway to a depth of 12.5 meters at a cost of almost PLN 2 billion; the upgrade of the protective breakwater system in the Northern Port in Gdańsk at a cost of almost PLN 800 million; the deepening of the approach fairway and internal basins and the reconstruction of quays in the Port of Gdynia at a cost of almost PLN 600 million, and the construction of a protective breakwater in the Port of Gdańsk at a cost of PLN 850 million. The program was prepared with a view to implementing the “Strategy for Responsible Development until 2020 (with an outlook until 2030).”

Budimex SA remains interested in implementing projects under the public-private partnership (PPP) formula. There are still very few PPP tenders for high-value projects on the Polish market.

The Polish electricity market offers good prospects from the point of view of investing in green generation assets.

In 2022, the annual demand for electricity in the Polish electricity system is approximately 174 TWh and 55 GW of installed generation capacity. Currently, Poland has the fifth largest annual electricity demand in Europe, which is largely covered by coal-fired sources. Low-carbon electricity generation accounts for 23% of total output. Over the next decade, Poland will face the challenge of ensuring sufficient generation capacity as coal-fired power plants are being phased out. The main goals and objectives of Poland’s energy development are set out in the “Poland’s Energy Policy until 2040,” which is currently being updated. According to government announcements, a draft of the new document will be prepared by the end of this year. Unofficial information suggests that the share of RES in the energy mix will be higher than originally assumed. The document from 2019 provided for, among other things, an increase in installed photovoltaic capacity to around 10–16 GW (2040), the installation of offshore wind farms with a total capacity of 11 GW by 2040 and an increase in the share of RES in all sectors and technologies by at least 23% (2030). The expansion of the market will be further boosted by the investment program of the Polskie Sieci Przesyłowe (PSE) and investments under the National Recovery Program.

The Budimex Group is scouting for further projects to acquire and is working towards the organic development of such plants through a long-term development process.

Between 2022 and 2023, the Budimex Group entered the electromobility business. Budimex Mobility SA’s network of electric car chargers has already exceeded 160 stations. The company is among the top 5 players in the market. The electromobility market in Poland is at an early stage of development. Charging station operators are focused on securing attractive locations, whose purchase will pay off as a result of successive improvements in market utilization. According to estimates by the PSPA, annual sales of electric vehicles (BEVs) in Poland will increase from 14,425 in 2023 to more than 0.5 million cars per year in 2040. The network of charging points will be expanded dozens of times during this period, from 6,639 points in 2023 to nearly 176,000 points in 2040.



Another promising market for the Budimex Group is the waste management and infrastructure maintenance segment. Since 2012, these markets have been developed by FBSerwis Group companies.

The waste management sector in Poland deviates from Western European standards and requires major changes, in line with the trend of promoting a circular economy. Various legal regulations are being introduced at both national and EU level, forcing municipalities and producers to reduce waste generation and bear the costs of waste disposal. Thermal treatment and landfilling are the least promoted waste disposal options in the EU. In recent years, along with economic growth, the amount of municipal waste in Poland has been gradually increasing. In 2022, 13.4 million tons of waste were produced. Due to the decline in coal mining, a different trend was observed in the case of industrial waste, with over 115 million tons generated in 2022, i.e., significantly less than even 10 years ago. A major problem for the industry is the so-called “grey market.” It is estimated that around 30% of waste in Poland is managed outside the system. For comparison, the same indicator in Western European countries stands at about 5%. In the long term, recycling and reuse of waste as a raw material should be the primary means of “disposing” of waste. If this happens, the amount of mixed waste, and thus the production of the calorific fraction of waste, should decline. This trend will set the stage for further market development. The level of recycling in Poland (30–40%) is far from the figures observed in other countries: Germany (around 70%), Austria (60%), Italy (50–60%) or Norway and Sweden (50%). This percentage has been increasing in Poland to a small extent in recent years, with the main reason being the insufficient level of funding for raw material recovery by producers of packaged goods.

The FBSerwis Group is active in the infrastructure maintenance industry, mainly with regard to the national and local road network. As a result of the successive implementation of the National Road and Motorway Construction Program, the length of expressways and motorways has increased to more than 5,000 kilometers in recent years. The target network is expected to be over 8,000 kilometers. Over time, the emphasis will shift from road construction to road maintenance and repair.

The same trends will be observed at the local level, where the expansion of the road network is supported by programs such as: the New Deal or the Program for Strengthening the National Road Network.



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2.1. Business model and value chain, 2.1.2. Our customers and suppliers, About Budimex Group

2.1.2. Our customers and suppliers

By on

April 25, 2024

- Category : 2.1. Business model and value chain, 2.1.2. Our customers and suppliers, About Budimex Group

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Budimex SA performs contracts for both public (state and local government) and private entities.

The most common kinds of entities in the company’s supply chain are:
  • construction contractor,
  • building material suppliers,
  • construction machinery service providers,
  • fuel and energy suppliers,
  • suppliers and service providers in support processes.

The company’s customers include:

  • road infrastructure managers (General Directorate for National Roads and Motorways, voivodship governments),
  • railroad infrastructure manager (PKP Polskie Linie Kolejowe),
  • manufacturing companies,
  • developers,
  • public institutions in the areas of administration, health care, culture, sports etc.

Scale of Budimex SA’s operations in 2023:

  • putting 105 kilometers of new railroad track into service,
  • putting nearly 121 kilometers of new roads into service,
  • signing 71 new contracts with a total value of nearly
  • PLN 7.5 billion.

Mostostal Kraków SA’s customers include both private and public entities:

  • industrial companies (including those in the cement
  • and lime, metallurgical, chemical and power
  • and fuel industries),
  • railroad entities and municipal transportation companies,
  • foreign customers purchasing mainly steel structures (including power and bridge companies and waste incinerators).

The most common kinds of entities in the company’s supply chain are:

  • suppliers of metallurgical materials and steel structures,
  • installation work service providers,
  • steel structure assembly service providers,
  • companies engaged in hiring hourly workers,
  • suppliers of construction materials and scaffolding.

Scale of Mostostal Kraków SA’s operations in 2023:

  • 58 contracts executed in Poland and abroad,
  • signing 35 new contracts with a total value of
  • PLN 525 million,
  • the plant in Kraków produced 4,048 tons of steel structures, the plant in Kleszczów produced 3,932 tons, and the plant in Radomsko, since becoming part of the Mostostal Kraków Group in May 2023 – 3,608 tons.

Customers of FBSerwis Group companies are public and private entities, including in particular:

  • road managers,
  • local governments (cities, municipalities, counties),
  • retail chains,
  • logistics and distribution centers,
  • building owners/administrators,
  • retail customers (including commercial undertakings of all sizes, including micro-undertakings).

The most common kinds of entities in the company’s supply chain are:

  • waste management service providers – mainly waste processing and waste transportation, including waste collection,
  • construction service providers,
  • providers of services performed with vehicles, machinery and specialized equipment,
  • providers of vehicles, machinery and specialized equipment rental services,
  • fuel and energy suppliers,
  • material suppliers,
  • suppliers and service providers in support processes.

Scale of FBSerwis Group’s operations in 2023:

  • technical maintenance of approx. 1,800 km of national roads and motorways and 6.5 million sqm of surface area,
  • providing waste collection services to more than
  • 600,000 residents nationwide,
  • operation of five facilities for mechanical-biological processing of municipal waste and three landfills.

In 2023, there were no significant changes in the value chain (upstream, downstream) of any of the key Budimex Group companies.

Information on the Budimex Group’s sales revenue structure and other data on the scale of operations and value chain can be found in the financial section of the 2023 report.
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2.1. Business model and value chain, 2.1.1. Main areas of activity, About Budimex Group

2.1.1. Main areas of activity

By on

April 25, 2024

- Category : 2.1. Business model and value chain, 2.1.1. Main areas of activity, About Budimex Group

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BUDIMEX SA

Infrastructure construction

As part of the Infrastructure Construction Division, the company carries out road, bridge and hydraulic engineering. The Division has its own equipment base, an asphalt plant and a network of certified laboratories. Its rich technological and equipment background enables it to undertake technically advanced projects throughout the country. Its offer is complemented by Budimex Group’s FBSerwis Group, which provides comprehensive road infrastructure maintenance services.



General construction

Building construction is one of the pillars of Budimex SA’s long-standing activities. The company’s General Construction Division performs the full range of services of this segment and provides comprehensive support at every stage of the project. The General Construction Division’s offer includes general contracting of public buildings, and commercial, industrial, military, residential and sports facilities. In the implementation of projects, it provides customers with full support of the technical office and optimal technological solutions, including those based on the BIM methodology, streamlining the process of designing, operation and management of facilities. Budimex SA’s activities in the building segment are supported by other companies of the Budimex Group: Mostostal Kraków SA, specializing in the execution of steel structures, and FBSerwis in the area of technical maintenance of facilities.


Railroad construction


Railroad construction is another major area of Budimex SA’s operations. The company carries out comprehensive railroad projects with full infrastructure facilities, such as platforms, stations and overpasses, including participation in the construction of new and modernization of existing railroad lines of strategic importance for Poland and the region. The Railway Construction Division has extensive and modern equipment facilities and is constantly developing the competence of its personnel in the field of, among other things, high-speed rail construction. Budimex SA is among the three largest contractors for the modernization of railroad lines in Poland. The Division’s offering is complemented by Budimex Kolejnictwo, which provides a variety of services for railroad construction, including equipment, welding, transportation and surveying.



Power and industrial construction

As a general contractor or in consortia with leading companies in the industrial sector, Budimex SA builds, among others, gas and steam units, gas transmission pipelines, and thermal waste conversion installations as well as water treatment stations, flue gas desulfurization and denitrification installations. The Power and Industrial Construction Division also participates in the development of nuclear power, supporting Poland’s energy transition.

Laboratory services

The company has its own extensive laboratory and technological facilities, consisting of the Central Laboratory and 25 field laboratories. It makes it possible to effectively conduct ongoing quality control of individual construction work ranges, in accordance with contract terms and technical specifications, and to perform as-built analyses. Budimex SA Laboratories also provide services to third parties. The Central Laboratory is accredited by the Polish Accreditation Center under number AB1414.

Production of mineral and asphalt mixtures

Budimex SA has bitumen plants with a capacity of up to 320 tons per hour. High-end technological and laboratory facilities allow the company to produce mineral and asphalt mixtures that meet the requirements of European standards for construction products. To ensure production stability and maintain high quality, a Company Production Control system has been implemented in accordance with the requirements of the harmonized standards of the PN-EN 13108 series. The compounds produced are not only used for ongoing contracts, but also are sold to external customers.

 

Equipment services

The Directorate of Equipment and Manufacturing Services [1] performs, among others, earthmoving and earth spreading, pavement milling, crane services and the transportation of oversized machinery and equipment. The combination of state-of-the-art equipment, skilled operators and supervisory staff, and innovative solutions allows construction work to be carried out with the highest quality.


MOSTOSTAL KRAKÓW SA 

Manufacturing of steel structures

The company’s core business areas include prefabrication, supply and assembly of steel structures, and the provision of design services. The backbone of the company is the steel structure plants located in Kraków and Kleszczów, and from May 2023, also the Konstalex plant in Radomsko, which deals with heavy structures, mainly steel bridges. The company’s total production potential exceeds 18,000 tons per year. Deliveries of structures are made, among others, for industrial, bridge and environmental facilities.

Industrial projects

The company is a designer and general contractor of steel structures for the construction of logistics centers, warehouses, and industrial and power facilities, among others. It has established teams responsible for developing its modular construction offerings and implementing multi-level steel system parking facilities.



FBSERWIS GROUP

Waste management

The FBSerwis Group companies offer a full catalogue of services in the area of municipal and industrial waste management, including collecting and transporting waste, managing waste processing facilities and landfills. In addition, they post employees to handle processes at customer sites, and advise on waste management and legal requirements in the environmental area. They perform tasks related to the maintenance of green areas and cleaning in cities and municipalities. The FBSerwis Group’s operations are complemented by Circular Construction SA, whose business activities focuses on the collection, storage and processing of waste. The company specializes in the recycling of building materials.


Comprehensive road infrastructure maintenance services

The FBSerwis Group provides comprehensive summer and winter maintenance services for roads, engineering structures and outdoor areas, taking care of their proper condition, passability, cleanliness and appearance as well as maintenance of horizontal and vertical road signs and traffic lights, etc. It also performs construction work and temporary signage for road works and events.





Lighting infrastructure management

FBSerwis performs comprehensive lighting modernization projects – from the system design stage, through obtaining construction permits and executing the works, to ongoing maintenance, and warranty and post-warranty repairs.


Technical building maintenance

The company provides technical maintenance and upkeep services for building installations, fit-out services, i.e. comprehensive development of building space, cleaning and green space maintenance services as well as providing administrative and security services for facilities. In addition, it performs energy audits, and reviews of energy consumption with an indication of achievable savings.




In addition, the Budimex Group is active in renewable energy production and the development of electromobility infrastructure, as described in more detail in Section 7.4. The company’s activity in foreign markets is presented in Section 7.3.

[1] By February 1, 2024. Under the name of the Equipment Services Division.

 

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