J.W. Construction expects a better second half of the year

2010-08-30

In H1 2010, the property developer J.W. Construction posted revenue of PLN 241.1m (€60.6m) and net profit of PLN 32m (€8m). Compared to the corresponding period of 2009, this marks a decline from revenue of PLN 331.1m (€83.2m) and net profit of PLN 49.3m (€12.4m), as reported by Parkiet.
In the opinion of the company's senior management, poorer financial performance was related to lower sales of flats in the first six months of the year, relative to H1 2009. From January to June 2010, the company sold 650 apartments, compared with over 900 flats a year earlier. However, the second half of the year is expected to be better, driven by the revenue from the sale of flats built as part of the Lewandow II housing estate in Warsaw and the Gorczewska Park project in Warsaw's district of Wola.
The company estimates that around 2,000 flats can be completed in 2010 as a whole. Currently, J.W. Construction has approx. 1,500 homes on offer, 547 of which have been finished. The company will soon start phase 1 of a housing project at Zdziarska Street in Warsaw (almost 600 flats); additionally, a small project comprising 25 flats is likely to be launched in Lodz by the end of the year. In 2011, the company will launch projects in Katowice, Gdynia and Poznan. Although J.W. Construction has a substantial land bank, it is sill looking for attractive building plots. In 2010, it acquired land in Poznan, Katowice and Gdynia. Due to excessive risk related to the legal status of a plot located at Wronia Street in Warsaw, the company decided not to pursue the transaction. However, negotiations on the acquisition of a large project in the Warsaw's Wola district continue.
In accordance with the company's plans, J.W. Construction will develop its contracting segment of business operations. The company is seeking to win orders from external entities. Furthermore, it participates in a tender competition for a road project (as a consortium member), whose results are expected in September 2010. The company's share in the potential contract is estimated at around PLN 150m (€37.7m).

Find more news and analyses in internet service Construction Poland Online and pdf newsletter Polish Construction Review.