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Poland in the European Union New opportunities for foreign investors Warsaw, the 29th of May 2007

Poland in the European Union New opportunities for foreign investors Warsaw, the 29th of May 2007. PRODUCTION POTENCIAL OF THE COMPANIES IN THE LIGHT OF THE REALIZATION OF THE ROAD ENGINEERING WORKS PROGRAM IN THE YEARS 2007 – 2013. Wojciech MALUSI President of the Board

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Poland in the European Union New opportunities for foreign investors Warsaw, the 29th of May 2007

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  1. Poland in the European UnionNew opportunities for foreign investors Warsaw, the 29th of May 2007 PRODUCTION POTENCIAL OF THE COMPANIES IN THE LIGHT OF THE REALIZATION OF THE ROAD ENGINEERING WORKS PROGRAM IN THE YEARS 2007 – 2013 Wojciech MALUSI President of the Board of Polish Chamber of Road Engineering

  2. Impact factors of the realization of the road engineering program : • friendly road engineering regulations • amount of the financial funds • efficient administration • staff for road engineering • road materials and their transport • production capabilities of the road engineering companies

  3. Do the companies operating on the Polish production market are able to cope with significantly increased scope of road engineering works and what factors will determine the possible success or the failure of this ambitious program?

  4. ZL bn 2005 2006 2007 2008 2009 2010 2011 2012 2013 Market Forecast Investment outlay for public roads in years 2005 - 2013 Total amount of the outlay for public roads in the years 2007 – 2013 – ZL 131,5bn.

  5. Companies Fixed Assets 7 6 5 4 ZL bn 3 2 1 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Calculation of the necessary fixed assets of the sector

  6. Fixed Asset Investment 2,5 2 1,5 ZL bn 1 0,5 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Necessary Investments

  7. zl bn Total net profit for sector companies 1,40 1,20 1,00 0,80 0,60 0,40 0,20 0,00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Net profit of the road engineering sector companies

  8. 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Average net profitability

  9. 12,0% 10,0% 8,0% 6,0% 4,0% 2,0% 0,0% 1999 2001 2003 2005 2007 2009 2011 2013 Average operating profitability in %

  10. Conclusions arising from the indicators analysis: • growth of the production capabilities in the recent years has occurred mainly as an effect of the use of the reserves from years 1998 - 2000 • expansion of foreign road engineering companies on the Polish market does not bring value-added production capabilities, because these companies engage polish firms as subcontractors in a significant extent, while not investing themselves their tangible assets in the fixed assets in Poland

  11. Conclusions arising from the indicators analysis: • In the recent years, the objective of investment in fixed asset has been mainly the maintenance of the operating capabilities and not the increase of the production capabilities • Simple production growth reserves are nearly run out • Annual companies investments in next few years should exceed more than ZL 2bn. • In the case of lack of investments, the companies’ production capabilities will be sufficient to carry out only 75% of the road works

  12. Main factors impeding the companies’ investments: • Low profitability of the road engineering works’ contracts • Unfavorable conditions stipulated in the bid documentation • Amount of works passed to be realized by subcontractors is too high. • Conducting a „second bid process” by the winners of the bid • Long payment terms forced by the principals

  13. The final conclusion: The immediate growth of the profitability of the road and bridge engineering firms is necessary. If the growth does not occur, the whole sector will not be able to realize the planned scope of road works within next years.

  14. Thank You Wojciech Malusi President of the Board of the PCRE Cooperation: Jarosław Laskowski, Jacek Stefański Arcata Partners

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