PSJ: decrease of revenues and maintaining profitability

26 Apr 2010

PSJ, a.s., one of the most significant Czech construction companies, reviews the last year, which was affected by the world finance and real estate crisis. From the perspective of the PSJ Group the crisis was apparent in the decrease of gross revenues. However, profitability remained at the same level as in previous years. Consolidated group revenues reached 3.94 billion crowns and group profit before tax amounted to 136 million crowns.

The mother company, PSJ, a.s., shares in the results with turnover of 3.08 billion crowns and its profit before tax reached 131 million crowns. In 2010 the PSJ Group plans approximately a 15% increase of realized volumes and profit exceeding 150 million crowns.

"In the construction industry we can see the worst impacts of negative economic development in structural engineering in the private sector, so in the segment on which we are focused. The number of newly started projects decreased and some contracts which have already started face problems, are divided into stages or their realization date has been postponed. Therefore we began to change our marketing strategy already during 2008 when the first signs of the crisis appeared. It is a long-term process so the results can be seen only in a certain time interval. Yet we expect that in 2010 these measures will have a positive effect particularly on our export results. As the private investments significantly decreased we once again endeavour to get contracts in state, municipal and regional spheres. At the same time we still have to be very cautious while executing our development projects," pointed out General Manager and Chairman of the Board of Directors of PSJ, a.s., František Vaculík.

In 2009 PSJ again proved that in the eyes of the most significant investors it ranks among the most sought-after Czech construction companies in the construction engineering segment. Compared to 2008 the structure of realized contracts changed only minimally. It confirmed the trend of previous years when the predominant volume comprised contracts financed by private investments – in 2009 it was 90%. Contracts for the state and municipalities comprised four or six percent of turnover. In the given period PSJ realized the biggest volume of contracts in the administrative construction sector (52.5%) and in the civic amenities sector (38%).

The most significant constructions finished in 2009 were surely the administrative building F of Smíchov Factory Office Centre, the high capacity food product warehouse for Lidl Czech Republic near Měřín and the new building of the Palmos social centre in the premises of the BB Centrum in Michle.

The most significant contract in progress on the Czech market is the construction of the high-rise building Filadelfie in the premises of the BB Centrum in Prague – Michle for the development company Passerinvest Group. Some of the other biggest commenced constructions are the administrative building Main Point Karlin in Prague 8, the buildings CITY DECO and CITY ELEMENT at Pankrác or the poly-functional complex CPI City Centre in Ústí nad Labem.

Since the beginning of its existence PSJ has asserted itself on foreign markets. Business outside the Czech Republic features among the strategic targets of the company because PSJ sees a potential there for interesting growth and currently also room for compensation of the drop in domestic contracts. So far PSJ has realized construction contracts in twenty-five countries world-wide, while it perceives Slovakia, Tunisia, South-East Asia and primarily the Russian federation as the priority markets. In 2009 export comprised 19 % of the aggregate turnover of PSJ, a.s., which is 6% more than in the previous period. In the next years the Export Division should become one of the workhorses of PSJ.

In Slovakia we finished a complex transformation of the former building of VUB bank to the City Gate building. In Tunisia, last year we finished the enlargement of the La Goulette port and the building of modern tourist facilities and we also commenced building the demanding structure of the residential complex Sea World Residence in Hammamet. In Russia, a minor construction of the administrative building in Archangelsk is currently in progress and mainly, in December 2009,  an extensive realization of the M5 Mall commercial and entertainment centre in Rjazan commenced. Furthermore the negotiations about building the Sochi City complex significantly advanced, while due to its demanding nature and budgeted investment of approximately 10 billion crowns this complex could become the biggest contract in the history of PSJ.  In the second quarter of this year we shall commence building the motorway in Vietnam in the financial volume of 350 - 400 million dollars. Last but not least, in January 2010 we handed over another of our orders for the Ministry of Foreign Affairs of the Czech Republic, namely the reconstruction of the Embassy in Brazil.

"The consequences of the slump in the whole Czech economy will still make themselves significantly felt. We will face a drop in investments in private as well as state and municipal sectors. I expect that we will have to deal with the signs of the crisis also in the years 2010 – 2011 and the construction market will undergo significant changes in the following years. I expect that the projects of private investors and developers will be commenced very cautiously because they will have significant difficulties in seeking their customers such as office tenants or flat buyers," said František Vaculík.