Commentary of the President of Budimex on the results of the first half of 2025

Budimex Group in the second quarter of 2025. achieved good results, which proves a stable market position, effectiveness in  cost control and effective management of the project portfolio. The Group’s results for the second quarter are better than in the first quarter of 2025. Despite the challenges in the difficult construction market this year, we are optimistic about its further development.

In the construction segment, revenues remained at a comparable level compared to the previous year. We consider it a great success. Most of our contracts started last year are implemented in the design and build formula. Compared to the previous year, the structure of the Budimex Group recorded an increase in the share of contracts in the case of which the recognition of sales revenues is deferred in time. As a result, consolidated sales revenues in the first half of the year amounted to PLN 3,947 million and were 2.3% lower than in the corresponding period of the previous year. The gross profit of the Budimex Group amounted to PLN 336 million with a profitability of 8.5% compared to 9.1% in the first half of the previous year, which is due to the lower result on financing activities, which is a consequence of lower interest on cash.

1 half. 2024

y/y

Sale

3 947

4 040

-2,3%

Operating profit

302

296

2,0%

% of sales

7,6%

7,3%

0.3p.p.

Gross profit

336

366

-8,1%

% of sales

8,5%

9,1%

-0.5pp

Net profit*
from continuing operations

270

277

-2,3%

% of sales

6,9%

6,9%

0.0p.p.

*attributable to shareholders of the Parent Company

Construction and assembly production in the first half of 2025 (current prices) increased by 2.7% year-on-year from PLN 63.6 billion to PLN 65.4 billion. In the buildings segment, sold production increased by 5.4%, while in the infrastructure area in general, no changes were recorded.

1 half. 2024

y/y

Production
Sold

65,4

63,6

2,7%

Buildings

33,7

32,0

5,4%

share

51,5%

50,2%

1.3p.p.

Engineering

31,7

31,7

0,0%

of which: roads

11,6

12,1

-4,7%

of which: railways

3,4

2,5

34,0%

share

48,5%

49,8%

-1.3%p. p.

Sales of the construction segment of the Budimex Group in the first half of 2025 amounted to PLN 3,590 million (unchanged y/y), recording an increase in operating profitability to 8.0% (from 7.2%) and a comparable level of gross profitability (from 9.1% to 9.0%).  An improvement in operating profitability was recorded m.in. in the segment of building construction. This was due to the optimization of the structure of the portfolio of cubature projects and cooperation with customers, enabling the improvement of margins.

1 half. 2024

y/y

Sale

3 590

3 590

0,0%

Operating profit

286

257

11,1%

% of sales

8,0%

7,2%

0.8p.p.

Gross profit

323

327

-1,2%

% of sales

9,0%

9,1%

-0.1p.p.

Order Backlog

17 046

15 344

11,1%

Contracting

2 457

5 661

-56,6%

Level of realized sales revenues in the first half of 2025
In the construction segment, compared to the same period last year, it did not change. On the other hand, the share of intra-group sales carried out by Budimex SA to subsidiaries, m.in. for the construction of the “Azalia” and “Kamellia” photovoltaic farms. In the short term, this results in a reduction in the Group’s consolidated sales due to the elimination of internal turnover, but in the coming quarters, the launch of photovoltaic farms will strengthen the Group’s operating profitability and will positively support the cash flows generated.

In the first half of 2025, the level of revenues generated by Budimex SA’s foreign branches on the Czech and Slovak markets increased noticeably. This increase is a consequence of the implementation of foreign construction contracts, acquired as part of the direction of geographical diversification of the Group’s construction portfolio adopted a few years ago and consistently pursued.

Order Backlog and Cash Position

The Budimex Group’s order book at the end of June 2025 amounted to PLN 17 billion. The high value of the order book secures the Group’s work front for the entire current year and most of 2026, as well as part of 2027. Intensive work on new offers has resulted in the fact that the value of projects awaiting signing and those where the offer of Budimex or Group companies has been rated the highest is currently about PLN 8.5 billion. In the first half of 2025, we obtained contracts worth PLN 2,457 million.

In the perspective of the coming quarters, this gives the opportunity to take a responsible approach to bidding in future tender procedures. In addition, in March 2025, a consortium with the participation of Budimex S.A.. signed a framework agreement for the design and construction of the main Rail Baltica line in Estonia, on the Pärnu – Latvian border section, with a total value of EUR 332 million (approximately PLN 1.4 billion). Budimex has a 40% share in the construction part of the contract. This is another step towards expansion and development on foreign markets.

The Budimex Group ended the first half of 2025 with a net cash position exceeding PLN 1.8 billion. The decrease in the level of cash in the second quarter of this year compared to the end of 2024 was mainly due to high CIT payments, implementation of investment programs supporting the Polish economy, in the field of construction of renewable energy sources, expansion of road and rail equipment base,  as well as development of development activities and payment of dividends to shareholders in the amount of PLN 649 million. We seasonally increased the involvement of financial resources in working capital.  

Budimex, as one of the largest CIT payers in the industry, pays several hundred million zlotys in taxes every year, significantly supporting the state budget. Since 2012, Budimex has paid 1.4 billion of tax to the State Treasury only in respect of CIT. Thanks to the fact that the company is registered in Poland and has been operating here for nearly sixty years, this money actually finances Polish education, health care and regional development.

FBSerwis Group has significantly improved profitability

1 half. 2024

y/y

Sale

444

463

-4,1%

Operating profit

46

38

19,2%

% of sales

10,3%

8,3%

2.0p.p.

Gross profit

45

41

11,9%

% of sales

10,2%

8,8%

1.5p.p.

After the first half of the year, the FBSerwis Group achieved a comparable level of sales revenues while significantly improving profitability. The FBSerwis Group generated an operating profit of PLN 52 million (compared to PLN 42 million after two quarters of 2024), while recording an increase in profitability from 9.2% to 11.8%.

Mostostal Kraków

In the first half of 2025, the level of contracting amounted to PLN 117 million. The current order book is PLN 503 million. The Mostostal Kraków Group generated revenues of PLN 296.5 million, which means that compared to the same period of the previous year, they are lower by 23%. The decrease in revenues was mainly a consequence of the lower advancement of the performance of active contracts, and also results from the situation on the public procurement market, related to the limited number of tender procedures. ‎

Operating profit of the Mostostal Kraków Group amounted to PLN 18.4 million. The operating result decreased by PLN 15.2 million compared to the previous year as a result of lower cost advancement on the implemented projects, decreasing attractiveness of wages in Germany compared to Polish conditions and failure to implement new contracts assumed at that time. The gross profit of the Mostostal Kraków Group was 39% lower than a year ago. In addition to the factors indicated above, this was significantly influenced by the improvement in the result on financing activities, mainly due to exchange rate hedging and thus the valuation and execution of forward transactions (a transaction consisting in the purchase or sale of a financial instrument with a predetermined execution date and for a predetermined price).

At the end of the first half of 2025, the Group’s cash balance amounted to PLN 76 million compared to PLN 72 million at the end of the first half of 2024. Such a high level of cash indicates solid foundations of the Company’s business and ability to operate efficiently.

The year 2025 is a challenging period for the Mostostal Kraków Group. On the one hand, we observe a limited number of tender procedures in the sector, and on the other hand, frequent delays in their settlement. These phenomena apply to  both the domestic and German markets, where   the Company actively conducts its business. This situation leads to increased competition and increasing price pressure in the construction sector.

Market outlook

The construction industry has had a very difficult 2024.  In the first half of 2024. Construction-assembly production, calculated in constant prices, decreased  by 8.7%. while in the whole of 2024 a decrease of 7.7 percent was recorded. In the first half of 2025. Construction and assembly production shrank by 0.7% compared to 2024, including general construction by 4.2% and infrastructure construction by 3.5%. – and only specialized robots recorded 7.6 percent. Growth. ‎ ‎

The situation of the construction sector remains demanding. The number of new building permits is decreasing and the revenues of many large construction companies are at a lower level year on year.

The technical potential of general contractors in Poland still significantly exceeds the scale of investments commissioned by the largest contracting authorities. The unused production capacity of construction companies is currently estimated at 20%.

In the face of significantly unused contracting potential, companies aggressively participate in tenders, offering prices below investor budgets. Such conditions for obtaining orders generate a serious risk – both for contracting authorities and for infrastructure users and taxpayers. There is a real threat that some companies will not be able to meet the performance of contracts or will declare bankruptcy, which will result in delays and a significant increase in investment costs. ‎

Despite the lower level of contracting, the portfolio of projects in progress and waiting to be signed in the Budimex Group ensures its business continuity.

The first signs of improvement are visible, especially in the segments related to strategic infrastructure. In order to fully use the potential of the construction industry – which accounts for nearly 10% of GDP and employs over 1.3 million people – it will be crucial to speed up administrative procedures, greater investment predictability, including more efficient mobilisation of funds from the National Recovery Plan and EU funds.

In recent quarters, the assumed directions of development of the Budimex Group have begun to bring measurable results. Strengthening the position in the tunnel infrastructure segment, military investments, as well as expansion into foreign markets allowed the Group to further diversify its order portfolio and increased the possibilities of scaling the business in the future.

In May, we signed a contract for the construction of a section of Rail Baltica in Estonia. Budimex is part of the Construction Group, with a 40% share, and the expected value of the contract is EUR 332 million. A year and a half earlier, in December 2023, we signed a contract for the construction of 220 kilometers of Rail Baltica in Latvia. In total, this gives almost 280 kilometers of railway infrastructure of key importance for the entire Baltic region.

In the second quarter, the TBM shield was officially launched on railway line No. 104, which once again confirms the Group’s readiness to implement the most technically demanding investments. We are waiting for the signing of another project that will strengthen our position and competence in the tunnel construction segment. The bid of the consortium with Budimex’s participation, worth PLN 1.69 billion net, for the construction of the 622 railway line section (Szczyrzyc – Tymbark) was selected by PKP PLK as the most advantageous.

For several years, we have been one of the certified partners of military investments in Poland. We are consistently developing our structures and expanding our military investment portfolio, acquiring orders worth  over PLN 300 million in the first half of 2025. 

Further development of development activities, investments in the Data Centres market and RES projects are additional areas outside the construction segment, which in the long term will allow the Budimex Group to further diversify its operations. In the coming months, the priority will be to responsibly execute the record order book and continue to work on cost control and process optimization, including digitization and automation, also with the use of  artificial intelligence.

Social activities

In the first half of 2025, Budimex continued its social activities. We have carried out Hello ICE road safety campaigns in 7 locations in Poland. We are preparing a Parent Zone in a hospital in Bratislava, Slovakia. In the 21st edition of the Construction Brand of the Year 2025 ranking, Budimex was selected as the “General Contractor Friendly to Construction Companies”. The award was granted on the basis of research conducted by over 1000 subcontractors in Poland. We have concluded a cooperation agreement with the University of Szczecin. The agreement was signed on 7 July 2025 and covered the areas of student internships, internships and joint research and development projects. The investment carried out by Budimex SA – Berdychów Bridges in Poznań – was awarded by the European Cyclists’ Federation (ECF) in the Cycling Infrastructure category. As part of the Przystanek Zieleń campaign at the construction of the Tram to Wilanów in Warsaw, we donated another 140 trees. We also organized 6 picnics in the districts adjacent to the construction site.