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BMI View: We expect a significant slowdown in the Polish construction industry during 2012 and 2013, as the majority of the projects related to the football tournament will have been completed and artificial demand will decline. As such, we have revised down our expectation of 2.9% year-on-year (y-o-y) real growth to a more cautious 1.8% in 2012, which will be followed by a morbid 2.4% in 2013.
A revised set of data released by the Central Statistics of Poland reveals that the Polish construction sector grew significantly higher than earlier estimates. Not only did the sector come out as a regional outperformer, but also stood resilient to the global economic downturn, with average annual real growth of over 9% between 2006 and 2010. This was followed by an even stronger 11.8% y-o-y growth in 2011, which came on the back of an overall increase in civil engineering projects and the last-minute rush in construction activity ahead of the Euro 2012 tournament. In addition to the high base effect, we believe that the completion of a majority of projects, weak investor sentiment and the ongoing gloom in the residential and non-residential sector will make strong growth difficult to attain over the short term.
However, there remains significant growth potential to 2016 (with annual average real growth of 2.8% forecast between 2012 and 2016) on the back of the following developments:
BMI View: We expect a significant slowdown in the Polish construction industry during 2012 and 2013, as the majority of the projects related to the football tournament will have been completed and artificial demand will decline. As such, we have revised down our expectation of 2.9% year-on-year (y-o-y) real growth to a more cautious 1.8% in 2012, which will be followed by a morbid 2.4% in 2013.
A revised set of data released by the Central Statistics of Poland reveals that the Polish construction sector grew significantly higher than earlier estimates. Not only did the sector come out as a regional outperformer, but also stood resilient to the global economic downturn, with average annual real growth of over 9% between 2006 and 2010. This was followed by an even stronger 11.8% y-o-y growth in 2011, which came on the back of an overall increase in civil engineering projects and the last-minute rush in construction activity ahead of the Euro 2012 tournament. In addition to the high base effect, we believe that the completion of a majority of projects, weak investor sentiment and the ongoing gloom in the residential and non-residential sector will make strong growth difficult to attain over the short term.
However, there remains significant growth potential to 2016 (with annual average real growth of 2.8% forecast between 2012 and 2016) on the back of the following developments:
- Road building programme: Poland's road building programme, running from 2007 to 2015, is expected to draw US$60bn of investment into the sector. In March 2012, Spanish engineering contractor OHL was awarded a EUR221mn (US$294.6mn) road and tunnel project in the country.
- EU Cohesion funds: The EU has allotted substantial funding for Poland's infrastructure sector in an effort to integrate the country into the EU's transport and energy networks. Geographically placed between Eastern and Western Europe, it is hoped Poland will act as a bridge between the two.
- Renewable and nuclear power growth: A slew of gas, coal and renewable energy projects are in the pipeline, driving industry growth expectations. The greatest boost to the energy and utilities segment will potentially come from plans to construct two nuclear power plants. In March 2012, French nuclear energy firm Areva and power utility Électricité de France (EDF ) revealed plans to jointly participate in a technology tender for the construction of a nuclear power plant in the country.
- Non-Residential Demand: The outlook for non-residential sector is changing for better. In April 2012, French construction company Vinci's subsidiary Warbud was awarded two EUR105.5mn (US$138.13mn) contracts for construction projects in Poland in April 2012. We expect stronger economic growth over the coming years to result in increased demand for housing. Poland remains at the top of our Infrastructure risk/reward ratings table, with an overall score of 66.6, on the back of its balanced infrastructure and construction market. However, we warn that a gradual weakening in sector growth – most notably, infrastructure opportunities - will bring the country back in line with the regional growth average in the short to medium term.
BMI Industry View
SWOT Analysis
Poland Infrastructure Industry SWOT
Market Overview
Competitive Landscape
Table: Poland EQS
Building Materials
Global
Europe
Table: Cement - Price/Volume % Variances (9m10/9m11)
Cement Forecasts
Table: Poland Cement Production and Consumption Data, 2009 - 2016
Table: Poland Cement Production and Consumption Long Term Forecasts, 2014 - 2021
Industry Forecast Scenario
Table: Poland Construction And Infrastructure Industry Data, 2008 - 2016
Table: Poland Construction And Infrastructure Industry Long Term Forecasts, 2013 - 2021
Construction and Infrastructure Forecast Scenario
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Table: Poland Transport Infrastructure Industry Data, 2008 - 2016
Table: Poland Transport Infrastructure Industry Long Term Forecasts, 2013 - 2021
Transport Infrastructure Outlook and Overview
Major Projects Table – Transport
Table: Major Projects - Transport
Energy and Utilities Infrastructure
Table: Poland Energy and Utilities Infrastructure Industry Data
Table: Poland Energy and Utilities Infrastructure Industry Data
Energy and Utilities Infrastructure Outlook and Overview
Major Projects Table – Energy and Utilities
Table: Key Projects – Energy And Utilities
Residential/Non-Residential Construction and Social Infrastructure
Table: Poland Residential and Non-residential Building Industry Data, 2008 - 2016
Table: Poland Residential and Non-residential Building Industry Long Term Forecasts, 2013 - 2021
Residential/Non-Residential Building Outlook and Overview
Major Projects Table – Residential/Non-Residential Construction and Social Infrastructure
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Poland’s Risk/Reward Ratings
Rewards
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Table: CEE Infrastructure Risk/Reward Ratings
Company Monitor
Budimex
Mostostal Warszawa
Skanska Poland
Global Overview
Methodology
Industry Forecasts
Construction Industry
Data Methodology
New Infrastructure Data Sub-sectors
Construction
Capital Investment
Construction Sector Employment
Infrastructure Risk/Reward Ratings
Table: Infrastructure Business Environment Indicators
SWOT Analysis
Poland Infrastructure Industry SWOT
Market Overview
Competitive Landscape
Table: Poland EQS
Building Materials
Global
Europe
Table: Cement - Price/Volume % Variances (9m10/9m11)
Cement Forecasts
Table: Poland Cement Production and Consumption Data, 2009 - 2016
Table: Poland Cement Production and Consumption Long Term Forecasts, 2014 - 2021
Industry Forecast Scenario
Table: Poland Construction And Infrastructure Industry Data, 2008 - 2016
Table: Poland Construction And Infrastructure Industry Long Term Forecasts, 2013 - 2021
Construction and Infrastructure Forecast Scenario
Transport Infrastructure
Table: Poland Transport Infrastructure Industry Data, 2008 - 2016
Table: Poland Transport Infrastructure Industry Long Term Forecasts, 2013 - 2021
Transport Infrastructure Outlook and Overview
Major Projects Table – Transport
Table: Major Projects - Transport
Energy and Utilities Infrastructure
Table: Poland Energy and Utilities Infrastructure Industry Data
Table: Poland Energy and Utilities Infrastructure Industry Data
Energy and Utilities Infrastructure Outlook and Overview
Major Projects Table – Energy and Utilities
Table: Key Projects – Energy And Utilities
Residential/Non-Residential Construction and Social Infrastructure
Table: Poland Residential and Non-residential Building Industry Data, 2008 - 2016
Table: Poland Residential and Non-residential Building Industry Long Term Forecasts, 2013 - 2021
Residential/Non-Residential Building Outlook and Overview
Major Projects Table – Residential/Non-Residential Construction and Social Infrastructure
Table: Major Projects – Residential/Non-Residential Construction
Risk/Reward Ratings
Poland’s Risk/Reward Ratings
Rewards
Risks
Regional Overview
Central and Eastern Europe Infrastructure Risk/Reward Ratings
Table: CEE Infrastructure Risk/Reward Ratings
Company Monitor
Budimex
Mostostal Warszawa
Skanska Poland
Global Overview
Methodology
Industry Forecasts
Construction Industry
Data Methodology
New Infrastructure Data Sub-sectors
Construction
Capital Investment
Construction Sector Employment
Infrastructure Risk/Reward Ratings
Table: Infrastructure Business Environment Indicators
