Construction companies face insolvency
Some construction companies could face a significant drop in profitability or even insolvency. And this already in the next year.
This is what experts of Credit Agricole Bank Polska think in their analysis. The reason is the increase in prices of materials. It has a negative impact especially on companies, which implement low-profit projects with a longer time horizon. The most at risk are small companies realizing infrastructure projects that are financed by public investments. Some construction companies signed contracts for their execution assuming much lower prices of materials than they are today. Generally, profitability of infrastructure contracts is quite low compared to other segments of the construction industry. In the case of small companies, the cost of materials is as much as 30 percent of revenue.
At the same time, some construction companies are doing very well. These are mainly companies operating in the residential segment.