Dekpol S A : Very good results of the DEKPOL GROUP in 1Q 2022 despite demanding environment

• Consolidated revenues in 1Q 2022 in the amount of PLN 313,5 million, +61% y/y
• Operating profit in the amount of PLN 19 million, +28% y/y
• Net profit in the amount of PLN 14,0 million, +86% y/y
• Segment of production of accessories for construction machines (Steel), the second largest segment in terms of contribution to the Group's sales: revenues in the amount of PLN 46 million, +83% y/y
• stable cash position of the Group - cash at the end of the first quarter of 2022: PLN 164.3 million
• safe debt level - net debt / EBITDA LTM ratio at the end of the first quarter of 2022 at 1.64

The DEKPOL Group, operating in the areas of general contracting, property development, as well as production of buckets and accessories for construction machines, published its financial results for Q1 2022. The Group's revenues in the discussed period amounted to PLN 313.5 million, which means an increase by 61% y/y. The Group's operating profit in the discussed period amounted to PLN 19 million and was higher y/y by 28%. The Group ended the first three months of 2022 with a net profit of PLN 14.0 million, which means an increase by 86% y/y.

At the end of the first quarter of 2022, the Group's cash position was at the level of PLN 164.3 million, and the LTM net debt / EBITDA ratio was at a safe level of 1.64.

General contracting segment

The general contracting segment (GW) remains the largest segment of the DEKPOL Group's operations, with a share in revenues exceeding 69% in the first quarter of 2022. Revenues of the GW segment in the discussed period amounted to approximately PLN 215.5 million and were higher by 88% year-on-year, while the operating profit amounted to PLN 10.7 million, compared to PLN 7.7 million a year earlier.

At the end of March 2022, the Company carried out contracts for external entities with a total contractual value in the amount of over net PLN 1.2 billion. After reporting period, for implementation remained projects with a total value of approximately net PLN 312 million. Additionally, as a part of the GW segment, intra-group property development projects are carried out with a total value of PLN 412 million, and projects with a value of approximately PLN 268 million remained to be implemented after reporting period. Most of contracts of Dekpol Budownictwo are carried out on behalf of private investors and have a value of up to PLN 50 million, while at the end of the first quarter of 2022, GW segment had 7 contracts in its portfolio with a value exceeding PLN 70 million.

Property development segment

In Q1 2022, revenues of the property development segment amounted to PLN 38.7 million (12% share in Group's revenues), and the operating result amounted to PLN 6.4 million (compared to PLN 47.9 million and PLN 8.4 million in Q1 2021, respectively). In the first three months of 2022, contracting of the property development segment defined as preliminary, property development and reservation agreements amounted to 70 units (compared to 79 agreements in Q1 2021).

In the discussed period, the Group recognized in segment's revenues sales of 73 units (in Q1 2021 it was 148 units).

As at the end of March 2022, in sales offer of the Dekpol Deweloper were 715 units available.

The goal of the Group's property development segment for 2022 is to recognize sales revenues in the amount of PLN 250 million. A similar level of revenues to last year will be achieved thanks to recognition of approximately 540 units in financial result (compared to 406 units in 2021) and revenues from implementation of investments in the PRS (Private Rented Sector) formula.

Segment of production of accessories for construction machines

The segment of production of accessories for construction machines (Dekpol Steel) accounted in Q1 2022 for over 15% of revenues of the Group and was the second business activities segment in terms of contribution to sales revenues. Dekpol Steel's revenues in the reported period amounted to PLN 46 million (+ 83%), and the operating profit amounted to PLN 4.3 million (compared to PLN 2.8 million in previous year). Thanks to standardization and stabilization of production processes, the Company is able to carry out an increasing number of orders.

It is expected that due to dynamic development of Dekpol Steel, including the takeover of the INTEK company at the end of 2021, in the next three years, the revenues of Dekpol Steel should increase to the level of even approximately PLN 300 million.

Commentary of Management Board on Q1 2022 results and the prospects for upcoming quarters

Beginning of the year, despite challenges related to the increase in operating costs and the outbreak of war in Ukraine, is for us a successful one. General Contracting Segment (Dekpol Budownictwo) entered 2022 with a significant portfolio of orders, which translated into a nearly 90% increase in sales year on year and a satisfactory level of operating result. Thanks to the flexibility and experience of the team, as well as implementation of numerous tools allowing for effective bidding in an environment of high dynamics of price changes on the market, we are prepared to strengthen our position in the construction segment. The goal of the segment for this year is to maintain revenues and operating profit similar to those achieved in the record-breaking year 2021, thanks to an action focused on caring for the level of realized margins.

The segment of production of accessories for construction machines, i.e. Dekpol Steel, continues positive trends observed in 2H 2021, when orders grew dynamically after the previous turmoil related to after pandemically broken supply chains in the world. The war in Ukraine caused a stoppage of supplies and a significant increase in steel prices on European markets, but thanks to decisive actions and a flexible approach, the Company was able to face successfully market challenges. Thanks to production capacity increased by acquisition of the INTEK company, we were able to respond to the growing market demand for accessories we manufacture and, as a result, in Q1 2022, Dekpol Steel was the second largest segment within Group's operations, after recording 83% increase in revenues year-on-year. We are convinced that the company's share in Group's revenues will continue to grow, following strengthening of its market position on a global scale. Results of the property development segment are a derivative of schedules of individual projects, hence their level may fluctuate on a quarterly basis, but Dekpol Deweloper has ambitious plans to sell about 460 apartments this year and to achieve revenues worth about PLN 250 million for the third year in a row. In the scale of the entire Group, we continue to focus on generation of solid results despite numerous challenges - our ambition is also to achieve a net profit this year at a level similar to recurring profit from 2020 and 2021 - says Mariusz Tuchlin, President of Management Board of DEKPOL S.A.

The DEKPOL Group successively increases the scale of its business operations. In connection with this, the challenge and at the same time our goal is to ensure its safe financial base, adapted to this scale and enabling its further growth. I care about the optimal level of working capital and debt, which is of particular importance in the environment of rising interest rates. We place great emphasis on the quality of results achieved, so that the increases do not take place at the expense of margins achieved. Recent quarters have shown that we can do it, even on a very demanding market, and we intend to continue this sensible approach to business development - adds Katarzyna Szymczak-Dampc, Vice President of Management Board, Financial Director of DEKPOL S.A.

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The Dekpol Capital Group is dynamically developing in construction and property development industry as well as in production of accessories for construction machines. The company was founded in 1993. It has a modern machine park and highly qualified staff. From the beginning of its business activities, it has ambition and determination to further dynamic development with the use of modern technologies. Business activities of the Dekpol Capital Group are based on three main segments. General Contracting services provide the largest share of revenues. The offer covers a very wide range of activities. The company has extensive experience in implementation of industrial, logistic, commercial, public, sports and recreational facilities, as well as environmental protection facilities. It also carries out road, sanitary and hydrotechnical works. The company has an established leadership position in Northern Poland and is one of the largest general contracting companies for cubature facilities on a national scale. In turn, Dekpol Steel, a part of the Dekpol Capital Group, is a manufacturer of buckets and accessories for construction machines. It cooperates with world's largest manufacturers of construction machines. The products are sold to Norway, Sweden, Germany, the USA and Great Britain, and even to Morocco or Australia. The third dynamically developing segment of the Dekpol Capital Group is the property development activity, which, from the beginning of 2019 as a part of Dekpol Deweloper Sp. z o.o., offers flats, apartments and commercial premises. Since January 2015, the shares of Dekpol S.A. are listed on the Warsaw Stock Exchange.

More information: https://dekpol.pl/