Strikers expect a growth of 3.3% in the sector next year

Praha - Construction company directors expect that the sector will maintain this year's estimated mild growth next year. According to builders, construction should grow by 3.3% year-on-year in 2015. This follows from the latest analysis of Czech construction carried out by CEEC Research and KPMG Czech Republic, which its authors presented at today's meeting with representatives of the state and construction companies.
Similar expectations exist for both small (average growth of 3.2%) and large companies (3.6%). However, the differences between companies based on their construction focus are significantly larger. Companies that build or renovate buildings predict a production growth of 2.6%. Companies specializing in the construction of roads and railways talk about more rapidly growing workloads, at 5.1%.
Optimistic expectations are related to the increasing number and, above all, the volume of public construction contracts. "The value of public contracts awarded from January to October 2014 amounted to 93.4 billion crowns and increased by 20.5% year-on-year, which represents a very strong investment impulse from the public sector into construction. Ongoing tender processes for additional construction contracts also indicate a potential further influx of new work for construction companies," said Jiří Vacek, director of the analytical company CEEC Research.
The better outlook for the sector is also influenced by the expected recovery of the entire Czech economy. "The development of construction is closely linked to the development of the economy as a whole. In addition to the anticipated economic growth, which drives private demand, increased public sector spending has a positive impact on construction output," noted Pavel Kliment, a partner responsible for services to real estate and construction companies at KPMG Czech Republic.
Builders expect a revenue increase next year of nearly five percent (4.7%). The most optimistic are large companies. Their directors predict a revenue increase of 6.2% compared to this year. The growth at small firms will be smaller, at 4.1 percentage points compared to the construction giants. In civil engineering, they expect a revenue increase of 4.5%. Companies operating in the engineering construction sector talk about a growth of 5.3%.
"We all perceive a mild growth in the construction sector, but it is necessary to take into account what we consider a springboard. And that is currently very low. Whether the sector will start to grow again will largely depend on the readiness of projects, which is particularly weak in the road construction sector," noted Patrik Choleva, CFO of Skanska.
In 2016, the gradual growth of the sector is expected to continue at 3.7%. According to construction company directors, it will not be any extreme improvement despite the announced pro-investment policy of the government. The amount of money prepared in budgets for construction and renovations actually exceeds the prepared projects, according to leading figures in the construction sector. Therefore, there is a risk that the finances may not even be fully utilized.
Construction is one of the sectors most affected by the recent economic crisis. Builders have lost 443 billion crowns since 2008, which is the turnover for one year. The cumulative decline in the sector compared to 2008 has reached 24 percent. According to the analysis of statistical data, 41 larger companies went bankrupt during this time, and up to 50,000 people lost their jobs in the sector.