Construction companies see this year and next year increasingly bleak

Prague - Construction companies are increasingly pessimistic about the results of this year and the next. This year's decline in the sector is expected to be around six percent. They now agree that a return to growth may not occur even in 2011. Companies are still struggling mainly with a shortage of orders. This follows from a new Quarterly Analysis of Czech Construction by CEEC Research, KPMG Czech Republic, and Ipsos Tambor, provided to journalists ahead of today's press conference.
    "Czech construction is facing a difficult year, in which the decline in orders for building construction and transport infrastructure will fully manifest," stated Václav Matyáš, president of the Association of Construction Entrepreneurs (SPS), in the analysis.
    According to the head of SPS, the stimulus measures proposed by the association and adopted by the government of Jan Fischer will not show effects this year. In the future, the approach of the new government and the recovery of the economy next year will be decisive.
    "A risk factor for further development remains the possible limitation of public contracts for construction due to the savings of public budgets," noted ČSOB analyst Petr Dufek.
    The Ministry of Transport announced on Wednesday that, due to savings and shortfalls in the income of the State Fund for Transport Infrastructure, it is possible to expect a halt to most transport construction projects starting in August.
    "Without greater support for investment in transport infrastructure from the state, there will be a significant slowdown in the current pace of construction in the coming years, which will significantly affect employment in this sector," stated Zdeněk Synáček, the commercial director of Eurovia CS. The general director of OHL ŽS, Michal Štefl, estimates that one-fifth of companies in the construction sector will go bankrupt.
    The biggest decline in orders is expected by medium and small companies. Estimates for the further development are also worsening in building construction, which mainly includes building construction.
    Currently, the capacity utilization of construction companies is higher than at the beginning of the year, now hovering around 82 percent. According to the survey, this is a result of the initiated construction season and partially earlier capacity reductions. Almost half of the companies still report having fewer orders than a year ago. Weak demand is also increasingly reflected in the economic results of builders.
    Construction expert from KPMG Czech Republic, Andreas Höfinghoff, estimates that Czech construction is facing only a gradual recovery, which will not occur before 2011. Companies expect a decline in the sector next year of an average of 0.7 percent.
    The research was conducted in July 2010 through interviews with one hundred leading managers of Czech construction firms.