Construction industry looking forward to 2017 after downturn this year

12-10-2016

A fall in the number of public contracts is seen as the main reason for an 11 percent decline in revenues in the Czech construction industry in the first eight months of this year, iHned.cz reported on Wednesday. However, building companies say they expect to see growth again in 2017, the new site said.

Photo: Kristýna MakováPhoto: Kristýna Maková A decline of over a third – 36.5 percent – in public contracts hit the Czech construction industry between January and August this year. This has led the market to decline after two years of mild growth and despite the positive development of the economy as a whole, Patrik Choleva, financial director of one of the biggest players in the industry, Skanska, told iHned.cz.

According to regular analysis conducted by the company CEEC Research, engineering firms have been hardest hit by the downturn. Though the big construction firms have actually seen their orders grow this year, those orders have been of lower value.

Small and medium-sized firms, meanwhile, have been showing similar results to those they achieved last year. The directors of construction companies therefore expect to see the construction industry as a whole decline by one percent this year compared to 2015, iHned.cz reported.

Builders are, however, optimistic when it comes to the forecast for next year, predicting growth of 3.1 percent in the sector in 2017. The director of CEEC Research, Jiří Vacek, told the news site that construction firms are expecting an influx of public orders, most of which will be completed next year.

Public contracts account for approximately 40 percent of the Czech construction industry’s revenues, making it considerably dependent on the state.

Builders’ estimates for 2017 reflect a rise in tender processes launched by central government. Contracts worth over CZK 80 billion were announced in the first eight months of this year, which is one quarter more than in the same period in 2015.

By contrast, the value of tenders in which a winner has already been selected was down by over a third, falling to CZK 52.5 billion, iHned.cz reported.

A minimum number of new, large-scale infrastructure contracts were launched in the first half of this year, according to Tomáš Havránek, an executive at one of the country’s biggest road builders, Colas.

Tomáš Koranda, a member of the board at construction firm Hochtief, said the industry did not expect to see any major contracts that would reduce the hitherto decline this year.

In 2017 the Czech Ministry of Transport is planning to build a total of 140 kilometres of motorway and 24 kilometres of first-class roads. Meanwhile, the Czech Roads and Motorways directorate has promised to announce a tender process for 20 different building contracts valued at some CZK 64 billion in autumn next year, iHned.cz reported.

12-10-2016