Publication of semi-annual financial results of TORPOL S.A. and the Capital Group
In the last half-year, Torpol generated PLN 545.6 million of consolidated revenues. The group’s EBIT amounted to PLN -4.7 million (-10.3 million PLN in the previous year), while EBITDA was 3.5 million PLN (-2.2 million PLN in the previous year), and net profit PLN -5,9 million (PLN -11.2 in the previous year).
– Consolidated and unconsolidated revenues in the first half of the year increased notably, which had been the result of the entry into the production cycle of construction works stemming from the portfolio of orders held by the Company. At the end of the second quarter, our backlog amounted to almost PLN 2.6 billion net, while in August, an offer of a consortium including Torpol S.A. worth of PLN 1.5 billion net turned out to be the most advantageous one. We have gained the right pace of implementation, due to which in 2018 we will achieve a scale of operations that will allow us to sell at a level close to that of 2015, when the group reached PLN 1.24 billion. We assume at least maintaining such a level of scale in the following years – says Grzegorz Grabowski, President of the Management Board of Torpol.
The situation in Norway is strongly influenced the results of the first half of the year. After adjusting for one-off events, the unit result was at the net level of almost PLN 8 million. Currently, Torpol focuses primarily on the proper service of the ongoing order portfolio, on the maintenance of project profitability and access to the appropriate level of credit and guarantee limits. The Group traditionally maintains a low level of net debt, which is related to the contracts and investments in the machinery park. At the end of June, it had over PLN 74 million in cash.
The half-year results have been strongly influenced by the situation in Norway. Upon the correction of one-off events, the separate financial result amounted to nearly PLN 8 MN. Currently, Torpol focuses primarily on the proper implementation of the ongoing portfolio of orders, as well as the maintaining project profitability and access to the appropriate level of credit and guarantee limits. The Group also traditionally maintains a low level of net debt, which is related to the contracts and investments in the machinery park. At the end of June, Torpol had over PLN 74 million in cash.
In the opinion of President Grabowski, the domestic market has good prospects for the coming years. Until 2023, the National Railway Program envisages the implementation of about 220 infrastructure projects with a potential total value of over PLN 66 billion, which means an increase in investment outlays to the level of over PLN 10 billion a year.
– We are prepared to carry out contracts at every level. We have about 90% of the basic materials required to implement the current backlog, the modern machinery park and highly qualified managerial staff. We also care about maintaining safe levels of cash-flow, so that we are ready to acquire new orders. Railway infrastructure is still our main area of activity, but we also see opportunities in sectors such as the construction of tramway catenary networks and the oil & gas industry, where we are consistently looking for further potential orders. However, it should be noted that it is necessary to introduce systemic solutions in the scope of introducing real valorization of both modernized and planned modernization projects. This will allow for the economically effective implementation of contracts by contractors, but also, to a significant extent, will improve the smoothness of material supplies and thus the quality and timeliness of the work – emphasizes Grzegorz Grabowski.
The company is closely monitoring the Norwegian market. Torpol is constantly working on reducing fixed costs, including by temporarily transferring part of the resources to Poland and reducing employment. In August, mainly due to the lack of contracts, the company decided to write off and set up provisions worth a total of PLN 25.3 million.
– The main factor determining the situation on the local Norwegian market is the prospect of launching the National Transport Plan for Norway, which envisages huge investment outlays, including in the area of railway infrastructure. Unfortunately, despite numerous announcements of representatives of Norwegian contracting authorities, we still do not observe any activity on the market of tender procedures, which deepens the difficult situation of Torpol Norge AS. Currently, the company is implementing the last project in the north of Norway, the completion of which is expected this month. We are currently analyzing the possibilities of establishing cooperation with a branch investor or resigning from the activity conducted there. We should make the final decision in the next few months. Despite the above circumstances affecting business in Norway, Torpol remains in a good economic and financial situation, with very good prospects for the coming years – Mr. Grabowski adds.