After the first quarter of 2020, the J.W. Construction Group generated sales revenues of PLN 45.6 million, compared to PLN 101.3 million in the first quarter of last year, which constitutes a 55% decrease. Gross profit on sales reached PLN 11.6 million, compared to PLN 25.7 million a year earlier (also a 55% decrease). Such a decrease in revenue and gross profit resulted in the Company recording a net loss of PLN 4.5 million (compared to a net profit of PLN 6.8 million in Q1 2019). On a nonconsolidated basis, the Company achieved a net profit of PLN 2.7 million. The above results are caused by the transfer of a small number of premises resulting from the investment implementation schedule. The gross margin remains at the same level of 25%.
Małgorzata Szwarc-Sroka, Supervisory Board Member of J.W. Construction S.A. comments on the Company’s results:
The COVID-19 pandemic has had an impact on development activities, perhaps not as large as other industries, but has nevertheless significantly affected many processes within the Group.
In the area of execution of the investments underway, the Company did not record any significant delays and a significant decrease in the pace of work, however, in the area of sales, a substantial slowdown was recorded In March, compared to February, the Company recorded a decline in the number of new contracts of approximately 45%, which in our opinion is exclusively due to the COVID-19 epidemic.
However, we have not observed, which is promising for the future, the withdrawal from the concluded contracts.
The Company has also observed the impact of the pandemic on the operation of public administration authorities. The issue of decisions, certificates, decisions in administrative processes has been significantly hampered by the lack of possibility of direct contact in the office, which resulted in even two or three times longer time needed to obtain a given document compared to normal procedures.
During the pandemic, the Company's hotels were closed down and the majority of its employees were granted the "Postojowe"[Government programme subsidising the salaries of workers affected by the coronavirus epidemic], thanks to which the Company took advantage of the anti-crisis shield programmes. From June, resuming activity in this sector is planned.
Despite the difficult and uncertain situation, the Company has a great potential because it has over 2 thousand units sold but not transferred, which will be recognised in future accounting periods. Moreover, in the situation of unfreezing economic processes, the Company, on the basis of its land bank, may in a short period of time start construction works for over 5 thousand units and warehouse and commercial facilities with a total area of over 400 thousand square meters.