On Thursday, April 2, 2020, an investor chat was held with the president of the board PROJPRZ MAKRUM, Piotr Szczeblewski. During the meeting, we talked about the financial results for 2019. Investors also asked about dividend policy, possible acquisitions, sales on the foreign market and the impact of the COVID-19 epidemic on the company’s operations. Nearly 500 people attended the meeting, and the president of the board answered over 30 questions. We invite you to read the entire chat report.
Zapis czatu:
At the moment, it is too short to see increased sales or the number of orders obtained in our group. Like you, we also expect increased interest in our products in the near future. As a group, we operate particularly intensively in the area of industrial and less individual clients. From what we observe, our competition with a strong share of private recipients loses much more on the coronavirus epidemic.
The PJP Makrum Group does not focus on housing. A similar topic was raised in one of the latest blog entries of the Grupa Kapitałowa IMMOBILE, to which I refer.
We can talk about the situation before and during the epidemic. Before the epidemic, our analyzes showed a large increase in interest in MODULO products (growth in the first quarter y / y), with dynamics similar to those between 2018 and 2019, i.e. about 150% increase. Now, during the epidemic, we have to wait for developers ‘reaction, clients’ interest in new apartments or stabilization of their employment and the possibility of financing potential purchases. We will tailor our offer to these special market conditions.
The improvement process is permanent work – technological improvements, technical product optimization, cost reduction, employment optimization etc. If the question is about our original plans, then this restructuring has ended. Now we are focusing on completing the investment at the Koronowo Plant, starting production according to new technological process and optimization of internal logistics (warehouses and internal transport)
In the report, we recommended allocating up to 50% of the profit for this purpose, but our final position in this matter is dynamic, due to the new situation around us. The goal is to go through the coming time of recession in the best condition – we will talk about this during the company’s general meeting in June with our shareholders
The company’s shares before the epidemic were heavily undervalued, as you can see by comparing the values in the reports published by our company. The current additional decline in our shares reflects the general downward trend in the market. It may be a good time to invest in the assets of our company, but please do not take it in any way as an investment recommendation on my part, everyone must decide for themselves.
No. We are expecting even more interesting proposals in the near future. 20.02.2020 we bought a company from the area of warehouse solutions, trolleys, shelves, spare parts and service. This acquisition will expand our offer for logistics companies, i.e. the main area of our interest. Please familiarize yourself with the offer of our new company PromLift, which will be active in this area. More details coming soon!
Yes, but it is burdened with a large unknown, i.e. the market demand for our solutions of modern parking systems after the epidemiological crisis. We are ready for this on the production and assembly side.
Our company has undergone a major reorganization, adapting our work to procedures limiting the possibility of spreading the virus and protecting our employees and contractors against the possibility of infection. This introduces some difficulties as well as additional costs. I believe that we are well prepared for this time, we work and fulfill our clients’ orders.
This is an extensive question, I will try to answer individual fragments. The end of 2019 brought us a 150% increase in production and an improvement in the product’s margin, i.e. we implement the adopted strategy. Positive results should be achieved with approximately PLN 25m in sales, which seemed real in 2020/21. Now we will see what time will bring us after the epidemic, hopefully it will be soon. Are we satisfied: yes, but we feel a constant hunger for the development of individual areas of our business. As the key for the coming years are two processes: the first is the development of sales departments, generating thanks to them greater interest in our products and it is not simply a larger number of people but the use of modern ways to reach customers. The second big task is to complete the investment in Koronowo, which will enable us to produce what sales departments will obtain in an optimal way.
The purchase of DPS (now PromLift) was dictated by the expansion of our business in the area of equipping warehouses with shelves, various mezzanines and, above all, the sale of handling equipment, such as warehouse trucks and front loaders. We will also offer service and spare parts here. The purchase of DPS will help us shorten the period of implementation in the industry, as well as acquire staff rich in experience.
No. We sell export with PROJPRZ MAKRUM, PROMStahl Polska and PROMStahl Germany, while in the second half of 2020 it is planned that sales will be additionally carried out through a subsidiary in the United Kingdom. This is a dynamically developing market. Currently, after several years of intensive presence on it, we want to expand the range of customers, cooperate with dealers so far, but also directly offer our goods and services, as is the case in Germany. or in Poland.
The company has been preparing for this point for a long time. I would like to add that from May 2019 we operate outside the walls of our old factory. The goal was to move to a more modern and at the same time cheaper infrastructure by limiting the size of workshops, while maintaining the necessary production capacity.
We consider 😉
Of course, controlling our level of debt, but more importantly cash flow is one of the main parameters of our company’s existence. The situation is stable today and in the coming months. We all observe the situation related to COVID 19, we will respond adequately to the flowing information. Our relations with financing banks are very good, e.g. in March we launched new financing for two contracts.
Yes, because it was associated with the development of the organization, including the export department at Projprzem MAKRUM S.A., and the increase in the operating costs of Projprzem Budownictwo Sp. z o.o. (including a new branch in Wrocław). In addition, there was an increase in payroll costs throughout the Group.
The increase in exports results from high sales growth in the docking solutions systems segment (+ PLN 26.5 million, i.e. 24.8%).
We deliver transhipment systems to every country in Europe. Our largest customers are customers from the German (sales increase by 15% y / y) and French (+ 38% y / y). The Netherlands (+ 43% y / y) and the Central and Eastern and Northern Europe markets (+ 28% y / y) are becoming more and more important, where sales are very dispersed and the largest recipients are customers from the Polish and British market, where we want to significantly increase its participation by establishing a branch, Hungarian, as well as Scandinavia, the Czech Republic and Estonia
We started the current year with a portfolio of orders filling 80% of revenues achieved in 2019. The expected completion period is Q2 / Q3 2020. As at the date of the report, advanced talks with investors are also underway regarding the commencement of contracts planned for the second half of 2020.
The production of parking lots recorded a 150% increase, while noting a higher level of sales profitability. Considering the level of the report concluded and contracts being negotiated as at the date of publication, we expect further dynamic sales growth and improvement of profitability, due to three factors: – we are approaching the volume allowing to generate an appropriate margin – this year we will complete the automation of this product’s production, as well as introduce further optimization solutions – market interest in this type of products in Poland and abroad is growing
This is such a fear, which is why we checked the supply chain some time ago and identified the most critical points. At the moment, the situation is stable and deliveries secured for the coming months.
The service of our devices is another area in which the company has been growing dynamically for several years (+ 15% y / y). This applies to all companies and areas: both at PromStahl Gmbh and in domestic companies, we strive to increase the number of our own service technicians vs external companies. Modulo has been implementing a policy of servicing its own devices from the very beginning, therefore the expansion of its own service branch in Warsaw is a consequence of this policy. In the reports, this will be an upward trend in terms of revenue.
Not yet, the investment is advanced – the main production building has already been commissioned, equipped with modern pre-assembly and final assembly stations; the existing main production hall is being adapted to take over production from the oldest part of the factory, which will soon be demolished. We install more welding robots, gradually launch more machines, and the material preparation has been equipped with a very modern, high-performance computer-controlled machine for burning details for production. We are very happy with the purchase. We are also implementing a new internal transport policy that will allow us to save 30% of moving within the company.
The area on which we will focus in 2020 will be Great Britain, which in a few years is to catch up with the market and our activity on the Polish market, and then move towards an even greater share in our income. The objectives are clearly outlined, the company is established, the operational launch procedure is underway. This does not mean, however, that we are currently not on the British market – for now we operate from the level of PromStahl Export. We are also increasing our share in other foreign markets.
We had a temporary outflow of employees from Ukraine at the beginning of the pandemic, we kept this crew in about 80%. We were able to quickly rebuild the decrease in employment by employees from Poland.
We answered this question in part in the questions above. It’s too early to talk about the consequences.
Industrial Construction, represented by Projprzem Budownictwo, has recently acquired a portfolio of orders that is important from the point of view of its operations. It already accounts for 80% of 2019’s revenue, which is why the future of PJP Budownictwo looks stable and the management is focused on improving contract margins. After expanding the organization with an office in Wrocław, the company’s potential also increased significantly, and in the coming years will be able to run projects worth PLN 200 million annually.
The COVID 19 epidemic affects all countries in which we are active. Due to the demand for our products, especially PromStahl whose products work in facilities ensuring uninterrupted supply of goods to the public, stopping construction does not significantly affect us. Of course, there are projects that are temporarily suspended, e.g. in France or Luxembourg, but we expect them to be launched soon after the culmination wave in these markets. The situation is very dynamic, the company collects information from the market to prepare for it as best as possible, because it is related to the entire production process, supply, etc.
All these situations described in the question, of course, take place, but it should be added that PJP Budownictwo has developed a reputation as a reliable company that requires but also pays regularly to its subcontractors. Doing so persuades many companies to work with us, especially in these uncertain times. Generally speaking, all our constructions continue to work.
At present, we have a portfolio worth 70% of the assumed budget for this year. Other threads have been raised in previous questions.
Expanding the answer to the previous question – the economy of many countries will slow down in the coming years. At the moment, we can say that we still had positive relations year-to-year through COVID 19, especially in the number of orders acquired. We are now waiting. If this period does not last too long, i.e. it closes within a quarter and the market does not change demand drastically, the situation will quickly return to normal, i.e. levels from 2018 or 2019. However, if it lasts longer or the economic environment changes radically, we will implement savings programs.
