Last Tuesday the president of the board of PROJPRZEM MAKRUM S.A. Piotr Szczeblewski answered questions about company on investor chat. The chat was organized by the Strefa Investorów (the Investors’ Zone). Over 350 investors took part in the meeting, and the president answered almost 40 questions. We present the chat record.

 I would like to welcome all the interested parties and encourage everyone to ask questions:)

 How would you evaluate the results for the first 3 quarters? What were you able to achieve and what did not pan out?

We were able to significantly improve revenues (+42%) and EBITD (+55%) and pay the dividend. We achieved this without increasing the amount of debt. The margin could always be improved and thus the challenges for the upcoming year include modernization of the facility in Kornowo, which will satisfy the increasing sales and improve the margin.

 What is the rate of growth of the online trade? So far it has favoured the segment of docking solutions, is it still the case and what are the perspectives for this segment?

The broadly defined e-commerce segment is developing rapidly. Looking at myself and observing the younger generation makes me think that the development of online sales is safe. Projprzem Makrum shall evolve together with the market.

 Mr President, I would like to ask you about your view on the rapidly growing market of parking systems in Poland. Is Projprzem prepared in terms of production and assembly in order to meet the growing demand of the developer and office markets? As a production company, do you strive to fight for the leadership position on the market and what steps do you take in order to achieve that? Are you wary of other domestic producers, that is Nowina Konopka and Grupa Metaltech, which are more established and more experienced in that segment. What is the estimated sales volume over the period 2019-2020? As an active architect I am happy that new companies with an optimistic outlook on this market segment, such as your company, are appearing on the market. Congratulations on the courage needed to make that decision.

We respect our competitors but we do the utmost the become the leader. The experience was gained from docking solutions. In terms of production we are well prepared. We offer a wide range of products in order to adjust to the architectural ideas and the needs of our customers.

 Do you stand by your dividend policy? Will the company strive to pay a larger dividend in each subsequent year? What factors may influence suspension of its payment? Thank you and regards.

Our goal is to conduct our activity in a way that satisfies the company’s development needs and at the same time meets the expectations of the shareholders. This year we have achieved the plan in 100%. We record a dynamic growth of revenues and results. A large part of the generated cash was allotted for dividend. We want it to continue in the upcoming years.

  What was the basis for the decision of expanding the management board to three people?

The dynamic growth of the industrial construction segment, including the opening of another branch in Wrocław, required strengthening the competences in that sector.

 What is the current state of restructuring of the company after the acquisition? Is it nearing its end?

The phase of organizational restructuring is finalizing. The effects are evident in the great results. Now we are mainly focusing on sales development. The process of modernization and development of the facility will end in 2020 and will allow us the further improve the results of the cargo docking solutions.

 What is the cause of the year-to-year 40% increase in revenues and doubled profit?

The two main factors behind the increase of revenues are the reactivation of activity in industrial construction and sales growth in the docking solutions sector. The doubling of profits results from high effectiveness of project management and the development of sales networks. It was also influenced by the sale of the unprofitable facility in Sępólno Krajeńskie.

 Which of the PJP’s business segments has the greatest growth potential?

Loading solutions and MODULO parkings have the greatest growth potential.

 At the moment of the takeover the company had a lot of real estate. Where have the funds obtained from the quick sale been allocated?

We have launched a construction segment and equipped the companies with working capital. Those actions allowed a 42% increase in revenues without adding more debt. We have also paid the dividend.

 What was the biggest challenge for you during the restructuring process of the company after the takeover?

The change of the mentality of the personnel, in order to implement standards that have been working effectively at the Grupa Kapitałowa IMMOBILE for years now. It was equally important to set a common goal and present the development strategy for the company, which would result in improved performance and increased value of the company.

Which activity is characterized by the highest margin levels?

During the current year industrial construction was characterized by good margin levels and long-term it should be the loading solutions segment.

 What is the current idea for relocating production from Osiedle Leśne in Bydgoszcz? There was some talk about an industrial park in Bydgoszcz, where there any other proposals?

85% of the production shall be relocated to the two strategic partners. The remaining 15% will be implemented in cooperation.

 Are your products competitive in terms of price on the domestic market and abroad?

The main attribute of our products is their quality. We win by offering a good quality/price ratio.

 The loading solutions segment significantly increases sales, but unfortunately it is not backed up by results. Both the gross margin on sales as well as sales profits could be better. The question is why is the margin significantly lower and why are the sales costs increasing? Are those trends still present in Q4 and is there a chance to return to the margin from 2017 in the upcoming year (2019)?

After three quarters the company recorded very good results in the loading solutions segment – the gross sales profit amounted to almost PLN 28 million. With the increase in sales, sales costs rise appropriately, which is only natural. 2018 and 2019 will be devoted to preparation of the sales for production capacities, which will be achieved in 2020. The increase in margin will be the result of the modernization of the facility.

 The construction segment has very nicely contributed to the improvement in results in the last 4 quarters. However, Q4 will be the first quarter in which there will be a high comparative basis. Will you be able to exceed it and will the trend of decreasing profitability on sales (7.4% in Q1 and 4.8% in Q3) continue or the profitability in Q3 is more or less on the level that you will be able to maintain?

We have recorded very good results for this sector during that period. We want to maintain the margin on a level higher than the market average, which is 3.5%.

The balance sheet indicates the Makrum trademark in the value of PLN 1.7 million. Is there a risk of a write off, considering the restriction of operations in the steel construction segment?

The activity of MAKRUM continues and expands. It is showcased by the results of the steel construction segment, where the revenues after three quarters are associated with the activity of MAKRUM, while the decrease in revenues results from the aforementioned sale of the unprofitable facility in Sępólno Krajeńskie.

 Is it true that you voted to increase the dividend at PJP at the request of a minority shareholder?

Yes, each vote is important to us and each vote is discussed during the General Meeting. In this instance, the GMS endorsed the request of one of the individual shareholders present at the meeting.

 Has the facility in Kronowo took over all the production potential after the sale of the facility in Sępólno?

As already mentioned, the production at the facility in Sępólno, based on manufacturing of low margin steel constructions, generated losses. We have ceased the production, while remaining in the sector in more technically advanced projects and production of our own machinery, The facility in Kornowo on the other hand is developing and adapting to the increased productivity within the scope of loading solutions and parkings.

 What does the phrase (referred to in the report) of transforming MAKRUM into an activity “mainly of an engineering character” mean?

It means that MAKRUM will focus on sales of our own products and implementation of the submitted industrial projects, where specialized engineer knowledge and project management is required. The projects also require involvement of a bigger number of cooperation/partner entities in relation to our own production base.

 The report mentioned a creation of a third branch of Projprzem Budownictwo. Can you shed more light on this topic?

Up to this point the projects were conducted at the two branches of the company in Bydgoszcz and Poznań. Due to the dynamic growth and potential exhibited within the territory of the Lower Silesia province, beginning from November this year the company has decided to launch a branch in Wrocław, covering the area of southern Poland.

 Do you know that PJP is one of the few companies on the stock exchange, the price of which increases despite of ubiquitous drops? Do you think the strength of the price indicates a reassessment of the company or is it still far ahead?

We think that the market appreciates our high growth potential. We focus on increasing the value of the company, which was clearly reflected in the results after 3Q. The best is still ahead of us:)

 Does the company plan to sale any real estate in the near future and where do you want to allocate the money?

We have assets for sale, such as the office building in Bydgoszcz. The obtained funds will be allocated for pro-development activities.

 Mr President, what do you think about the steady rise of PJP and recent fall of GKI? There is no doubt that here is a high dependency between the results of both companies.

I am happy with the growth of PJP and think that it will be reflected in the price of GKI in the future.

 Will the company be present during WallStreet conference in Karpacz next year?

The calendar for next year remains open, it is possible we will be there, but it depends on several factors.

 Hello. What is the state of development of MODULO parkings? How many were you able to sell?

Not counting the systems currently in the production phase, the customers already use over 900 parking spots.

 Is this solution popular amongst the developers?

Of course, it is becoming increasingly popular, also in Poland. It is a more economically viable solution for developers. We encourage you to observe our projects all around the country, e.g. in the Korona Pragi investment or Wilanów in Warsaw.

 How is the sales of MODULO to the foreign markets?

After gaining experience on the Polish market the next step for the company will be to launch sales abroad. We want to utilize sales channels built by the PROMStahl brand.

 Will the increase of electricity prices impact the results of the company in the upcoming quarters?

We are observing this trend and will adjust accordingly in the new calculations.

 Docking solutions – you mentioned a planned expansion of the facility in Kornowo. Can you provide more details and elaborate on how it could help, considering current lower profitability of this segment?

We were able to unlock the potential of this facility by increasing the volume of production by almost 100%. The investment planned for the years 2018-20 is projected to cause additional increase in capacity and lower unit manufacturing costs.

 How does acquiring contracts work in the industrial construction segment? What kind of projects do you prefer (what value and what type of investments)?

We conduct sales via three branches (Bydgoszcz, Poznań and Wrocław). We prefer mainly industrial projects (production halls, warehouses etc.) with volume up to PLN 30 million and duration up to 18 months.

 How is it possible for you to maintain profitability in the industrial construction segment?

We have entered the market without a baggage of old, long and unprofitable contracts, which is reflected in the results. That baggage of bad contracts negatively influences the results of many of our competitors.

 Will the management board propose payment of dividend for 2018 and can we expect a strong growth, analogous to the improvement in company profits in 2018?

The question about the dividend has already been answered, but it is worth to point out our positive attitude regarding this issue:)

 Thank you for your participation and numerous questions. I encourage you to follow our profiles in the social media and the company blog, where you can always find the latest information on PROJPRZEM MAKRUM.

MAKRUM at the 5th Cracow Days of Surface
Invitation to a meeting after publishing the 3Q2018 results of PROJPRZEM MAKRUM