Builders' profits drop in 2000; high interest rates to blame

The year 2000 has been a disappointing one for construction companies, as three publicly-traded firms, EBI, Beton Stal and Murawski Holding are close to bankruptcy and official statistics show real construction output down 2%. "Nothing will change without a significant interest rate cut. High rates are taking their toll on building firms in two ways. They suffer both because of their own debts as well as high financing costs for their clients," said COK Bank Handlowy analyst Arkadiusz Chojnacki. Such publicly-traded firms as Mostostal Plock, Mostostal Zabrze and Elektromontaz Warszawa recorded lower profits last year than in 1999. Even those companies which managed to boost profits, such as Hydrobudowa Gdansk and Energomontaz Polnoc, saw their return-on-sales drop. Analysts say that small builders are suffering even more than the big-name firms which are taking over their contracts, and soon many of them may go bankrupt. Chojnacki said that the year 2001 is unlikely to be a major improvement, because even if interest rates are lowered, it will not affect the construction sector immediately. (Parkiet, p.2) T.J.