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The top-ranking regions in terms of the value of railway projects include Malopolskie, Lodzkie, Mazowieckie, Slaskie, and Podlaskie. These five voivodships combined account for over 60% of all projects underway and planned. Opolskie, Lubuskie, Warminsko-Mazurskie, Swietokrzyskie, and Podkarpackie are expected to be the regions with the lowest level of investment activity in the railway segment in the coming years.

The aggregate annual revenue earned by top 80 railway construction companies (defined as companies specialised in construction of railways, tramways, electrical traction systems, rail traffic control, and signalling systems) described in the report have levelled off at PLN 30bn, including nearly PLN 12bn (nearly 40% of total revenue) contributed by railway projects.

The Polish railway construction sector is still moderately concentrated. Out of the top 80 companies covered in the report, the five largest companies account for 43% of the market. Over the past decade, the Polish railway construction sector has been an unstable market with high volatility in terms of the volume of orders. It is also strongly dependent on investment activity of a single contracting entity. A delayed start to actually using the EU funds available to Poland within the 2021-2027 financial framework is increasingly becoming a threat to the continuation of a positive economic situation in the railway segment.

A slowdown in PKP PLK’s tendering activity observed in 2020 and 2021 has been reflected in the aggregate backlog of orders held by the top four railway construction companies (Torpol, Budimex, ZUE, and Trakcja), as calculated by Spectis - it was a mere PLN 7.2bn as at the end of 2021, compared to PLN 8bn a year earlier and PLN 10bn two years previously. Despite a temporary slowdown in tendering activity, the long-term outlook for the railway construction sector is promising.

The long-term outlook for the railway construction industry will be mostly driven by the implementation of the so-called CPK railway component of the potential construction of the Central Communication Port. The main objective of the ambitious investment scheme is to ensure travel time from 120 cities to the Central Communication Port in under two and a half hours. Projects comprising the airport part are scheduled for completion by the end of 2027. Tasks included in the railway section of the project are planned to be delivered by the end of 2034, with the timeline spanning two consecutive EU financial perspectives.

Relatively low profitability of the railway construction sector is its main pain point. In 2016-2020, the average net profit margin for the 80 companies stood at 1.9% as it was adversely affected by financial problems faced a number of major market players whose results weighed on the industry’s results as a whole. An analysis of financial results posted by the major companies shows that the industry’s net profit margin improved significantly for a second year in a row in 2021, coming close to the record-high level of 2010 of just under 6%.

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