In 2022, the challenge for companies in the building materials sector will be to maintain sales volumes with the expected decline in margins.Along with the increase in costs, another increase in product prices is expected, assess PAP Biznes interlocutors.The Ferro company may have a good year ahead, incl.due to the geographically diversified revenue structure."At the beginning of 2022, I would expect rather flat, and in some companies - worse y / y results due to a very high base, but still good in absolute values," said Sylwia Jaśkiewicz, analyst at DM BOŚ, told PAP Biznes.In her opinion, the market will observe greater dynamics of changes in the results of companies in the second half of 2022, when the base will not be "very demanding".The high benchmark already influenced the pace of improvement in the results of companies from the building materials industry in the second half of 2021, but the results should be better throughout the year - believes Jaśkiewicz.Among the challenges for companies in the construction materials sector in 2022, Jaśkiewicz indicates the achievement of revenues that will ensure the maintenance of results at a high level, with a declining margin.In her opinion - maintaining the level of profits would mean success.Download the guide for free or buy it for PLN 10.Do you have a question?Write to [email protected]"It is worth noting that there have not been such good results in the sector for years. Even maintaining the level of profits would be a great success, as it would mean much higher results than before the pandemic. Investments are another challenge," said analyst at DM BOŚ.Also Trigon DM analyst David Sharma assessed that the biggest challenge for the companies is the defense of sales volumes, related to the slowdown in the renovation market and cost pressure, which may translate into erosion of profitability.Source: Companies, Notoria, own calculations* the financial year starts in AprilJaśkiewicz assumes slightly lower profits in 2022, e.g. in Decora or Ferro, but at a high level compared to the period before the pandemic."I assume an increase in revenues, a decrease in margins, high investment expenditures. However, I would like to emphasize that the uncertainty regarding the projection is now very high," said analyst at DM BOŚ.In turn, the analyst of Trigon DM, David Sharma, sees an opportunity to improve results in the case of, among others,Ferro, which through its subsidiary Termet is a beneficiary of the growing importance of renewable energy and ESG in the building materials segment.In his opinion, a difficult year, incl.due to the raw material and currency environment, it may wait, for example, for Śnieżka."I like Ferro the most due to its exposure to the segment of green heat sources and a highly geographically diversified revenue structure," assessed Sharma.The analyst of the Brokerage House of BPS Bank, Artur Wizner, indicated that the situation in Ukraine is a risk for some companies in the industry - for example for Śnieżka, which has a production plant in that country."Besides, Śnieżka is currently valued at a fairly large discount compared to paint companies, and here the reason may not only be the risk of higher production costs, which affects the entire industry. factors for the company - the effects of building a new distribution center, how much it will reduce costs, and synergies with the Hungarian company Poli-Farbe. the prism of threats rather than opportunities, said Wizner.According to the analyst of the Brokerage House of BPS Bank, investors' concerns about costs - primarily energy - may be responsible for any drops in the valuation of companies in the building materials segment."These are companies whose production is energy-intensive, so the impact of recent increases will be visible in their results for the first quarter, and until then I do not expect a wave of increases in the prices of these companies. We do not know how much production costs will increase, it will be easier to assess the situation - and this how are the companies dealing with increases - after the first quarter "- Biznes Wizner told PAP.In his opinion, the main factor that should have a positive impact on the sector representatives later in the year is the maintenance of the good condition of the property development industry.According to the Central Statistical Office (GUS) data, the number of apartments whose construction began in November 2021 increased by 7.2%.yy.At the end of November, 880.3 thousand sq m was under construction.flats, by 5.5 percent.more than a year ago.In the period January-November, developers handed over 125.6 thousand sq m.flats, by 2 percentless yoy"In the longer term, I see more opportunities for this industry than risks. This year, the building materials sector should perform better than the broad market," added Wizner.The interlocutors of PAP Biznes agree that the companies will probably decide to further increase the prices of products as a result of the increase in costs.However, consumer acceptance of high prices can be a challenge."I expect increases - a high several or a dozen percent depending on the assortment. The companies will try to neutralize the increase in costs not only of raw materials or logistics, but also wages," said Sylwia Jaśkiewicz."Taking into account the increasingly + more expensive + stocks that companies have in their warehouses, further unfavorable raw materials environment and continued pressure on wages, it can be concluded that further increases are inevitable" - added David Sharma.The analyst of Trigon DM pointed out that there is no certainty that consumers and end-users of building materials will be willing to accept increases as high as those that took place over the last year / one and a half.According to the announcement of Polskie Sklady Budowlane, the prices of building materials and materials for home and garden increased by 24% in December.y / y, and throughout 2021 by 12 percent.yy.The prices of all assortment groups went up - the most expensive part of the materials, the so-calledheavy construction - OSB boards, thermal insulation (polystyrene, wool) and all products made of steel, aluminum, wood and petroleum derivatives."Increases in material prices are the result of rapid demand and insufficient supply caused by disruptions at various stages of the traditional production and supply chain in our industry (raw materials, components, logistics). In addition, increases in electricity, gas, fuel prices, increases in labor costs and exchange rates will affect on the availability and further increases in the prices of construction materials, including those currently in short supply - thermal insulation, wall, construction adhesives (the most severe in the field of cements) and imported from the Far East "- said Mirosław Lubarski, PSB Handel's management board director in a comment sent to PAP Biznes.Arnaud Boule, the general director of the Bricoman Polska network of construction wholesalers, also noted the great interest in renovation and construction purchases and product price jumps in 2021.As he noted, last year there was a deficit in the availability of construction, wooden and imported materials.In 2022, however, it expects a slow stabilization."We expect a slow stabilization in the availability and prices of selected product categories, but the general upward trend is likely to continue in 2022, as the stabilization of energy and raw materials prices as well as the impending end of the pandemic are not yet visible. Additionally, the decisions of the National Bank of Poland and the government seem to be insufficient to prevent the further development of inflation, ”assessed the director general of Bricoman Polska.For many companies, 2021 meant operating with interrupted supply chains, but - as analysts indicate - the situation is slowly normalizing."Recent statements and guidance from both companies from the sector and global logistics giants indicate that the situation in supply chains is slowly normalizing. Analyzing the levels of inventories of companies from the industry, we can also come to the conclusion that there is more and more goods in Europe and it is more easily available than it was in 2021 "- assessed Trigon DM analyst David Sharma.As Jaśkiewicz from DM BOŚ pointed out, the companies have been working in the environment of disturbed logistics processes for a long time, so this should not be an obstacle in their operations, especially as some of them were able to turn these problems to their advantage."On the other hand, rising commodity and transport prices are taking their toll. Taking stock levels into account, I think we will see and partially see cost increases in 2022. I expect margins to decline y / y," she added.PAP Biznes interlocutors do not agree in their assessment of the demand expectations for the coming months."In my opinion, the + peak + in the renovation market is already behind us, and the demand for construction materials related to the primary housing market may also cool down in the entire region in the near future" - assessed Trigon DM analyst David Sharma.Additionally - in his opinion - the FIFO effect, which has been supporting for the last 12-18 months, is slowly fading away, which may affect the profitability of companies in the industry.Jaśkiewicz believes, however, that the residential market in the region is doing well and the demand for building materials may remain at a high level."The finishing / renovation cycle is delayed in relation to the construction of apartments, so the demand is likely to remain high. Additionally, the value of sales will be stimulated by price increases" - she added.The director of the management board of the PSB Handel Group indicated that in 2022 a significant increase in demand for materials should not be expected due to insufficient executive power of construction and renovation companies, which translates into limited investment intentions."Supply and logistics turmoil will have a significant impact on the sale of some materials in our sector at least in the first months of 2022. Household demand pressure may significantly weaken in the face of rising mortgage rates, while the high comparative base (above-average renovation in 2020-21) will significantly weaken the sales dynamics. Demand and the scale of investments in non-residential construction will depend on the political and social situation and the availability of EU funds "- assessed the director of PSB Group, which offers building materials in 365 stores and in 343 retail stores (Mrówka) ."This year, demand is likely to remain strong, but its dynamics should slow down a bit as the inevitable increase in interest rates will reduce creditworthiness and the attractiveness of real estate investments. Besides, more and more people expect housing prices to stabilize, so they should not rush to buy so as it was in 2021 "- added Arnaud Boule from Bricoman Polska.PAP Biznes interlocutors expect that in 2022 companies from the sector will continue to develop, which will entail investments in e.g. production capacity."I expect large investments in the sector in 2022. The companies are operating close to full capacity utilization. Investments will take place in both production facilities and logistics. (...) It should also be noted that the pandemic has postponed investment plans. Companies preferred to be cautious or needed the investment was not so pressing ”- assessed Jaśkiewicz."The industry is constantly developing and the companies are constantly expanding abroad, which entails the need to invest in new distribution and logistics centers," added Sharma of Trigon DM.Moreover, the analyst pointed out that in the segment of building materials, ESG and RES trends are becoming more and more visible, and EU programs (eg Clean Air) support thermal modernization, the beneficiaries of which are companies such as Ferro."The share of ecological heat sources in the mix is ​​constantly growing and, in our opinion, the next quarters may bring a dynamic increase in revenues in companies that have gas boilers or heat pumps in their assortment," added Sharma.Get PLN 300 and enjoy the card for freeApril became part of this year's tradition and was another month that brought about a reduction in the expectations of the sellers of construction plots - according to Bankier.pl data provided by the Otodom real estate website.This time, however, declines could be seen much more often in announcements concerning the sale of plots located in the capitals of voivodeships.The Department of Development and Technology is working on further changes to the Construction Law, which will concern, among others,deregulation of regulations - announced in the Sejm Deputy Minister of Development and Technology Piotr Uściński.He added that the changes will facilitate investments or building a house.The average cost of building a square meter of an apartment in the first quarter increased to PLN 5,252 compared to PLN 5,134 in the fourth quarter of 2021, the Central Statistical Office (GUS) reported.By using the portal, you accept the regulations