Construction is the only sector in the K100 ranking where large companies report a decline in revenues in 2022 en masse. While the sector's top 40 show token growth of less than 4%, it is due to a few companies' triple-digit jumps against the backdrop of many others recording losses, double-digit inflation and rising prices of raw materials, supplies and labor in the industry. The picture in the sector is at two extremes - pink in buildings and shades of gray in roads.
Because of the boom in housing, high-rise construction companies are refusing orders because they cannot cope with the increased volumes and, most importantly, ensure that they have enough people to build them. They have their building programmes filled for several years to come and are forecasting continued growth in revenues and profits.
At the other pole are the sector's recent leaders - the road construction companies. Their turnover has shrunk massively, and much of the revenue they still generate is from contracts won more than two years ago and whose construction is nearing completion. They continue to dominate the rankings this year, but it seems that this may soon change.
Piggybank leaderA little over four years after the first so-called in-house contract for the construction of the Hemus motorway was signed and three years after the awarding of the second one, not a single kilometer of the 224-km long project has been completed. However, according to data obtained by Capital weekly under the Access to Public Information Act, BGN 1.145 billion of the BGN 3.28 billion total value of the two Hemus contracts have been already paid out by the Road Infrastructure Agency to state-owned Avtomagistrali company. As a result, this motorway construction company leads the sector ranking for the second year in a row.
The other two state-owned companies in the top 10 are the subsidiary of the State Consolidation Company, Montazhi, the principal of which is the Ministry of Economy and which was awarded dam repairs worth half a billion levs, and Transport Construction and Reconstruction, which is under the umbrella of the transport ministry and received nearly BGN 400 million for the expansion of the seaport of Varna, although in theory it is specialized in the construction of railway infrastructure.
Just like Avtomagistrali, both companies receive large state contracts without a tender and then enter the role of distributor of works among subcontractors. Thus, public money sinks into companies selected without tenders and bearing little or no responsibility for the work done.
A good year for the Savev family
The big surprise in this year's ranking is the second place of European Roads, a company owned by Anka Saveva. The company which is a successor to Roads Plovdiv, is making a debut in the top five of the sector, reporting revenues of over BGN 380 million which is a triple increase over the previous year. A triple-digit growth rate was also achieved by Groma Hold (5th in the ranking), whose sole shareholder is Anka's son Hristo Savev.
The two companies are often bidding jointly in tenders. Among their joint projects is Lot 3.1 of the Struma motorway in the section after the Zheleznitsa tunnel in the direction of Kulata border crossing, a three-kilometer stretch of which was put into operation last year.
The overall leader
Traditionally, the Glavbolgarstroy (GBS) group has had at least two companies in the top ten, and over the years one of them has repeatedly led the sector rankings. This year, Glavbolgarstroy has four companies in the top 20. Their combined revenue is nearly BGN 587 million, which exceeds those of Avtomagistrali by more than BGN 70 million and is more than double the consolidated turnover of Trace Group Holdings, which comes in third.
Part of the Glavbolgarstroy group is the second largest company in the ranking - GBS Plovdiv, which increased its revenues by nearly 160% in 2022. Among the key projects of the Plovdiv division of GBS are the reconstruction of the city's wastewater treatment plant, a retail park in Karlovo with Premier X as the client, the new Pierer & Maxcom e-bike plant, the expansion of the existing Maxcom plant, as well as the new Profilink plant for aluminum products.
The big players that shrank
Coming third in the ranking, Trace Group Holding also marks increased revenues. In Bulgaria, the group is working on the tunneling under the Plovdiv railway station worth BGN 90 million, the repair of the railway infrastructure at Svoge station and the expansion of the Sofia metro. The firm also participates in a highway project in Romania and a railroad project in Serbia.
Part of the leading group, although in lower positions, are companies owned by Veliko Zhelev - Hydrostroy, VDH and Patstroy VDH. Together with several other companies such as Bitumina GmbH, Haskovo AB and Infra Expert (which the sector associates with Zhelev, but he denies), his group received hundreds of millions worth of orders under in-house contracts alone. Zhelev is also among the biggest actors in road maintenance works in almost half the country.
After a 34% drop in revenue in 2021, a year later Vladimir Zhitenskiy's GP Group saw a 15% rise. In recent years, the company has been increasingly active in the building construction sector. In 2022, in a consortium with the Bulgarian division of Austria's Strabag, the construction of the railway section Ihtiman - Kostenets began at a projected cost of BGN 394.5 million.
Shumen-based Avtomagistrali Cherno More saw its revenue fall last year. The company is one of the largest and long-established road builders in northeastern Bulgaria, and in 2022 it completed work on the section between the Buhovtsi and Belokopitovo road junctions on the Hemus motorway in a consortium with Infra Expert and Pattengeneringstroy-T.
Orders are in, but there's no one to complete them
Regardless of each other, all the industry managers Capital spoke to pointed to the lack of manpower as the biggest challenge they have to deal with. The shortage of staff in the building construction sector is the most noticeable, and according to representatives of the sector it is at all levels and in all specialties.
Some company owners even said that they employ workers from Bangladesh and Uzbekistan and are looking for options to hire more. Increasingly, work teams are from Turkey and Albania are hired, with Bulgarian companies arranging their accommodation for the duration of the engagement.