The years 2021 and 2022 were also good in the European Union, in which we observed a significant increase in the useful area of non-residential buildings in the issued permits and notifications clearly above the level of 170 million m2 . In 2022, however, we were dealing with a decrease by 1.1% compared to 2021. Eurostat has not yet collected data for all EU countries for the first half of 2023, but data from Q1'2023 show a decrease of over 2% y/y.
We expect a slight slowdown in the value of orders in the second half of 2023/24 and in the 2024/25 financial year. We see a risk that the slowing economy will have a negative impact on the number of commenced constructions of cubature facilities. This should translate into orders for Mercor products with a delay, but the scale of the slowdown should not be large.
We estimate that sales revenue in 2023/24e will amount to PLN 643mn (+2.3% y/y), and in the following year it will decrease by 3.6% y/y to PLN 620mn. In the following years, we assume an increase in sales, but at a rather conservative level. We assume a 6-year CAGR (2022/23 – 2028/29e) of the value of orders and revenues at the level of 2.9% and 2.2%, respectively.
Mercor looks decent in terms of gross profit margin on sales, which oscillated at around 25%. 1Q'2023/24 was slightly worse than 1Q'2022/23, gross profit margin decreased from 27.5% in 1Q'2022/23 to 25.4%, which may be a sign of deterioration of margins in the near future. In our forecast, we assume a decline in gross profit margin from 24.9% in 2022/23 to around 23% in the next two years. After this period, we assume an increase in the margin along with the expected improvement in the economic situation in the industry
