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Doprastav forecast lifted by building sector optimism

SLOVAKIA'S largest construction company, and the second largest in the combined Czech and Slovak Republics, is planning significant growth this year with the anticipated recovery of the Slovak construction sector.
Doprastav Slovakia, created in January 1994 from a former state monopoly, is projecting 2002 earnings of Sk70 million on revenues of Sk6.9 billion as it prepares further transportation infrastructure projects including the Bratislava-Trnava rail corridor and highway construction in the Czech Republic.
Doprastav, which specialises in transportation infrastructure, is also part of a consortium bidding for the contract to build the Košická bridge in Bratislava - the city's fifth bridge across the Danube river.

SLOVAKIA'S largest construction company, and the second largest in the combined Czech and Slovak Republics, is planning significant growth this year with the anticipated recovery of the Slovak construction sector.

Doprastav Slovakia, created in January 1994 from a former state monopoly, is projecting 2002 earnings of Sk70 million on revenues of Sk6.9 billion as it prepares further transportation infrastructure projects including the Bratislava-Trnava rail corridor and highway construction in the Czech Republic.

Doprastav, which specialises in transportation infrastructure, is also part of a consortium bidding for the contract to build the Košická bridge in Bratislava - the city's fifth bridge across the Danube river.

After a number of postponements, a tender for the reconstruction of the Bratislava Rača-Trnava rail corridor, which will cost an estimated 42 million euros, was awarded in March to a consortium led by Doprastav and including Železničné stavebníctvo Bratislava, Železničné stavby Košice and ŽS Brno.

The competition for the project was due to close in October 2001, but was extended several times following conflict of interest allegations. The then-director of Slovak Rail's (ŽSR) technical development section and chairman of the contract selection committee, Ladislav Dimun, stepped down from the committee when it was revealed that he had business interests in some firms making bids.

Doprastav chairman Ivan Šesták attributed his company's victory to their low price, which he claims was Sk67 million lower than their nearest competitor's, as well as Doprastav's strict adherence to the tender requirements. A big part of the savings, said Šesták, was made possible because "Doprastav knows how to make concrete bridges, and has also prepared alternatives." Concrete bridges are much cheaper than iron or steel.

While the European Union will be paying for 75 per cent of the project through its Instrument for Structural Policies for Pre-Accession (ISPA) programme, the remainder will be paid through the Slovak state budget.

Doprastav's activities in the Czech Republic increased sharply following the firm's acquisition of a 62.53 per cent share of Czech firm Metrostav in August 2000. Metrostav specialises in underground construction, tunnels and maintenance of the Prague Metro.

This year, according to Doprastav production director František Potisk, the firm plans to further expand activities in the Czech Republic. "We are trying to penetrate the highway sector there, for example the bypass around Plzen. Together with Metrostav and Stavba Silnice, we are also planning to enter other sectors," said Potisk.

Doprastav Director Dušan Mráz reported that the firm had achieved output in the Czech Republic totalling Sk199 million in 2001, a figure expected to more than double for 2002. "This year we expect output in the country at Sk500 million," said Mráz.

However, an improvement on the Czech market or elsewhere may not necessarily mean a rapid turnaround in Slovakia's construction sector. According to the director of the Association of Construction Entrepreneurs (ZSPS), František Slávik, the domestic market is still hampered by a lack of orders, low purchasing power among Slovak citizens, and weak investment into the construction sector.

Nevertheless, Doprastav is planning a good year, with Sk70 million in after-tax profits and another 100 hirings to complement a workforce of 2,840 last year.

A Doprastav-led consortium was also one of five groups to submit a bid on the Košická bridge project by the March 18 deadline. The project will cost an estimated Sk3.6 billion.

The decision of the selection committee is expected on April 10.

Doprastav has recently been the subject of a public takeover bid by employee company Doas, which has long been its majority shareholder. Doas announced the bid on March 25, as required by law, which stipulates a public bid when shareholder voting rights exceed 50 per cent. As of March 11, following a gradual acquisition of shares, Doas controlled 64.25 per cent of shares in the company.

The Financial Market Office (ÚFT) approved a price of Sk1,430 per share, which represents the average share price on the stock market over the last six months. During that time, Doprastav shares fluctuated between Sk630 and Sk4,584 per share, closing at Sk950 at the time of the bid on March 25.

Doas is planning to finance the transaction through its own resources. The bid, whereby Doas will buy shares from individual holders at the UFT-approved price, is set to expire April 24.

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