Construction company Sisk has pulled out of a number of road-building projects in Poland at a cost of between €50m and €60m due to what it says are spiraling costs and problems linked to ongoing issues with the Polish Road Authority.
In was reported on the Business and Leadership website that Since 2010 the company had been working on three separate road-building projects comprising 92km in total, which were joint ventures with two Polish companies, Budbaum and PBG, both of which collapsed earlier this year.
The Polish market comprised around 10pc of Sisk’s overall revenue up to now, and the company had put approximately €90m into its Polish operations.
Although one of the road projects was completed, with the other two 70pc and 48pc completed, Sisk said all three road builds had been beset with problems, including radically different ground conditions to those set out in the tender, a lack of access to raw materials, as well as bureaucratic issues all adding hugely to the costs of each project.
Sisk said it will now spend a month clearing up the sites before pulling out of the country, but said that there would be no Sisk-related job losses as a result and that the 400 people working on the projects would be re-deployed elsewhere. [Some of these workers were employed by Roadbridge, a Limerick company that was working jointly on the projects with Sisk.]
The company is now in the process of trying to re-claim the €90m owed to it for the completed road and says it is considering taking legal action in connection with the other two projects, although it also admitted it is “quite probable” that the Polish authorities may also take legal proceedings against Sisk.
In 2010, Sisk reported after-tax profits of €8m, with revenue of over €1bn.
The impact of the ill-fated Polish projects, somewhere between €50-€60m, is expected to be incorporated into the company’s 2011 accounts, which will be filed in the next few months.
The company says it expects to return to profitability in 2012.