Building on Expertise
August 29, 2013
Ludovic Duplan, CEO of Karmar, a Polish-based construction company that is part of France’s Bouygues group, talks to Marcin Mierzejewski.
In what market segments is Karmar active as a construction company in Poland?
We have two main types of activities in construction. We are a general contractor in constructing all types of buildings—housing, hospitals, offices, schools, universities. We also handle infrastructure projects—bridges, small tunnels, small access roads. But this represents only 30 percent of our business. Parallel to acting as a general contractor we are also active in property development. We handle property development on a non-speculative basis, which means we do not necessarily acquire land, but try to develop products that are not offered by traditional developers. We don’t do housing or offices, but focus on products where it makes sense to have a combination of a contractor and developer. We contract projects like data centers or budget hotels, where the budget is very tight and you have to optimize everything in the project in order to be able to build it.
What major projects has Karmar carried out recently?
We have a long list of projects. We recently finished a housing project called Naruszewicza Residence in Warsaw. We also got an occupancy permit for the future headquarters of the Orange telecom company—43,000 square meters of office space in Warsaw, one of Karmar’s biggest projects of this type. We completed a shopping mall in Toruń and housing projects in Poznań and Wroc³aw. Basically, we handle all kinds of housing and office projects, all types of buildings.
Europe is going through an economic and fiscal crisis. What are the benefits of being a part of the Bouygues group under these circumstances?
There are different advantages to being a member of a group like Bouygues. First, the group has more than 50 years of experience, so we have been through a number of crises over this time already. It is not the first crisis the group has encountered. And we are much more familiar with mature markets and competitive markets than purely speculative and booming markets. Another aspect is that Bouygues is a big group. Today its annual turnover is 33 billion euros. We are a very profitable group, which gives us robustness and credibility on the market, especially because clients today are looking for companies that can deliver rather than go bankrupt in the middle of a project. We are also able to get a bank loan or financial facilities, which is also very helpful. So I think being a member of the Bouygues group in a crisis basically provides you with a backup and support—technically, but also financially—whenever this is needed. And if you compare Karmar’s 100-million-euro turnover today with the group’s total turnover of 33 billion euros, you can see that Karmar is very small on the group level, so there is no problem helping it if the need arises.
How long has Karmar been a member of the Bouygues group?
It was acquired in 2006. Interestingly, however, we have been active in Poland for a long time, because we were one of the very first Western companies to come here after the end of communism. And we were active as Bouygues Polska. The point is that throughout the 1990s we focused on large-scale projects, we were bringing in a lot of expatriates, because the market was not very well developed and structured. At the start of the next decade, we decided that it was essential for us to be active in Poland, as Poland is the largest country in Central Europe. For us it was crucial to build a network of companies throughout Europe. Our interest was in setting up steady business and undertaking small, medium-sized and large projects on a regular basis. And that’s why we decided to get access to additional resources, clients and references through the acquisition of a company. Our strategy today is to develop a network of local companies and capitalize on local resources.
We have been here for the past 20 years, first under the name of Bouygues, now as Karmar. I do not rule out that in the coming years we will be seeking an opportunity to develop on the market by acquiring another company, in order to diversify our business by either expanding to new regions or embracing new types of products. So we are anchored in the Polish market through Karmar and our intention is to develop it.
What can you say about the Polish construction market in comparison to other markets where Bouygues is active? How has it changed and what are its prospects for development?
For me, the Polish market, compared to Europe as a whole, is still one of the most booming markets. There is still dynamism in the economy. Clearly, it’s nothing compared to what it was two years ago, but compared to what is happening elsewhere in Europe, we believe that the Polish market is still very dynamic. What I can say today is that the Polish market is becoming well structured and more and more mature. This market is also very competitive and our clients want value for money. They don’t necessarily want the lowest price. They want a company that will deliver on time, that will provide them with quality, a company that will respect the budget and in which they can believe. So a low price is key, but it is not the only factor. For me, the Polish market is still growing compared to elsewhere and the fact that it’s becoming increasingly mature is an opportunity for Karmar. We are ready for this opportunity and well positioned to take advantage of it. We can compete not only in terms of price, but also in terms of better standards and quality.