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Josef Mařinec (70) belongs to the nestors of Czech retail. In the mid-1980s, he became the head of the building materials store in Český Brod, which then belonged to the Jednota consumer cooperative. After the fall of socialism, the business privatized and in the following years built the second largest domestic seller of building materials (number one is the DEK of the Kutnar family).
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Today, Pro-Doma houses 176 stores and employs over 1,500 people. At the end of last year, just after reaching the age of 70, the founder handed over the family business to his sons. “Today, I’m just evaluating their results,” says Mařinec, who left the Board of Directors and is now the only member of the Pro-Doma Supervisory Board.
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The company is run by Jan and Josef Mařinec together with long-term director Petr Vaněrka. But even now they probably don’t have their hands free: “I tell them: do it yourself, but I’ll stop you from doing it wrong,” the senior admits.
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The largest Czech sellers of building materials according to sales in 2020
| 1. | DEK building materials |
| 2. | Pro-Doma |
| 3. | Hornbach Baumarkt |
| 4. | OBI |
| 5. | Bauhaus |
| 6. | Stavmat Building Materials |
| 7. | BM Czechia (Baumax) |
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Both successors are merged with the family business. They went to construction brigades as high school students at a time when their grandfather ran the business. And they were preparing to take over their father’s company from a young age. Josef is an operations management specialist. Jan, two years younger, the new head of the board, studied finance and spent several years in schools abroad.
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Demand fever
Marínek’s sons took the helm at a difficult time. After the covid pandemic, the bosses of the Pro-Dom expected a slowdown, instead a demand fever, problems with the distribution of goods and inflation. The future is difficult to predict.
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According to Marínec’s sale of building materials, the rise in prices, the cooling of the mortgage market, the lack of some materials and fears of war have not yet fallen. On the contrary. Hunger is after all, regardless of the price increase, which for most products for construction so far averages ten percent.
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Demand is compounded by problems with poorer availability of certain types of goods. And also the fear of continuing inflation: There is a lot of money among people after the covid downturn, at the same time they are afraid that their savings will lose value. And so they headlessly pour them into real estate.
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Clan of the Mařin family, owners of the Pro-Doma company.
“Czechs are crazy, they don’t solve the risks at all. Probably because nothing much happened to them economically during the covid, “says Petr Vaněrka, director of Pro-Dom. “As if they have forgotten the responsibility for the future. Whereas in the past an increase of two hundred per square meter of land was solved, today’s increase of a thousand will not discourage anyone. But I’m afraid the euphoria is slowly coming to an end, “he adds.
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According to him, Pro-Doma is less threatened by the expected market decline than some competitors, because it operates in the segment of small housing construction, which should remain “vital” in the coming months. But uncertainty and shocks in distribution complicate trade for everyone.
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Panic is raising prices
Many products simply do not exist with increased demand, reservation systems are being introduced, if possible with a fixed price. This is pushing for further price increases.
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“Panic plays a role, which some manufacturers like to abuse,” says Vaněrka. The rise in prices often does not correspond to inputs or the price of labor, it is only caused by concerns about the availability of the necessary products. “Distribution and customer behavior have changed,” says Pro-Dom’s boss.
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Fear of further price increases, people are buying material into stock. Today, roof constructions are being sold, which builders will need, for example, in October. The panic is exacerbated by occasional rumors that cement will not be needed, even though its production is not declining.
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In recent weeks, facade polystyrene and brickwork have become the most expensive. Their prices, as with some other products, rose by more than a quarter. “Iron is extremely unstable,” they agree with Marinec. Recent increases of hundreds of percent are replaced by announced discounts of tens of percent. Today, up to three months are waiting for ordered bricks, and two months for polystyrene boards.
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Products such as cement products and bricks reflect the rising price of energy, and more expensive transport also plays a role. But sometimes the reason for the increase is not clear at first glance. It can simply be a higher margin, which suppliers hedge against possible further turbulence in the market.
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For traders, there is a risk that today’s product deficit may quickly turn into a surplus, so that expensive goods block their warehouses and are forced to sell below the purchase price.
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Last year, for example, a panic broke out about OSB boards, which are imported to us mainly from Poland. “Prices have tripled. But it took less than three months, then they fell quickly again, “says Vaněrka.
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It looks like a fever this year with iron. For example, the bar suppliers rose in price within a few weeks from 25 to 50 crowns per kilogram, but the price was already slightly lower. “We now have 160 million iron in our reserves, and if the market fails like last year’s OSB boards, it could mean a multi-million loss for us,” says Vaněrka.
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The market will cleanse the crisis
Nevertheless, Marínec is convinced that Pro-Doma is going through the pitfalls of a volatile market. “We are not afraid of the crisis, so far we have experienced the fastest growth in all previous crises. We now expect market consolidation to continue. Many smaller traders will probably not survive, today’s big players will rather increase their market share, “estimates Jan Mařinec.
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For years, his father grew the family business through systematic acquisitions. He considers the absorption of the competing company Bierhanzl to be the first breakthrough purchase, with the acquisition of which he acquired Pro-Dom and director Vaněrka. A number of important mergers followed, thanks to which the Mařinecs expanded their scope: they entered the metallurgical production market through the acquisition of Dama and Filinger, and they acquired a construction machinery rental company in the form of Tonstav. Last year, they took over Woodcote, a player with three billion in sales, making them number one in plasterboard supplies.
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Last year, Pro-Doma achieved record 13 billion sales and its EBITDA exceeded one billion. This year, sales exceeded three billion in the first quarter due to price growth and construction fever. Maríncov’s group achieved a net profit of more than 147 million in the first three months of the year alone, earning ten times more than last year.
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The family is ready for further acquisitions. “If I regret something in my life, it’s just an opportunity I haven’t taken advantage of,” says Josef Mařinec Sr., looking back on his career. The sons nod. They are waiting for a crisis, but they are said to strengthen it again.
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