Construction and infrastructure in Serbia delivered stable top-line performance in 2025, but financial results across both foreign-owned and domestic companies confirmed that the sector has entered a margin-constrained phase. Activity levels remained high, supported by transport corridors, energy facilities, utilities and urban infrastructure, yet profitability depended far more on contract design, indexation mechanisms and execution discipline than on headline project volume.
Across the sector, revenue growth in 2025 averaged 8–12 percent year-on-year, reflecting continued public investment and the rollover of large multi-year projects. Highways, rail modernisation, energy-related infrastructure and municipal utilities accounted for the bulk of activity. Nominal revenues expanded largely due to project progression and inflation-adjusted contract values rather than the launch of materially new megaprojects.
Foreign-owned contractors and international joint ventures continued to dominate the highest-value and most technically complex segments. European construction and engineering groups such as Strabag, Vinci and Porr operated in Serbia either directly or through subsidiaries and consortia, focusing on highways, rail corridors, bridges, tunnels and energy facilities. These firms benefited from scale, access to group balance sheets, advanced project management systems and experience with FIDIC-style contracts.
Despite stable revenues, EBITDA margins for foreign-owned contractors remained compressed, typically in the 7–11 percent range. Rising input costs were the primary driver. Prices of steel, cement and specialised construction materials increased by 5–9 percent during the year, while labour shortages pushed average construction wages up by 10–12 percent, particularly for skilled operators, engineers and site managers. While larger international firms were better positioned to negotiate supplier contracts and absorb volatility, margin pressure was visible even among the strongest players.
Domestic construction companies experienced a similar revenue environment but faced sharper profitability constraints. Serbian firms such as Energoprojekt, Putevi Užice and other regionally active contractors remained heavily involved in roadworks, utilities, energy facilities and municipal projects. Revenue growth for domestic firms often matched or slightly exceeded the sector average, particularly where companies were embedded in public infrastructure programmes. However, EBITDA margins frequently clustered at the lower end of the range, 6–9 percent, reflecting weaker pricing power, higher financing costs and greater exposure to unindexed contracts.
Contract structure became the decisive financial variable in 2025. Projects with clear price indexation clauses for materials and labour preserved margins, while fixed-price or weakly indexed contracts suffered material erosion. Companies operating under older contracts signed before the full inflation cycle were particularly exposed, absorbing cost overruns that could not be passed through. This dynamic created wide dispersion in profitability even among firms with similar project portfolios.
Energy infrastructure and utility projects offered comparatively better financial profiles. Construction linked to power plants, substations, grid upgrades and renewable energy facilities tended to include more robust indexation and risk-sharing mechanisms. As a result, margins on energy-related projects were typically 1–2 percentage points higher than on general transport infrastructure. This partly explains the growing strategic focus of both domestic and foreign contractors on energy-related civil works and EPC-lite arrangements.
Project backlogs across the sector remained strong at the end of 2025, extending well into 2026 and in some cases 2027. Large foreign contractors reported Serbian backlogs equivalent to 1.5–2.0 years of revenues, providing visibility but not necessarily margin comfort. Domestic firms also maintained solid order books, but with greater concentration risk tied to a smaller number of public clients.
Financing conditions further shaped performance. Foreign-owned contractors benefited from lower cost of capital, often accessing group financing at effective rates of 4–6 percent, while domestic firms faced borrowing costs closer to 7–9 percent, directly affecting net margins and working capital flexibility. Delays in public payments, although improved compared with earlier years, continued to strain liquidity for smaller domestic contractors.
Capital expenditure in the sector remained modest. Most investment focused on equipment renewal, digital project management tools and compliance rather than capacity expansion. Annual capex typically represented 2–3 percent of revenues, underscoring that construction in Serbia remains execution-driven rather than asset-heavy.
From a financial perspective, 2025 confirmed that construction and infrastructure in Serbia is no longer a high-margin growth sector, but a volume-stable, risk-managed business. Revenues are supported by public investment and EU-aligned infrastructure priorities, yet profitability hinges on contractual discipline rather than scale. Foreign-owned firms maintained an advantage through contract sophistication and financing access, while domestic companies relied on local knowledge and execution speed to remain competitive.
The sector entered 2026 with strong order books but limited margin headroom. In this environment, the winners are not those with the largest pipelines, but those best able to price risk, enforce indexation and control execution costs in a market where activity remains high, but financial slack has largely disappeared.
