The construction and infrastructure sector in Serbia demonstrated stable revenue performance in 2025, although financial results indicated a tightening of margins across both foreign-owned and domestic companies. High levels of activity were maintained, driven by projects in transport corridors, energy facilities, utilities, and urban infrastructure. However, profitability increasingly depended on contract structures, indexation mechanisms, and strict execution practices rather than merely the volume of projects undertaken.
In terms of revenue growth, the sector saw an average increase of 8–12 percent year-on-year. This growth was largely attributed to ongoing public investments and the continuation of large multi-year projects rather than the initiation of new megaprojects. The primary areas of activity included highway construction, rail modernization, energy infrastructure, and municipal utilities.
Foreign contractors and international joint ventures played a significant role in the most valuable and technically complex segments of the market. Major European construction firms such as Strabag, Vinci, and Porr operated within Serbia through direct involvement or partnerships, focusing on key areas like highways, rail corridors, bridges, tunnels, and energy facilities. These companies leveraged their scale, access to group resources, advanced project management capabilities, and familiarity with FIDIC-style contracts.
Despite stable revenues, EBITDA margins for foreign-owned contractors were constrained, typically ranging between 7–11 percent. The rise in input costs was a significant factor influencing this compression. Prices for essential materials like steel and cement increased by 5–9 percent over the year. Additionally, labor shortages led to average wage increases of 10–12 percent for skilled roles such as operators, engineers, and site managers. While larger international firms were generally better positioned to negotiate favorable supplier contracts and manage cost fluctuations, margin pressures were evident even among the most robust players.
Domestic construction companies encountered similar revenue trends but faced more pronounced challenges regarding profitability. Serbian firms like Energoprojekt and Putevi Užice were actively engaged in roadworks and energy-related projects. Revenue growth for these domestic entities often matched or slightly surpassed the sector average due to their involvement in public infrastructure initiatives. However, EBITDA margins frequently fell within the lower range of 6–9 percent due to limited pricing power, higher financing costs, and increased exposure to unindexed contract agreements.
Contract structure emerged as a crucial factor influencing financial outcomes in 2025. Projects featuring clear price indexation clauses for materials and labor generally maintained better margins. In contrast, fixed-price or poorly indexed contracts experienced significant erosion of profitability. Firms operating under older agreements that did not account for inflation faced considerable challenges in managing cost overruns.
Energy-related infrastructure projects provided comparatively stronger financial profiles. Construction associated with power plants and renewable energy facilities typically included more effective indexation and risk-sharing provisions. Consequently, profit margins on energy projects were generally 1–2 percentage points higher than those associated with general transport infrastructure.
At the end of 2025, project backlogs remained robust across the sector, extending well into 2026 and beyond for some contractors. Large foreign firms reported backlogs equivalent to approximately 1.5–2.0 years of revenues. While this provided visibility into future work, it did not necessarily translate into improved margin conditions. Domestic firms also reported solid order books but faced greater concentration risk due to reliance on a limited number of public clients.
Financing conditions further influenced sector performance. Foreign contractors benefited from lower capital costs by accessing group financing at effective rates between 4–6 percent. In contrast, domestic companies encountered borrowing costs closer to 7–9 percent which directly impacted net margins and working capital flexibility. Although delays in public payments improved compared to previous years, liquidity remained a concern for smaller domestic contractors.
Capital expenditures within the sector remained modest during this period. Investments primarily focused on equipment upgrades and digital project management tools rather than expanding capacity. Typically representing around 2–3 percent of revenues annually, capital expenditure underscored that construction activities in Serbia are primarily execution-driven rather than reliant on heavy asset investment.
As 2025 concluded, it was evident that the Serbian construction and infrastructure sector had transitioned from a high-margin growth environment to one characterized by stable revenues but constrained profitability driven by risk management practices. While public investment continued to support revenues alongside EU-aligned infrastructure objectives, contractual discipline became critical for maintaining profitability. Foreign-owned firms retained an edge through sophisticated contract management and financing capabilities while domestic players relied on local expertise and execution efficiency to stay competitive.
Entering 2026, the sector faced strong order books but limited margin flexibility. The landscape suggested that success would favor those adept at managing risk pricing while enforcing indexation clauses and controlling execution costs amidst high activity levels but diminished financial leeway.
