Korean builders fare well in Q1 with overseas projects
Eun-Ji Shim and So-Hyeon Kim
Apr 28, 2023 (Gmt+09:00)
The design drawing of Panama Metro Line 3 garage, a project involving Hyundai E&C South Korea’s leading construction companies, led by Hyundai Engineering & Construction Co. (Hyundai E&C), posted modest operating profits in the first quarter, driven by large-scale overseas projects from emerging markets.
Despite the subdued housing market and a sharp increase in raw material prices, Hyundai E&C and Samsung C&T Corp.’s construction division logged operating profit growth in the first three months of this year.
HDC Holdings Co. swung to an operating profit.
Hyundai E&C posted a 1.2% increase on-year to 173.5 billion won ($130 million) in first-quarter operating profit, with sales up 45.5% to 6 trillion won.
The sales growth was led by overseas orders, including the construction of a tunnel and a gas processing facility in Saudi Arabia; Panama Metro Line 3; and an oil refining plant in Iraq.
The construction division of Samsung C&T Corp. reported an 88.4% surge to 292 billion won in first-quarter operating profit.
Sales shot up 52.4% to 4.6 trillion won, led by the projects to build solar panels in Qatar and a high-voltage, direct-current subsea power transmission network in the United Arab Emirates.
Samsung and other Korean construction firms scaled back 2023 targets for homebuilding orders DL Construction Co. posted a 90.2 billion won operating profit on sales of 1.9 trillion won. Higher raw materials prices drove its quarter earnings slightly lower, despite a 22% spike in sales.
New orders it received nearly tripled to 3.3 trillion won, compared to a year-earlier period. The figure includes a 1.4-trillion-won plant building order in Ulsan, South Korea.
Daewoo Engineering & Construction Co. raked in 2.6 trillion won in sales, up 15.9% on-year. Its operating profit dwindled 20% on-year to 176.7 billion won.
The company is trying to receive new orders related to its ongoing projects in Iraq and Nigeria.
HDC reported a 50.1 billion won operating profit in the first quarter, versus a shortfall of 94.2 billion won in the same period last year. Its sales soared 57% on-year to 1.07 trillion won.
Construction costs, including steel beams and labor costs, climbed about 30% over the past year, according to industry officials.
Write to Eun-Ji Shim and So-Hyeon Kim at summit@hankyung.com Yeonhee Kim edited this article.