Fears of a massive restructuring are again lingering in the local construction industry as leading contractors are known to have logged steep losses in the first quarter amid a protracted industry downturn, data showed Sunday.
The combined operating profit of eight listed construction companies here is estimated at 197.7 billion won (US$174.9 million) for the January-March quarter, down 75.2 percent from a year ago, according to the data compiled by local corporate information tracker FnGuide Inc.
Only three out of the tallied companies will probably log an increase in their profits -- Samsung Construction & Trading Corp., Hyundai Engineering & Construction Co. and Daelim Industrial Co., the data showed.
GS Engineering & Construction Co., one of the top players, is expected to run into the red with an estimated net loss of 386 billion won.
The dim earnings outlook came as local builders have been struggling from a protracted slump in South Korea's property market, leading them to seek profit sources from overseas, analysts said. But as they all rushed to win offshore orders, the excessive competition has hurt their profitability, they added.
"There are fewer orders to make a bid for, but it's more competitive now. We thought that we just need to get the order even if it wasn't good money, which is why it's inevitable to see lackluster performance," said an industry official.
According to some industry and financial sources, it has been widely speculated recently that about five to six mid-sized builders may be on the verge of filing for a workout or court receivership.
Last month, Ssangyong Engineering & Construction Co., the country's 13th largest builder, filed for a workout program after suffering massive losses for the second straight year in 2012, getting creditor banks to salvage the troubled builder with a rescue plan worth 170 billion won. (Yonhap News)
