Builders see rise in Q2 operating profits

Korea’s major construction firms have seen a rise in their operating profits of the second quarter, thanks to the jump of orders and expansion to the overseas market, industry analysts said.

Hyundai Engineering and Construction said on Wednesday that its operating profit rose by 5.5 percent to 268 billion won ($236 million) in the second quarter on-year.

The sales dropped by 2.7 percent to 4.69 trillion won but the net profit jumped by 16.4 percent to 167.7 billion won.

In the first half of this year, the company, consequently, saw a 4.5 percent rise in the operating profit to 476 billion won and a 2.5 percent increase in sales to nearly 9 trillion won.

The sales expansion to overseas contributed to the operating profit jump, the company said.

“The marine bridge construction in Kuwait and nuclear power plant project in the United Arab Emirates kicked off while apartments were parceled out in Gwangju, Gyeonggi Province, this year. All of those are believed to have boosted the sales,” said the company.

Hyundai Engineering and Construction projects that it will continue seeing the sales boost in the second half of the year as more contracts will likely be made that have been delayed earlier this year.

Hyundai Development Co. also posted a 59.6 percent surge in the second quarter’s operating profit to 161 billion won with a 53.7 percent jump of net profit to 120 billion won. The sales slightly decreased by 2.6 percent to 1.2 trillion won.

“The recovery of rate of cost to sales sharply contributed to the positive performance in the all business sectors such as housing projects to construction business,” said the company.

Doosan Engineering and Construction also saw a soaring operating profit to 10 billion won in the second quarter, surging by about 515.6 percent on-year. The sales also rose by 7.2 percent to 311 billion won.

This has led to a total of 26 billion won of operating profit for the first half of this year, showing a 88.8 percent growth on-year. The sales also slightly increased by 1.3 percent to 586 billion won on-year.

Doosan Engineering and Construction has put efforts into saving costs by selling assets and improving the financial status, it said.

Samsung Engineering which has not posted the second quarter report, is also projected to show better performance than last year, analysts said.

The company is expected to post about 1.8 trillion won of sales and 43 billion won of operating profit. Although this will be a 2 percent drop in sales, the operating profit will likely hit a record high by 123 percent since the second quarter of 2014, they said.

Analysts speculated that massive orders from Samsung’s affiliates affected the operating profit rise.

As of this month, the company is estimated to have received orders equivalent to 1.8 trillion won from Samsung this year.

By Lee Hyun-jeong (rene@heraldcorp.com)