DL E&C’s Q1 OP down 32.5% on rising raw material prices

[Courtesy of DL E&C Co.]

South Korean builder DL E&C Co. announced on Thursday that its operating profit for the first quarter declined 32.46 percent to 60.9 billion won ($44 million) from the same period a year ago.

The earnings fell short of the market consensus of 86.4 billion won compiled by Yonhap Infomax.

Sales rose 2.19 percent to 1.89 trillion won but net profit plunged 72.28 percent to 26 billion won.

DL E&C blamed the poor earnings to a decline in profitability across the housing sector amid higher raw material costs.

DL E&C said that it will commit to enhancing cost efficiency through increases in contract values. It also highlighted its strong performance in the plant and civil engineering projects and expects robust sales growth moving forward.

As part of its push for greater profitability and reliable earnings, DL E&C unveiled plans to adopt an order strategy focusing on profitability and cost management.

The amount of new orders in the first quarter reached 1.9 trillion won, with 792.9 billion won in residential construction projects, 285.2 billion won in civil engineering projects, and 37.3 billion won in plant projects.

The construction company has 1.2 trillion won in net cash, with an increase of 189.6 billion won from the end of last year.

“DL E&C has kept its credit ratings strong despite elevated financial risks in the construction industry, including recent credit downgrades among its rivals in the wake of project financing contingent liabilities and industry-wide liquidity risks,” said a company official.