Korean construction companies post mixed Q2 results

GS Engineering & Construction Corp. headquarters in Seoul. [Courtesy of GS E&C]

South Korean construction companies reported mixed results for the second quarter, with GS Engineering & Construction Corp. (GS E&C) logging an operating loss of 414 billion won ($324.6 million) on sales of 3.5 trillion won.

GS E&C announced Wednesday that it suffered an operating loss as costs of 550 billion won were incurred for rebuilding the entire Gumdan apartment complex in Incheon. Sales jumped about 15 percent from a year ago. New orders totaled 3.59 trillion won, down from 4.38 trillion won a year earlier.

For the first half of the year, GS E&C posted an operating loss of 255 billion won on sales of 7.01 trillion won. After excluding the rebuilding costs, its operating profit was 295 billion won. Sales increased 29.2 percent year on year, driven by growth in the housing sector. New orders reached 5.69 trillion won.

The company’s new business is particularly showing continued growth, with its water treatment subsidiary GS Inima winning a project worth 296 billion won in Brazil.

HDC Hyundai Industrial Development Co., which released its second-quarter results on the same day, said it posted 933.6 billion won in sales, down 2.7 percent from a year ago, and 5.7 billion won in operating profit, down 91.4 percent.

The company reported an operating profit of 55.8 billion won in the first six months of the year, turning around from an operating loss of 27.4 billion won in the same period a year ago, on sales of 2.01 trillion won, up 22.1 percent.

HDC Hyundai Development blamed the decline in operating profit at a slowdown in the construction industry, rising costs on an increase in subcontracting costs, and an expected cost increase at sites where construction is underway.

Samsung C&T Corp., on the other hand, saw its operating profit rise 40 percent from a year ago on the back of its strong performance in the construction sector.

Samsung C&T said Wednesday that its operating profit was 772 billion won on sales of 10.59 trillion won in the second quarter this year. Sales were down 2.2 percent but operating profit was up 38.9 percent.

The strong operating profit was led by the construction segment.

In the second quarter, operating profit in the segment rose 96.8 percent year on year to 305 billion won while the company’s commercial, fashion, and resort segments saw a slight decline in operating profit.

“In the construction sector, domestic and overseas projects for airports and liquefied natural gas (LNG) are performing well,” said an official from Samsung C&T. “We saw solid performance with the expansion of housing sales and the start of new overseas projects. The results also include the operating profit of our subsidiary Samsung Biologics.”