Small and midsize ready-mix concrete companies that have held their ground in local markets for more than 30 years are at a crossroads for survival. Even relatively larger firms have flashing warning lights on their results. The industry says restructuring in the ready-mix business has begun in earnest.
According to the ready-mix industry on the 27th, Hwangwon Remicon Asphalt Concrete Industry, Byeokcheon Remicon Industry, and Daeheung Remicon are undergoing court receivership. These small and midsize ready-mix companies, which have operated for more than 30 years in places such as Goseong, Gangwon Province, and Chungju, North Chungcheong Province, have found it difficult to continue operations as business conditions have worsened. Hwangwon Remicon Asphalt Concrete Industry and Daeheung Remicon face court hearings on their rehabilitation plans next month.
If the court approves a rehabilitation plan, the company proceeds with normalization based on restructuring measures such as debt adjustment. It can also continue business activities under court supervision. If the plan fails to pass, the receivership may be terminated or proceed to bankruptcy.
These corporations saw their finances deteriorate in the 2020s. Hwangwon Remicon Asphalt Concrete Industry's revenue last year was 10.1 billion won, up from 6.48 billion won in 2021, but it posted losses for three years starting in 2022. It also logged a 37.77 million won loss last year. Byeokcheon Remicon Industry maintained sales in the 4.2 billion to 5.6 billion won range, but posted persistent operating losses except in 2023.
Daeheung Remicon is in crisis together with its affiliate Daeheung Construction. Daeheung Remicon had been a solid company generating operating profit in the 3 billion won range. But as the sales of Daeheung Construction, long regarded as No. 1 in construction performance in the North Chungcheong region, slumped, Daeheung Remicon also wobbled. Daeheung Construction ranked 96th in construction capacity last year, entering the top 100 for the first time. It is now undergoing receivership together with Daeheung Remicon and Daeheung Civil Engineering & Construction.
Even if court approval of a rehabilitation plan keeps a company alive, it is unclear whether it will return to a normal trajectory. The ready-mix industry is enduring a hungry season as a construction downturn, rising raw material prices, and falling ready-mix unit prices converge. Last year's shipments were 46,894,000 cubic meters, entering a three-year decline from 62,413,000 cubic meters in 2022. The industry's operating rate was 18% last year but fell to 14% in the third quarter this year, facing the worst crisis since 1998 during the foreign exchange crisis.
The situation is no different for mid-sized corporations. SAMPYO Cement's ready-mix business is also sluggish. SAMPYO Cement posted about 42.4 billion won in sales from the ready-mix business in the third quarter last year. It accounted for 6.23% of total sales. In the third quarter this year, sales were 34.5 billion won, and the share of total sales fell to 5.93%. On a consolidation basis, SAMPYO Cement's third-quarter operating profit was 43.3 billion won, about half of the 83.1 billion won recorded in the third quarter last year.
The industry diagnoses that restructuring is becoming visible. Over the past two to three years, the industry had forecast that lower operating rates and declining shipments would not lead to a wave of closures. But as companies that served as regional mainstays enter receivership, the warning signs are materializing.
An official at the Korea Ready-Mixed Concrete Industry Association said, "Companies rooted in their regions entering receivership one after another is a signal that the overall business environment for the industry has reached its limit."
The official added, "The ready-mix industry is also pursuing digital transformation, such as AI-based production management and demand forecasting, and must use this to create a turning point," and "In preparation for a recovery in the construction cycle, efforts to improve fundamentals, such as enhancing quality and strengthening manufacturing capabilities, must proceed in parallel."