On the 22nd, Samsung C&T and Hyundai E&C will announce their fourth quarter (October-December) and annual results for 2024. As the leading construction companies that ranked first and second based on construction capacity evaluation release their results for last year first, interest in the construction industry is expected to be high. Following Samsung C&T and Hyundai E&C, Daewoo E&C (scheduled for early February) and GS Engineering and Construction (February 5), DL E&C (February 6), and POSCO E&C (scheduled for the end of March) will sequentially publish their results.
Samsung C&T's construction division is projected to have a revenue similar to or slightly lower than last year, 2023, with operating profit also expected to decrease slightly. However, it is anticipated that the company will maintain its operating profit close to 1 trillion won, earning praise for its resilience despite a deteriorating market environment. On the other hand, many major construction companies are expected to see significant declines in operating profit.
According to the Financial Supervisory Service and the construction industry on the 20th, the companies that have confirmed their annual result announcement dates for 2024 by this date are Samsung C&T, Hyundai E&C, GS Engineering and Construction, and DL E&C.
Samsung C&T's construction division, which will announce its annual results on the 22nd, is projected to have annual revenue in the 19 trillion won range and an operating profit between 900 billion and 1 trillion won. Kyobo Securities forecasted the revenue to be 19.417 trillion won, while Heungkuk Securities estimated it at 19.682 trillion won, both figures representing an increase of 106 billion to 371 billion won compared to last year's 19.311 trillion won.
There is also interest in whether Samsung C&T's construction division can maintain its operating profit of 1 trillion won. Heungkuk Securities projected an operating profit of 987 billion won, while Kyobo Securities estimated it at 1.066 trillion won. The construction division reported an operating profit of 875 billion won in 2022 and exceeded 1 trillion won with 1.035 trillion won in 2023. If it records an operating profit of over 1 trillion won again this year, it will have maintained this level for two consecutive years.
Park Jong-ryul, a researcher at Heungkuk Securities, said, "Samsung C&T has significant operations related to the Samsung Electronics Pyeongtaek campus semiconductor factory and a high proportion of overseas business sites, so relatively strong results are expected compared to other construction companies that struggled due to project financing issues."
Hyundai E&C, which will announce its results on the same day, is expected to report annual revenue of 33.5883 trillion won last year, an increase of nearly 4 trillion won (3.9369 trillion won or 13.2%) compared to the previous year (29.6514 trillion won). However, its annual operating profit is projected to sharply decline to 583 billion won from 785 billion won during the same period, a decrease of 25.7% (202 billion won).
A point of interest in Hyundai E&C's results is the accounting treatment approach of Joo Woo-jung, the CEO of Hyundai Engineering, who was appointed last November. CEO Joo, a financial expert who previously served as the head of the finance department at Kia, is expected to lead significant restructuring of low-revenue business sites following his appointment.
This means CEO Joo may conduct what is called a big bath, reflecting all bad factors in a single fiscal year to eliminate risk factors all at once. Since Hyundai Engineering is consolidated into Hyundai E&C's financial statements, if CEO Joo executes a big bath, there is a significant possibility that Hyundai E&C's profits will also decrease. Jang Yoon-seok, a researcher at Yuanta Securities Korea, noted, "CEO Joo may handle losses from many overseas business sites and execute a big bath, which could significantly affect Hyundai E&C's profit level."
In early February, Daewoo E&C, GS Engineering and Construction, and DL E&C will also release their results for last year. Most construction companies are expected to see declines in operating profit. However, GS Engineering and Construction, which recorded a loss due to the collapse of the Incheon Geomdan apartment underground parking lot in 2022, is anticipated to return to profitability.
Daewoo E&C is projected to have a revenue of 10.4421 trillion won last year, a decrease of 10.35% from the previous year (11.6478 trillion won). Its operating profit is also expected to decline significantly from 357.1 billion won to 662.5 billion won, a reduction of 46.1%. DL E&C is expected to have a revenue of 8.0909 trillion won last year, up 1.25% from the previous year (7.9911 trillion won), and its operating profit is projected to decrease by 17.83% to 271.7 billion won.
GS Engineering and Construction is expected to report revenue of 12.7375 trillion won and operating profit of 317.9 billion won last year. It recorded an operating loss of 387.9 billion won in the previous year due to one-time costs associated with the Geomdan apartment collapse, but a return to profitability is expected this year.
Jeon Young-jun, head of the Future Industry Policy Research Department at the Construction Industry Research Institute, stated, "The period of rapidly rising construction costs and declining orders began 2 to 3 years ago, and this is now being reflected with a lag in the results of 2024 and this year," adding, "It is unlikely that we can expect improvements in operating profit for major construction companies until at least the first half of this year."