Kumho Engineering & Construction recorded an operating loss of 181.8 billion won last year, marking a shift to the red. The loss is believed to have widened due to intensive financial restructuring efforts. However, it is expected that a substantial V-shaped recovery will take place as the company returned to an operating profit in the fourth quarter of last year.
Kumho Engineering & Construction announced on the 6th that its operating profit for last year was -181.8 billion won, showing a shift to a loss compared to the previous year. During the same period, sales decreased by 13.7% to 1.91 trillion won.
Kumho Engineering & Construction’s operating profit plummeted last year due to the termination of low-profit project contracts, and the write-off of lending losses with lowered recoverability, executing a "big bath" strategy. The company recorded operating losses in both the second and third quarters of last year.
However, Kumho Engineering & Construction returned to an operating profit in the fourth quarter of last year. The company’s operating profit for the fourth quarter was 5.5 billion won, successfully reversing from a loss compared to the previous quarter, and increased by 7.8% compared to the same period last year. Sales rose by 34.7% from the previous quarter to 521.5 billion won, but decreased by 14.8% compared to the same period the previous year.
Kumho Engineering & Construction explained that the reduction in its cost-to-revenue ratio, attributed to the positive housing business following its new brand launch, and an increased revenue share from high-margin new projects, contributed to its successful turnaround in the fourth quarter. The cost-to-revenue ratio was at 94.6%, slightly down from the same period the previous year.
A representative from Kumho Engineering & Construction noted that the rise in brand recognition through the launch of ARTERA in May of last year, the increasing profitability of its housing development projects, and the expanded revenue share from high-margin business sites were pointed out as factors for the performance improvement, adding that the sales have been bolstered as major complexes such as 'Cheongju Technopolis ARTERA' and 'Goyang Janghang ARTERA' were all sold out.
Kumho Engineering & Construction’s debt ratio has decreased. It recorded a standalone debt ratio of 524%, down 46% from the previous quarter, while the consolidated debt ratio recorded a decrease of 40% to 602% compared to the previous quarter.
A representative from Kumho Engineering & Construction said, "In the third quarter of last year, the debt ratio increased temporarily due to a drop in Asiana Airlines’ stock price, which reduced asset value, but it has decreased due to improved fourth quarter performance." They added, "Furthermore, continuous repayment of borrowing funds and the completion of some business sites are expected to lead to a further decrease in the debt ratio."
Kumho Engineering & Construction’s cash and cash-equivalents last year amounted to 203.9 billion won, a 24% increase from the previous year.
Kumho Engineering & Construction plans to establish a continuous profit structure centered around risk management and profitability this year. The company explained that in the first half of this year, the major business sites, such as Busan Eco Delta (Block 24) and Cheongju Technopolis (Block A7), are scheduled for sale, leading to anticipated ongoing performance improvement.
A company representative stated, "There are no additional risks such as unbuilt project financing or bridge loans, and since we began the turnaround to profitability in the fourth quarter of last year, a clear V-shaped recovery is expected in 2025."