This year's second quarter (April to June) is expected to see a sharp improvement in the performance of DL E&C among the major construction companies. Last year, DL E&C recorded an operating profit of around 30 billion won in the second quarter, but it is projected to exceed 100 billion won this year, marking more than a threefold increase compared to a year ago. The recovery of the dwellings sector is showing signs, and the plant institutional sector is also expected to contribute to the profit increase. In contrast, Samsung C&T and Samsung E&A, among others in the Samsung Group construction sector, are expected to see their operating profits decline by about 10 to 40% compared to the same period last year.
According to FnGuide, a financial information provider, among the construction companies for which three or more securities firms have released performance forecasts, DL E&C is projected to see the largest increase in operating profit for the second quarter compared to the same period last year. DL E&C is expected to record an operating profit of 108.5 billion won in the second quarter, which is more than three times the figure from a year earlier (32.6 billion won). The growth rate is 233.3%.
If DL E&C records an operating profit exceeding 100 billion won for the quarter as expected by the market, it will be the first time in 2 years and 6 months since the fourth quarter of 2022 (120.24 billion won). In 2022, DL E&C recorded operating profits of 110 to 130 billion won every quarter, but since 2023, the profits have sharply decreased, falling below 100 billion won per quarter.
The increase in DL E&C's operating profit is analyzed to be influenced by the improvement in the cost of sales ratio in the dwellings institutional sector and the increase in sales from overseas plant projects. DL E&C is undertaking about 1.4 trillion won in construction in the 'Shahin Project' that S-Oil is establishing refining and petrochemical facilities in the Ulsan Onsan National Industrial Complex, with a total project cost of 9.2 trillion won. Additionally, it has secured part of the order to participate in the 'Baltic Complex Project,' which involves constructing the world's largest polymer plant in the Ust-Luga region of Russia.
Kim Gi-ryong, a researcher at Mirae Asset Securities, noted, "With the expansion of completed portions of key projects such as the Shahin Project and the Baltic in Russia, plant sales are expected to increase by 35% this year compared to last year."
Hyundai E&C, which shocked the market by posting an operating loss exceeding 1.2 trillion won last year, is also expected to see an increase in operating profit in the second quarter. The expected second quarter operating profit is 240.6 billion won, a 63.3% increase compared to the second quarter of last year (147.3 billion won). In addition, HDC Hyundai Development Company (72.1 billion won, 33.9%) and GS Engineering and Construction (112.1 billion won, 20.0%) are also projected to see their operating profits increase by over 20%. A GS Engineering and Construction official stated, "As high-cost projects are being completed, the cost of current projects is stabilizing, and many construction sites are reflecting high inflation rates, resulting in increased project costs, which is helping to recover profitability, particularly in dwellings projects."
In contrast, construction companies belonging to the Samsung Group are showing prolonged poor performance. Samsung E&A's operating profit is estimated to be 164.1 billion won in the second quarter, which is a 37.5% decrease compared to the same period last year. Samsung C&T is also expected to record an operating profit of 785.2 billion won, 12.8% lower than the same period last year.
Kim Se-ryeon, a researcher at LS Securities, stated, "The decrease in the order volume for group companies, such as Samsung Electronics' overseas semiconductor plant construction, is impacting the sales and profits of Samsung E&A and Samsung C&T," adding, "As Samsung Electronics reduces its factory expansion and overseas investment, the profits of the group's construction companies are also declining."