HDC Hyundai Development Company, which began sales in November last year, has seen its sales reflected from the first half of this year. The Seoul One I-Park is being developed at 145 Hwarang-ro 45-gil, Nowon-gu, Seoul, consisting of 8 buildings with a basement of 4 floors to a height of 49 floors and a total of 3,032 units. This project is being built on the site of the former Seongbuk Station (currently Kwangwoon University Station) railroad logistics base, with residential apartments, residences, commercial facilities, and rest areas, all of which are self-funded by HDC Hyundai Development Company from planning to construction.
There were 1,856 units available for general sales, but all sales have been completed. All but some penthouses have been sold out. HDC Hyundai Development Company's revenue from its own housing projects in the first half of the year was 212.1 billion won, more than four times the 52.7 billion won in the same period last year. The effects of the Seoul One I-Park housing project sales are becoming evident.
Although the construction market has been in a prolonged recession, some construction companies have successfully recovered profitability, with some recording gross profit margins exceeding 10%. This is analyzed as a result of either the success of their own projects being reflected, as in the case of HDC Hyundai Development Company, or the thorough management of sales costs.
According to the Financial Supervisory Service on the 28th, the average gross profit margin among the top 10 construction companies based on construction capacity evaluation for the first half of the year (January to June) was 8.7%, slightly improved from 8.4% in the same period last year. The gross profit margin is one of the indicators for measuring profitability, representing the ratio of the remaining profit after excluding the cost of sales incurred in producing and selling goods or services from total sales. A gross profit margin of 10% means that if sales amount to 100 billion won, the gross profit is 10 billion won.
The average gross profit margin was 13.86% in 2021 but fell to an average of 11.58% in 2022 due to rising raw material costs, and since 2023, it has dropped below 10%.
Among the top 10 construction companies based on the first half of the year, HDC Hyundai Development Company recorded the highest gross profit margin at 12.3%. This company's gross profit margin has remained relatively stable in the 9% range since 2022 and has surged rapidly this year to the highest level in the industry. HDC Hyundai Development Company attributes this to the successful progress of its own project, the Seoul Kwangwoon University Station development (Seoul One I-Park). A representative from HDC Hyundai Development Company stated, "Major self-funded projects like Seoul One I-Park have been fully reflected in sales, and the improvement in cost ratios is robustly restoring key financial indicators."
DL E&C (11.8%) and Daewoo E&C (11.5%) also exceeded a gross profit margin of 10%. Additionally, GS Engineering and Construction (9.4%) and SK ecoplant (9.2%) recorded gross profit margins close to 10%. A representative from a construction company noted, "Profit margins had stagnated due to rapid increases in construction costs in recent years, but with such projects being completed this year, improvements in profitability are being achieved."
On the other hand, there are companies with lower profit margins than average. POSCO E&C had the lowest gross profit margin at 4.6% among the top 10 construction companies. However, this company accounted for all costs incurred in support departments as cost of sales, while other construction companies handle these as selling and administrative expenses, resulting in a lower profit margin than other firms. Lotte Engineering & Construction (5.5%) and Hyundai E&C (6.5%) also recorded lower ratios than the average.
Lee Ji-hye, a researcher at the Construction Industry Institute, explained, "Construction companies with high gross profit margins can be seen as effectively managing costs, which improves profitability."