With the construction market weakening, major builders' third-quarter results this year showed overall declines in scale and profitability compared with a year earlier. In particular, sales and operating profit at Samsung C&T's construction division, Hyundai E&C, and Daewoo E&C backpedaled.
According to the Financial Supervisory Service's DART filings on the 10th, Samsung C&T's construction division, Hyundai E&C, and Daewoo E&C all saw their third-quarter sales and operating profit on a consolidation basis decline year over year.
Samsung C&T's construction division posted third-quarter sales of 3.309 trillion won and operating profit of 111 billion won. Compared with the third quarter of last year, they fell 31% and 52.9%, respectively. As large-scale projects wrapped up, both sales and operating profit appear to have decreased.
Hyundai E&C's third-quarter sales and operating profit were 8.2569 trillion won and 114.3 billion won, down 3.5% and 24% year over year, respectively. A roughly 220 billion won bond call (a claim on a performance bond due to contract default) stemming from Hyundai Engineering's projects in Poland and Malaysia weighed on sales and operating profit.
Daewoo E&C's third-quarter sales and operating profit were 1.9906 trillion won and 56.6 billion won. They fell 21.9% and 9.1% from the third quarter of last year, respectively. With the domestic housing market slump deepening and private housing project orders dropping sharply, both sales and operating profit decreased, according to the analysis.
The securities industry projected that in the fourth quarter as well, results could differ by builder depending on order-taking strategies and the ability to manage sites with high cost ratios.
Cho Jeong-hyeon, an analyst at IBK Securities, said, "In the third quarter, performance divergence by builder was pronounced," and added, "In the fourth quarter as well, fortunes will split depending on project profitability, the share of overseas business, and capabilities in managing material costs."
Kim Seon-mi, an analyst at Shinhan Investment & Securities, said, "The key keyword for the construction sector next year is 'differentiation by company,'" and judged, "In the domestic segment, tougher enforcement of the Serious Accidents Punishment Act and strong regulations on housing demand make a slowdown in top-line growth inevitable."
Kim added, "Performance growth will likely be possible for corporations that increase groundbreaking amounts centered on core-area urban redevelopment projects, commercial real estate, and government policy projects," and said, "Full-fledged differentiation is expected to be led by new business divisions being pursued by each company."