Lotte Construction said on the 12th that operating profit in the second quarter rose 230% from the same period a year earlier (37.1 billion won) to 122.4 billion won.
Revenue for the same period came to 1.6792 trillion won, down 14.1% from a year earlier. The operating margin was 7.3%, up 5.4 percentage points from 1.9% a year earlier.
A Lotte Construction official said, "A strategy that focused on quality projects rather than excessive top-line growth drove profit improvement," and noted, "Based on a stable profit-generation foundation, stronger cost control and selective order-taking have been proven in the results, confirming a qualitative change in the revenue structure, and we are steadily easing the burden related to project financing (PF)."
In particular, manufacturing and construction cost control improved. The cost ratio, which reached 93.6% in the second quarter of last year, fell to 92.8% at the end of last year and 91.7% in the first quarter of this year, and then dropped to 88.8% in the second quarter, showing a steady downward trend.
First-half total revenue was 3.2804 trillion won, and operating profit was 172.8 billion won. In particular, cumulative first-half operating profit increased by 131.9 billion won (323%) from 40.9 billion won a year earlier. Along with the strength of the urban redevelopment business and the development institutional sector, increasing the share of higher-margin project sites led to profit expansion.
Efforts to cut fixed costs such as promotion and administrative expenses also helped. First-half selling, general and administrative expenses were 148.5 billion won, down 16.8 billion won from 165.3 billion won a year earlier, contributing to a higher operating margin.
The liability ratio, which was 186.7% at the end of last year, fell consecutively to 168.2% in the first quarter and 162.8% in the second quarter. Total equity increased by 453.6 billion won to 3.615 trillion won from 3.1614 trillion won at the end of last year due to the issuance of hybrid securities and the accumulation of earnings. The current ratio improved to 149.8% from 120% at the end of last year, and cash and cash equivalents increased by 184 billion won to 820.9 billion won.
Contingent liabilities for PF, which the market had been worried about, are also declining. As of the second quarter, PF contingent liabilities stood at 2.4262 trillion won, down about 727.6 billion won from the end of last year as major project sites such as the Bucheon Sang-dong and Dongdaemun stores of Homeplus Co. were successively converted to main PF.
The balance of the "Charlotte Fund," set up to manage PF, is also shrinking. The fund, which was 1.9 trillion won at the time of refinancing in 2025, has repaid 745.3 billion won so far, reducing the balance to around 1.2 trillion won. The company said it will repay about 320 billion won more before maturity to bring the balance down to the 800 billion won range, and then manage it stably through maturity extensions. Furthermore, it aims to reduce total PF contingent liabilities to around 2.2 trillion won by year-end.