Net profit for the period rises 61% to W12.4b

Q3 cumulative new orders reach W2.85tr

'Profitability recovering on improved cost ratio'

Kumho Engineering & Construction corporate identity logo [Kumho Engineering & Construction]
Kumho Engineering & Construction corporate identity logo [Kumho Engineering & Construction]

Kumho Engineering & Construction reported third-quarter consolidated sales of 494.5 billion won ($370 million), operating profit of 22.2 billion won and net profit for the period of 12.4 billion won, the company announced Thursday. Sales fell 5.5 percent from a year earlier, while operating profit and net profit for the period rose 44.2 percent and 61 percent, respectively.

The improvement in profitability was driven by a decline in the cost-of-sales ratio, which fell 1.8 percentage points to 91.9 percent in the third quarter from 93.7 percent a year earlier. As a result, the operating profit margin rose 1.6 percentage points, from 2.9 percent to 4.5 percent.

New orders also surged. Cumulative new orders through the third quarter reached 2.85 trillion won, up 91.5 percent from 1.49 trillion won in the same period last year, already surpassing the company's full-year new-order target of 2.7 trillion won.

By segment, new orders comprised 1.28 trillion won in building construction, 927.8 billion won in housing and 640.4 billion won in civil engineering — up 180 percent, 60 percent and 42 percent, respectively, from a year earlier. Particularly notable was 1.41 trillion won secured through Korea Land and Housing Corporation's private-participation public housing program. The company also booked orders across multiple sectors, including the Busan Eco Delta City Block 8 and Namyangju Wangsuk 2 A-1 Block projects, the Jangji bus depot redevelopment and the Samsung Electronics Flakt Korea factory.

The order backlog stood at 10.2 trillion won as of the end of the third quarter, up 906.9 billion won, or 9.8 percent, from 9.29 trillion won at the end of last year — roughly five times the company's annual sales last year. By segment, the backlog comprised 3.04 trillion won in building construction, 4.65 trillion won in housing, 2.39 trillion won in civil engineering and 119.8 billion won in overseas projects.

The company's financial structure also improved. The consolidated debt-to-equity ratio at the end of the third quarter stood at 337.2 percent, down 68.3 percentage points from 405.5 percent at the end of the previous quarter and 183.0 percentage points below the 520.2 percent recorded at the end of last year. Kumho Engineering & Construction said the ratio is expected to fall further once perpetual convertible bonds issued in October are reflected in fourth-quarter equity.

"We are achieving positive results across key management indicators, including a recovery in profitability through improved cost ratios and an expansion of new orders," a company official said. "We will maintain a stable business foundation built on our robust order backlog and continue the trend of improving profitability."

Meanwhile, the Jangji bus depot redevelopment project — in which Kumho Engineering & Construction holds a 50 percent lead stake — is worth approximately 350.6 billion won and was commissioned by the Seoul Housing & Communities Corporation. The development will add 658 public housing units along with community facilities and green space to the existing Jangji public bus depot site.


shy@heraldcorp.com