Samsung Engineering Reduces Internal Transaction Ratio to 40% Range After 2 Years

[Asia Economy Reporter Dongwoo Lee] Samsung Engineering's proportion of internal transactions decreased to the 40% range last year. This was thanks to expanding overseas large-scale project orders by leveraging its technological expertise in the petrochemical plant sector. Having already secured overseas orders worth 4 trillion won in the first half of this year, the proportion of internal transactions is expected to decrease further.

According to the Financial Supervisory Service's electronic disclosure system on the 13th, Samsung Engineering's proportion of inter-affiliate goods and service transactions based on separate financial statements last year was 47.5%, down 4.3 percentage points from 51.8% the previous year. This is the first time in two years since 2017 (59.3%) that the company's internal transaction ratio has fallen to the 40% range.

The reason for the decrease in Samsung Engineering's internal transaction ratio is that sales transactions between domestic affiliates decreased, while sales through overseas orders relatively increased.

In fact, the company recorded total sales of 2.266 trillion won through transactions among domestic affiliates such as Samsung Electronics, Display, and Biologics last year. This is a 15.1% decrease compared to 2.671 trillion won in 2017. On the other hand, overseas sales during the same period increased by 47.1%, from 1.6556 trillion won (2017) to 2.4366 trillion won (2019).

The reason Samsung Engineering's internal transaction ratio had expanded in the past is attributed to the large-scale deficit crisis caused by competitive low-price overseas orders in 2015. The proportion of overseas sales in total sales halved from 72.8% in 2015 to 36.8% in 2017. As overseas orders decreased, the company expanded domestic affiliate work, increasing the internal transaction ratio.

Samsung Engineering plans to reduce the internal transaction ratio to below the 30% range by increasing overseas orders in the future.

After hitting a 'jackpot' by securing large-scale projects worth a total of 4 trillion won in Saudi Arabia and Algeria earlier this year, the company secured a contract worth 5 million dollars (approximately 6 billion won) for basic design of a gas plant in Malaysia at the end of April.

Additionally, last month, it increased overseas sales by signing an additional contract worth 60 million dollars (approximately 70 billion won) for pile construction in the Dos Bocas refinery project in Mexico. Samsung Engineering is also expecting the EPC main contract for the Sarawak methanol project (1 billion dollars) in Malaysia and the second phase EPC contract in Mexico later this year.

A Samsung Engineering official said, "The company possesses solid experience and technological capabilities in products and regions, and plans to expand global project orders going forward."

This content was produced with the assistance of AI translation services.