"Impact of COVID-19" Hyundai Engineering & Construction's Operating Profit Down 29% in H1... Orders Up 62% (Comprehensive)

[Asia Economy Reporter Kim Yuri] Hyundai Engineering & Construction received an operating profit report for the first half of this year that was 29% lower than the same period last year. The company explained that this was due to conservative accounting in anticipation of the prolonged impact of the novel coronavirus disease (COVID-19) situation.

On the 24th, Hyundai Engineering & Construction announced that its operating profit for the first half of this year was 319.2 billion KRW, a 29.1% decrease compared to the same period last year. During the same period, sales increased by 0.5% to 8.603 trillion KRW, while net profit decreased by 23.6% to 266 billion KRW.

The second quarter results had a significant impact. Hyundai Engineering & Construction's consolidated operating profit for the second quarter of this year was 153.9 billion KRW, down 37.2% from the same period last year. Sales during the same period decreased by 2.9% to 4.5442 trillion KRW, and net profit fell 63.9% to 69.4 billion KRW.

Hyundai Engineering & Construction explained that the poor operating profit in the first half compared to the same period last year was due to "conservative accounting in anticipation of the prolonged COVID-19 situation." The company added that the reason sales held up during the same period was due to domestic housing performance and the full-scale commencement of domestic plant projects such as the improvement work at Hyundai Oilbank's refinery.

Orders received in the first half rose 61.6% year-on-year to 18.5574 trillion KRW, including domestic and overseas projects such as the Panama Metro Line 3, Qatar Lusail Plaza Tower PLOT3 and PLOT4 construction, Hannam District 3 redevelopment, and Busan Beomcheon 1-1 district redevelopment. The company stated, "This amount represents about 74% of the annual order target of 25.1 trillion KRW for this year."

The order backlog for the first half recorded 66.2916 trillion KRW, up 17.7% from the end of last year. The company explained that this secures about 3.8 years' worth of work.

The liquidity ratio, which indicates payment ability, was 200.2%, and the debt ratio was 113.3%. The credit rating is AA-. The company said, "This is at the highest level in the industry, maintaining an excellent financial structure." Cash and cash equivalents (including short-term financial instruments) amount to 5.3332 trillion KRW, and net cash is 2.5885 trillion KRW, indicating abundant cash liquidity.

Based on a solid financial structure, Hyundai Engineering & Construction plans to invest in future new growth engines to prepare for the rapidly changing post-COVID era. The company stated, "In response to the growing social demand for a low-carbon and eco-friendly economy, we plan to secure future growth engines centered on renewable energy and eco-friendly sectors as part of the Korean New Deal policy." It explained, "Major ongoing projects include hydrogen fuel cell power generation, offshore wind power, tidal power generation, and contaminated soil purification projects." It also added that it is promoting the development of a Green Bio City combining Smart Farm and Care Farm, as well as a smart city development that integrates information and communication technology (ICT) and artificial intelligence (AI) based on big data.

A Hyundai Engineering & Construction official said, "Despite the difficult global economy, we will continue qualitative growth by strengthening core competitiveness in design, technology, and execution, and by discovering future new growth engines."

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