Hanshin Engineering & Construction "Contingent Liability Risk at Industry's Lowest Level"

Hanshin Engineering & Construction announced on the 2nd that it is maintaining its contingent liability risk at the lowest level in the industry. On the same day, Hanshin Engineering & Construction disclosed that the amount of unbilled construction work decreased by 21.2 billion KRW compared to the previous year, totaling 88.2 billion KRW (6.3% of sales).

A representative from Hanshin Engineering & Construction explained, “While major domestic construction companies have seen a significant increase in unbilled construction amounts compared to the previous year despite ongoing projects, Hanshin Engineering & Construction has experienced a decrease. Maintaining a low ratio of unbilled construction indicates that risks are being effectively managed through our system.”

They also stated that the balance of project financing (PF) loans and the amount of completion guarantee commitments are at the lowest levels in the industry. Hanshin Engineering & Construction’s PF guarantee balance stood at 326.8 billion KRW. The completion guarantee commitment amount and loan balance were 486.1 billion KRW (36.7% of sales) and 453.4 billion KRW (34.6% of sales), respectively. According to a report by Korea Ratings, the ratio of PF contingent liabilities for unstarted projects relative to Hanshin Engineering & Construction’s equity capital is 0%. This means there are no delays in projects deemed highly likely to incur losses, nor any resulting PF contingent liabilities.

The debt ratio, a financial soundness indicator, was 158% as of the end of 2023, down 18% from the previous year.

A representative from Hanshin Engineering & Construction said, “We have focused on risk management rather than profitability in preparation for the housing market downturn. As a result, we have maintained a low ratio of unbilled construction and have low risks related to PF contingent liabilities and completion guarantee contingent liabilities.” They added, “The debt ratio is expected to continue declining, and profitability is anticipated to improve this year through the progress of self-developed projects and contract increases at sites where cost increases have been pre-reflected.”

Hanshin Engineering & Construction Building located in Jamwon-dong, Seocho-gu, Seoul

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