Daewoo Construction Achieves Order Success Despite Construction Slump... Secures Financial Stability

[K-Construction, A New Leap] Daewoo Construction

Urban Renewal Orders Expected to Exceed 3 Trillion Won This Year
Strengthening Non-Residential Projects Including Public and Social Overhead Capital
'Solid Management' Through Liquidity Securing and Project Site Organization

Despite the severe downturn in the construction industry, Daewoo E&C is achieving remarkable results in urban renewal projects based on the competitiveness of its 'Prugio' brand. The company is conducting solid management activities by strengthening non-residential businesses such as public and social overhead capital (SOC), diversifying borrowing structures, and restructuring low-profit projects.

Perspective view of 'Sinbanpo Summit Lapium' in Seocho-gu, Seoul (Sinbanpo 16th Reconstruction) / Image courtesy of Daewoo E&C

According to the Q3 business performance disclosure this year, Daewoo E&C's cumulative new orders amount to KRW 7.3722 trillion, with an order backlog of KRW 44.7777 trillion as of the end of Q3. Recently, it secured KRW 1.9443 trillion in orders not only in key Seoul areas such as Gaepo Jugong 5 Complex in Gangnam-gu, Sinbanpo 16th Complex in Seocho-gu, and Seongsan Moatown 1 District in Mapo-gu, but also in Busan’s Dadae 3 District and Goejeong 5 District. If it also wins the reconstruction project of Samik Mansion in Gangdong-gu and the urban environment improvement project of Yeongdeungpo 1-11 District in Yeongdeungpo-gu, which are scheduled for contractor selection at the end of the year, the total orders for renewal projects this year alone will exceed KRW 3 trillion despite the selective order policy.

Daewoo E&C is also building its order record in non-residential projects. These include private contract projects with no sales risk such as the ultra-low temperature logistics center in Yeonsu-gu, Incheon, and the G-TOWN office in Gwacheon Knowledge Information Town, Gyeonggi Province, as well as numerous public projects. Examples include the Donghae New Port miscellaneous ore and general cargo pier, Saemangeum International Airport, Jinhae New Port dredged soil disposal site revetment (Section 2), Dorimcheon rainwater drainage tunnel, and the construction of main and auxiliary facilities for the Gongju natural gas power plant.

Large-scale private investment projects are also gaining momentum. The project to construct a 10.4 km long, four-lane (two lanes each way) deep underground road exclusively for small vehicles connecting Seokgwan-dong in Seongbuk-gu to Cheongdam-dong in Gangnam-gu, aimed at reducing traffic congestion on the existing Dongbu arterial road, has recently commenced. The metropolitan area express railway (GTX)-B private sector project is also about to start construction.

Some express concerns that the overall uncertainty in the construction industry and worsening financial conditions necessitate further strengthening of financial stability. In response, a Daewoo E&C official stated, "It will take some time for the housing sales market, where all construction companies are struggling due to the construction downturn, to improve. In Daewoo E&C’s case, there is a large supply of housing and many projects are scheduled for completion in the second half of this year, so accounts receivable may temporarily increase, but once move-ins proceed smoothly in the near future, a significant portion will decrease."

In fact, the Olympic Park Foret on Gangdong-gu, known as the largest reconstruction complex since the founding of Korea with 12,032 households, received completion approval on the 25th of last month and began move-ins on the 27th. Daewoo E&C expects that approximately KRW 320 billion in unbilled construction amounts will be recovered sequentially through this. A Daewoo E&C official added, "Projects that started sales in the second half of this year, such as the Yongin Prugio One Cluster, are maintaining a successful trend. For projects with low sales rates in some areas like Daegu, we expect visible results through various promotion measures."

Daewoo E&C also stated that it is securing operating funds stably and proactively by diversifying borrowing structures and restructuring low-profit projects. In May last year, it successfully issued Islamic bonds worth USD 100 million through Warba Bank in Kuwait, followed by a second issuance of USD 100 million in July. This year, in March, it signed a loan agreement worth USD 250 million (approximately KRW 330 billion) with local banks including Al Ali Bank. Subsequently, it issued bonds worth SGD 150 million (approximately KRW 148.4 billion) in Singapore, an Asian financial hub, breaking down financial boundaries and raising funds through various methods. Domestically, it secured an additional KRW 180 billion by selling shares of Dongtan 2 Daewoo New Stay, the developer of Dongtan Happy Village Prugio. Considering Daewoo E&C’s cash and cash equivalents of KRW 949 billion as of the end of the first half of this year, the cash scale is expected to exceed KRW 1 trillion with this sale.

A Daewoo E&C official said, "We are focusing on building a stable financial structure through proactive liquidity securing, expanding overseas markets, and diversifying our business portfolio. We will strengthen integrated risk management, expand sound management, lay the foundation for sustainable performance, and wisely overcome the construction market crisis."

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