Kumho E&C Posts KRW 16.2 Billion Operating Profit in Q2, Marks Three Consecutive Quarters in the Black

Sales of KRW 53.1 Billion, Operating Profit of KRW 16.2 Billion
Cost Ratio Improvement and Civil Engineering Recovery
Debt Ratio at 607.2%, Financial Soundness Enhanced

Kumho E&C has achieved a profit for three consecutive quarters since the fourth quarter of last year. This turnaround is attributed to improved cost ratios and successful housing pre-sales.

On August 12, Kumho E&C announced in its preliminary earnings disclosure that consolidated sales for the second quarter of this year reached KRW 531.2 billion. This marks a 3.9% increase compared to KRW 511.1 billion in the same period last year.

The company posted an operating profit of KRW 16.2 billion, turning around from an operating loss of KRW 38.164 billion in the second quarter of last year. The operating margin also rose to 3%. Since the fourth quarter of last year (KRW 5.5 billion), Kumho E&C has continued its streak of profitability, recording operating profits of KRW 5.7 billion and KRW 16.2 billion in the first and second quarters of this year, respectively, marking three consecutive quarters in the black.

The cost ratio, which had previously weighed on profitability, has also improved. The cost ratio for the second quarter of this year stood at 93.6%. After rising from 94.6% in the fourth quarter of last year to 95.8% in the first quarter of this year, it declined again this quarter.

Kumho E&C explained that its performance improved as the cost ratio was lowered, underpinned by a stable profit structure in the housing division, and as the civil engineering division recovered. In the second quarter of last year, gross profit and operating profit declined due to project delays at certain sites and a higher cost ratio. However, in the second quarter of this year, the lower cost ratio had a positive impact on profitability.

In the housing division, the new brand Athera, launched last year, received a favorable response in the subscription market. "Cheongju Technopolis Athera Phase 2," which began general sales in April, achieved a complete sell-out within two weeks of the contract period, marking a rapid sell-out. In the construction division, improved cost ratios were attributed to the progress at private construction sites such as Daewoong Pharmaceutical Magok Research Center and Wonju Severance Christian Hospital.

The high debt ratio, previously identified as a risk factor, has also improved. The debt ratio for the second quarter was 607.2%, down 41.2 percentage points from the previous quarter. Previously, Kumho E&C's debt ratio had surged to 640% in the third quarter of last year after proactively reflecting increased construction costs as losses. In the first quarter of this year, it rose slightly to 648%. However, borrowings decreased from KRW 260 billion in the previous quarter to KRW 236.2 billion in the second quarter, resulting in a lower debt ratio. The borrowing dependency ratio also fell from 16% in the first quarter to 14.9%.

Kumho E&C expects its growth trend to continue in the second half of the year. The company forecasts that the commencement of major pre-sale projects and increased sales from highly profitable projects will further strengthen the stable improvement in performance.

A Kumho E&C official stated, "The profit trend that began at the end of last year accelerated further in the second quarter, expanding the scale of performance improvement," adding, "With major pre-sale projects set to begin construction in the third and fourth quarters and increased sales from highly profitable projects, we expect balanced growth across all business divisions."

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