Hyundai E&C Q3 Operating Profit at 103.5 Billion Won, Beats Consensus... Avoids "Earnings Shock"

Third-Quarter Operating Profit at 103.5 Billion Won, Over 40% Above Consensus (72.3 Billion Won)
Solid Profit Despite Subsidiary Hyundai Engineering Risks
Cumulative Operating Profit for January?September at 534.2 Billion Won, Up 4.2% Year-on-Year
84% of Annual Order Target Achieved; Order Backlog at 96 Trillion Won, Securing 3.2 Years of Work
Bond Call Risk Remains for Fourth Quarter, with Potential for Deferred Earnings

Hyundai Engineering & Construction has overcome concerns of an "earnings shock" due to subsidiary risks and reported third-quarter results that exceeded market expectations. Despite worst-case projections of operating profit falling to the 20 billion won range, the company posted operating profit in the 100 billion won range.

On October 31, Hyundai Engineering & Construction announced through a regulatory filing that its consolidated operating profit for the third quarter of 2025 was provisionally tallied at 103.5 billion won. This represents a 9.4% decrease compared to the same period last year (114.3 billion won). During the same period, revenue was 7.8265 trillion won, down 5.2% from a year earlier.

Although the results declined year-on-year, the company significantly outperformed market expectations. Previously, securities firms had issued extremely pessimistic forecasts for Hyundai Engineering & Construction's third-quarter results. This was because its subsidiary, Hyundai Engineering, faced bond call claims (contract performance guarantees) totaling about 220 billion won for projects in Poland and Malaysia. As a result, the third-quarter operating profit consensus (the average forecast by securities firms) dropped from the 180 billion won range to around 72.3 billion won. Some securities firms, such as Hyundai Motor Securities, even projected a "shock" level of 22 billion won, which would have been a drop of over 80% compared to the third quarter of last year.

However, the actual third-quarter operating profit came in at 103.5 billion won, dispelling market concerns. It is believed that large-scale overseas loss expenses were reflected to a lesser extent in the third quarter than initially expected, or that losses were offset by cost management in other business areas. In addition, the sequential completion of sites that began construction during a period of soaring construction costs, as well as progress on large-scale projects such as the Saudi Amiral Package (PKG) and The H Class, contributed to defending the company's performance. However, there is still uncertainty, as costs related to Hyundai Engineering's bond call may be deferred and reflected in the fourth quarter or next year.

Meanwhile, Hyundai Engineering & Construction maintained solid performance on a cumulative basis through the third quarter (January to September). Cumulative revenue for the first three quarters reached 23.0028 trillion won, and cumulative operating profit was 534.2 billion won, a 4.2% increase compared to the same period last year. The company also achieved new orders of 26.1163 trillion won this year, fulfilling 83.9% of its annual target. Its order backlog stands at 96.04 trillion won, securing approximately 3.2 years' worth of work.

A Hyundai Engineering & Construction representative stated, "Despite an uncertain business environment, we achieved solid results through a quality-focused order strategy and thorough cost management," adding, "We will continue to expand future growth engines, including energy innovation strategies such as large-scale nuclear power plants and small modular reactors (SMRs)."

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