Hanshin Gongyeong "Successfully Defended Last Year's Cost Ratio at 89.6%"

by Roh Kyungjo

Published 17 Apr.2023 09:18(KST)

Hanshin Engineering & Construction announced on the 17th that it succeeded in defending its cost ratio last year.

Hanshin Gongyeong Headquarters Exterior / Photo by Hanshin Gongyeong

According to the Financial Supervisory Service's electronic disclosure, Hanshin Engineering & Construction recorded a consolidated cost ratio of 89.6% in 2022. This is an increase of 1.1 percentage points from 88.5% a year earlier. While most construction companies saw their cost ratios rise by more than 3 percentage points last year due to increases in raw material prices and labor costs, Hanshin Engineering & Construction explained that it implemented design changes in public construction projects based on efforts to reduce cost ratios and a stable portfolio.

A representative from Hanshin Engineering & Construction stated, "There were two public construction contract amount change disclosures in the fourth quarter of last year, but including sites not subject to mandatory disclosure, the contract amount in the public construction sector alone increased by about 63.5 billion KRW, and when adding private construction projects, the contract amount increased by about 198.2 billion KRW. Through this, the cost ratio in the fourth quarter of the previous year improved, and such increases in construction costs for public projects are expected to continue this year."

Hanshin Engineering & Construction reflects the increased construction costs from subcontractors occurring at each site quarterly without delay. Accordingly, the cost ratio in the third quarter of last year was 90.0%, up 1.5 percentage points from the previous year. However, due to the nature of public construction projects, design changes were made at the end of the year, improving Hanshin Engineering & Construction's cost ratio to 88.9% in the fourth quarter.

Hanshin Engineering & Construction also emphasized efforts to strengthen its fundamentals. Looking at the sales portfolio, the proportion of public construction sales is 47.9%, managing risks stably despite the recent contraction in the housing sales market. Additionally, Hanshin Engineering & Construction's fourth-quarter results last year recorded consolidated sales of 1.2215 trillion KRW and operating profit of 39.4 billion KRW.