Hyundai E&C beats Q2 profit estimates on strong foreign deals

Hyundai Engineering & Construction Co., South Korea’s leading builder, reported better-than-expected profit in the second quarter thanks to major deals at home and abroad. As a result, it expects to easily achieve this year's annual sales target.

Hyundai E&C, an affiliate of the country’s top automaker Hyundai Motor Group, said on Friday its operating profit rose 27.4% to 223.6 billion won ($174.3 million) in the April-June period from a year earlier, with sales up 28.4% to 7.2 trillion won. Its profit exceeded an average estimate of 191.6 billion won compiled by Yonhap Infomax, a domestic financial news provider.

“Both sales and operating profit grew as major overseas projects such as the Saudi Arabian Neom tunnel, Panama Metro Line 3 and Poland Olefin plant expansion gathered pace, while we started reflecting earnings from local housing deals,” the company said in a statement.

Hyundai E&C, along with Samsung C&T Corp., secured a deal to build a railway tunnel at the Neom, a $500 billion megacity project unveiled last year by Saudi crown prince Mohammed bin Salman. Hyundai E&C’s subsidiary Hyundai Engineering Co. and Spain’s Técnicas Reunidas S.A. signed a contract with PKN Orlen in 2021 for Europe’s largest petrochemical project in 20 years.

Earlier, Hyundai E&C also won a $2.8 billion contract to build a 25-kilometer monorail in Panama with its subsidiary Hyundai Engineering Co. and POSCO Eco & Challenge Co. in 2020.

“Sales are expected to grow further in the second half due to higher earnings from major domestic state projects and overseas deals,” Hyundai E&C said, adding that the company will likely meet this year’s sales target of 25 trillion won.

The upbeat earnings and forecast helped push Hyundai E&C’s shares up 0.8% at 37,700 won on Seoul’s main bourse, outperforming the Kospi's 0.4% gain.

ORDERS FOR WORK OVER NEXT FOUR AND A HALF YEARS

Hyundai E&C has landed a combined 20.7 trillion won in new contracts in the first half, including a $5 billion deal for Saudi Aramco’s Amiral project, meeting 71.3% of this year's order target of 29.1 trillion won on a consolidated basis, according to the company.

It is set to build a mixed feed cracker and utility system with an annual nameplate capacity of 1.7 million tons of ethylene and related industrial gas at the petrochemical complex, which Aramco is constructing with Total Energies in Jubail, Saudi Arabia.

The contract in June raised Hyundai E&C’s total overseas deals to 11.4 trillion won in the first half, up 268.3% from a year earlier, the company said.

Hyundai E&C has secured work for the next four and a half years, with 95.3 trillion won in order backlogs.

Write to In-Hyeok Lee at twopeople@hankyung.com
 
Jongwoo Cheon edited this article.