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Daewoo E&C paves way for sustainable growth with financial stability

By Kim So-yeon

Published : March 31, 2023 - 18:07

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Jungheung Group Vice Chairman Jung Won-ju visits the construction site of Daewoo E&C's Duqm oil refinery facility in Oman in February. (Daewoo Engineering & Construction) Jungheung Group Vice Chairman Jung Won-ju visits the construction site of Daewoo E&C's Duqm oil refinery facility in Oman in February. (Daewoo Engineering & Construction)

Daewoo Engineering & Construction said Friday it is accelerating efforts to pave the way for sustainable growth by strengthening its internal management amid uncertain external conditions.

Last year, Daewoo E&C achieved an all-time high operating profit of 760 billion won ($583 million), while its consolidated sales reached 10.4 trillion won.

Amid the real estate market downturn in 2022, the company exhibited risk management skills by earning 5.2 trillion won from urban maintenance projects.

In addition to its stellar performance, the builder also improved its financial stability, according to the company.

As of the end of last year, the debt-to-equity ratio -- a key indicator of financial leverage -- was down 26.1 percent year-on-year to 199.1 percent, with the liquidity ratio also showing a steady rise from 141.6 percent to 148.5 percent.

Industry analysts attributed Daewoo E&C's solid financial performance to Jungheung Group's acquisition of the builder. The company strengthened financial stability under Jungheung Group Chairman Jung Chang-sun’s management policy underscoring "growth in stability”.

The synergy from the tie-up of the two is also reflected in Daewoo E&C's management strategy. The company said it plans to reorganize its portfolio by expanding orders in non-housing construction sectors like domestic and overseas infrastructure projects. The company also vowed to pursue growth while overcoming difficulties in the domestic real estate market by continuously increasing sales.

Daewoo E&C’s new strategy has already yielded results from the end of 2022, with gross profits in the non-housing construction sector reaching 49.5 percent of the total sum, up 22.4 percentage points from 2021.

Meanwhile, Jungheung Group Vice Chairman Jung Won-ju met with top-ranking officials in Nigeria, Vietnam, the Philippines, Turkmenistan and Uzbekistan last year, promoting the company as at the forefront in expanding its share in the global market. In February, Jung visited the construction site of the Duqm oil refinery in Oman to supervise business strategies in the Middle East, while giving encouragement to on-site executives and employees.

Daewoo E&C has continued to show notable progress in the non-housing construction sector this year.

In the civil engineering sector, the company secured more than 1 trillion won in orders for Dongbu Expressway underground section 4 and the GTX-B in January. The company achieved orders exceeding 3 trillion won this year alone, through Libya's fast-track power station construction and Nigeria's Kaduna refinery emergency repair project, along with the construction of the Gangnam Data Center.

The company plans to further increase its order backlog by winning additional orders from key markets such as Libya, Nigeria and Iraq.

"Stable financial structure and portfolio improvement are the most important factors that enable the company's sustainable growth at a time when external uncertainties are maximized,” a Daewoo official said, adding, “As the acquisition has enabled rapid decision-making and overseas market exploration, Daewoo E&C will stand strong amid crisis."

Junheung Group is the parent company of Herald Corp., publisher of The Korea Herald.