Battle for Leadership

Hyundai E & C continues to lead the industry in sales and project orders

Hyundai Engineering and Construction Co. is on the road again as a leading builder in the country and recently has pulled off a feat in winning a large construction project in Saudi Arabia as it often does. The largest construction company won a project order worth $780 million to build a gas processing facility in the Middle East country from Saudi Aramco. The company signed the contract on September 20th.
The project involves the construction of facilities to process 550 million cubic feet of natural gas and 70,000 barrels of crude oil per day at an oil field some 180 km from the country's capital Riyadh and three oil tanks to contain 600,000 barrels of oil and incinerator facilities during the 31 month contract period. HDEC officials said the company won the order due to its accumulated technology in successfully completing the Iran's South Pars project worth $2.6 billion, winning a high recognition for its technology and experience in building gas plants.
HDEC has so far won $2.3 billion worth of projects overseas this year and seems to be on target to meet its target set at $2.73 billion.
The company's sales upto the Q3 this year recorded 3.6 trillion won, up 21.6 percent YoY, operating profit 307.5 billion won, up 3.1 percent and ordinary profit 260 billion won, up 16.2 percent YoY. Net profit registered 297 billion won, up 34.5 percent YoY.
The sales figure represents 71 percent of the target sales figure for the year amounting to 5.06 trillion won, operating profit 74 percent of the target set at 417.3 billion won. The net profit amounts to 84 percent of the 353.7 billion won targeted for this year, while project orders won valued at 7.419 trillion won represents 89 percent of 8.30 trillion won targeted for the year.
Domestic orders amounted to 5.112 trillion won while overseas project orders totaled 2.307 trillion won made up mostly of gas-to-liquid, gas processing facilities, which is down 4.8 percent YoY.
The sales figure breaks down to 2.7 trillion won from domestic sector, against 898.4 billion won from overseas. The domestic sector sales increased 10.5 percent YoY due to rises in civil , its own housing projects and plant construction projects. Overseas project orders expanded 74.5 percent YoY thanks to increases in plant and electric facility projects.
The company's history is synonymous with that of Korea's construction industry development as it has been a driving force behind the astounding growth of the industry since its establishment in 1947. The builder, as its founder late Chung Ju-yung intended, brought heart and soul in managing its operation infused with a pioneering and creative spirit to all of its areas of operation; civil engineering, construction, plant and electrical works.
Since entering the overseas construction market in 1965, HDEC has earned a worldwide reputation by completing a great number of large construction projects successfully in a timely, efficient and cost effective manner. HDEC's successful operations both at home and abroad has been reconfirmed when it won the appreciation plague from the International Contractors Association on this year for its contribution to Korea's achievement of $200 billion in overseas construction project orders during the last four decades.
HDEC's overseas projects accounted for one/fourth of Korea's total in the past four decades, roughly amounting to $49,629 million as of April. The company posted record-high earnings every year since 2000 focusing on high-profit projects and cost cutting. The company was officially taken off from the debt-work out program as a result of the stringent management policies, turning the operation around on May 25, emerging fresh from four and half years of restructuring program under its creditor banks.
HEDC President-CEO Lee Jong-soo recalled, "Operating income, net income, and share value all rose dramatically to such an extent that we ranked first in market value in our field of industry. The success is owed to our insistence on profit-oriented management. Other contributing factors were a significant improvement in our cost of sales to sales ratio and a steep decline in interest and commission expense." nw

(from Left) A new oil pier built by Hyundai E&C. Hyundai E&C President Lee Jong-soo.