Daewoo E&C Q1 profit surges nearly 70%

Daewoo Engineering & Construction said Tuesday its first-quarter operating profit rose nearly 70 percent from a year earlier, as margins improved in its core building business despite a challenging external environment.

The builder reported operating profit of 255.6 billion won ($173 million) in the January-March period, up 68.9 percent on-year, while net profit more than tripled to 195.8 billion won. Revenue fell 6.0 percent to 1.95 trillion won from 2.08 trillion won.

By segment, housing and building construction accounted for the largest share of revenue at 1.27 trillion won, followed by civil engineering at 350.6 billion won, plant construction at 284 billion won and other businesses at 43.6 billion won.

“Operating profit rose as building margins improved with the completion of higher-cost projects,” a company official said. “Despite rising geopolitical risks, we expect to meet this year’s targets."

New orders rose 21.2 percent on-year to 3.42 trillion won, led by domestic redevelopment projects in Busan, Seoul and Cheonan, South Chungcheong Province. Its order backlog stood at 51.9 trillion won at the end of March, equivalent to about 6.4 times annual revenue.

The company said it plans to tighten risk controls while focusing on higher-value projects, including domestic redevelopment and overseas urban development, and infrastructure and data centers, as it seeks to diversify its portfolio.

It is targeting several big projects this year, including the Gadeokdo New Airport in Busan, the Dukovany nuclear power plant in the Czech Republic, Iraq’s Al Faw Grand Port and a liquefied natural gas processing facility in Papua New Guinea.

Stronger-than-expected earnings sent shares past the 40,000 won mark in early trading Tuesday. The stock rose as much as 20 percent to a record 40,350 won, up from 33,200 won in the previous session.

The rally — more than twelvefold from its 52-week low of 3,320 won — extends gains built in recent months, as investors bet on overseas nuclear projects and potential reconstruction work in the Middle East, market analysts said.