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Daewoo E&C eyes bigger footing in overseas markets

March 26, 2024 - 11:17 By Park Se-ra By Heo Yu-jeong
Daewoo E&C Chairman Jung Won-ju (right) shakes hands with Dammu Lavi, economic relations secretary at India's Ministry of External Affairs, in New Delhi on Feb. 2. (Daewoo E&C)

Amid escalating construction costs and volatility in the financial markets triggered by interest rate hikes, the domestic real estate sector is grappling with unprecedented risks. In response, Daewoo Engineering & Construction is pivoting to international markets, notably in urban development projects, to mitigate these challenges, the company said Tuesday.

Despite the recent market downturn, Daewoo E&C has demonstrated resilience. The builder reported sales of 11.6 trillion won ($8.67 billion) with an operating cost of 662.5 billion won last year.

Its profit margin, in particular, outpaced rivals. Daewoo E&C recorded a 5.7 percent profit margin, compared to an industry average of 2 percent.

The firm secured a significant volume of new contracts, totaling 13.2 trillion won, surpassing its initial target of 12.3 trillion won by over 7 percent.

A significant portion of this success is attributed to its international operations, where the company secured 3.13 trillion won in contracts from projects like emergency construction at Nigeria's Kaduna Refinery and a fast-track power generation project in Libya, vastly outperforming its foreign order target of 1.8 trillion won by nearly 74 percent. The figures reflect Daewoo E&C's strong international presence and strategic efforts to mitigate the impacts of the domestic construction market downturn.

Looking to the future, Daewoo E&C is positioning itself for sustainable growth in the global construction industry by diversifying its portfolio beyond the Korean market.

The company is now focused on enhancing its competitive presence in established markets such as Nigeria and Iraq, where it already has a strong foothold, and is seeking to enter emerging markets like Turkmenistan. This strategy aims to transform the firm into a global construction entity.

At this year's commencement ceremony, Daewoo E&C Chairman Jung Won-ju, who is also chairman of Herald Corp., the publisher of The Korea Herald, emphasized the importance of expanding the company's role beyond construction to include project development on an international scale.

"The limitations to profit and growth through construction activities alone are evident. It is crucial to yield tangible results as a developer that oversees both project execution and construction on an international scale," he said.

Aligning with this vision, Jung unveiled plans to embark on development projects across North America, Africa and Southeast Asia. The plans are based on comprehensive market analyses in 10 countries last year, the company said.

Jung also assessed the construction and real estate markets in New Delhi and Mumbai, India. During his visit to India, he engaged in discussions with Dammu Lavi, the secretary for economic relations at the Ministry of External Affairs of India, and representatives from the National Hydroelectric Power Corp., India's largest hydropower development organization.

A view of Starlake City in Hanoi, Vietnam, an exemplar of international urban development. (Daewoo E&C)

As a further catalyst, South Korea's Ministry of Land, Infrastructure and Transport recently unveiled a strategic initiative designed to foster collaboration among government entities for international urban development projects. This plan is focused on mitigating risks for developers and enhancing their engagement through financial incentives.

Within the scope of the government-led strategy, Daewoo E&C's track record, including the execution of the Starlake City project in Vietnam, marks it as a principal contributor to these collaborative efforts.

"Amid real estate challenges, construction companies will find new horizons. Daewoo E&C remains committed to its mission of emerging as a leading global developer, bolstering South Korea's reputation as a construction powerhouse," a company official commented.