Builders’ earnings fall 7.6% on slump

Korea’s seven major construction companies saw their combined earnings drop 7.6 percent in 2012 from a year earlier, an online financial information provider said yesterday, pointing to their troubles stemming from the country’s long property slump.

The combined net profits of Hyundai Engineering & Construction, Daewoo Engineering & Construction and five other builders stood at 2.6 trillion won ($2.4 billion) last year, FnGuide said, citing earnings estimates released by brokerage companies. The five other builders are the construction arms of Samsung C&T, Hyundai Development, GS Engineering & Construction, Daelim Industrial and Samsung Engineering.

The combined sales of the seven builders jumped 15 percent on-year to 81.6 trillion won in 2012, though their operating profits came to 3.6 trillion won last year, down 7.9 percent from 2011, according to FnGuide.

Hyundai Development saw its net profit plunge 65.4 percent on-year to 77.7 billion won while net income of GS Engineering & Construction came to 266 billion won last year, down 37.7 percent from a year earlier.

Kang Seung-min, an analyst at NH Investment & Securities, said bigger-than-expected losses in the housing business amid falling housing prices are to blame for the builders’ poor performance in the fourth quarter.

Transaction prices of apartments in Seoul dropped 4.5 percent last year, the biggest decline since 1998 when Korea was hit hard by the Asian financial crisis, real estate information provider Realtoday has said, citing data compiled by Korea’s top lender Kookmin Bank.

Koreans are unwilling to buy homes out of concern that housing prices could drop further amid a prolonged property market slump. The development has led to piles of unsold apartments. Yonhap