Mid-sized construction firms shift focus to public and non-housing projects as they lose ground in private redevelopment
Doosan E&C 1quarterly operating profit margin to the 8% range and set its annual urban renewal project order target at 6trillion won.
Large construction companies with stronger brands and financial resources are leading order wins in urban renewal projects in Seoul and the greater Seoul area. An official at a mid-sized construction company said the industry is turning its attention to public works as its position in private urban renewal projects narrows. Mid-sized and small construction companies are shifting their business focus from private housing projects to public and non-housing sectors. The industry explains that high interest rates combined with rising costs are making it difficult to defend profitability in private housing projects. As a result, a trend is spreading of focusing on improving operating profit margins and securing a stable order backlog rather than pursuing excessive growth in scale. An official said public-sector orders are becoming a new avenue for growth. Mid-sized companies are increasing the share of public and non-housing projects while diversifying their portfolios into data centers, infrastructure, and overseas businesses. Doosan E&C expanded its foundation in public urban renewal projects and pursued a data-based selective ordering strategy. The company 1quarterly operating profit margin to the 8% range this year and set its annual urban renewal project order target at 6trillion won. Doosan E&C secured 1the reconstruction of Sinan Villa in Magok-dong, Seoul, the street housing renewal project in Sillim-dong, the Hong-eun1district public redevelopment project, and the Chungjeongno1district public redevelopment project, among 4urban renewal projects in the quarter. Mid-sized companies are managing risk by increasing their order backlogs through the projects they have secured. They were also reported to be pursuing data center and infrastructure construction orders in parallel. The industry explains that the pace of mid-sized companies' business shifts has come into view. The expansion of public-sector orders and increase in non-housing orders are expected to affect the sales composition of mid-sized companies this year. Specific order details and changes in operating profit margins can be confirmed in each company's quarterly earnings announcements.
Sources: 뉴시스 경제
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