쌍용건설

Despite the Pandemic, Overseas Business Has Been Successfully Normalized

Despite the slowdown in business last year due to the protraction of the pandemic, Ssangyong E&C has proved itself a global construction giant by normalizing its overseas business. With most overseas project sites of Korean contractors expected to return to normalcy within the year, the company is also likely to report better business performance starting from the second half of the year.

 

According to Ssangyong E&C's Consolidated Audit Report 2020 submitted to the Data Analysis, Retrieval and Transfer System of the Financial Supervisory Service, the company's revenue and operating profit in 2020 were KRW 1,448,327,400,000 (some USD 1.28 billion) and KRW 2,649,800,000 (some USD 2.3 million), respectively. Thus, year on year, revenue decreased only by 0.5%, whereas operating profit decreased by 76.25%. In the same period, the company's net profit turned into a net loss of KRW 10,698,290,000 (some USD 9.4 million).

This downturn was likely caused by the slowdown in the housing division, Ssangyong E&C's primary area of business. As for the company's architecture division, its provision for construction losses (an appropriation of estimated potential losses that may be incurred due to construction delays or halts, or other causes) soared from KRW 4,403,000,000 (some USD 3.9 million) in 2019 to KRW 11,683,000,000 (some USD 10 million) in 2020. Such increase is thought to be a reflection of pandemic-induced losses in the form of net losses.

 

Against the back of the raging pandemic, Ssangyong E&C has achieved a remarkable feat: the normalization of its overseas business. 

In 2020, the company's overseas revenue decreased by 5.70% to KRW 510,877,000,000 (some USD 450 million) from KRW 541,779,000,000 (some USD 478 million) in 2019. In fact, these represent outstanding performance figures showcasing Ssangyong E'C's prowess as a global contractor, considering the fact that the top five Korean construction companies (based on a construction capability evaluation) experienced a decrease of 12.95% in their total revenues over the same period.

 

A closer look at specific numbers reveals the strengths of the company in many respects. For instance, last year, Ssangyong E&C GE S.A., the company's branch in Equatorial Guinea and the outpost of the African market, witnessed year-on-year increases in its revenue (by 26.82%) and net profit (by 126.50%) even though the branch faced hardship when its Korean staff and workers had to temporarily return to Korea. Similarly, PT. SSY KONSTRUKSI INDONESIA, the company's Indonesian branch, saw a slight reduction in net losses year on year despite the pandemic.

 

However, above all, the Royal Atlantis project, which accounts for more than 10% of the company's total revenue, regained a stable footing. The project's construction receivables, which had amounted to USD 39 million (KRW 44.6 billion) as of late 2019, were all settled as of late 2020. Removal of such risk is a boon to Ssangyong E&C as the project was commissioned by the Investment Corporation of Dubai, the largest shareholder of the company. It is believed that Chairman and CEO S. Joon Kim's visit to construction sites in Dubai, UAE during the Korean Thanksgiving holidays last year, which took place despite the raging pandemic, was the major factor that led to the reduction of receivables.

 

"With the dwindling influence of the COVID-19 pandemic, Ssangyong E&C and other major contractors with a strong focus on overseas business are expected to gradually return to normal performance starting from the second half of the year," an industry official said. "Ssangyong E&C, in particular, is likely to demonstrate its strength in the remodeling market this year, building on the successful normalization of its overseas business."