GS Engineering & Construction reported second-quarter operating profit of 91.3 billion won, falling short of market expectations as the housing division declined amid reduced construction activity. The South Korean construction firm announced on July 29 that Q2 revenue reached 2.7799 trillion won, down 13.02% year-over-year, while operating profit dropped 43.63% compared to the same period last year. The housing market downturn led to fewer construction starts, causing the building and housing division's revenue to fall 28.5% year-over-year to 1.5368 trillion won, though the division showed an 8.1% increase compared to the previous quarter. The company stated that new project launches will proceed in stages and expects performance to recover to previous levels. GS Engineering & Construction Stocks (006360) fell 5.88% to 24,000 won as of 9:27 AM following the earnings announcement.
GS Engineering & Construction Reports Q2 Operating Profit Below Market Forecasts
The company's second-quarter operating profit of 91.3 billion won came in below the market consensus of 115.2 billion won, according to a survey of 14 domestic securities firms by Yonhap Infomax over the past month. Analysts had projected Q2 revenue of 2.7539 trillion won and operating profit of 115.2 billion won on a consolidated basis.
The building and housing division recorded revenue of 1.5368 trillion won in the second quarter. The company attributed the 28.5% year-over-year decline to reduced construction sites due to the housing market downturn, though the division showed an 8.1% increase compared to the previous quarter.
The plant division generated revenue of 402 billion won, up 18% year-over-year. The infrastructure division recorded 396.5 billion won in revenue, representing a 27.4% increase compared to the same period last year.
Company Secures 7.4 Trillion Won in New Contracts During First Half
GS Engineering & Construction's second-quarter new orders totaled 5.2242 trillion won. The building and housing division secured major urban redevelopment projects including Sangtaewon District 2 (1.9218 trillion won), Macheon District 3 Redevelopment Promotion Zone (1.0142 trillion won), and Ansan Seongpo-dong Mixed-Use Development (641.6 billion won).
For the first half of the year, the company obtained construction rights worth 7.4695 trillion won in urban redevelopment projects, including Seongsu District 1 (2.154 trillion won) and Busan Gwangan District 5 Redevelopment (970.9 billion won).
GS Engineering & Construction Stocks Drop 5.88% Following Earnings Release
GS Engineering & Construction shares traded at 24,000 won as of 9:27 AM, down 5.88% from the previous day's close. A company official stated that despite uncertain external conditions, the firm continues to secure future revenue sources through best efforts. The official added that the company will continue strategic management activities focused on profitability while building a stable business portfolio.
FAQ
What were GS Engineering & Construction's Q2 2024 financial results?
GS Engineering & Construction reported Q2 revenue of 2.7799 trillion won (down 13.02% year-over-year) and operating profit of 91.3 billion won (down 43.63% year-over-year) on July 29. The operating profit fell below the market consensus estimate of 115.2 billion won.
Why did GS Engineering & Construction's housing division revenue decline in Q2?
The building and housing division's revenue fell 28.5% year-over-year to 1.5368 trillion won due to reduced construction sites resulting from the housing market downturn. However, the division showed an 8.1% increase compared to the previous quarter, and the company stated that new project launches will proceed in stages.
