Hyundai Engineering & Construction Co., Korea’s largest contractor, is leading the industry’s transition with a range of contracts for skyscrapers, infrastructure and plants.
While 83 percent of overseas construction projects that a majority of domestic companies are running largely involve building power plants or development facilities, Hyundai E&C has diversified its project portfolio in a number of different international markets through new contracts for green energy production and harbor works in Middle Eastern countries like Kuwait and the United Arab Emirates.
Under the five-year plan to promote overseas construction, the government has proposed a mid- and long-term strategy to fit the rapidly-changing global market climate, involving measures to diversify markets and project types to explore future growth industries such as green technology-related businesses.
The plan focuses on practical strategies for a shift to higher value-added businesses, improved profitability and the development of niche markets, while diversifying project portfolios to occupy new areas such as green energy resources such as nuclear, water, wind and tidal power, which has been emphasized due to hikes in oil prices and the growing need for renewable energy.
Since CEO Kim Joong-kyum took office last year, Hyundai E&C has successfully stepped up in the global market, targeting new business areas such as alternative energy, nuclear power, water industry and environment, especially for low-carbon green growth, officials say.
The construction firm aims to receive orders worth $12 billion in total by the end of this year, more than double last year’s $4.5 billion. The goal seems highly achievable, since the number has already reached $6.7 billion as this month, and additional projects in regions such as Southeast Asia and the Middle East are expected to button up.
Between January and June, the company won domestic and overseas contracts worth 10.6 trillion won ($8.97 billion), up 45.3 percent from the same period last year, posting a net profit record of 331.1 billion won, a 50 percent increase from a year earlier.
The builder also collected 283 billion won in operating profits in the first half of the year, a 22.4 percent increase due to reduction in costs, it said.
In the pace of the global economic rebound, the number of overseas construction orders received by Korean builders swings upward rapidly, the government reported.
So far this year, contracts have exceeded $41 billion mark, according to the Ministry of Land, Transport and Maritime Affairs’ data, a 138.6 percent increase from the same period of last year.
The drastic increase is driven by growing demand in the Middle East, where oil-rich nations have expanded investment for facilities. Orders from other Asian countries also grew, the ministry said.
By region, orders from the Middle East reached $30.8 billion, which includes $18.6 billion worth of deals to build nuclear reactors in the UAE. Asian countries come next with $8.5 billion, followed by $1.2 billion from Latin America
The latest totals are in line with trends over the past six years.
In 2004, Korean builders secured a combined $7.5 billion in overseas orders, with the corresponding figures growing to $10.9 billion in 2005, $16.4 billion in 2006 and $39.8 billion in 2007.
The figure rose further to $47.6 billion and $49.1 billion in 2008 and 2009.
The ministry forecasts that the upward move will continue, predicting the nation’s overseas orders will likely top the annual objective of $60 billion for this year.
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