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Hyundai E&C Q2 Profits Plummet Over 30% Amid Surging Raw Material Costs

Company's Efforts to Stabilize Profitability Fall Short as Operating Profits Miss Analyst Expectations
South Korea
h 000720.KO Mid and Small Cap 2000
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Hyundai Engineering & Construction Co. (Hyundai E&C) reported a significant drop in its second-quarter earnings, attributing the decline to increased raw material costs and additional quality and safety improvement expenses. The company disclosed a consolidated net profit of 146.1 billion won (US$105.3 million) for the April-June period, marking a 31.2% decrease from the previous year.

Despite a 20.4% increase in sales to 8.62 trillion won, Hyundai E&C’s operating profit fell sharply by 34.1% to 147.3 billion won, missing the average analyst estimate of 174.7 billion won by 15.7%, according to Yonhap Infomax. This earnings shortfall highlights the challenges the company faces in managing rising costs and sustaining profitability.

In response to the adverse conditions, Hyundai E&C has been focusing on expanding its business model through new complex development projects. The company remains optimistic about meeting its annual sales target of 29.7 trillion won, supported by large overseas projects in Saudi Arabia and Iraq, alongside domestic housing and data center initiatives.

The persistent rise in raw material prices continues to be a critical factor impacting Hyundai E&C’s financial performance. As the company navigates these challenges, its strategic initiatives will be crucial in determining its ability to stabilize and enhance profitability in the coming quarters.

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