Hanwha Construction Q2 Operating Profit Up 61%... Rising Expectations for Merger with Hanwha

Hanwha Construction's residential brand 'FORENA'

Hanwha Engineering & Construction recorded strong second-quarter earnings, signaling smooth progress in the absorption merger plan led by Hanwha Corporation.

Hanwha Engineering & Construction announced on the 16th that its consolidated second-quarter sales reached KRW 1.1116 trillion, up 36.7% year-on-year and 61.5% quarter-on-quarter.

Operating profit also surged, achieving KRW 112.4 billion, up 61% year-on-year and 263.7% quarter-on-quarter. The operating profit margin for the second quarter was 10.1%, an increase of 1.5 percentage points from 8.6% in the same period last year.

On a half-year basis, sales reached KRW 1.7996 trillion and operating profit KRW 143.3 billion, representing increases of 22.8% and 33%, respectively, compared to the previous year.

This earnings announcement was the first since Hanwha Corporation announced its plan to absorb Hanwha Engineering & Construction on the 29th of last month. With strong earnings expected going forward, anticipation for the merger is also growing.

Hanwha Engineering & Construction is preparing for a full-scale earnings rebound this year. It aims for consolidated sales of KRW 4.5 trillion and operating profit exceeding KRW 200 billion, which represents more than a 150% increase in sales compared to the previous year.

The strong second-quarter performance was driven evenly by large-scale complex development projects, the housing business led by the residential brand 'FORENA', and large-scale plant projects.

First, sales from the Inspire Entertainment Resort construction project?which includes a 5-star hotel, multi-purpose arena, convention, and entertainment facilities and is valued at approximately KRW 1.8 trillion?began to be reflected in earnest. Additionally, continuous sales are being generated from previously secured large projects such as the Tongyeong LNG plant project and the Incheon Airport Terminal 2 expansion.

Construction of FORENA residential products in major regions nationwide, including FORENA Incheon Michuhol and FORENA Pohang, is also progressing smoothly. Hanwha Engineering & Construction plans to supply about 15,000 housing units this year.

Sales recognition for large-scale complex development projects totaling KRW 7.3 trillion, which Hanwha Engineering & Construction is pursuing in the mid to long term, is also becoming visible. Starting next year, sequential groundbreaking is planned for projects such as the Seoul Station North Area Development (approximately KRW 2 trillion), Daejeon Station Area Development (approximately KRW 1 trillion), Suseo Station Area Development (approximately KRW 1.2 trillion), and Jamsil Sports MICE Complex Development (approximately KRW 2.16 trillion).

Janggyo-dong Hanwha Building

Upon merging with Hanwha Corporation, Hanwha Engineering & Construction's competitiveness and future growth potential are expected to be further strengthened. Hanwha Engineering & Construction stated, "Based on enhanced financial stability, we plan to actively leverage the 'Hanwha' brand power to further expand large-scale complex development projects." Additionally, improved credit ratings are expected to reduce financial costs, improve project financing (PF) interest rates, and expand order opportunities.

High synergy is also anticipated in the eco-friendly business sector, which is the core of Hanwha Engineering & Construction's Environmental, Social, and Governance (ESG) management and future growth engine. Various collaborations will be carried out to develop eco-friendly infrastructure such as wind power, hydrogen energy, and water treatment facilities.