DL E&C Q1 Operating Profit Down 32%... "Impact of Rising Construction Material Costs"

DL E&C's operating profit in the first quarter of this year decreased by more than 30% compared to the same period last year. This is attributed to the deterioration of profitability in the housing business due to rising raw material prices.

Photo by DL E&C

DL E&C announced on the 2nd that its consolidated sales for the first quarter are expected to be 1.8905 trillion KRW, with an operating profit of 60.9 billion KRW. Compared to the same period last year, sales increased by 2.2%, but operating profit decreased by 32.5%.

New orders were tentatively recorded at 1.9109 trillion KRW. Specifically, housing accounted for 792.9 billion KRW, civil engineering 285.2 billion KRW, plant 37.3 billion KRW, and DL Construction (a subsidiary) 795.5 billion KRW. Although this is a decrease compared to the first quarter of last year’s order performance (3.2762 trillion KRW), considering that the Shahin project worth 1.4 trillion KRW was included at that time, it can be seen as a performance at the usual level.

DL E&C identified the sharp decline in operating profit as due to the rise in raw material prices. The increase in material costs caused the profitability of the housing business to fall below the average level. A DL E&C official stated, "We are continuously working on cost improvement through increased contract amounts in existing businesses, and the profitability of the housing business is expected to accelerate its improvement after the second half of the year." They also predicted that sales in the plant and civil engineering businesses will increase significantly starting this year.

DL E&C’s financial stability maintained the highest level in the industry. As of the end of the first quarter, consolidated net cash increased by 189.6 billion KRW compared to the end of last year, reaching 1.2506 trillion KRW. Cash and cash equivalents increased by 223.3 billion KRW, while borrowings increased by only 33.7 billion KRW.

A DL E&C official said, "Although the business environment is expected to remain difficult this year, we will overcome the crisis through a selective order strategy focused on profitability that we have maintained so far," adding, "We will achieve differentiated profit improvement through continuous cost management."