Kumho Construction Posts Large Q3 Loss... 157.4 Billion KRW Operating Loss

189.8 Billion KRW Net Loss
"Potential Loss, Proactively Reflected"

Kumho Construction recorded a significant loss in the third quarter of this year, with an operating loss of 157.4 billion KRW and a net loss of 189.8 billion KRW.

On the 14th, Kumho Construction announced these results through a performance disclosure. A Kumho Construction official stated, “The loss in this quarter was larger than expected due to proactively and conservatively accounting for potential future losses.”

Specifically, the company preemptively reflected increased construction costs caused by a surge in demand for tunnel equipment due to large-scale tunnel construction orders, construction delays caused by various civil complaints, and rising raw material prices. Losses such as contract deposits and interim payment interest incurred during the termination of a public-private joint project contract, which is expected to incur additional losses during the project, were also accounted for in advance. One-time losses caused by failure to complete the project responsibly were treated similarly.

Additionally, loans with a low likelihood of recovery due to deteriorating project viability and implementation losses were written off. The loan loss treatment pertains to simple loan losses, not the restructuring of non-performing project financing (PF). A Kumho Construction official explained, “The conservatively accounted receivables and loans may improve profitability if recovered in the future through reversal entries.”

He added, “However, there are absolutely no additional risks such as unstarted PFs, bridge loans, or PF guarantee realizations, which have recently become problematic.”

Kumho Construction expects a ‘V-shaped’ recovery starting from the fourth quarter of this year, as the proactive and conservative loss treatment has lowered the possibility of additional losses. A Kumho Construction official emphasized, “We will continue stable growth through ongoing financial structure improvement and active project management, aiming to establish a continuous profit structure next year.”

Meanwhile, accounts payable stood at 341.4 billion KRW, down 125.1 billion KRW from the second quarter, and borrowings decreased by 33.7 billion KRW to 301.6 billion KRW. Sales were 387.1 billion KRW, showing a level similar to the third quarter of last year.