Construction Industry Actively Returns Value to Shareholders Despite Earnings Decline... Continues Dividends and Share Buybacks

Samsung C&T and Samsung E&A Expand Dividends and Cancel Treasury Shares
DL E&C and GS Engineering & Construction Resume Dividends and Share Buybacks
Mid-sized Builders Maintain Dividends, Focus on Enhancing Shareholder Value
Securities Firms Expect Construction Industry Rebound, Highlight Cost Ratios and Overseas Orders

The construction industry has actively pursued shareholder returns despite the economic downturn and domestic and international risks. Even in a challenging environment where most companies' performance has deteriorated, they are focusing all efforts on enhancing shareholder value through cash dividends, share buybacks, and cancellations.

According to the Financial Supervisory Service's electronic disclosure on the 18th, Samsung C&T Corporation decided to increase dividends for common and preferred shares by 50 won each from the previous year, setting them at 2,600 won and 2,650 won respectively. Samsung C&T recently completed a share cancellation worth approximately 930 billion won. Another Samsung Group construction affiliate, Samsung E&A, decided to pay a cash dividend of 660 won per common share. This marks Samsung E&A's first dividend payment in 12 years since 2013.

DL E&C and GS Engineering & Construction are also continuing their shareholder return policies, sending positive signals to the market. DL E&C plans to execute a share buyback worth about 350 won this year. GS Engineering & Construction decided on a dividend of 300 won per common share this year, resuming dividends after two years. GS Engineering & Construction skipped dividends last year due to the aftermath of the 'Geomdan apartment collapse accident.'

Among the major listed construction companies, Hyundai Engineering & Construction and Daewoo Engineering & Construction have yet to disclose plans for cash dividends or share buybacks/cancellations. Hyundai Engineering & Construction determines dividends based on performance rather than payout ratio. Since it recorded an operating loss of about 1.2 trillion won last year, whether it will pay dividends remains uncertain. Daewoo Engineering & Construction, which has not paid dividends for 15 years since 2009, is in a similar position. Instead, Hyundai Engineering & Construction has practiced 'responsible management' this year, with CEO Lee Han-woo and 13 executives purchasing company shares.

Many mid-sized construction companies, which are more affected by the sluggish industry conditions, will continue cash dividends this year. Gyeryong Construction decided on a dividend of 400 won per common share, the same as last year. IS Dongseo resolved to pay a cash dividend of 1,000 won per common share, down from 1,500 won per share last year. However, the company explained that despite difficulties in shareholder returns due to a halving of operating profit last year, it decided on dividends to enhance shareholder value.

Meanwhile, positive outlooks on the construction industry continue to emerge in the securities sector. Kim Ki-ryong, a researcher at Mirae Asset Securities, said, "The rebound point for the construction industry will be the stabilization of housing cost ratios reflected throughout the year and overseas order achievements," adding, "Attention should be paid to the gradual downward trend of housing cost ratios." Researchers Jang Moon-jun and Kang Min-chang of KB Securities stated, "Concerns about performance that have persisted since 2022 have eased," and "Previously underemphasized factors such as nuclear power plants, small modular reactors (SMRs), the end of the war in Ukraine and reconstruction projects, and the possibility of improved inter-Korean relations will become more tangible."