Daewoo and DL Outlook 'Cloudy' Amid Housing Slump... Hyundai E&C 'Sunny' with SMR Strategy [Real Estate AtoZ]

Major Construction Firms’ Q4 2023 Earnings Outlook
Sales and Operating Profits Hit by Industry Downturn
Hyundai E&C’s New Business Sees Positive Prospects with AI Momentum

There are forecasts that the fourth-quarter earnings of major construction companies declined last year. Analysts attribute the decrease in performance to the downturn in the housing market and deteriorating profitability caused by rising construction costs.

According to financial information provider FnGuide on the 16th, Daewoo Engineering & Construction’s consensus (average forecast) for fourth-quarter 2025 results is sales of 2.1863 trillion won and operating profit of 102.4 billion won. These figures represent decreases of 17.4% and 15.5%, respectively, compared to the same period a year earlier. DL E&C, which ranked fourth in last year’s construction capability evaluation, is also expected to see a decline in fourth-quarter results. Its sales and operating profit are projected at 1.8237 trillion won and 65 billion won, down 23.2% and 30.9%, respectively, from the previous year’s fourth quarter.

The underlying factor behind these declines for large companies is the slump in the housing market. A decrease in overseas orders is also cited as a cause of underperformance. Kim Giryong, a researcher at Mirae Asset Securities, commented on Daewoo Engineering & Construction, saying, "We expect the trend of declining sales to continue, following a gap in overseas orders and a decrease in housing starts." Ryu Taehwan, a researcher at Eugene Investment & Securities, commented on the outlook for DL E&C, stating, "Both the housing division and subsidiaries are expected to see negative growth year-on-year and quarter-on-quarter, due to the decline in housing starts in 2023," and added, "The plant division is also likely to experience a greater decrease in sales from the fourth quarter of last year, due to sluggish orders continuing from 2024."

GS Engineering & Construction, traditionally considered a strong player in the housing business, is also receiving poor evaluations. Its fourth-quarter sales last year are estimated at 3.0977 trillion won, an 8.52% decrease compared to the same period a year earlier. Kim Giryong of Mirae Asset Securities downgraded his investment rating for GS Engineering & Construction from ‘buy’ to ‘neutral’ and lowered the target price by 5,000 won to 22,000 won. Kim explained, "Last year’s housing pre-sale performance was 8,858 units, only about half the pre-sale guidance presented at the beginning of the year," and added, "A sharp drop in housing pre-sales, which account for a large portion of the business, will inevitably lead to a decline in sales." He further noted, "Concerns about the housing business remain due to the government’s continued real estate regulatory announcements, and the lack of momentum in nuclear power generation or gaps in new businesses are also seen as disappointing factors."

Hyundai Engineering & Construction is also expected to face sluggishness in its housing business, but its outlook is relatively brighter due to its new business in small modular reactors (SMRs). Last year’s fourth-quarter sales for Hyundai Engineering & Construction are projected at 7.7444 trillion won, up 6.9% from the same period a year earlier, with operating profit forecast to return to the black at 103.9 billion won. Shin Daehyun, a researcher at Kiwoom Securities, said, "As support from the U.S. government and the likelihood of investment from big tech companies increase, concerns about the realization of the nuclear power business, including SMRs, have eased." He added, "In December last year, the U.S. Department of Energy (DOE) decided to provide $400 million in subsidies to Holtec’s Palisades SMR project, which is a core partner in the business. As a result, it is expected that orders for two 300-megawatt-class SMRs at the Palisades nuclear power site will be secured in the first half of this year." The scale of this construction project is estimated to be between 2 trillion and 2.5 trillion won. SMRs are considered a key power source for the artificial intelligence (AI) industry.