Wednesday, October 24, 2018
Middle East Risks Put Korean Builders on Rollercoaster Ride
SK E&C Takes Top Spot
Middle East Risks Put Korean Builders on Rollercoaster Ride
  • By Michael Herh
  • June 12, 2018, 12:02
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Performances of Korean major builders are affected by the instability in the Middle East, which was fueled by the Iranian risk.
Performances of Korean major builders are affected by the instability in the Middle East, which was fueled by the Iranian risk.

The top 10 Korean construction companies have posted mixed results in terms of overseas order receipt so far this year. The main factors that affected their results included the unstable situation in the Middle East, which was fueled by the Iranian risks.


According to the International Contractors Association of Korea, SK E&C chalked up the largest increase in overseas orders among Korean contractors this year. From January to June 11, the builder landed orders worth US$2.5 billion, exceeding the US$2.12 billion it recorded for the whole of last year. Its overseas order ranking rose from 18th place in 2016 to 7th in 2017 and ranks first this year.

SK E&C attributes the surge in order receipt to its focus on investment and development-type projects in Asia, including Hong Kong, Kazakhstan and Vietnam. An investment and development-type project requires a construction company to plan the whole process of completing the project, ranging from financing to construction, on its own. This type of project is awarded through negotiations rather than competitive bidding, so a construction company can push a project at a proper price. SK E&C landed investment development projects amounting to US$4.5 billion over the past 12 months.

Samsung C&T also rose by five notches from eighth place last year to third place this year. Its order receipts this year totaled US$ 2.07 billion, exceeding US$1.53 billion for the whole of last year. In March, Samsung C&T received a one-trillion-won order (US$900 million) for a combined power plant from Indonesia, ramping up its overseas orders.

GS E&C and POSCO E&C also ranked sixth and seventh, respectively this year, rising by three notches in comparison with last year. GS E&C is expected to book orders amounting to US$9 billion from the Asian market including Thailand (US$5 billion) and Indonesia (US$4 billion) in the second quarter of this year. POSCO E&C is preparing to land orders from Myanmar and Indonesia.

Some construction companies have been slumping in receiving overseas orders this year. Daelim Industrial has received orders worth US$157.23 million so far, a poor performance compared to last year's record of US$2.65 billion. Iran had a big impact on the drop in its new orders. Daelim Industrial received a 3.2 trillion won (US$2.9 billion) oil refinery contract from Iran in March of last year, but the contract was canceled in March of this year as the US’s tougher sanctions on Iran made it difficult for the country to finance the project.

Hyundai E&C which won first place with US$4.86 billion last year, also slid to fourth place with the current order volume of US$1.46 billion which is one third of last year’s. In March of last year, the company won a 3.8-trillion-won (US$3.4 billion) petrochemical plant project, but it is unclear whether or not the project will go on because of strengthening US sanctions on Iran.