Major builders' Q3 profits forecast to have dropped

The country's major construction companies are expected to have suffered a drop in their earnings in the third quarter of the year, data showed Thursday, in the latest sign of trouble for local builders amid a protracted slump. The combined net profits of Hyundai Engineering & Construction Co., Daewoo Engineering & Construction Co. and four other builders are projected to reach 430 billion won (US$404 million) in the July-September period, down 43 percent from the same period last year, according to the data compiled by IM Investment & Securities. The other four are Samsung C&T Corp., GS Engineering & Construction Corp., Daelim Industrial Co. and Samsung Engineering Co. Analysts said only four out of the six builders -- Hyundai E&C, Daewoo E&C, Samsung C&T, and Daelim Industrial -- are projected to have logged an operating profit in the third quarter. GS E&C and Samsung E&C are expected to have racked up an operating loss for the third quarter as lower-priced overseas deals they clinched in recent years continued to cut into their bottom line. They said their profit margins of overseas deals have dipped, and they even lost money on some of the projects. Samsung E&C, GS E&C and four other major builders clinched lower-priced overseas deals worth 37.3 trillion won between 2009 and 2011, according to industry data. The ill-fated deals could squeeze margins of the builders until at least next year when most of the projects are slated to be completed. Hyundai E&C's operating profit is expected to reach 210 billion won in the July-September period. Samsung C&T, Daewoo E&C and Daelim Industrial are estimated to have logged operating profits ranging from 100 billion won to 130 billion won, according to HI Investment & Securities. Samsung E&C is estimated to have posted an operating loss of 45 billion won, and GS E&C is projected to have posted an operating loss of 91 billion won in the third quarter, according to the brokerage house. "Builders' performance is improving, but their first-half performance was too bad," said Noh Ki-young, an analyst at HI Investment Securities. "Their business results for the year would be the worst since 2004," he said.