Top 5 Construction Companies See Higher Dependence on Domestic Orders, Turn to Nuclear Power Plants to Diversify Contracts

As the Middle East war and a domestic redevelopment boom overlapped, the share of domestic orders for the Top 5 Construction Companies rose above 92% in the first quarter. Although they booked more than 16 trillion won in orders, the extreme concentration has prompted calls within the industry for greater diversification. Companies are pointing to nuclear power projects as a way to expand overseas orders.
■ Domestic order share for the Top 5 Construction Companies reaches 92.4%
According to the construction industry on the 5th, the average share of domestic orders in the first quarter of this year for Samsung C&T Corporation, Hyundai Engineering and Construction, Daewoo Engineering & Construction Co., Ltd., DL E&C Co., Ltd., and GS Engineering & Construction reached 92.4%. Daewoo Engineering & Construction Co., Ltd. posted the highest domestic order share at 95%. DL E&C Co., Ltd., Samsung C&T Corporation, and GS Engineering & Construction followed at 93.4%, 93.3%, and 93.2%, respectively, while Hyundai Engineering and Construction was the only company in the 80% range at 87%. The average domestic order share for the five companies in the first quarter of last year was 78.7%. That means it rose by 13.7 percentage points in a year.
The biggest reason for the higher dependence on domestic orders is being attributed to the Middle East war. Since the conflict involving the United States and Iran began in late February and dragged on, some local project launches have been delayed. With conditions still not improving, new orders have also been blocked. The Middle East is the largest market for Korean builders, accounting for more than half of their overseas orders.
The rapid expansion of domestic redevelopment projects has also pushed builders to focus more heavily on reconstruction and redevelopment contracts.
That is why calls for change are growing. Kim Hwa-rang, associate research fellow at the Construction Economy Research Institute of Korea, said, "The only areas that can still compete globally with China and others are large-scale bridges and ports." He added, "With civil engineering and building construction effectively lacking competitiveness, companies now need to diversify orders into the areas they do best."
■ First-quarter domestic orders total 16 trillion won
The five major construction companies recorded orders worth nearly 16 trillion won from domestic projects in the first quarter.
Samsung C&T Corporation won contracts from January to March this year including structural work for Samsung Electronics Co., Ltd.'s next-generation semiconductor production base P5 worth 230 billion won, finishing work at the P4 complex in Pyeongtaek worth 900 billion won, the Yongin Deokseong Data Center worth 500 billion won, and the Geoyeo Saemaeul Public Redevelopment project worth 400 billion won. Its total domestic order value came to 5 trillion won.
Hyundai Engineering and Construction also secured more than 3.4 trillion won in domestic orders. Its projects included The Hyundai Gwangju worth 500 billion won, the Pocheon Pumped Storage Hydroelectric Plant worth 300 billion won, preliminary work for the Wando Geumil Offshore Wind Farm worth 100 billion won, and construction of Hyundai Motor Ulsan hydrogen fuel cell plant worth 300 billion won.
Daewoo Engineering & Construction Co., Ltd., DL E&C Co., Ltd., and GS Engineering & Construction were similar. Over the three-month period, they won domestic projects worth 3.2496 trillion won, 1.9852 trillion won, and 2.4251 trillion won, respectively. Most of these orders were concentrated in housing. GS Engineering & Construction's major domestic housing orders included the Osan Yangsan 4 District, the Geoyeo Saemaeul Redevelopment project, and the Seonbu Apartment Complex 1 Reconstruction Project.
■ Nuclear power plants seen as the breakthrough for overseas orders
The construction companies are also drawing up response measures. Nuclear power plants are being highlighted as a representative area for diversifying orders. Samsung C&T Corporation plans to take part as a contractor in Team Korea, the nuclear export consortium led by KEPCO and KHNP. Samsung C&T Corporation is currently focusing on three projects: Cernavoda Units 3 and 4 in Romania, a nuclear power plant project in Vietnam, and a Saudi nuclear power plant project. A company official said, "In the case of SMRs, we are accelerating cooperation with NuScale Power Corporation in the United States, which is regarded in the market as the technology leader closest to commercial operation of the first unit."
Hyundai Engineering and Construction will begin full-scale nuclear contract signings as early as the second quarter of this year. While declining to disclose detailed plans for security reasons, the company said, "We expect many overseas order wins in the second half of the year."
Daewoo Engineering & Construction Co., Ltd. plans to diversify its overseas orders by focusing on major overseas bases such as Iraq, Nigeria, and Vietnam. A contract for the Dukovany Nuclear Power Plant in the Czech Republic is also within reach. A company official said, "We raised our target for overseas orders this year compared with last year," adding, "That means we have many places where we are planning to win overseas contracts."
kjh0109@fnnews.com Kwon Jun-ho Reporter