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In 2022, Ssangyong Engineering & Construction (Ssangyong E&C) was incorporated into the Global Sae-A Group, and has since become a wholly-owned subsidiary.

Following the acquisition, improved financial structuring and cost ratios ensured a profit was recorded in 2023, and again last year, it marked two consecutive years of positive earnings. This is a notable achievement in an industry still grappling with surging raw material prices. To build on this momentum and secure a third consecutive year of profitability in 2025, Ssangyong E&C aims to expand orders and its client bases overseas, while also growing its domestic housing business.

In 2024, Ssangyong E&C reported consolidated sales of KRW 1.4931 trillion, with operating profit of KRW 49.7 billion and net income of KRW 66 billion. The back-to-back positive earnings represented year-over-year increases of 1.5%, 32%, and 50.4%, respectively. Having posted net losses of KRW 10.7 billion in 2020, KRW 116.5 billion in 2021, and KRW 54.7 billion in 2022, 2023 marked a return to profit for the first time in four years.

A Ssangyong E&C representative stated at the time, &ldquoLosses from large-scale overseas projects, which were severely impacted during the COVID-19 pandemic, have now been largely recovered,&rdquo before adding, &ldquoAs of the third quarter of last year, we had already achieved accumulated sales of KRW 981.8 billion and net income of KRW 29.9 billion, meaning we are now firmly on track to achieve a second consecutive year of profitability. &rdquoA Ssangyong E&C representative stated at the time, &ldquoLosses from large-scale overseas projects, which were severely impacted during the COVID-19 pandemic, have now been largely recovered,&rdquo before adding, &ldquoWe are now firmly on track to achieve a second consecutive year of profitability.&rdquo

This financial turnaround helped Ssangyong E&C to achieve its highest construction capability assessment score of the previous five years. In the 2024 evaluation, the company recorded KRW 1.9437 trillion in assessed construction capacity, rising two places from the preceding year&rsquos ranking, to 26^th. The assessed amount figure rose by 24%, or KRW 370 billion approximately, up from KRW 1.5673 trillion.

These results are particularly noteworthy against the back of a construction industry downturn. Amid persisting high interest rates, rising construction costs, and an increasing number of unsold apartments, especially in regional markets, many mid-sized builders are entering Corporate rehabilitation procedures (court receivership), signaling widespread instability in the sector.

Ssangyong E&C&rsquos strong performance this year, ranking 5th among Korean firms for overseas orders, is attributed to a combination of factors arising from Global Sae-A becoming its parent company. Financial restructuring, significantly reduced cost ratios in its housing and building sectors, and increased contract values and settlements from major overseas construction projects.

The company has weathered considerable ups and downs since the breakup of the original corporation during the Asian financial crisis. Once ranked among Korea&rsquos top 10 builders, it underwent a corporate debt restructuring in 1999 and was sold to Korea Asset Management Corporation (KAMCO) in 2002. Further struggles in the wake of the 2008 global financial crisis precipitated a second debt restructuring in 2013, before entering corporate rehabilitation in 2014. Despite exiting court receivership after its 2015 acquisition by the Investment Corporation of Dubai (ICD), the underlying financial structure remained fragile. While it briefly benefited from a booming domestic housing market, and increased pre-sales volume, an inability to control costs at overseas sites during the pandemic made it difficult for the company to generate profitability from new contracts.

That changed at the end of 2022 when OEM apparel manufacturer, Global Sae-A, ed Ssangyong E&C as a strategic partner for road and rail infrastructure (Social Overhead Capital/SOC) projects in Latin America, and initiated an acquisition process. A special purpose company (SPC) named Avondale Investment was established to purchase shares from ICD, the then-majority shareholder. In late 2023, Global Sae-A acquired the SPC, effectively bringing Ssangyong E&C under its control. In February of this year, Global Sae-A purchased an additional 10% stake from ICD for KRW 26 billion, thereby securing 99.98% ownership (78.97 million shares) and formally converting Ssangyong E&C into a wholly-owned subsidiary

Immediately following the acquisition at the end of 2022, Global Sae-A provided a KRW 150 billion capital increase, in January 2023. This capital injection dramatically improved Ssangyong E&C&rsquos balance sheet, with its debt ratio ping from 753% in 2022 to 267% in 2023, and its total equity rising to KRW 293.4 billion by the end of 2023, and then to KRW 326.2 billion by September 2024. Cash, and cash equivalents, which stood at KRW 84.6 billion at the end of 2022, nearly doubled to KRW 169.7 billion by the end of 2023, significantly bolstering the company&rsquos reserves.

With Global Sae-A strengthening its financial base, Ssangyong E&C was able to shift focus to securing international contracts. International Contractors Association of Korea figures show its overseas order volume surging from USD 121.01 million in 2022 (ranked 24th among Korean firms) to USD 385.1 million in 2023 (13th place). Although this slipped back to USD 250.31 million in 2024 (15th place), the company nevertheless secured USD 288.9 million worth of new overseas contracts between January and February of this year alone, catapulting it to 5th place. Major wins include the KRW 320 billion Dubai Immersive Tower project . When domestic contracts are added, the company&rsquos total backlog, including projects yet to break ground, reached KRW 7.2 trillion as of September 2024.

A company official commented, &ldquoFollowing the acquisition, the KRW 150 billion capital increase significantly improved our financials, and Global Sae-A&rsquos payment guarantees allowed us to participate in more bids. As a result, we&rsquore clearly seeing improvements in both domestic and international business performance.&rdquo

Alongside securing new contracts, Ssangyong E&C significantly improved its cost structures. In 2021, prior to the acquisition, the company&rsquos cost of sales at KRW 1.4474 trillion exceeded its revenue of KRW 1.4016 trillion, for a cost ratio of 103.27%. Although it improved slightly in 2022 to 97.4%, even with new project wins, it was difficult to generate profits after overheads and other expenses were accounted for.

Under the Global Sae-A umbrella, the company focused on reducing construction periods and on-site project costs. This included multiple reviews of construction methods to identify the most cost-efficient alternatives before groundbreaking, and pinpointing materials and techniques that improved product value while lowering expenses. In cases of overseas project delays, the company proactively negotiated with clients to secure increased contract payments. A notable example is the Atlantis The Royal luxury hotel project in Dubai, completed in February 2023, where renegotiation of the contract value from KRW 900 billion to KRW 1.6 trillion helped to avert losses.

Accordingly, Ssangyong E&C&rsquos cost ratio, exceeded 100% in 2021, fell to 92.34% in 2023, and ped a further 3-5 percentage points at several sites last year. This is a significant achievement given that many large construction firms continue to operate with cost ratios above 95%, due to high interest rates and rising material costs.

The industry is now keeping a keen eye on Ssangyong E&C to see if its profit streak can be sustained for a third consecutive year. The company has a robust project pipeline, with a backlog worth KRW 7.2 trillion, or 4 to 5 times its annual revenue. A diversified portfolio offers further stability, with the revenue distribution of the past five years (2019&ndash2023) showing 16.5% from civil engineering, 20.4% from building construction, housing accounting for 29.8%, overseas projects generating 31.2%, and plants, 2.2%.

Ssangyong E&C is furthermore expected to actively pursue domestic housing development and urban renewal projects, leveraging its significantly strengthened financial position. This year alone, the company plans to launch sales of its &lsquoPlatinum&rsquo apartment brand across 12 sites, mainly centered in Seoul, the greater capital region, and Busan. A total 6,734 units are planned.

However, given prevailing real estate market sentiment in Korea, achieving these sales targets is not guaranteed. Of the four complexes Ssangyong E&C launched last year, three were undersubscribed. Notably, two of these were in Pyeongtaek, a city recently designated as an unsold housing management zone due to its rapidly-rising inventory of unsold stock.

Kim Chang-soo, a researcher at NICE Credit Rating, commented, &ldquoSsangyong E&C has largely resolved losses from its overseas projects, and with cost fores for ongoing work under control, we can expect continued profitability in 2025.&rdquo However, he cautioned, &ldquoSluggish housing demand poses a lingering risk to the company&rsquos real estate development performance.&rdquo