Hyundai makes history in overseas construction

Top builder set to reach $80 billion in global sales

By Kim Tae-gyu

Hyundai Engineering & Construction (HE&C) is poised to achieve an unprecedented milestone of an aggregate $80 billion in revenue from its global construction business, which started in the mid 1960s.

The country’s top builder said Wednesday that its cumulative turnover from overseas projects amounted to $79.26 billion as of this month, shy a mere $740 million of reaching the $80 billion plateau.

``During the first quarter we won offshore contracts worth around $1 billion. We are projected to top the aggregate $80 billion total in the not-so-distant future,’’ HE&C Vice President Lee Dong-ho said.

``To continue to fare well in the global markets, we are determined to advance to untapped countries as well as expand our business horizons in tandem with the paradigm shift underway in the construction industry.’’

HE&C gained the global spotlight in 2009 through an $18.6 billion project to build four nuclear reactors in the United Arab Emirates as one of the major partners of contracting party Korea Electric Power Corp. (KEPCO).

The Korean consortium broke ground this month on the decade-long project.

Another strong year

The Seoul-based contractor racked up record high sales of 9.3 trillion won last year, up 27.6 percent from 2008, on the back of robust performances abroad.

In recognition of these feats Hyundai won the top prize this month at the 2011 Overseas Construction Awards, sponsored by the Ministry of Land, Transportation and Maritime Affairs and the International Contractors Association of Korea.

Things are also expected to be good this year in consideration of the first three months.

Hyundai E&C opened this year’s accounts by winning a $340 million order to build a thermal power plant in central Bangladesh to be completed midway through 2013.

In the same month, the corporation secured an agreement for a second tower in Asia Square, Singapore, whose value amounts to $350 million. It plans to build the mixed-use tower next to the first one, also a Hyundai project.

In February, it won a contract of building petrochemical facilities in Abu Dhabi. Under the $169 million project, Hyundai E&C will establish a cross-linkable polyethylene unit with a yearly capacity of 80,000 tons of innovative plastic products for energy cables.

The most recent contract was a $132 million one with the state-run power corporation of Indonesia involving a hydraulic power plant in the northern part of Sumatra.

``We aim to earn a total of $14 billion in global orders this year, up 24.4 percent from 2010. We are optimistic about reaching the targets because some massive projects are due in the near future,’’ Lee said.

``We will continue our commitment to the overseas projects down the road as the first local constructor, which waded into the global markets more than 45 years ago, will remain ahead of the pack.’’

Hyundai was the first Korean company to make a foray abroad. Its first overseas venture was a deal to build highways in Thailand in 1965

.

Back then, Hyundai competed with a total of 29 players from 16 countries including Germany and Japan.

The country’s oldest builder raked in oil dollars in the mid 1970s as a role model for its domestic competitors.

The company, founded in 1947, topped the local markets for 42 years through 2003 in terms of construction capacity.

But Hyundai suffered a liquidity crisis in 2000 and the following crunch prompted it to lose its No. 1 position in 2003. Hyundai finally regained the highest ranking in 2009 and remained in pole position last year.

Grandiose scheme

The strong push for international business has been spearheaded by its charismatic Chief Executive Officer Kim Joong-kyum, the Hyundai lifer who joined the outfit back in 1976.

In an interview with The Korea Times last year, Kim said that Hyundai E&C strives to more than double its annual sales from 10 trillion won last year during the next five years.

``By 2015, we strive to increase the figure to around 23 trillion won while reaching 2.2 trillion won income for a near double-digit profit ratio of 9.5 percent. It is a part of our mid- to long-term vision,’’ Kim said.

The 61-year-old said that the grandiose scheme would be propped up by the entity’s global projects.

``Approximately half of our turnover comes from global business. Over the long haul, we are looking to crank up the proportion by up to 70 percent,’’ said Kim who took charge of the firm in early 2009.

``In addition, we will concentrate on securing lucrative engineering bids while managing the overall projects including procurements. Along the same lines, we may outsource the thin-margin physical construction work in foreign countries.’’

Hyundai E&C is also relying on the diversification of its businesses to potentially rich areas such as green technology in realizing its ambitious goals as Kim noted in the firm’s website.

``As the forerunner in low carbon green technology, we will have all of our resources to explore opportunities to develop alternative energy sources, such as nuclear power, desalination, wind, hydro, tidal, bio-energy and solar power,’’ Kim said.