Hyundai Constructions overseas orders top $11 bil.

First time for Korean builder to pass $10 bil. milestone in a year

By Kim Tae-gyu

Hyundai Engineering and Construction (E&C), Korea’s primary builder, continues to make the headlines of late with regard to its 35-percent stake currently up for sale.

Market watchers point out that the real big thing happened last month regarding the Seoul-based company even though the news received relatively little attention ― the outfit’s overseas orders topping $11 billion.

The country’s oldest constructor, which was established in 1947, won a fit-out deal over the waning days of last month to set up a mega-sized medical city in Qatar to refurbish the athlete’s village from the 2006 Doha Asian Games.

By winning the Hamad medical city project, which involves three hospitals with more than 1,000 beds, Hyundai E&C’s overseas orders surpassed the $11 billion mark for this year.

This is the first time that any builder in Asia’s fourth-largest economy ever reached the $10 billion milestone for a year, also Hyundai’s yearly aim for 2010, and accounts for around a fifth of the nation’s overall global orders.

Considering that Hyundai reached the $70 billion plateau earlier this year in around a half century since the outfit started tapping offshore markets in 1965, the pace is far faster than general expectations.

``When we set the goal of obtaining global orders whose values are more than $10 billion, more than double last year’s $4.6 billion, there were some worries that the target was overly ambitious,’’ a Hyundai official said.

``However, we silenced the critics once and for all through over-achieving the goal in November by securing a series of large-sized deals in the Middle East throughout the year.’’

The firm signed a $3.1 billion contract earlier this year to construct nuclear power plants in the United Arab Emirates (UAE) and a $1.4 billion pact to facilitate pipe lines for gas and oil in Kuwait.

It also won a $1.3 billion thermal power station project in Libya and a harbor contract whose value amounts to $1.1 billion on the Bubiyan Island located in Kuwait, to name but a few.

Charismatic leadership

The exploits were achieved under the stewardship of its Chief Executive Officer Kim Joong-kyum, the Hyundai lifer who has stressed the significance of entering into the world markets after taking the reins of the corporation in early 2009.

The charismatic head recognized little upside potential in the over-stuffed domestic markets and has turned his sights to the lucrative international scenes including the Middle East.

He visited Middle East states such as Qatar, Saudi Arabia and UAE in April 2009, a month after his inauguration, and visited approximately 40 countries across the world.

In some 600 days at the helm, he spent about 100 days overseas, which demonstrates how much attention he pays to the overseas markets.

Kim also expanded the business horizon to high-value works such as nuclear power generation, petro-chemical facilities and harbor businesses while competitors are busy focusing on just the plants.

Despite such notable feats he doesn’t seem to be content yet.

``Currently, approximately half of our turnover comes from global businesses. Over the long haul, we look to crank up the proportion by up to 70 percent,’’ Kim told The Korea Times earlier this year.

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

Vision 2015

Another unprecedented landmark that Hyundai strives to achieve is the 10 trillion won in sales this year, which appears to be possible in consideration of the entity’s performances thus far.

Over the first three quarters of this year, the company chalked up 6.9 trillion won in turnover and the figure for the final three months of 2010 is expected to surpass 3 trillion won.

Then Hyundai will be able to attain its long-held dream of attaining 10 trillion won in annual sales and 20 trillion won in orders both at home and abroad.

The company sees this as just a turning point to realize its grandiose five-year vision of more than doubling sales and order receipts.

``We aim to see upside of 10 trillion won in sales this year for the first time in the domestic construction sector,’’ Kim said. ``By 2015, we hope to increase the figure to around 23 trillion won while racking up 2.2 trillion won in income for a near double-digit profit ratio of 9.5 percent. It is our five-year vision.’’

Through accomplishing these bold missions, Hyundai is jockeying to join the ranks of the world’s top 20 constructors and the goal is not a long shot by any means.

According to the Engineering News Record, Hyundai was positioned 23rd this year thanks in large part to the above-mentioned performances, up 29 slots compared to last year.

Market observers say it is a tall task for a company the size of Hyundai to double sales in just half a decade but the company has the competitiveness to do so.

``Hyundai has a knack for building infrastructure and power generators, which have yet to fully recover in the aftermath of the financial meltdown. Should it secure sufficient contracts in the potential-laden segments, in my view, its five-year target is not a wildcat scheme,’’ Woori Investment and Securities analyst Wayne Lee said.