Samsung C&T looks overseas for growth

By Choi Kyong-ae

Samsung C&T, a construction affiliate of Samsung Group, is strengthening its push into overseas markets, a move to ride out an extended slump in the construction sector following the 2008 financial crisis.

Its strenuous efforts to expand into new markets and higher-end projects seem to be paying off. As of July, the company already achieved its annual target for orders, aided by an increase in overseas deals.

Samsung C&T, the country’s second-largest construction company by construction work ability, posted 12.15 trillion won ($10.8 billion) in orders in the January-July period. It is comparable to an actual achievement of 6.2 trillion won for the whole of last year.

The company earlier set its order target at $10.5 billion for the year. But it “is planning to revise up” the annual order target, company spokesman Sohn Soo-keun said.

For Samsung C&T which once relied on domestic projects, it is a positive sign that overseas projects account for 75 percent of the orders received for the first seven months. In the three years to 2012, the corresponding figures stood at a range of 42-45 percent.

Jung, who took control of Samsung C&T in March 2010, looked overseas to offset a steep decline in domestic orders. Previously, he led a stellar performance for eight years at Samsung Engineering, another builder affiliate of the country’s biggest conglomerate by assets.

“Our previous business portfolio (of Samsung C&T) was not competitive enough to survive the economic downturn (that came after the crisis) as it focused on the domestic markets and lacked in valued-added overseas projects,” Samsung C&T CEO and Vice Chairman Jung Yeon-joo said, according to the spokesman.

In fact, Samsung C&T was a major beneficiary of the apartment-building boom years which lasted until the economic crisis hit a blow to the construction industry.

For the past three years under Jung’s leadership, the spokesman said Samsung C&T has transformed itself into a multiplayer also capable of engineering, procurement and construction (EPC), feasibility study, and organizing and management (O&M).

Samsung C&T is stepping up its efforts to win more infrastructure projects in new markets such as the U.K., Australia, Mongolia and Morocco to diversify its portfolio. It has been mainly involved in building power plants in the Middle East and Singapore.

In its latest achievement, Samsung C&T won a $5.6 billion “mining package” to build an iron ore processing plant, as the railway and a port needed to carry the raw material in Australia’s RoyHill project. Construction begins late this year and will last for 32 months.

Hit by shareholding losses from its trading affiliate, Samsung C&T posted a 55 percent fall in its net profit for six months, finishing on June 30 at 176.26 billion won from 395.21 billion won a year earlier.

But the company offered a positive outlook as it believes its high-end, diversification strategy will underpin its business in the long term.

Samsung C&T aims for an order of $33 billion in 2015.