LSIS is drawing attention for having posted significant growth during Q1 even as industrial companies’ performances are anticipated to worsen.
LSIS announced in its performance disclosure on April 22 that it posted sales of 529.2 billion won, operating profit of 32.6 billion won, and net profit of 12.7 billion won for the first quarter of 2013.
Sales and operating profit rose 16.8 percent and 7.3 percent, respectively, year on year.
Net profit temporarily reflected a derivative evaluation loss associated with enhanced exchange rates, thereby decreasing 38.6 percent.
Despite the generally sluggish domestic and overseas economies recently including the construction sector, such remarkable results were obtained thanks to stabilized growth in the “cash-cow” electric device and automation areas. These two areas are LSIS’s core businesses in which the company boasts high domestic market share and profitability. Together with this, the power system business has recorded stable growth, thus boosting overall performance.
In the domestic market, the company saw sales of distribution panels and super-voltage GIS (gas insulated switchgear) systems rise 77 percent. In the overseas market, substation orders from Iraq continued to rise, increasing its sales growth by four-fold year on year.
In particular, the Iraqi substation project °™ which has continued to add orders since 2011 °™ has begun to translate orders into sales since Q1, thus raising expectations of continued sales gains in the coming months.
In addition, the KTX Honam Line project won by the company last year began implementation, bolstering sales and improving transport SOC profitability as well. Although this project has yet to generate sales in earnest, both sales and profitability grew year on year. Thus, stable recovery can be expected, coming out of the recession that has been persisting for the past two years.
Even with the global market recession, the solar energy business of the company is thriving at home and overseas, increasing sales by more than three times year on year. Exports to Japan have continued to strengthen into this year from last year. Despite concerns over worsening profitability due to the weak Japanese yen, the enhanced cost competitiveness and Korean won hedge secured since last year are presumed to have worked successfully.
“Even amid the recent overall market recession due to various unfavorable conditions, we have domestically stabilized device sales and have successfully beefed up our system sales bases overseas. Thus, we have posted significant growth. Given the usual lowest-season Q1 performance, we expect to improve our growth by a large margin this year,” an LSIS official said.
Making a strong showing in Iraq LSIS won an order for the construction project involving four 132kV/33kV GIS substations from the Iraqi government. LSIS inked the final agreement, proving the Middle East market’s strong confidence in the company.
At $45.8 million (50.4 billion won), this deal is the single largest one ever for LSIS.
This is yet another deal after the company won a GIS substation order worth $39.4 million this January. So far, the company has won a total of $292 million (330.3 billion won) worth of substation orders in Iraqi reconstruction projects alone since 2011.
The agreement signing ceremony for the construction of substations was held at MOE’s headquarters in Bagdad and was attended by some 20 dignitaries including LSIS T&D (Transmission & Distribution) Head Lee Jeong-cheol, Iraqi ETP Head Abdul Razzaq N Aylan, and Iraqi MOE Minister Kareem Aftan.
The 132/33kV-class GIS substation transforms and distributes super-high voltage power generated at power plants, allowing it to be used at homes, factories, etc.
Of the four substations, two will be installed in Baghdad and one each in Mosul and Karbala. The project is to be completed within 12 months of the agreement date.
In the bidding for the project, LSIS beat Siemens and ABB among other global companies, thereby proving its technology and confidence again.
Meanwhile, in early April in Bagdad an Iraq-South Korea Business Forum was held. The forum was jointly organized by KOTRA of South Korea and the NIC (National Investment Commission) of Iraq and attended by Iraqi Prime Minister Nouri Al Maliki. At the forum, the Iraqi government announced a plan to invest $94.5 billion in reconstruction projects for six years during the period from 2012 to 2017.
This GIS substation project is part of Iraq’s power reconstruction project to secure 25GW of power generation capacity by 2017.