President Lim Byeong-yong of GS Engineering and Construction Co. (Photo: GS E&C)

GS E&C posted a stellar operating profit of 1.064 trillion won in 2018, the largest in its history and an increase of more than three times YoY, thanks to thriving residential housing construction at home and settling various problems overseas, the Financial Services Commission (FSC) and F’n Guide said on Feb. 6.

The Xi apartments built by GS E&C at home have been selling well, while overseas projects, which the company won by bidding low prices, have all been taken care of. That paved the way for the company to end the year by posing a large operating profit.

The successful operation last year would lead the company to take care of its financial problems this year by further strengthening its residential housing projects under the brand name Xi and its overseas operations more profitable, with unprofitable projects out of the way.

GS E&C has been able to get its claims totaling 180 billion won related to its projects in Libya and Saudi Arabia, which no other Korean builders have been able to do.

The company has done well in its domestic construction projects, with the company signing a contract to build a petroChemical plant for LG Chem at the cost of 400 billion won, which is just a part of the 2.6 trillion won that the Chemical company is set to invest in its Yeosu PetroChemical Complex in Yeosu, South Jeolla Province.

An analyst with E Best Investment Securities, said GS E&C is about to steadily expand its plant and apartment construction projects at home this year, with apartment projects located near Seoul and in the immediate vicinity with minimal risks due to huge demand for the new apartments in the area.

The securities firms noted that the company’s net profit amounted to 588.4 billion won, the largest in its history, which is a great help to normalizing its cash flow this year and improving it a great deal from 2016-2017 when the company suffered losses.

This year, the company is expected to log 544.6 billion won in net profit, marking the second straight year of profitability, leading to substantially lower debt. The company’s total borrowing stood at 2.1 trillion won last year, but it was cut by 1.5 trillion won leading 8.4 trillion won in total debts, down from 10.4 trillion won at the end of last year.

Around 2 trillion won in lower levels of debt would lead to an improved credit rating, which would make it easier to get loans with better rates of intertest. Its credit rating stands at A and its outlook remains positive for the first time in six years.

A credit analyst said the company should get a better credit rating up two or three grades considering its smooth cash flow, but the company has a lot of work to do on its overseas projects to take care of the risks. But the company may be able to recover its best rating of AA of 2013 if it does well this year, especially in its overseas projects.

Abu Dhabi’s demand for gasoline is expected to stay firm after its plans to restart a gasoline-making secondary unit at its Ruwais refinery were delayed by about a year into early 2019.

South Korea's GS Engineering & Construction said on Friday it had won an order worth $865 MM to restore a fire-hit refinery unit owned by Abu Dhabi National Oil Corp. (ADNOC). GS E&C, which said it won the order because it had constructed the refinery, added it aimed to complete the work by early 2019.

Crude oil and refined products markets had previously estimated repairs and reconstruction of the affected unit, a residue fluid catalytic cracker (RFCC) capable of processing 127,000 bpd, to be completed by Q1 2018, after a fire broke out at ADNOC's 800,000 bpd Ruwais refinery in January this year.

ADNOC has sought more than 1.5 MMt of gasoline for March to December delivery to plug the supply gap following the shutdown of its gasoline-making unit at the Ruwais refinery.