Hyundai E&C Business Trends and Guarantee Risk Monitoring — 2026-07-31

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Major Business Shifts and Risk Signals

New Orders and Portfolio Expansion

• Backlog Surpasses 100 Trillion Won: For the first time since the company's founding, Hyundai E&C’s backlog reached 103.9831 trillion won in the first half of the year, securing about 3.8 years of work.

• 22.823 Trillion Won in New Orders, Up 36% YoY: New orders for the first half saw a significant jump, with the second quarter alone exceeding 18 trillion won, marking explosive growth.

• Strong Overseas and Mixed-Use Development Wins: Large-scale projects, such as a steel mill in the U.S. and station-area developments, drove these figures.

• 2026 Construction Capability Ranking: Samsung C&T and Hyundai E&C maintained their 1st and 2nd place rankings, though the competitive landscape is shifting as GS E&C and Hyundai Engineering each moved up two spots.

Operating Profit Recovery and Cost Improvements

• H1 Operating Profit of 442.7 Billion Won (Q2: 261.8 Billion Won): Despite a drop in revenue to 13.1236 trillion won, operating profit saw a slight increase, with Q2 profit growing 20.7% year-over-year.

• Housing Cost Ratio is Key: Improvements in cost ratios within the housing sector were the main driver behind the profit growth.

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Guarantee Risks and Partner-Related Issues

Construction Cost Settlement and Subcontracting Friction

• "Over-investment" in Shaheen Project: Hyundai E&C is experiencing friction with some subcontractors over construction cost settlements during the S-Oil Shaheen Project, highlighting a growing "over-investment" issue between prime and subcontractors.

Moves to Strengthen Cooperation with Partners

• Agreement on Supply Price Hikes: In the wake of rising costs due to the war in the Middle East, major construction firms including Hyundai E&C have pushed for mutual growth agreements with subcontractors, with discussions underway to improve the linkage cycle for construction costs.

• Expansion of Support Programs: Beyond financial aid, comprehensive support programs covering fair trade, education, technical assistance, and safety management are becoming vital for supply chain stability. Hyundai E&C received positive ratings in mutual cooperation assessments.

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Market Analysis and Practical Insights

Positioning Against Competitors

• Maintaining Top-Tier Status: While Samsung C&T and Hyundai E&C remain in the top two spots in the 2026 construction capability rankings, competition at the top is intensifying due to the rapid rise of GS E&C and Hyundai Engineering.

Signs of Stricter ESG Reporting

• 2026 Sustainability Report Published: In his first year as CEO, Lee Han-woo unveiled a new growth strategy via the sustainability report, with the company strengthening its response to global ESG standards like the Korea Sustainability Standards Board (KSSB) and the European Sustainability Reporting Standards (ESRS).

Key Takeaways for the Field

While Hyundai E&C’s H1 performance confirms strong orders and recovered operating profits as of the 31st, issues regarding subcontractor financial burdens and construction cost settlements persist. Key monitoring points for the second half include the improvement of construction cost linkage mechanisms between prime and subcontractors, trends in urban renewal orders, and the progress of major overseas projects like the U.S. steel mill.