Hanwha construction arm posts W58.4b operating profit in Q2, recovering 10% margin

Hanwha's construction division posted lower sales and operating profit in the second quarter compared with the same period last year, as several large projects reached completion. However, improved cost efficiency allowed the unit to recover an operating profit margin above 10 percent.

According to second-quarter 2026 earnings data Hanwha released Tuesday, the construction division recorded sales of 577.4 billion won ($404 million), down 22 percent year on year. The decline was attributed to the completion of large-scale architecture and development projects, which reduced revenue.

Operating profit for the construction division came in at 58.4 billion won in the second quarter, down 30 percent from the same period last year. The decrease reflects a base effect from contract settlement gains on major projects in the second quarter of last year. Still, the operating profit margin reached 10.1 percent on the back of improved cost rates — up 6.8 percentage points from 3.3 percent in the first quarter.

Looking at the quarterly trend, construction division sales fell from 737.6 billion won in the second quarter of last year to 704 billion won in the third quarter, 610.6 billion won in the fourth quarter and 521.8 billion won in the first quarter of this year, before rebounding to 577.4 billion won in the second quarter. Operating profit also recovered, swinging from a loss of 40.4 billion won in the fourth quarter of last year to a profit of 17.2 billion won in the first quarter, then expanding further to 58.4 billion won in the second quarter.

On the order front, the division secured 374.5 billion won in new contracts during the second quarter. The architecture and development segment accounted for 365.1 billion won, while the infrastructure segment contributed 9.4 billion won. Within architecture and development, reconstruction and redevelopment projects made up 271.4 billion won and data centers 81.5 billion won. Infrastructure orders included 8.2 billion won in road projects and 400 million won in environmental projects.

Adding first-quarter new orders of 476.8 billion won, the cumulative first-half order total reached 851.3 billion won. Hanwha's construction division has set a full-year new order target of 2.7 trillion won — 1.8 trillion won from the architecture and development segment and 900 billion won from infrastructure.

Within architecture and development, the key targets are 1.1 trillion won from reconstruction and redevelopment, 300 billion won from data centers and 400 billion won from other projects. On the infrastructure side, the division is pursuing 400 billion won in environmental projects, 100 billion won in roads and railways, and 400 billion won in private-sector projects including site development.

The order backlog also remains stable. Excluding the Iraq Bismayah New City Project (BNCP), the construction division's backlog is projected at 13.4 trillion won by year-end. Major backlog items include the North Seoul Station transit-oriented development at 1.61 trillion won, the Suseo Station transit hub at 1.35 trillion won, GTX-C at 454.5 billion won and a residential complex in Mugeo-dong, Ulsan, at 424 billion won.

The Iraq BNCP — a 70,000-unit housing project delayed due to conditions in the Middle East — is set to resume construction following approval by the local cabinet. As of the end of the second quarter, the BNCP backlog stood at approximately 9.6 trillion won.

Meanwhile, the construction division's total project financing guarantee exposure, based on outstanding loan balances as of the end of June, came to 1.96 trillion won. Of that, maintenance and improvement projects accounted for 316.1 billion won, proprietary development projects for 909.4 billion won and general contract projects for 735.1 billion won.