South Korea’s five largest construction firms have set their 2025 revenue targets below their actual earnings in 2024—an unusual move, as companies typically aim for at least modest year-over-year growth. The combined revenue targets for these top builders are approximately 8 trillion won ($6 billion) lower than their total revenue last year, effectively wiping out the annual earnings of a mid-sized construction firm. The anticipated revenue decline among major builders, which play a pivotal role in the labor market and related industries, is deepening concerns over a broader downturn in the construction sector.
The industry slump is largely attributed to a prolonged slowdown in the domestic real estate market, driven by high interest rates since the second half of 2022, tighter project financing (PF) conditions, and soaring construction costs linked to the war in Ukraine. With new project launches dwindling, the revenue contraction in 2025 appears inevitable. Industry experts warn that the ongoing real estate slump, now entering its third year, could result in a severe shortage of projects. “Construction firms are focused on limiting profit erosion amid rising labor and material costs, but a decline in new orders ultimately constrains their ability to maintain operating profits,” an industry source said.
According to corporate disclosures on Feb. 9, Samsung C&T Corporation’s construction division has set a revenue target of 15.9 trillion won ($11.9 billion) for 2025, marking a 2.75 trillion won ($2.1 billion) drop, or 14.8%, from last year’s 18.66 trillion won ($14 billion). Hyundai Engineering & Construction (Hyundai E&C) projects 30.38 trillion won ($22.8 billion) in revenue, down 7.1% from 32.69 trillion won ($24.5 billion) in 2024.
Daewoo Engineering & Construction (Daewoo E&C), which posted a 9.8% year-over-year revenue decline in 2024 to 10.5 trillion won ($7.9 billion), has set an even lower target of 8.4 trillion won ($6.3 billion) for 2025, a sharp 20% decrease. DL E&C expects a 6.2% drop, reducing its revenue by 518.4 billion won ($387 million), while GS Engineering & Construction Corporation (GS E&C) projects a 2.1% decline, or 263.8 billion won ($197 million) less than last year.
Even if these targets are met, the industry is bracing for a downturn. Hyundai Motor Securities slashed its price target for Samsung C&T by 10% last month, citing weaker construction revenues impacting profitability. Hyundai E&C has also seen its price targets cut by brokerages, with reductions ranging from 7% to 12%.
Escalating raw material and labor costs are further straining the industry, squeezing profit margins across the board. The sector’s average operating profit margin has steadily declined, falling from 6.2% in 2021 to 4.8% in 2022 and just 3% in 2024.
A sluggish housing market is a key factor behind the industry’s struggles. In provincial areas, unsold apartment inventories continue to grow, discouraging new housing supply, while in the Seoul metropolitan area, redevelopment and reconstruction projects have stalled, limiting new contracts for major builders.
According to Statistics Korea, fourth-quarter construction output in 2024 plunged 10.1% year-over-year to 30.44 trillion won ($22.7 billion), marking the steepest drop since the 2008 global financial crisis, when output fell 15.3%.
The industry downturn is already impacting project pipelines. GS E&C, which supplied approximately 20,000 housing units annually between 2021 and 2024, expects its 2025 supply to shrink by nearly 40% to 16,000 units. Hyundai E&C, which managed over 200 active domestic and international projects at the start of 2024, has seen that number fall to around 170. Daewoo E&C has also reported a roughly 10% decline in its domestic project portfolio.
“With interest rates remaining high and rising labor and material costs pushing up construction expenses, projects are being delayed or even canceled,” an industry official said. “Beyond housing, securing large-scale infrastructure projects is also becoming increasingly difficult, making this a full-scale crisis for the industry.”
