It has been revealed that the outstanding receivables from large domestic construction companies for projects in the first quarter of this year increased compared to the fourth quarter of last year.
The increase in outstanding receivables is a factor that can affect the liquidity and financial situation of construction companies.
According to the Financial Supervisory Service's electronic disclosure system on the 13th, among the top 10 construction companies in the first quarter of this year, five firms—HDC Hyundai Development Company, Hyundai E&C, GS Engineering and Construction, Lotte Engineering and Construction, and Samsung C&T—reported a total of 13.5139 trillion won in outstanding project receivables on a consolidated basis.
This represents an increase of 3.4% compared to the fourth quarter of last year (13.0556 trillion won).
HDC Hyundai Development Company saw the largest increase in outstanding project receivables in the first quarter of this year compared to the previous quarter. HDC Hyundai Development Company's outstanding receivables for the first quarter amounted to 956.3 billion won, an increase of 11.6% compared to the previous quarter.
Hyundai E&C was found to have the largest absolute increase in outstanding project receivables, rising from 5.0903 trillion won in the fourth quarter of last year to 5.4162 trillion won this year, an increase of 325.9 billion won (6.4%).
Following that, GS Engineering and Construction increased from 2.4394 trillion won to 2.5434 trillion won, a rise of 4.3%. Lotte Engineering and Construction also increased from 1.9323 trillion won to 1.987 trillion won, marking a 2.8% increase.
Samsung C&T was the only company to see a decrease in outstanding project receivables. While it recorded 13.0556 trillion won in outstanding receivables in the fourth quarter of last year, it dropped to 2.611 trillion won in the first quarter of this year, a decrease of 4.6%.
In the construction industry, it is noted that the increase in outstanding receivables is attributed to the expansion of orders while maintaining a structure that settles receivables based on the progress of projects.
For large business sites, outstanding receivables are initially recorded after the commencement of construction, settling in the order of contract payments, interim payments, and final payments as the project progresses.
However, forecasts indicate that the trend of delayed collection of outstanding receivables will continue due to the ongoing construction market downturn and the expansion of unsold units in the local real estate market.
If this trend of increasing outstanding receivables persists, while large construction companies will also be impacted, the financial pressure on small and medium-sized construction companies is expected to intensify.
A representative from the Korea Construction Policy Institute noted, "Over the past two years, the outstanding receivables of large companies have increased by less than double, while those of small and medium-sized enterprises have more than quadrupled," adding, "The construction industry operates through an organic cooperation system between large corporations and medium-sized and small enterprises, and if the crisis for small businesses deepens, it will lead to a weakening of the overall competitiveness of the construction industry."