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Biz News Korea(Eng)
Daewoo E&C books $700 million in one-time loss in Q4 for forward-looking leveraging
- Collected
- 2017.02.10
- Distributed
- 2017.02.13
- Source
- Go Direct
The so-called ‘big bath’ accounting practice by reflecting one-time losses to clean the balance sheet for the future has been recommended by its external auditor Deloitte Anjin.
Daewoo E&C announced in a regulatory filing on Thursday that it had recorded 770 billion won ($668.9 million) in operating loss during the October to December period last year after keeping up operating profit of around 100 billion won for 11 consecutive quarters until the third quarter last year.
For full 2016, operating loss amounted to 503 billion won on sales of 10.99 trillion won. The company would fall into deficit net worth as its total capital of 2.83 trillion won would be reduced to 2.36 trillion by booking net loss of 794.4 billion won, making it smaller than paid-in capital of 2.78 trillion won.
The losses stemmed from unclaimed offshore construction bills including the 450 billion worth delayed payment from Saudi Arabia’s Jazan plant project and the 110 billion won from Algeria’s Ras Djinet Power Plant (RDPP) project.
The builder expects an operating profit of 700 billion won on sales of 11.4 trillion won for this year. The balance sheet would look better if it retrieves part of its claims of 600 billion won from Saudi project and 150 billion won from Algerian mission.
As of 1:19 p.m. in Seoul trading on Friday, shares of Daewoo E&C fell 0.17 percent to 5,830 won.
By Kim Dae-gi and Yong Hwan-jin
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