Samsung C&T Corporation (028260.KS) — FY2025 Financial Analysis

Bio Carries the Group — Revenue down 3.2%, Operating Profit up 10.4%, with Biologics Single-Handedly Driving 66.6% of Group Operating Income

Source: 62nd Annual Business Report — Filed 2026.03.12 with DART | Consolidated Financial Statements | Unit: KRW billions

Note: The company name in the original work order (Celltrion) does not match the actual disclosed filing. This analysis therefore proceeds against the entity that filed the report — Samsung C&T Corporation (Ticker: 028260.KS, 62nd Annual Business Report submitted 2026.03.12) — for its FY2025 results. A separate Celltrion analysis will be produced upon receipt of that company's annual report.

Samsung C&T closed its 62nd fiscal year (1 January – 31 December 2025) with consolidated revenue of ₩40.74 trillion, a 3.2% contraction from ₩42.10 trillion in the prior year, yet delivered consolidated operating profit of ₩3.29 trillion — a 10.4% increase. The asymmetry is explained almost entirely by mix: the Biologics segment generated revenue of ₩5.95 trillion (+30.9%) and operating profit of ₩2.19 trillion (+69.1%), shouldering roughly 66.6% of group operating income on its own. Over the same period, Construction operating profit collapsed from ₩1,001.3 billion to ₩535.5 billion (-46.5%). Meanwhile, mark-to-market gains on listed equity holdings (principally Samsung Biologics) lifted total equity from ₩37.26 trillion to ₩57.50 trillion (+54.3%), driving the debt-to-equity ratio down from 66% to 50% within a single reporting period.

1. Consolidated Balance Sheet Analysis

1-1. Key Asset Comparison Table

The ₩22.95 trillion increase in non-current FVOCI financial assets is the decisive driver of the asset jump. The business report itself states this directly in Section IV (Management Discussion, p.620+): "the increase in FVOCI financial assets of ₩22,948.1 billion attributable to the share-price appreciation of investment securities." In other words, the asset growth is not the product of operating activity — it is the accumulated revaluation of the portfolio (chiefly Samsung Biologics). The corresponding gains were booked through other comprehensive income rather than the income statement, leaving an ₩16.84 trillion balance lodged in the "Other capital" line of equity.

The carrying value of listed equities, separately disclosed in the equity-price risk note (Section II-5, Risk Management), more than doubled from ₩21.68 trillion to ₩44.75 trillion. Because this asset is 100% exposed to share-price movement, a 1% drop in the underlying share price would translate into an immediate ₩332.5 billion swing in other comprehensive income.

1-2. Debt Structure: Financial vs Operating Liabilities

Key implication: (i) interest-bearing debt fell in absolute terms by ₩476.2 billion, and (ii) the increase in total liabilities (+₩4.30 trillion) is single-handedly exceeded by the rise in deferred tax liabilities (+₩5.31 trillion). Every other liability line moved lower — current liabilities -₩875.3 billion, total borrowings -₩476.2 billion — and a single non-cash line absorbed all of those declines while still pushing the headline number higher. The deferred tax liability arises because mark-to-market gains on the equity portfolio create a future tax obligation under accrual accounting, but no cash outflow is required until the underlying shares are sold. The business report's Section IV-3-(1) confirms this directly: the liability increase is "attributable to the increase in deferred tax liabilities (+₩5,310.6 billion)…" Thus, the headline debt picture worsened on paper while the genuine financial leverage of the firm eased.

Net debt moved deeper into negative territory — from -₩1,184.7 billion to -₩2,057.7 billion — meaning the net cash cushion thickened by an additional ₩873.0 billion (verified directly in IV-4-(1) Liquidity Indicators). The debt-to-equity ratio dropped from 66% to 50%, while the current ratio improved from 137% to 154%.

1-3. Capital Structure: Paid-in Capital vs Retained Earnings

Of the ₩20.24 trillion increase in total equity, approximately 85.9% (₩17.39 trillion ÷ ₩20.24 trillion) flowed through the "Other capital" line — i.e., the FVOCI revaluation discussed above. Retained earnings, the cleaner measure of operating accumulation, grew by a more modest ₩1.50 trillion, which reconciles to controlling-interest net income of ₩2.44 trillion less ₩425.5 billion in dividends and roughly ₩646.4 billion deployed for share cancellation and related items. The composition raises two simultaneous observations on capital quality: (i) the share of equity tied to mark-to-market revaluation is now large enough to inject meaningful market-volatility exposure into book value, but (ii) operating-derived retained earnings of ₩15.51 trillion still provide a substantial absorptive cushion underneath that revaluation layer.

2. Consolidated Income Statement Analysis

2-1. Core Metrics Comparison Table

Observation 1: The asymmetry between -3.2% revenue and +10.4% operating profit is a mix story. Revenue contraction was concentrated in Construction (revenue down ₩4.51 trillion), while revenue growth came from the structurally higher-margin Biologics segment (+₩1.40 trillion). Cost-of-sales ratio improved from 83.1% to 81.1% — a 2.0-percentage-point compression — and gross profit expanded by ₩580.0 billion. The mix shift mechanically lifted profitability even as the top line shrank.

Observation 2: Income tax expense collapsed by 62.8%, from ₩950.5 billion to ₩353.6 billion. The business report does not explicitly explain this swing, but read alongside the +₩5.31 trillion increase in deferred tax liabilities and the IFRS treatment that recognizes tax effects on FVOCI revaluations directly through other comprehensive income, the most reasonable inference (analyst interpretation) is that the taxable base flowing through the P&L was structurally narrower this year. The effective tax rate on pre-tax income fell from 25.5% to 8.3%.

Observation 3: Non-controlling interest income jumped 170.9%, which is most consistently explained by the strong performance of subsidiaries — Samsung Biologics in particular — flowing through to minority shareholders (the roughly 43% non-controlling stake in Biologics is visible in the consolidated statement of changes in equity).

2-2. Segment Revenue and Operating Profit — The Single Most Important Table

The single message of FY2025 is unambiguous: Biologics alone delivered 66.6% of group operating profit, and every other segment's operating profit declined. The business report attributes the segment moves with unusual specificity: Construction's profit decline is explained by "completion of large-scale high-tech projects and the wind-down of major construction phases"; Trading's modest decline by "margin compression from intensified competition amid the spread of global protectionism"; Fashion's by "expanded promotional activity"; Resort's by "lower park admissions"; Food Service's by "rising input costs in food and beverage." Biologics' surge is attributed to "production-volume growth from the full ramp-up of Plant 4 and increased product sales."

2-3. Fixed vs Variable Cost Analysis

SG&A rose ₩270.6 billion (+6.6%) — moving in the opposite direction to revenue (-3.2%). The SG&A-to-revenue ratio consequently expanded from 9.80% to 10.79% (+1.0pp). R&D spending, a useful proxy for the firm's appetite for fixed-cost investment, climbed from ₩557.6 billion to ₩581.3 billion (+₩23.7 billion), with the R&D-to-revenue ratio rising from 1.32% to 1.43%. Both the absolute amount and the ratio moved higher despite a shrinking top line, signaling that fixed-cost R&D commitment is being maintained through the cycle. Granular item-level disclosure (labor, depreciation by category, etc.) is only partially visible in the public PDF, so a fully quantitative fixed/variable split is not undertaken here owing to source data limitations.

3. Cash Flow Analysis

Free cash flow (analyst calculation): operating cash flow (₩3,023.7B) − PP&E CapEx (₩1,736.4B) − intangible acquisitions (₩169.1B) = approximately ₩1,118.2 billion. Compared with prior-year FCF of ₩1,513.1 billion (₩3,306.9B − ₩1,628.1B − ₩165.7B), this represents a 26.1% decline.

Three observations. First, operating cash flow fell 8.6%, and the dominant pressure point is income tax paid, which rose by ₩343.1 billion. Notably, this moves in the opposite direction to the ₩596.9 billion decline in income tax expense recognized on the income statement — a divergence that reflects the IFRS practice of pushing tax effects from FVOCI revaluations through other comprehensive income, while actual cash payment tracks the operating-profit base. Second, CapEx held at ₩1,736.4 billion (+₩108.3 billion year on year), or 4.3% of revenue, well within the normal range for a capital-intensive industrial group. Third, the prior year's ₩602.0 billion business-combination outflow disappeared this year, leaving headline investing cash flow roughly unchanged in magnitude but materially different in character — last year's spend was acquisition-driven, this year's is pure organic CapEx.

4. Additional Analysis — Five Issues Worth an Investor's Attention

4-1. Order Backlog — Construction Slowing, Biologics Anchored Long

• Construction backlog: ₩29.50 trillion as of 31 December 2025 (₩21.29 trillion in construction projects + ₩8.21 trillion in housing). This represents roughly 30% of the ₩98.68 trillion in total contracted value.
• Biologics (CDMO) backlog at Samsung Biologics: a minimum-purchase-quantity commitment of USD 10,704 million (≈ USD 10.7 billion), expandable to USD 13,432 million (≈ USD 13.4 billion) under expected demand assuming successful client product development. Contractual delivery dates extend out to 2037.

The visibility of future revenue is therefore considerably longer and deeper on the Biologics side. The business report notes that the 2025 order intake at Biologics "once again surpassed the prior-year record."

4-2. Shareholder Returns — Dividends and Cancellation in Combination

Total shares outstanding have fallen 8.4% across three years, with another 7,807,563 common shares scheduled for cancellation by board resolution on 13 March 2026 (p.821). Separately, in February 2026 the company announced its next three-year shareholder return policy ('26–'28), raising the minimum dividend per share from ₩2,000 to ₩2,500 (Section IV-6-a). The framework retains the long-standing rule of returning "60–70% of dividend income from affiliates." The arithmetic effect of share cancellation is a substantial portion of the +9.4% EPS growth delivered in a year of -3.2% revenue contraction.

4-3. R&D — 1.43% of Revenue, an All-Time-High Absolute Spend

• R&D expense ₩581.3 billion (prior year ₩557.6 billion; two years prior ₩476.0 billion)
• R&D-to-revenue ratio: 1.14% (2023) → 1.32% (2024) → 1.43% (2025), a third consecutive year of expansion
• Accounting split: ₩60.8 billion capitalized as development assets, ₩520.5 billion expensed as research

Within Biologics R&D, the Nectin-4 antibody-drug conjugate (ADC) candidate received Phase 1 IND clearance from the U.S. FDA in December 2025, while an EGFR-HER3 ADC is in pre-clinical development under a co-development agreement with China's Frontier (Frontline). ADC manufacturing facilities reached GMP-Ready status by the end of Q1 2025, with build-out plans for an ADC drug-product line and a pre-filled syringe (PFS) mother line targeted for completion by 2027 (Section IV-3-(4) New Businesses).

4-4. Mark-to-Market Exposure — Roughly 78% of Equity Tied to Market Prices

• The ₩44.75 trillion carrying value of listed equity holdings (vs ₩21.68 trillion the prior year) corresponds to approximately 77.8% of total equity of ₩57.50 trillion.
• The Section II-5 risk-management note explicitly quantifies sensitivity: "a roughly 1% movement in the share price of listed equity holdings would change other comprehensive income by ₩332.5 billion."
• Mechanically, a 10% drop in the prices of held positions (principally Samsung Biologics, Samsung Epis Holdings, etc.) would erase approximately ₩3.3 trillion of equity instantly.

This is a fundamentally different kind of equity volatility from accumulation through retained earnings. ROE of approximately 6.0% (vs 6.8% in 2024) is partly diluted by the rapid expansion of the equity base from these revaluation gains.

4-5. Contingent Liabilities and Governance Items

• Litigation: 204 actions in which the company is defendant (claims totaling ₩232.1 billion + USD 605,248 thousand) and 58 actions as plaintiff (claims totaling ₩304.7 billion + USD 758,848 thousand). Management states that "the outcome of these proceedings is not expected to have a material impact on the consolidated financial statements."
• Samsung Biologics accounting fraud — first administrative measure litigation: On 25 September 2025, the Supreme Court dismissed the Securities & Futures Commission's appeal, finalizing in full the cancellation of the first-round administrative measure in Biologics' favor (p.12732). Stage one is closed.
• Second administrative measure litigation: Following Biologics' first-instance victory on 14 August 2024, the prosecution's appeal is currently being heard by the Seoul High Court.
• External auditor change: 60th–61st periods audited by EY Hanyoung; 62nd period audited by Samil PwC. All reporting periods received unqualified opinions. The key audit matter is "revenue recognition under the input method for order-based industries and the recoverability of unbilled construction receivables."
• Credit ratings: Domestic corporate bond AA+/stable (Korea Investors Service, Korea Ratings, NICE); foreign-currency long-term A2/stable (Moody's), A-/stable (S&P) — all ratings were affirmed in the 2025 annual review cycle.
• Largest shareholder: Chairman Jae-yong Lee and related parties hold 36.02% (as of 31 December 2025). Following the 2 January 2026 gift transfer from Ra-hee Hong to Jae-yong Lee, Jae-yong Lee's individual stake stands at 20.82% (35,688,797 shares).

5. Key Takeaways and Outlook

The character of the group is changing. While the FY2025 revenue mix runs Trading 35.9% > Construction 34.7% > Biologics 14.6%, the operating profit mix is completely inverted: Biologics 66.6% > Construction 16.3% > Trading 8.3% > Food Service 4.6% > Fashion 3.7% > Resort 0.6%. The earnings engine has already migrated to Biologics; every legacy business (Construction, Trading, Fashion, Resort) saw operating profit decline.

Equity is inflated by mark-to-market gains. Approximately 85.9% of the ₩20.24 trillion increase in total equity came from Other capital — specifically the FVOCI revaluation of listed equity holdings — so the headline ₩57.50 trillion equity figure should not be read as if it were operating accumulation. It is directly exposed to market volatility.

Cash flow remains solid but is softening at the margin. Operating cash flow declined 8.6% and FCF declined 26.1%, with the +₩343.1 billion swing in income tax paid as the decisive driver. CapEx of ₩1,736.4 billion at 4.3% of revenue remains within normal capital-intensity ranges.

Shareholder return discipline is consistent. Three consecutive years of dividend increases (₩2,550 → 2,600 → 2,800), an annual cadence of buybacks and cancellations (₩646.3 billion in 2025 alone), and a 25% step-up in the minimum dividend in the next three-year return policy. The arithmetic effect of cancellation is the central reason EPS rose 9.4% in a year of negative revenue growth.

Key monitoring points: (i) new orders at the Construction segment, particularly the share of new product categories such as data centers, SMR, and BESS; (ii) the production schedule of Biologics Plant 5 following the full ramp-up of Plant 4; (iii) the timing at which new growth categories such as ADC and mRNA begin to contribute meaningfully to revenue; (iv) equity-volatility transmission from market-price movements on the listed equity portfolio; (v) the change in the EPS denominator following the share cancellation scheduled for 13 March 2026; and (vi) the High Court ruling on the appeal of the second Samsung Biologics administrative-measure litigation.

Disclaimer

This report has been prepared for informational purposes only on the basis of the Samsung C&T Corporation 62nd Annual Business Report (FY2025) filed with DART on 12 March 2026, and does not constitute investment advice or a solicitation to buy or sell securities. All figures are quoted and verified directly against the disclosed filing; sections that contain analyst interpretation are explicitly identified as such within the body of the report.