Daewoo E&C (047040.KS) Q1 2026: Operating Profit Surges 69% as Cost Rate Drops 6.5%p, Cash Burns ₩185B
A post-big-bath margin normalization: the 13.1% operating margin is real, but a ₩185.4 billion operating cash outflow signals that the earnings quality story remains incomplete.
Source: Q1 2026 Quarterly Report (27th Fiscal Year, First Quarter) — Filed March 31, 2026 with DART | Consolidated Financial Statements | Unit: ₩ billions
Daewoo E&C's first-quarter 2026 results deliver the strongest operating margin in recent memory — 13.1% on revenues of ₩1,951.4 billion — yet they arrive in the immediate aftermath of FY2025's decade-worst annual loss: ₩815.4 billion in operating losses and ₩916.1 billion at the net level, with the bulk crystallized in a fourth-quarter big bath that swept problematic overseas and domestic project costs off the income statement in a single period. Operating profit reached ₩255.6 billion, up 68.9% year-on-year, driven entirely by a 6.5 percentage-point compression in the cost-of-revenue ratio from 87.9% to 81.4% — the highest-quality margin improvement a contractor can post, because it reflects the exit of loss-making sites rather than an accounting adjustment. Revenue contracted 6.0% to ₩1,951.4 billion, confirming that the strategy was to sacrifice volume for quality. The single most important counterpoint is that operating cash flow turned negative at -₩185.4 billion in the same quarter, reversing from a positive ₩153.5 billion a year earlier, as working capital absorbed ₩390.4 billion in inventory build and ₩149.0 billion in unbilled receivables — a reminder that profitability and cash conversion are not the same thing at this stage of the recovery.
