[비즈한국] Daewoo E&C047040, the third-largest construction company by contracting capacity, has appointed Executive Vice President Kim Bo-hyun, son-in-law of Jung Chang-sun, Chairman of Jungheung Group, as its new CEO. With Daewoo E&C’s operating performance and order backlog both falling this year due to the construction industry downturn, the new CEO faces the daunting task of overcoming immediate market uncertainties and crises. This marks the second time this year that a member of a major construction firm's owner family has stepped into the front lines of management, following Hur Yoon-hong, CEO of GS E&C006360.
According to Daewoo E&C, new CEO Kim Bo-hyun held an inauguration ceremony on the 17th and began his official duties. At the ceremony, CEO Kim emphasized "a culture prioritizing safety and internal stability," "advancing into smart construction and new businesses," and "a horizontal organizational culture and collaboration," proposing that they "build a resilient Daewoo E&C to respond to market uncertainties." Daewoo E&C had previously held a board meeting on the 12th to appoint Executive Vice President Kim Bo-hyun as the new CEO. The former president, Baek Jung-wan, resigned from his position on the same day.
New CEO Kim Bo-hyun is the son-in-law of Jungheung Group Chairman Jung Chang-sun. He is married to Jung’s daughter, Jung Hyang-mi, and is the brother-in-law of Jung Won-ju, Chairman of Daewoo E&C and eldest son of Chairman Jung. Born in 1966, the new CEO served as an Air Force Brigadier General before joining Daewoo E&C in 2021 as the head of the acquisition team, overseeing Jungheung Group's takeover of the company. Since the acquisition was finalized in 2022, he served as a consultant for one year before joining the management team as an executive vice president last year and this year.
The move of owner families to the forefront of management is seen as a response to growing internal and external uncertainties. Daewoo E&C's cumulative revenue for the first three quarters of this year was 7.8566 trillion KRW, down 11% year-on-year, while operating profit plummeted by 52% to 281.9 billion KRW due to rising construction costs. The order backlog, considered a key indicator of future growth, also fell by 767.8 billion KRW (2%) to 44.7777 trillion KRW during the same period. Presales performance this year has been sluggish, particularly outside the capital region (related article: 'Acceleration of Capital Region Concentration,' survey results on apartment subscription for the 6 major construction companies in 2024).
Regarding the appointment, Daewoo E&C stated, "Based on his long experience in the military, he possesses the capability to make rational and swift decisions while also being attentive to organizational members, and this move is intended to strengthen responsible management." The company added, "As uncertainties are expected to persist in the construction market next year, we aim to overcome the crisis by preemptively establishing a new CEO regime."
This is not the first time a major construction firm has appointed a member of its owner family as CEO. Previously, GS E&C appointed Hur Yoon-hong, son of GS Group Honorary Chairman Hur Chang-soo, as CEO last March. Born in 1979, CEO Hur joined GS Caltex in 2002 before moving to GS E&C in 2005. After serving as head of future innovation and the new business division, he stood at the forefront of management as CEO last November. GS E&C suffered significant image damage and an operating deficit (-387.9 billion KRW) last year due to the underground parking lot collapse at the Geomdan New Town apartment complex in Incheon.
Since CEO Hur Yoon-hong's inauguration, GS E&C has been credited with focusing on structural innovation. The company renewed its housing brand "Xi" (launched in 2002), refined its construction processes, and attempted to move away from a vertical workplace atmosphere through measures like dress code liberalization and unifying job titles. The cumulative operating profit through the third quarter of this year reached 45.7 billion KRW, marking a successful turnaround, and the order backlog stood at 44.7777 trillion KRW, an increase of 1.4036 trillion KRW (3%) compared to the same period last year. This increase in order backlog is the largest among the five major listed construction companies.
Other major construction firms have focused their CEO appointments on "financial experts." HDC Hyundai Development Company294870 appointed Executive Vice President Jung Kyung-goo, a former CFO, as its new CEO on the 6th, while Hyundai Engineering appointed President Joo Woo-jung, former head of the finance division at Kia, as its new CEO in November. SK Ecoplant had already selected President Kim Hyung-keun, formerly the financial division head at SK E&S, as its CEO back in July.
Only Hyundai E&C and DL E&C375500 chose CEOs from their core business sectors. Hyundai E&C appointed Lee Han-woo, head of the Housing Business Division, as its new CEO in November, while DL E&C appointed Park Sang-shin, head of the Housing Business Division, as CEO in August. Oh Se-chul, CEO of Samsung C&T028260's Construction Division, and Park Hyun-chul, Vice Chairman and CEO of Lotte E&C, were both retained in their respective group's regular executive reshuffles this year.