July 25 (Bloomberg) -- Hyundai Engineering & Construction Co., South Korea's largest builder by market value, said profit in the second quarter climbed 60 percent to a record as the company built more refineries and power plants overseas.

Net income in the three months ended June 30 rose to 117.1 billion won ($116 million), from 73.1 billion won a year earlier, the Seoul-based company said in a regulatory filing today. Sales increased 32 percent to 1.82 trillion won.

South Korean construction companies are set to win record orders for a third year as economic growth and soaring oil prices encourage spending on refineries, power plants and homes in the Middle East.

``Hyundai Engineering's earnings will continue to improve as it starts some of the projects it won overseas,'' said Harry Jun, an analyst at Hanwha Securities Co. in Seoul. Earnings will also improve because the company has completed construction of projects that lost money, according to Jun, who rates the stock a ``buy.''

Second-quarter operating profit, or sales minus the cost of goods sold and administrative expenses, climbed 82 percent to a record 169.5 billion won.

Hyundai Engineering received 9.79 trillion won of orders in the first half, with those from overseas reaching $6 billion, the company said. That helped increase its order backlog to 38.5 trillion won, representing more than six years of work.

For the first half, net income rose 37 percent from a year earlier to 216.6 billion won, with sales 30 percent higher at 3.25 trillion won. Operating profit jumped 83 percent to 283.3 billion.

Profit Target

The company said it expects to achieve this year's operating profit target set in January of 450.8 billion won, 25 percent more than 2007. Sales may rise 15 percent to 6.5 trillion won.

South Korean companies, including Hyundai Engineering and Posco Engineering & Construction Co., won $27.2 billion of orders so far this year, 58 percent more than a year earlier, according to the International Contractors Association of Korea.

Hyundai Engineering gained 0.6 percent to close at 67,800 won in Seoul. The stock has fallen 23 percent this year, compared with a 16 percent decline in South Korea's Kospi index.

To contact the reporter on this story: Kyunghee Park in Hong Kong at kpark3@bloomberg.net

Last Updated: July 25, 2008 05:28 EDT