Beyond Ready-Mixed Concrete to AI and Hotels... Building Materials Companies Shift Survival Strategies

Declining Profits for Building Materials Firms Amid Construction Slump

Leveraging Existing Land and Logistics Networks

Eugene Group Enters AI Data Center Business

Aju Group Expands Actively into Tourism Industry

Building materials companies are seeking new growth engines to replace the construction sector, which has entered a prolonged slump. By leveraging their existing business foundations such as accumulated land and logistics networks—assets secured during periods of construction boom and stable profits—they are rapidly diversifying their revenue streams by expanding into new sectors including data centers, content production, and tourism.

Rendering of Bucheon Samjeong AI Hub Center, which Dongyang is promoting in Samjeong-dong, Bucheon-si, Gyeonggi-do. Eugene Group

According to industry sources on July 10, domestic building materials companies have recently embarked on aggressive business diversification. The prolonged downturn in the construction market has led to declining profitability in core businesses such as ready-mixed concrete and cement. In addition, a further slowdown in construction demand is anticipated over the medium to long term due to population decline, making the securing of new future growth engines inevitable.

As a result, land, logistics networks, and power infrastructure—which were previously seen as manufacturing advantages—have now emerged as core assets for new businesses. These companies can utilize their nationwide business sites and idle land for facilities such as data centers or content production studios, enabling them to reduce the burden of initial investment while generating new revenue streams.

Eugene Group is regarded as the most aggressive in expanding its portfolio. Dongyang, a Eugene Group affiliate, recently began construction of the 'Bucheon Samjeong AI Hub Center,' an artificial intelligence (AI)-specialized data center in Ojeong-gu, Bucheon, Gyeonggi Province. The center will have a total power capacity of 9.8MW and an IT load of 7MW. After construction is completed, the facility will undergo installation of essential equipment, performance verification, and operational stabilization, with full-scale services expected to begin in 2028.

Exterior of Studio Eugenia located in Unjeong, Paju, Gyeonggi Province. Eugene Group

The company is also expanding its content production and related infrastructure businesses. Dongyang operates 'Studio Eugnia' in Paju, Gyeonggi Province, utilizing idle land from its ready-mixed concrete plant. The studio has gained attention as the filming site for the popular Netflix variety show "Black & White Chef," and is being used for various drama, variety, and music video productions. The company plans to further increase its influence in the market going forward. In addition, Eugene ENT recently held a business vision presentation, announcing plans to invest 2 trillion won over the next 10 years to foster a comprehensive media platform centered on YTN.

Aju Group is also accelerating portfolio diversification to reduce its dependence on the construction sector. The revenue share of non-building materials businesses such as finance, automotive, hotel, and information technology (IT) increased from about 45% in 2023 to 50% last year. Recently, the group has shown clear growth in hotel businesses, including the Hongdae Ryse Hotel and Yeouido Fairmont Hotel, in response to rising domestic tourism demand. In June this year, it expanded overseas by opening the renovated "STILE" hotel in downtown Los Angeles.

An industry official said, "As the construction market slump is lasting longer than expected, it has become difficult for building materials companies to expect stable growth from manufacturing-focused businesses alone. Reducing exposure to construction cycles and securing stable revenue sources has become a common challenge, so investments in new businesses and diversification leveraging existing land, logistics networks, and power infrastructure will become even more active."

This content was produced with the assistance of AI translation services.