Sign another 300 million contract! Hanhua Engine "Supports" Samsung Heavy Industries

Samsung Heavy Industries, the only of South Korea's three major shipping companies that does not have engine manufacturing business, continuously receives marine engine supplies from Hanwha Engine Co.

According to the Electronic Disclosure System (DART) of the South Korean Financial Supervisory Agency, Hanwha Engine will supply Samsung Heavy Industries with 68.1 billion Korean won (approximately 363 million yuan) of marine engines, equivalent to 8% of Hanwha Engine's revenue of 854.4 billion Korean won last year. The contract period is from September 9th to October 1st, 2027.

Hanhua Engine was renamed from the original HSD Engine company. In February of this year, Hanwha Group officially acquired a 32.8% stake in HSD Engine for approximately $180 million, becoming its largest shareholder and renaming it "Hanwha Engine Co. This also marks the official entry of Hanhua Group into the marine engine business, known as the "heart of ships".

As the second largest low-speed engine company in South Korea after Hyundai Motor Company (HHI-EMD), Hanwha Engine previously mainly supplied marine engines to Samsung Heavy Industries and Daewoo Shipbuilding, the predecessor of Hanwha Marine, which was also acquired by Hanwha Group in May last year. Moreover, HSD engine has a blood relationship with Samsung Heavy Industries and former Daewoo Shipbuilding, with its predecessor being Hanjin Heavy Industries Engine, which was established in 1983. In 2000, Hanjing Heavy Industries, Samsung Heavy Industries (SHI), and Daewoo Heavy Industries (DHI) jointly established HSD Engine, and the company's name is derived from the first letter of the English abbreviations of the three shareholders. In 2005, HSD engine was renamed Doosan Engine. In 2015-2016, in order to make up for their own losses, Samsung Heavy Industries and former Daewoo Shipbuilding both liquidated their holdings of Doosan Engine Company stocks. In March 2018, as Doosan Heavy Industries sold its shares in Doosan Engine to two private equity funds in South Korea, the controlling shareholder of Doosan Engine changed and was renamed HSD Engine again.

In recent years, HSD engines have maintained a close cooperative relationship with Samsung Heavy Industries. In July 2022, HSD Engine signed a Memorandum of Understanding (MOU) with Samsung Heavy Industries to develop future technologies for intelligent ships, looking forward to working together with Samsung Heavy Industries to seize the market opportunities in environmental protection and digital marine engines. In August 2022, HSD Engine signed a memorandum of understanding (MOU) with Samsung Heavy Industries and former Daewoo Shipbuilding to jointly develop a new generation of environmentally friendly marine engines, in response to the constantly strengthening global maritime environmental regulations. Through the development of a new generation of environmentally friendly engines and related equipment, HSD Engine actively promotes technological self-reliance, reduces dependence on overseas technology, and strengthens the international competitiveness of South Korea's shipbuilding industry. The three parties look forward to strengthening their research and development capabilities through integration, ensuring the new generation of environmentally friendly and digital marine engine technology, reducing the long-term dependence on overseas engine authorization production license purchase costs, and enhancing South Korea's competitiveness in the new generation of environmentally friendly ship market.

After acquiring Hanhua Engine, Hanhua Group is building an industrial chain in the shipbuilding industry through vertical integration, leveraging synergies with Hanhua Marine, and further enhancing its comprehensive competitiveness in the shipbuilding market. In particular, Hanwha engines have already made a name for themselves in the field of environmentally friendly engines, which is expected to add new momentum to Hanwha Marine's dominance in the future ship market.

It is worth mentioning that in addition to continuing to supply engines to Hanwha Marine, engines are also supplied to other shipping companies in South Korea and shipbuilding companies in China. According to statistics, in the first half of this year, the sales proportion of Hanwha Engine Company was 37.9% for Hanwha Marine, 26.6% for Samsung Heavy Industries, 6.8% for Shanghai Waigaoqiao Shipbuilding in China, and 5.8% for New Era Shipbuilding in China.

It can be seen that after the acquisition of Hanhua Engine by Hanhua Group, its cooperation with Samsung Heavy Industries has not been affected in any way.

In addition, South Korea's largest shipbuilding company, HD Korea Shipbuilding&Marine, officially completed its acquisition of STX Heavy Industries in July this year and renamed it "HD Modern Marine Engine".

While competitors HD Korea Shipbuilding Marine and Hanhua Group have both incorporated engines into their business maps, Samsung Heavy Industries has clearly stated that it will not enter the engine field. Samsung Heavy Industries stated, "Engines are only a part of the entire shipbuilding industry chain. Instead of establishing a specialized engine company, we believe that it is more reasonable to obtain engine supply through outsourcing as before. The company will focus on enhancing the competitiveness of existing businesses such as LNG ships, methanol powered ships, and floating liquefied natural gas production equipment (FLNG), as it already has solid competitiveness in existing business areas such as shipbuilding and offshore equipment