Shipbuilding business profits exceed 2 billion! South Korean shipbuilding and marine industry saw a year-on-year surge in profits in the second quarter

HD, the largest shipbuilding company in South Korea, benefited from the industry's prosperity and achieved an operating profit growth of over 700% in the shipbuilding business in the second quarter of this year.
On July 25th, HD Korea Shipbuilding and Marine announced that according to preliminary statistics, the company achieved a revenue of 6.6155 trillion Korean won (approximately 4.78 billion US dollars) in the second quarter of this year, a year-on-year increase of 21.3%; Achieved operating profit of 376.4 billion Korean won (approximately 270 million US dollars, 1.97 billion RMB), a year-on-year increase of 428.7%; Achieved a net profit of 357.8 billion Korean won (approximately 260 million US dollars), a year-on-year increase of 808.1%.

This is also the fifth consecutive quarter of profitability achieved by HD Korea Shipbuilding Ocean since the second quarter of last year. Especially, the operating profit was 33.3% higher than the market forecast of 282.4 billion Korean won previously calculated by Yonhap News Agency.

From the perspective of various shipbuilding subsidiaries, HD Hyundai Heavy Industries achieved a revenue of 388.4 trillion Korean won (approximately 2.81 billion US dollars), a year-on-year increase of 26.7%; HD Modern Sanhu achieved a revenue of 1.8106 trillion Korean won (approximately 1.31 billion US dollars), a year-on-year increase of 16.9%; HD Hyundai Owari achieved a revenue of 1.1291 trillion Korean won (approximately 820 million US dollars), a year-on-year increase of 9.3%.

In terms of operating profit, HD Hyundai Heavy Industries reached KRW 195.6 billion (approximately USD 140 million), while HD Hyundai Sanhu reached KRW 175.5 billion (approximately USD 130 million), a nearly threefold increase year-on-year, leading the performance improvement in the shipbuilding industry. HD Hyundai Owari, which was previously in a loss making state, also achieved an operating profit of 17.4 billion Korean won (approximately 12.57 million US dollars), successfully turning losses into profits after 7 quarters.

From the perspective of various business areas, HD Korea Shipbuilding Marine's shipbuilding business achieved a revenue of 5.7221 trillion Korean won (approximately 4.13 billion US dollars), a year-on-year increase of 27.1%, thanks to the increase in new ship construction volume, improved profitability through selective order taking, and balanced and stable cost reduction by promoting shipbuilding production pace; The operating profit reached 394 billion Korean won (approximately 280 million US dollars, 2.06 billion yuan), a year-on-year increase of 724.3%.

In terms of engine and mechanical equipment business, benefiting from the good sales of marine engines and the expansion of the proportion of environmentally friendly dual fuel engines, the company achieved a revenue of 874.3 billion Korean won (approximately 630 million US dollars) and a profit of 91.1 billion Korean won (approximately 65.81 million US dollars).

In terms of offshore equipment business, it achieved a revenue of 158 billion Korean won (approximately 110 million US dollars) and incurred an operating loss of 27.1 billion Korean won (approximately 19.58 million US dollars), although the extent of the loss has decreased compared to the same period last year.

A spokesperson from HD Korea Shipbuilding and Marine stated, "With the rise in ship prices officially reflected in performance, the company's shipbuilding production has achieved stable, balanced and orderly results, and both operating income and profit have been significantly improved. In the second half of the year, the company will continue to implement a selective order taking strategy focusing on environmentally friendly high value-added ships, maintaining a steady trend of performance improvement
As of now, HD Korea Shipbuilding Marine has received 134 orders for ship and sea equipment this year, with a total contract amount of 16.27 billion US dollars (approximately 118.12 billion yuan), completing about 120.5% of its annual target of 13.5 billion US dollars. This includes 8 large LNG ships, 22 ultra large liquid ammonia carriers (VLACs), 12 15500 TEU container ships, 6 ultra large liquefied petroleum gas carriers (VLGCs), 4 medium-sized ammonia dual fuel natural gas carriers (MGCs), 8 LPG ships, 54 product oil tankers, 1 ultra large ethane carrier (VLEC), 6 VLCCs, 7 crude oil carriers, and 2 liquefied carbon dioxide carriers. (LCO2) transport ship, 2 PCTC car transport ships, 4 special ships, 1 offshore platform upper module, and 1 floating storage and regasification unit (FSRU). Thus, HD Korea Shipbuilding Marine has achieved its annual order target ahead of schedule for four consecutive years since 2021.

Looking ahead to the second half of the year, HD Korea Shipbuilding Ocean believes that the decline in steel prices will further reduce shipbuilding costs and create conditions for sustained improvement in performance. A relevant person from the company stated, "With the decrease in the price of thick plates, the proportion of steel imported from China by the company has increased from 20% to over 25%, which will also lead to a decrease in domestic steel prices in South Korea. It is expected that the company's performance in the second half of the year will reflect this achievement
For the special ship (military ship) business in the second half of the year, HD Korea Shipbuilding Ocean stated, "The company is developing the new generation of Korean destroyers (KDDX), and there are also projects for the Ulsan class frigates Batch-IV1 and 2 in the second half of the year. Although there are unfavorable factors in accepting orders for the Ulsan class frigate project, we believe the company can overcome them. In terms of overseas military ship business, the company is focusing on promoting the Australian frigate project, with the goal of building a Pacific Rim military industrial belt
Regarding the US Navy's focus on ship maintenance, repair, and operation (MRO) business since the beginning of this year, HD Korea Shipbuilding Marine stated, "The company has obtained the MRO business qualification from the US Navy this year, but the possibility of immediate implementation is unlikely. Considering the domestic production capacity situation, there are still great difficulties. Starting from next year, the company will consider relevant domestic and international situations before promoting this business
The relevant personnel of the company also stated that at the beginning of this year, the company had delivered 2 LNG ships to Qatar. Starting from next year, a large number of LNG ships from Qatar's "100 Ship Plan" undertaken in the past 2 years will be put into construction, and the proportion is expected to increase to 20%.

In addition, HD Hyundai (formerly Hyundai Heavy Industries Group), the parent company of HD Korea Shipbuilding Marine, also released its second quarter performance announcement on the same day. The group achieved a revenue of KRW 17.5549 trillion (approximately USD 12.68 billion) in the second quarter, a year-on-year increase of 12.4%; The operating profit reached 879.9 billion Korean won (approximately 640 million US dollars), a year-on-year increase of 86.2%, continuing the good performance trend.

HD Hyundai stated that the improvement in the group's performance is due to the significant increase in profits from its shipbuilding business. In addition, the electric machinery and ship maintenance and repair (AM), as well as digital solutions business, continue to maintain good momentum.

Thus, in the first half of this year, HD Hyundai achieved operating revenue of 34.0693 trillion Korean won (approximately 24.61 billion US dollars) and operating profit of 1.6735 trillion Korean won (approximately 1.21 billion US dollars).

HD Hyundai insiders stated, "In the rapidly changing international situation, the group has been able to maintain its growth momentum through diversified investment portfolios of various business groups and tailored strategies. In the second half of the year, the group will also maintain a stable performance trend through a profit oriented business strategy