Hyundai Doosan Infracore Q3 Operating Profit 33.7 Billion KRW... 47% Decrease YoY Due to Weakened Demand in China

[Asia Economy Reporter Jeong Hyunjin] Hyundai Doosan Infracore, a construction equipment division affiliate of Hyundai Heavy Industries Group, announced on the 21st that it recorded sales of 971.9 billion KRW and an operating profit of 33.7 billion KRW in the third quarter of this year. This is the first earnings announcement since its incorporation into Hyundai Heavy Industries Group.

Hyundai Doosan Infracore's third-quarter sales increased by 6% compared to the same period last year, while operating profit decreased by 47%. The company explained that sales grew due to global infrastructure investments and rising raw material prices, but operating profit declined due to factors such as a slowdown in growth in the Chinese market.

By business division, sales in the construction equipment segment reached 757.7 billion KRW, a 1.3% increase year-on-year, but operating profit was 22.5 billion KRW, down 65.4% from the same period last year, affected by demand contraction due to strengthened environmental regulations in the Chinese market and rising raw material costs. The engine division recorded sales of 214.1 billion KRW, up 25.9% year-on-year, driven by a surge in construction equipment demand and diversification of sales lineups including generators, materials, and parts, and also turned to operating profit.

Looking at sales by region in the construction equipment business, which accounts for 78% of total sales, sales in the Chinese market decreased, but increased in emerging markets including Korea, as well as in North America and Europe. In Korea and emerging markets, sales rose 54.2% year-on-year, supported by government-led economic stimulus policies following COVID-19 recovery, while sales in North America and Europe increased by 34.9% due to expanded sales networks and the full-scale implementation of economic stimulus measures in each country.

A Hyundai Doosan Infracore official said, "Considering that economic stimulus measures in each country will be fully implemented with accelerated vaccination, we expect noticeable performance improvements from the next quarter," adding, "In the Chinese market, we plan to focus on selling high-profit large lineups, and in emerging markets, we will do our best to generate profits through local close sales by expanding sales networks."

Meanwhile, Hyundai Doosan Infracore stated that it is pursuing a market diversification strategy. The proportion of the Chinese market in total construction equipment sales has gradually decreased from 56% in the second quarter of last year to 30% in the second quarter of this year, and 16% this quarter. In emerging markets, the share has grown from 24% in the second quarter of last year to 49% this quarter, and in North America and Europe, it has increased from 19% in the second quarter of last year to 35% this quarter.