Hyundai Construction Equipment Q3 'Earnings Surprise'..."Strong Performance in North America and Emerging Markets"

Operating Profit 63 Billion KRW, Up 70% YoY... Price Increase and Expansion of Large Equipment

[Asia Economy Reporter Moon Chaeseok] Hyundai Construction Equipment announced on the 26th that it recorded sales of 874.8 billion KRW, operating profit of 63 billion KRW, and an operating profit margin of 7.2% in the third quarter. Sales increased by 17.1% compared to the third quarter of last year, and operating profit rose by 70.3%. The sharp increase in operating profit was attributed to price increases and improved profitability due to the expansion of large equipment sales. Despite the contraction of the Chinese market, the company explained that it achieved an 'earnings surprise' by actively targeting the North American and emerging markets.

Looking at performance by region, sales in the Chinese market decreased by 22% year-on-year due to the impact of COVID-19. However, increased sales in North America, direct exports, India, Brazil, and other emerging markets offset the decline in the Chinese market.

In the direct export market, solid demand continued mainly in Central and South American countries, Middle Eastern oil-producing countries, and Indonesia, resulting in sales of 349.9 billion KRW, a 27% increase compared to the previous year. In particular, Brazil saw a significant increase in sales, and profitability greatly improved due to the reflection of price increases in the first half of the year. The North American market also saw increased demand, recording sales of 163.6 billion KRW, with profitability improving as the proportion of large equipment sales increased due to large-scale construction project orders.

As a result, Hyundai Construction Equipment recorded cumulative sales of 2.6822 trillion KRW and operating profit of 146.4 billion KRW from the beginning of this year through the third quarter.

The company expects this favorable performance trend to continue into the fourth quarter. It forecasted that demand for medium and large equipment will continue in advanced markets as infrastructure-related investments persist. In emerging markets, it noted that monthly orders exceeding 700 units are being achieved, mainly in so-called 'resource-rich countries.' It explained that demand is showing signs of increasing, especially in the Middle East, influenced by projects such as the NEOM City project. China is also expected to implement active government-level stimulus measures following the Party Congress.

A Hyundai Construction Equipment official stated, "Despite the uncertain internal and external management environment, we are maintaining profitability," and added, "We will continue to closely monitor changes in the business environment and do our best to strengthen business strategies to maintain profitability."