The Shipbuilding Industry Confirmed the Bottom... Expecting a Winning Streak in Orders in the Second Half

The shipbuilding industry is being evaluated as having hit bottom in performance after successfully turning a profit in the second quarter. Continued orders are expected in the second half of the year, so a favorable wind is anticipated for the time being.

HD Hyundai posted consolidated sales of 15.6213 trillion won and an operating profit of 472.6 billion won in the second quarter of this year. Sales and operating profit decreased by 0.8% and 61.8%, respectively, compared to a year ago. The significant decline in operating profit in the refining sector by more than 1 trillion won compared to the previous year had a major impact, but performance improved in construction machinery and power equipment sectors, including shipbuilding.

In particular, the shipbuilding division succeeded in turning a profit from a loss of 265.1 billion won in the second quarter of last year. HD Korea Shipbuilding & Offshore, the intermediate holding company for shipbuilding, recorded sales of 5.4536 trillion won, a 30.2% increase year-on-year, due to increased shipbuilding volume and ship engine deliveries. Operating profit was 71.2 billion won. From the third quarter, the effect of improved profitability due to price increases is expected to be reflected in the results, further expanding operating profit.

HD Korea Shipbuilding & Offshore secured 97 orders in the first half, reaching 74% of the annual target of 15.74 billion USD. This month alone, it signed construction contracts for one floating production unit (FPU) with Australia's Woodside Energy, two large LNG carriers with three overseas shipping companies, four pure car and truck carriers (PCTC), and two LPG carriers.

It also secured an order for the world's largest liquefied carbon dioxide carrier. A construction contract was signed with Greece's Capital Maritime Group for two 22,000㎥ liquefied carbon dioxide carriers worth 179 billion won.

An HD Hyundai official said, "Based on accelerated profit improvement in the shipbuilding division in the second half, improved refining market conditions, and solid performance in construction machinery and power equipment businesses, we expect to maintain a stable profit trend across all business sectors. We will continue to lead the market through continuous development of eco-friendly and digital technologies and maintain stable performance through profitability-focused sales strategies."

Samsung Heavy Industries also succeeded in turning a profit with an operating profit of 58.9 billion won in the second quarter. Sales increased by 36.4% to 1.9457 trillion won, the highest performance since the fourth quarter of 2019 (2.1572 trillion won). Net profit also turned positive at 23.2 billion won. The operating profit margin in the second quarter was 3%, more than double the 1.2% operating profit margin in the first quarter, which had turned profitable after 22 quarters.

A Samsung Heavy Industries official said, "The increase in the proportion of liquefied natural gas (LNG) carriers and large container ship construction drove sales growth. As sales increase, fixed cost reduction effects occur, and the trend of operating profit improvement is expected to continue."