Operating Profit Decline Due to Sales Drop and Rising Logistics Costs
Steady Demand for Mining Equipment... Engine Business Growth Expected
HD Hyundai Infracore announced on the 28th that its operating profit for the third quarter recorded 20.7 billion KRW, down 77% compared to the same period last year. During the same period, sales fell 15% year-on-year to 909.8 billion KRW due to a slowdown in demand for construction machinery and engines amid global tightening and stabilization of raw material prices.
The construction machinery business recorded sales of 654.8 billion KRW, down 17% year-on-year, and posted an operating loss of 12 billion KRW due to the impact on profitability from expanded promotions aimed at reducing inventory.
In advanced markets, demand recovery was delayed due to interest rate cuts, uncertainty surrounding the U.S. presidential election, and prolonged war in Europe. Emerging markets showed effective results with expanded bases in Indonesia, Brazil, and Chile, and demand for resource mining equipment remained solid.
In China, sales grew 9% year-on-year, continuing a recovery trend for the second consecutive quarter. Demand recovery is expected to start with small products following government-led economic stimulus measures, and in 2025, the trend is expected to expand to medium and large excavators approaching their replacement cycle.
In the engine business sector, sales and operating profit were 255 billion KRW and 32.7 billion KRW, respectively, down 11% and 17% year-on-year due to market demand adjustments amid the global tightening economy. In particular, steady sales flows were maintained in generators, ships, and defense engines, sustaining double-digit operating profit margins. Future contracts for the second batch of defense engines to be mounted on Poland’s K2 tanks and additional sales of battery packs due to electrification of industrial and commercial vehicles are expected.
HD Hyundai Infracore improved its financial soundness through steady repayment of borrowings. The debt ratio and net debt ratio in the third quarter were 130% and 51%, respectively, significantly improved from 249% and 82% in 2021. The company also completed the repurchase and cancellation of 56 billion KRW worth of treasury shares in August, which was initiated earlier this year, enhancing shareholder value.
An official from HD Hyundai Infracore stated, "Despite the contraction of the global market, we increased our market share in construction equipment in most regions by strengthening product and channel competitiveness. We will enhance fundamental competitiveness to improve profitability and prepare to show faster growth during the upcoming market recovery period."
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