1200% Growth Expected... Labor-Management Agreement After Q4 Earnings Compilation
High-Value Ultra-High Voltage Transformer Secures US Market... Operating Profit in 20% Range
As demand for power equipment surges, HD Hyundai Electric is expected to hold a bonus payout celebration. Industry insiders say the company will pay performance bonuses in the range of 1200%. This is even higher than the 1000% (50% of annual salary) performance bonus that SK Hynix, which recorded its highest-ever earnings this year, announced it would distribute to its employees.
At the completion ceremony of the transformer specialized storage facility held on July 26 (local time) at HD Hyundai Electric's production subsidiary in Alabama, USA, officials are taking a commemorative photo. From the second left, Seo Sang-pyo, Consul General of Atlanta; Son Chang-gon, Head of HD Hyundai Electric's US production subsidiary; and Jo Seok, Vice Chairman of HD Hyundai Electric (then President). Photo by Yonhap News.
According to related industry sources on the 24th, HD Hyundai Electric plans to pay this year’s performance bonuses next month after labor-management agreement. The company’s performance bonus this year is estimated to be about 1200% of the base salary, based on an operating profit margin exceeding 20%.
A company official stated, "Typically, the performance bonus ratio compared to the base salary has been set at about 60 to 70 times the operating profit margin," adding, "Last year, with an operating profit margin of about 11.7%, a performance bonus of 816%?70 times that margin?was applied." HD Hyundai Electric’s cumulative operating profit margin from the first to third quarters this year is 20.1%, and according to the consensus estimates by securities analysts posted on the financial information provider FnGuide, the operating profit margin for the fourth quarter is expected to be around 21.6%. In this case, the performance bonus ratio will exceed 1200%.
Some anonymous online community posts on Blind, a platform used by employees of similar companies, have already expressed envy. An industry insider commented, "Blind is buzzing over the scale of HD Hyundai Electric’s performance bonuses."
This is closely related to HD Hyundai Electric’s higher operating profit margin compared to its competitors, which forms the basis for the performance bonuses. The estimated operating profit margin for the first to third quarters of Hyosung Heavy Industries’ heavy industry division, which produces transformers, is 9.8%, about half that of HD Hyundai Electric.
There is also a significant difference in portfolio. HD Hyundai Electric has a high sales proportion of high value-added oil-immersed transformers, including ultra-high voltage transformers for transmission and substation use. In particular, it has a production plant in Alabama, USA, making it easier to respond locally to the recent strong demand for transformers in the US. LS Electric exports from domestic production facilities overseas and is a latecomer in the ultra-high voltage transformer market.
An HD Hyundai Electric official said, "The size of the performance bonus can only be determined after the fourth quarter results are out," adding, "Usually, the company proposes first, and if labor-management agreement is reached next month, the bonus will be paid in February."
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