Hyundai Heavy reports second black ink quarter

JULY 27, 2016 — South Korean shipbuilding giant Hyundai Heavy Industries stayed in the black in the first half of the year by bringing in an operating profit of 882.4 billion won (about $778 million).

According to a regulatory filing, during April-June period HHI racked up 9.8627 trillion Korean won in sales while operating income stood at 557.2 billion won, bringing accumulated sales and operating profits for the first half of this year to 20.1355 trillion won and 882.4 billion won respectively.
 
HHI attributes operating profits for two consecutive quarters to restructuring measures put in place since 2014 by current top management, and strong performances by Hyundai Oilbank, its refining subsidiary.
 
An HHI officer said, “Stabilization of manufacturing processes for offshore plant business, change orders received from its offshore plant business clients, and increased building volume of ships that HHI won at profitable prices outweighed the 260 billion won one-off cost for the voluntary retirement program. Continued efforts to reduce material costs for non-shipbuilding businesses including Engine & Machinery, Electro Electric Systems and Construction Equipment also played a role for the profits.”
 
The official added, “It is encouraging to post profits for two consecutive quarters but we still have a long way to go. Bearing in mind the 80% drop in new orders for our shipbuilding business for the first six months of this year, we will continue to faithfully implement the management improvement plan to facilitate sustainable performance.”

As we reported earlier, Samil PwC, a member of  global accounting firm PwC, pronounced yesterday that HHI’s 3.5 trillion won management improvement plan is good enough for it to make operating profits and secure liquidity even in the worst case scenario.
 
At a board meeting today, HHI decided to sell Hyundai Finance Corporation and Hyundai Venture Investment Corporation as a part of the proposed management improvement plan. With the decision to dispose of all of its financial arms including Hyundai Futures, Hi Asset Management and Hi Investment & Securities, HHI  says it will accelerate its business reorganization efforts with much more focus on its core businesses.