Hyundai Rotem Exceeds Market Expectations in Q2 Earnings

[Asia Economy Reporter Ji-hwan Park] KB Securities evaluated on the 25th that Hyundai Rotem's second-quarter earnings exceeded market expectations.

Jung Dong-ik, a researcher at KB Securities, said, "Hyundai Rotem recorded second-quarter sales of 656.6 billion KRW and operating profit of 25.6 billion KRW," adding, "sales exceeded market estimates by 8.3%, and operating profit turned positive, contrary to the consensus which expected a loss."

Despite gains of approximately 30 billion KRW from the sale of real estate and industrial gas divisions, pretax profit and net income fell short of KB Securities' forecasts due to foreign exchange-related losses.

The defense sector improved performance through the resumption of mass production of the K2 tank and increased productivity in the railway sector. Profitability improvements in both the defense and railway sectors were effective, and the second mass production of the K2 tank, which had been delayed due to powerpack issues, normalized. With an expansion in overhaul volumes for the K series, the defense sector's operating profit margin improved from 1.4% in the second quarter of last year to 6.9% this year. The railway sector also achieved a turnaround to profitability as production volumes increased in overseas projects such as Taiwan TRA, Egypt Line 3, and Kazakhstan, combined with cost reductions through improved cost management.

Researcher Jung Dong-ik stated, "New orders in the first half of this year totaled 1.3224 trillion KRW, including 808.1 billion KRW in railway, 354.6 billion KRW in defense, and 159.7 billion KRW in plants, marking a 28.2% increase compared to 1.039 trillion KRW in the same period last year." Major orders in the first half of this year include 422.2 billion KRW for GTX-A line electric trains, 347 billion KRW for Singapore LTA electric trains, and 25 billion KRW for the press line at the Korea GM Changwon plant. The order backlog increased from 8.9 trillion KRW at the end of last year to 9.3 trillion KRW at the end of the second quarter this year.

This content was produced with the assistance of AI translation services.