Hyundai Heavy Industries Holdings Reports Q2 Operating Profit of 104.3 Billion KRW... Turns to Profit Despite COVID-19 Challenges

Operating Profit and Net Income Both Successfully Turned Positive Compared to Q1

[Asia Economy Reporter Hwang Yoon-joo] Hyundai Heavy Industries Group succeeded in turning a profit despite the impact of the novel coronavirus disease (COVID-19).

Hyundai Heavy Industries Holdings announced on the 30th that its consolidated operating profit for the second quarter was 104.3 billion KRW, a decrease of 48.3%. Sales dropped 41.3% to 4.0058 trillion KRW, and net profit fell 59% to 22.2 billion KRW.

However, compared to the first quarter, which was severely affected by COVID-19, operating profit and net profit turned positive, while sales decreased by 29.9%.

The sales decline was influenced by the drop in oil prices and the scheduled maintenance of Hyundai Oilbank's Daesan refinery. Despite COVID-19, operating profit recorded a surplus as all affiliates, including Hyundai Construction Equipment and Hyundai Electric, posted solid earnings through proactive measures such as cost reduction.

In particular, Hyundai Oilbank succeeded in turning a profit, the only domestic refinery to do so, despite negative refining margins. By actively utilizing industry-leading advanced facilities, it increased the proportion of low-cost heavy and extra-heavy crude oil input by 5 to 6 times compared to competitors, reducing costs. Additionally, it improved profitability by increasing the production ratio of high-margin diesel and minimizing jet fuel production.

Korea Shipbuilding & Offshore Engineering also announced on the same day that its second-quarter sales reached 3.9255 trillion KRW, with an operating profit of 92.9 billion KRW. Sales decreased by 0.5% compared to the previous quarter’s 3.9446 trillion KRW, and operating profit fell 23.7% from 121.7 billion KRW in the previous quarter.

Regarding operating profit, all sectors except the offshore division recorded solid profits. The offshore division reduced its deficit compared to the previous quarter due to decreased fixed costs from ongoing large-scale projects, while the engine and machinery division maintained profitability through cost-cutting efforts.

However, despite an increased proportion of high value-added shipbuilding in the shipbuilding division, the profit margin slightly decreased due to a lower exchange rate compared to the previous quarter.

A Hyundai Heavy Industries Group official stated, “In the midst of a global economic downturn caused by COVID-19 and other factors, all affiliates have made efforts to improve profitability through revised management strategies and cost reductions.” He added, “We will continue to do our best to maintain solid earnings by proactively responding to changes in the external business environment.”

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