'Largest Order Backlog Since Establishment' Hyundai Rotem, Profit Turnaround Confirmed After 3 Years

Strengthening Internal Management After CEO Lee Yong-bae's Appointment as Financial Expert (通)... Improving Order Structure Focused on Profitability
Q4 Cumulative Operating Profit Expected at 83.4 Billion KRW

[Asia Economy Reporter Ki-min Lee] Hyundai Rotem, which embarked on a high-intensity structural reform earlier this year, has virtually secured a turnaround to profitability after three years. While shifting its order structure to focus on profitability, it has also recorded the largest order backlog since its founding, establishing a stable profit-generating foundation.

According to industry sources on the 31st, Hyundai Rotem's cumulative performance forecast for the fourth quarter of this year (securities consensus) is KRW 2.6991 trillion in sales and KRW 83.4 billion in operating profit. Hyundai Rotem recorded a cumulative operating loss of KRW 476 billion in 2018 and last year but is expected to achieve operating profit for the first time in three years since 2017 by posting profits every quarter this year. Net profit started with a loss of KRW 7.4 billion in the first quarter but recorded KRW 24.5 billion and KRW 4.6 billion in the second and third quarters, respectively, signaling an imminent escape from net losses for the first time in four years.

The key factors behind Hyundai Rotem's successful performance improvement include strengthened risk management and internal management focused on securing profitability. Immediately after the appointment of President Lee Yong-bae, known as a 'financial expert,' Hyundai Rotem formed an emergency management committee in January and has been implementing rigorous self-help efforts in various areas such as selling idle assets, improving profitability and organizational culture, and strengthening business capabilities. The debt ratio, which was 363% last year, significantly decreased to 197% in the third quarter of this year, indicating successful financial structure improvement.

This year's order backlog reached KRW 10 trillion, the largest ever. In just this month, contracts were consecutively signed for the third phase of the K2 tank mass production project (KRW 533 billion) and the operation and maintenance of the Sinlim Line light rail transit (KRW 329.5 billion). In the railway sector, which accounts for about half of sales, Hyundai Rotem secured orders for Singapore's first-ever electric trains, Taiwan TRA electric trains, Korail distributed high-speed trains, and GTX-A line trains. In the defense sector, orders for the third phase of wheeled armored vehicles, obstacle-clearing tanks, and K1 tank refurbishment projects supported the high order backlog.

Hyundai Rotem plans to strengthen profitability through business diversification in the future. In the railway sector, it will accelerate the development and commercialization of eco-friendly hydrogen electric trains. In the defense sector, while enhancing the technology of existing products, it aims to secure unmanned system technology in line with the Fourth Industrial Revolution era. Additionally, next year, it has set a goal to secure defense orders from overseas countries with demand such as Norway, Oman, and Poland.

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