[Click eStock] "Hyundai Construction Equipment, Expecting Profit Normalization Due to Demand Recovery"

[Asia Economy Reporter Ji Yeon-jin] NH Investment & Securities expects the global recovery in the construction market to continue and forecasts that Hyundai Construction Equipment's profits will normalize.

The company reported sales of 688.7 billion KRW in the fourth quarter of last year, up 10.4% from the previous quarter and 20% year-on-year. This exceeded market estimates by 14%. Sales in China increased by 35% year-on-year, India by 93%, and Korea by 56%. Compared to the average growth rate of -20% in the first half of the year in North America (-4%), Europe (-12%), and emerging markets (-2%), it is analyzed that demand has essentially recovered across all regions.

Operating profit in the fourth quarter of last year was 12.7 billion KRW (operating margin 1.8%), which was below market expectations. This was attributed to increased marketing expenses due to the COVID-19 pandemic, which impacted profitability.

Choi Jin-myung, an analyst at NH Investment & Securities, stated, "Marketing expenses are interpreted as a short-term issue, and long-term normalization of profits is expected with demand recovery." He added, "Most items such as impairment accounting for development costs caused by market environment changes like COVID-19 are known to be unrelated to cash flow, and the notable sequential decrease in net debt supports this. As demand recovers and conditions for new product launches improve, similar types of expenses are expected to disappear."

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