Hyundai Heavy Holdings Posts Operating Loss of 597.1 Billion KRW Last Year... Returns to Deficit (Update)

Losses in Refining Sector, Market Deterioration, and Exchange Rate Headwinds
5-for-1 Stock Split and Interim Dividend Decision

A 13,800 TEU-class ultra-large container ship built by Hyundai Heavy Industries

[Asia Economy Reporter Choi Dae-yeol] Hyundai Heavy Industries Holdings, the holding company of Hyundai Heavy Industries Group, announced on the 4th that its consolidated operating loss turned to a deficit of 597.1 billion KRW last year. The poor performance was due to significant losses in the refining sector early last year, as well as market downturns and exchange rate factors. Sales dropped 29% from the previous year to 18.911 trillion KRW.

Korea Shipbuilding & Offshore Engineering, the intermediate holding company for the shipbuilding sector, saw its operating profit decrease by 74% compared to the previous year, recording 74.4 billion KRW. Sales declined by 1.8% over the same period to 14.9037 trillion KRW. The company stated, "We increased the proportion of high value-added shipbuilding and reduced costs, achieving a profit for the second consecutive year." However, net income turned to a loss of 835.2 billion KRW due to book losses including foreign currency-related losses from exchange rate declines, asset impairments such as at the Gunsan shipyard, and corporate tax expenses from deferred tax asset impairments.

Hyundai Oilbank, which posted profits in the second and third quarters last year, returned to a loss in the fourth quarter, failing to offset the overall loss. It recorded an operating loss of 78.6 billion KRW in Q4. However, the company reported that most other affiliates delivered solid results, reducing the deficit. Hyundai Electric turned to a profit, recording 72.7 billion KRW. Hyundai Global Service posted an operating profit of 156.6 billion KRW, its highest ever.

Meanwhile, Hyundai Heavy Industries Holdings held a board meeting on the same day and decided on compensation measures to enhance shareholder value. For the first time since the company's establishment, a stock split will be conducted. The split ratio is 5 to 1, and the new shares will be listed on April 12 after approval at the March shareholders' meeting. Hyundai Heavy Industries Holdings expects that "this stock split will provide more investors the opportunity to hold shares and will lead to stock price increases and dividend income following performance improvements this year."

They also decided to implement an interim dividend. The plan is to generate profits by recovering market conditions in the core sectors of refining, shipbuilding, and construction machinery, and achieving economies of scale through successive mergers and acquisitions. The company decided to pay a dividend of 18,500 KRW, the same as one year ago, as compensation for shareholders who suffered losses due to stock price declines and to enhance trust through responsible management.

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