Hyundai Heavy invests 760 billion KRW to bridge technology gap in eco-friendly ships

Online Corporate Presentation Held Today
320 Billion KRW for Smart Shipyard Construction
130 Billion KRW for Hydrogen Infrastructure, etc.

The 174,000㎥ LNG carrier built by Hyundai Heavy Industries and delivered last year

[Asia Economy Reporter Choi Dae-yeol] Hyundai Heavy Industries is embarking on a large-scale investment worth around 700 billion KRW to hone eco-friendly and advanced digital technologies while establishing a safe and efficient production system. Amid a paradigm shift in the shipbuilding industry driven by global environmental regulations and technological advancements, the company plans to proactively respond and solidify its position as the world's No. 1 shipbuilder.

Hyun Young-seok, CEO of Hyundai Heavy Industries, revealed this mid-to-long-term plan during an online investor briefing held on the 2nd ahead of the company's initial public offering (IPO). Of the IPO proceeds, expected to be up to 1.08 trillion KRW, 760 billion KRW will be allocated to securing technologies to maintain the gap with trailing competitors. The company will invest 310 billion KRW in developing eco-friendly and digital ship technologies, 320 billion KRW in building smart shipyards, and 130 billion KRW in the hydrogen infrastructure sector, which is gaining attention as a future energy source.

Eco-friendly ships are a competitive area for Hyundai and other domestic shipbuilders. They are recognized for leading technologies in vessels powered by liquefied natural gas (LNG), which emits fewer pollutants, as well as ships using less harmful fuels such as ammonia and methanol. Last month, Hyundai Heavy Industries signed a contract with Maersk, the world's largest shipping company, to build eight methanol-powered ultra-large container ships worth 1.65 trillion KRW, marking a first among large vessels.

The company is accelerating its entry into the digital twin technology that enables virtual sea trials and the autonomous navigation market, which has significant growth potential. Additionally, Hyundai plans to establish smart shipyards integrating IT technologies into production processes by 2030. Investments will also increase in offshore renewable energy generation, green hydrogen production, and hydrogen transportation infrastructure to capture the anticipated growing demand in the offshore hydrogen infrastructure market.

Hyundai also emphasized the stabilization of its financial structure. Due to new orders since the end of last year, advance payments have increased, resulting in a net debt ratio of 34.9%, about one-third of the 107.9% average among major domestic shipbuilders. Financial soundness is a critical factor determining the success of orders.

Given that ship orders halted last year due to COVID-19 and the approaching application of strengthened environmental regulations, the company expects new orders centered on eco-friendly ships to increase for some time. According to MSI, a UK-based shipbuilding and shipping research institute, the global shipbuilding market, which had been in recession since 2009, is rebounding after 13 years, with new shipbuilding market demand expected to grow at an average annual rate of about 16% through 2025.

CEO Hyun said, "By intensively investing in eco-friendly future technologies, we will solidify our position as the No. 1 shipbuilder for the next 50 years, following the past 50 years."

Meanwhile, Hyundai Heavy Industries plans to issue 18 million new shares, representing 20% of the total shares, through this IPO. Demand forecasting for institutional investors will be conducted until the 3rd, with the final public offering price to be set on the 6th. Subsequently, subscription for general investors will take place on the 7th and 8th, with the company scheduled to be listed on the KOSPI market on the 16th.

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