Hyundai Construction Equipment Reports Q2 Operating Profit of 36.7 Billion KRW, Down 43%

"Market Diversification Strategy and Additional Price Increase in Q3 to Drive Performance Improvement in the Second Half"

[Asia Economy Reporter Park Sun-mi] Hyundai Genuine affiliate Hyundai Construction Equipment announced sluggish performance in the second quarter due to rising raw material and logistics costs. The company has a strategy to improve performance in the second half of the year through market diversification and additional price increases in the third quarter.

Hyundai Construction Equipment announced on the 27th that it achieved sales of 875.1 billion KRW and operating profit of 36.7 billion KRW in the second quarter of this year. Sales were similar to the same period last year (a 0.4% decrease), but operating profit fell 43% due to rising raw material and logistics costs and a contraction in the Chinese market. In particular, temporary factors such as shipment delays caused by adverse weather at the end of June and additional provisions set due to adjustments in the sales warranty policy affected the decline in operating profit.

As a result, Hyundai Construction Equipment posted sales of 1.8075 trillion KRW and operating profit of 83.4 billion KRW in the first half of this year, representing a 1.5% increase in sales and a 40.3% decrease in operating profit compared to last year.

Looking at the second quarter performance by region, sales in the Chinese market fell 63% year-on-year due to lockdowns caused by the resurgence of COVID-19, but sales in advanced and emerging markets increased significantly, resulting in overall sales similar to last year.

In the North American market, sales reached 154.8 billion KRW, a 50% increase compared to the same period last year, as demand for construction equipment surged due to the U.S. government's infrastructure investment amid a favorable economic trend. The European market also achieved sales of 124.8 billion KRW, up 19% year-on-year, as supply issues experienced in the first quarter were resolved.

The emerging markets also continued strong performance with sustained demand for mining equipment. In particular, India and Brazil, key bases for Hyundai Construction Equipment’s global production, recorded sales of 145.3 billion KRW, an 87% increase compared to the same period last year, influenced by the recovery of the construction market following COVID-19 and rising raw material prices.

Hyundai Construction Equipment plans to intensify its focus on advanced and emerging markets in the second half of the year. In North America and Europe, the company has established a sales strategy centered on medium- and large-sized equipment with high demand due to increased infrastructure-related investments. In emerging markets, the company currently holds a stable order backlog exceeding seven months and plans to maintain solid profitability through additional price increases.

A Hyundai Construction Equipment official stated, “Operating profit declined due to the contraction of the Chinese market and additional temporary costs, but construction equipment demand in the Chinese market is expected to increase from the second half of the year.” He added, “We expect second-half performance to strengthen as sales recover in the Chinese market and profitability improves through price increases in advanced and emerging markets.”

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