Hanwha Ocean Q3 Operating Profit Down 65.5% YoY (Comprehensive)

Slower Performance Improvement Due to Management Stabilization Costs
Increase in High-Value-Added Ship Sales Proportion
"Preparing for Additional US MRO Orders"

Hanwha Ocean succeeded in turning a profit compared to the previous quarter by expanding the proportion of high value-added vessels such as liquefied natural gas (LNG) carriers.

Hanwha Ocean announced on the 29th that it recorded sales of 2.7031 trillion KRW and an operating profit of 25.6 billion KRW in the third quarter. Sales increased by 41% compared to the same period last year, while operating profit decreased by 65.5%.

Hanwha Ocean explained that operating profit decreased compared to the same period last year due to a reverse base effect, including the reversal of inventory asset valuation following a win in an arbitration lawsuit for the refund of advance payments for two drillships in the third quarter of last year. However, sales increased as the proportion of LNG carriers grew and the plant business division began generating profits in earnest.

Hanwha Ocean Geoje Plant View
[Photo by Hanwha Ocean]

Compared to the previous quarter, performance improved. Despite a decrease in operating days, sales increased quarter-on-quarter due to the expanded sales proportion of LNG carriers and the incorporation of the plant business division acquired from Hanwha Corporation. Operating profit turned positive compared to the previous quarter despite one-off factors such as exchange rate declines and increased outsourcing costs.

The reason for the delayed performance improvement compared to competitors is attributed to costs for stabilizing management. Hanwha Ocean stated, "Additional costs were incurred to compensate for delays in processes such as strikes."

By business division, the merchant ship division saw a recovery in profitability as the proportion of low-priced container ship orders decreased and the proportion of high-profit LNG ships increased. Sales and operating profit are expected to increase next year due to the rise in the average price of LNG carriers. It is forecasted that losses in container ships will be resolved and profits will expand through continuous construction centered on high-priced LNG vessels.

The special ship division maintains a solid profit margin focusing on highly profitable submarine and MRO (maintenance, repair, and operations) businesses. Hanwha Ocean recently won a U.S. Navy MRO project and is preparing for additional orders.

The offshore division saw sales increase by 46.8% quarter-on-quarter and a reduction in losses as sales of facilities supplying power to deep-sea equipment and facilities (FCS) controlling gas fields, as well as offshore wind turbine installation vessels (WTIV), began in earnest.

Hanwha Ocean has recorded orders worth 7.36 billion USD this year, including one LNG FSRU (floating storage regasification unit), 16 LNG carriers, three VLACs (ammonia carriers), seven VLCCs (crude oil carriers), and six container ships.

A company official said, "We will continue to improve performance by operating a profitability-focused business based on production stabilization."

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