Turning Profitable
Hyundai Heavy Industries (HHI) succeeded in turning profitable despite a severe order drought last year. The company posted an operating profit of 1 trillion won (US$855 million) in four years since 2012.
HHI announced that its sales and operating profit in the 4th quarter of the previous year totaled 10.34 trillion won (US$8.79 billion) and 437.7 billion won (US$372 million), respectively. Its sales slid 7.1% year on year but its operating profit went into the black.
On an annual basis, its sales and operating profit reached 39.31 trillion won (US$33.4 billion) and 1.64 trillion won (US$1.4 billion), respectively. The sales volume shrank sharply from 46 trillion won (US$39.1 billion) in 2015. This drop was blamed on a sharp decline in offshore plant orders, each of which usually amounts to trillions of Korean won, to say nothing of commercial vessels.
The company’s operating profit of 1.6 trillion won (US$1.36 billion) last year was largely supported by two axles -- three shipbuilders (Hyundai Heavy Industries, Hyundai Mipo Dockyard and Hyundai Samho Heavy Industries) and Hyundai Oilbank. The Hyundai Heavy Industries Group's three shipbuilders cemented their positions as the group’s flagship companies while posting combined operating profit of 710 billion won (US$603 million). In 2016, rising refining margins drove up Hyundai Oilbank’s profits to about 800 billion won (US$680 million), a record high. .
The company’s offshore plant division, which was the main culprit behind its operating loss which hit trillions of Korean won in 2015, succeeded in making a surplus as the overcrowded dockyard problem was addressed, stabilizing work processes.
HHI plans to approve an agenda to divide the company into six independent corporations by holding a temporary general shareholders meeting on February 27. It is because the company judged that it is efficient to overcome the crisis if and when the shipbuilding division and non-shipbuilding division stand on their feet without causing conflicts between the two. At the same time, this scheme aims to transform Hyundai Heavy Industries into a holding company system.