Hanwha Ocean has turned a profit. This marks the first time it has emerged from a deficit in 12 quarters since the fourth quarter of 2020.
On Oct. 25, Hanwha Ocean announced that it recorded 1.92 trillion won (US$1.42 billion) in revenue, 74.1 billion won in operating profit, and 231.6 billion won in net profit for the third quarter. Its revenue increased by approximately 100 percent compared to the same period last year. Both operating profit and net profit returned to a positive status.
Compared to the previous quarter, which was 1.82 trillion won, revenue increased by 5.3 percent. Hanwha Ocean explained that its production activities have improved due to focused process management, resulting in increased revenue.
Operating profit reflects the victory in the recent arbitration lawsuit related to the prepayments for two drill ships. As a result of the victory, an amount of approximately 157 billion won was recovered in inventory asset valuation, leading to an increase in operating profit. An additional positive impact on net income was seen from the approximately 94 billion won related to interest adjustments and foreign exchange gains and losses. Furthermore, the operating profit also includes about 18 billion won generated from the decrease in expected vessel costs and approximately 10 billion won in profit from subsidiary companies.
After becoming a part of the Hanwha Group in May, Hanwha Ocean has been working towards the normalization of its operations through structural improvements. It was the first among the three major shipbuilding companies to successfully conclude wage negotiations, thereby striving for production stability.
The outlook is also promising. While Hanwha Ocean’s order intake rate for this year stood at 21.1 percent, it has already secured approximately three years worth of work. As of the end of the third quarter, out of the total order backlog of 99 vessels, 65 vessels account for 66 percent of the total and are high-profit LNG carriers. Additionally, there is an expectation that the revenue from high-margin vessels, particularly LNG carriers, will increase in 2024.
It’s also expected that the company will see an increase in new orders. Hanwha Ocean is implementing a strategy that prioritizes profitability in its order intake. It is currently in discussions regarding the total order quantity, ship prices, and other details for the second order of Qatar LNG carriers. In addition, discussions are active in the specialized vessel sector. The contract for the Ulsan-class Batch-III vessels 5th and 6th ships is expected to be concluded by the end of November. There are plans for the bidding of one Jang Bogo-III Batch-II 3000-ton class submarine, and the Canadian submarine project is also in progress.