Hyundai Heavy Industries Co. announced on May 2 that it made a turnaround by posting 28.1 billion won (US$24.1 million) in operating profit on a consolidated basis in the first quarter of 2019. Hyundai Heavy Industries recorded 123.8 billion won in operating losses in the first quarter of last year. Sales rose 7.4 percent to 3.27 trillion won (US$2.81 billion) from 3.04 trillion won during the same period last year. Net profit also turned around from a loss of $132.1 billion (132.1 billion KRW) in the first quarter of 2018 to a surplus of 17.3 billion won this year.
Hyundai Heavy explained that its profitability in the shipbuilding sector improved due to rising vessel prices and the rise in the won/dollar exchange rates, and that it swung to a surplus with the reversal of defect repair provisions for the Gorgon project in the maritime sector.
"Although uncertainty still exists in the shipbuilding market, expectations for a recovery are rising as environmental regulations have been tightened recently and large-scale LNG projects have been launched," the company said. "We will focus our capacity on LNG carriers in the future."
Meanwhile, Hyundai Heavy Industries Holdings also swung to the black in the first quarter on the back of recovering profitability of its subsidiaries, including Hyundai Heavy Industries Co. and Hyundai Oilbank Co. Hyundai Heavy Industries Holdings said in a regulatory filing that it recorded 6.49 trillion won (US$5.57 billion) in sales and 144.5 billion won (US$124 million) in operating profit in the first quarter. The holding company slumped to 163.9 billion won in operating losses in the previous quarter.
"As oil prices recover, Hyundai Oilbank had a reversal of inventory evaluation loss provisions, which helped the holding company make a turnaround," said Hyundai Heavy Industries Holding Co. "Hyundai Construction & Machinery also helped improve the group’s performance by recovering its profitability due to a price hike and exchange rate effect."