Hyundai Heavy shares gain on record profit

Hyundai Heavy Industries shares rose to the highest price in a year in Seoul trading after the world’s largest shipbuilder posted its biggest quarterly profit since 2013.

The shares gained as much as 5.7 percent to 121,500 won, the highest intraday level since July 10, 2015, and traded at 120,000 won as of 9:38 a.m.

Hyundai Heavy on Wednesday reported second-quarter net income, excluding minority interest, of 292 billion won ($259 million), compared with a loss of 241.2 billion won a year earlier, as the company cut costs under its restructuring efforts and the oil-refining unit posted stronger earnings. The profit beat the 130.3 billion-won average of 11 analyst estimates and is the largest since the first quarter of 2013, according to data compiled by Bloomberg.

The world’s top three shipyards, all South Korean, plan to raise a combined 8.41 trillion won through asset and share sales as orders have dried up this year. They are among Asian shipbuilders that are reeling from a slowing global economy and a slump in oil prices, which have led them to post losses or smaller profits last year.

Hyundai Heavy second-quarter sales dropped 17 percent to 9.86 trillion won. Operating profit stood at 557.2 billion won, compared with a loss of 170.9 billion won a year earlier. That beat an average estimate of 159.5 billion won from 10 analysts, according to data compiled by Bloomberg.

Higher earnings from its businesses in offshore, oil refining and marine engine helped lift operating profit in the second quarter, the company said. Oil refining was the second-largest contributor to sales, while accounting for the biggest share of operating profit, 323.4 billion won, or 58 percent.

Profit from its shipbuilding division fell 11 percent in three months after factoring in voluntary retirement packages as part of its restructuring.

Hyundai Heavy won $4.11 billion worth of contracts in the first half, 44 percent less than a year ago. Bloomberg