Hyundai Heavy Industries Holdings swings to loss

SK Shipping's bulk carrier installed with a navigation suppost system developed by Hyundai Heavy Industries. [HYUNDA HEAVY INDUSTRIES]

Hyundai Heavy Industries Holdings reported Wednesday an operating and net loss in the first quarter on the collapse in oil prices and the disruptions in industrial production caused by the coronavirus.

The holding company reported a 487.2 billion won ($400 million) operating loss from 144.5 billion won in operating profit in the first quarter last year. The net loss stood at 360.4 billion won in the first quarter of 2020, compared to 97.6 billion won in net profit in last year’s January-March period.

The company owns shares in Korea Shipbuilding & Offshore Engineering (KSOE), Hyundai Oilbank, Hyundai Electric and Hyundai Construction Equipment.

KSOE, which manages the group’s shipbuilding units, also reported first-quarter performance Wednesday. Its sales jumped more than 20 percent in the first quarter on improved performance of the shipping business.

KSOE reported 121.7 billion won in operating profit, up 251.7 percent on year, on 3.94 trillion won in sales, up 20.4 percent compared to the same period last year. Its net profit skyrocketed 853.2 percent compared to January-March last year to 164.9 billion won.

In the previous quarter, KSOE reported 26.2 billion won in net loss. Sales were led by expensive ships, like liquefied natural gas (LNG) carriers.
KSOE said it expects to win the approval for the combination between Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering (DSME) from the European Union by July.

The European Commission halted its investigations into the mergers.

“We will complete the business combination with DSME as early as possible,” said a KSOE spokesperson.

KSOE expects to deliver 12 LNG carriers from Hyundai Heavy Industries and six from Hyundai Samho Heavy Industries. It is currently preparing for a large-scale LNG carrier procurement project by Qatar.

“A maximum of 120 ships are expected to be ordered in the Qatar project, and the Korean shipbuilders are anticipated to deliver minimum 40 and maximum 80 of them,” said a spokesperson for KSOE.

“Although there are concerns that the coronavirus could reduce the number of orders if it lasts longer, we’ll do our best to secure orders,” the KSOE spokesperson said.

BY JIN MIN-JI [jin.minji@joongang.co.kr]