HD Hyundai's operating profit declines due to volatile oil prices

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HD Hyundai's operating profit declines due to volatile oil prices

[HD HYUNDAI]

[HD HYUNDAI]

 
HD Hyundai reported a 40 percent year-on-year decline in its operating profit for 2023 to 2.03 trillion won ($1.5 billion), attributed to the weak performance of its oil refining sector impacted by international oil prices and a decline in refining margins.
 
Analysts' forecasts, compiled by market tracker Company Wise, had anticipated a higher figure of 2.3 trillion won.
 
The 2023 revenue figure increased by 0.8 percent compared to the previous year, reaching 61.3 trillion won, according to its regulatory filing Tuesday. This marks the second consecutive year HD Hyundai has surpassed the 60 trillion won mark in sales.  
 
The Korean conglomerate in the shipbuilding, oil refining and machinery sectors cited "the increase in eco-friendly vessel orders and construction volumes, expansion of market share in construction machinery in new and advanced markets, and intensifying efforts to penetrate key markets like the United States and the Middle East in power equipment" playing a role in the strong sales.
 
However, the reported revenue fell short of the market consensus of 62 trillion won.  
 
Net profit also experienced a significant decline, dropping by 64.8 percent to 785.8 billion won, although it exceeded market expectations of 477 billion won.  
 
Looking at the fourth quarter alone, HD Hyundai's operating profit rose by 30.4 percent to 357.9 billion won compared to the same period the previous year. Quarterly revenue stood at 16.7 trillion won, while net losses amounted to 117 billion won.
 
Breaking down the performance by sector, HD Korea Shipbuilding and Offshore Engineering recorded sales of 21.3 trillion won, up 23.1 percent from the previous year, thanks to increased orders and construction volumes. The division turned to black after three years, after the company turned selective in taking new orders for high-value, environmentally friendly vessels.
 
In the energy sector, HD Hyundai Oilbank's revenue declined by 19.6 percent to 28.1 trillion won, accompanied by an operating profit slump of 77.9 percent to 616.7 billion won, primarily due to the impact of declining international oil prices and refining margins.
 
In the construction machinery sector, HD Hyundai XiteSolution reported a sales increase of 2.9 percent to 8.7 trillion won, with operating profit reaching 724.2 billion won, a 56 percent rise. The company attributed its solid performance to securing potential demand through diversified sales channels, price increases and increased demand for industrial and defense engines.
 
"We were able to navigate challenging external conditions with selective order taking and market exploration and achieve favorable results," an official from HD Hyundai said. "We anticipate improvements in the shipbuilding sector and a turnaround in the oil refining sector in the coming year."

BY SEO JI-EUN [[email protected]]
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