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HD KSOE posts surprising 436% profit jump, 'policy proposals' to U.S. in works

Published: 24 Apr. 2025, 19:03

An LNG carrier built and delivered by HD Hyundai Samho in 2024 [HD KOREA SHIPBUILDING & OFFSHORE ENGINEERING]

HD Korea Shipbuilding & Offshore Engineering (KSOE) posted operating profit of 859.2 billion won ($598.1 million) in the first quarter of this year, significantly exceeding market expectations. This represents a 436.3 percent increase compared to the same period of last year, when it posted 160.2 billion won in operating profit.

The shipbuilder cited “improved productivity” as the key factor behind the substantial profit growth. It also indicated that it intends to capitalize on the U.S. strategy to counter China for potential gains.

HD KSOE announced on Thursday that it had recorded first quarter revenue of 6.77 trillion won and operating profit of 859.2 billion won. This marks its eighth consecutive quarter in the black. Revenue rose 22.8 percent compared to the same period of last year.
HD KSOE is the intermediate holding company for HD Hyundai’s shipbuilding and marine operations, and its subsidiaries include HD Hyundai Heavy Industries, HD Hyundai Samho and HD Hyundai Mipo.

By company, HD Hyundai Heavy Industries led the results with revenue of 3.82 trillion won and operating profit of 433.7 billion won. HD Hyundai Samho reported revenue of 1.97 trillion won and operating profit of 365.9 billion won. HD Hyundai Mipo posted revenue of 1.18 trillion won and operating profit of 68.5 billion won.

Faster and more
Improving productivity to build ships faster and in greater numbers was the primary reason behind the profit increase.

A shipyard in Ulsan [JOONGANG ILBO]

“Shipbuilding speed has significantly increased due to investments in automation equipment, improved efficiency among foreign workers and more stabilized production processes,” said Sung Ki-jong, executive director of investor relations at HD Hyundai Heavy Industries during a conference call following the earnings announcement.

As work efficiency rose, the delivery schedules were advanced and the early handover of high-margin ships naturally led to increases in both revenue and operating profit.

HD Hyundai Heavy Industries announced on Tuesday that it had moved up the delivery date of a vessel scheduled for late November 2027 to the end of August — three months ahead of schedule — in a contract with a shipping company in the Middle East.

The increased share of high-value ship deliveries also contributed to the strong performance.

For HD Hyundai Heavy Industries, 80 percent of first quarter revenue came from ships ordered in 2022.

A British shipbuilding and maritime market analysis firm, the newbuild price index rose steadily from 161.84 in 2022 to 178.36 in 2023 and 189.16 in 2024, according to the Clarkson Report.

As ships ordered when prices were rising two to three years ago were delivered in the first quarter, earnings saw a notable boost.

“We will continue to selectively take orders for eco-friendly, high-value ships, which will further improve profitability,” a representative from HD Hyundai Heavy Industries said.

U.S. policy boosts container ship inquiries

The company also expressed optimism due to U.S. President Donald Trump’s policy to strengthen domestic shipbuilding and impose checks on China’s shipbuilding and maritime industries.

Joo Won-ho, head of the naval & special ship business unit at HD Hyundai Heavy Industries, right, and Brian Blanchette, president of Ingalls Shipbuilding, are pictured after HD Hyundai and Huntington Ingalls sign a memorandum of understanding on April 7 to collaborate on improving shipbuilding productivity and advancing shipbuilding technology. [HYUNDAI]

The U.S. Trade Representative announced on April 17 that ships owned by Chinese shipping companies or made in China would be subject to future port entry fees in the United States.

“The key is that a clear policy direction has been established to consistently check China’s shipbuilding and shipping industries,” said Lee Woon-seok, executive director of strategic marketing at HD Hyundai Heavy Industries. “As a result, shipping companies will naturally begin to avoid Chinese-made vessels, which we see as favorable to the Korean shipbuilding industry.”

The company reported that inquiries for container ships in the first quarter had jumped six times compared to the same period of last year and predicted that actual orders will follow in April and May.

HD Hyundai Heavy Industries also said it will continue to propose policies to the Korean and U.S. governments to strengthen cooperation in the naval defense sector.

It signed a memorandum of understanding with U.S. defense shipbuilder Huntington Ingalls on April 7.

“Although there are legal restrictions in the United States, we plan to start with small-scale cooperation, such as participating in the Ingalls shipyard supply chain, and gradually expand the scope of collaboration,” said Jung Woo-man, executive director of the special ship division at HD Hyundai Heavy Industries. “We are also making policy proposals to the Korean and U.S. governments to facilitate legal and regulatory changes.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY LEE SU-JEONG [[email protected]]