Hyundai Heavy Industries Group said Monday its mainstay shipbuilding business swung to the black in the third quarter, thanks to increased sales of high-value vessels like liquefied natural gas carriers and a weak Korean won.
Net profit of Korea Shipbuilding & Offshore Engineering Co. (KSOE), a sub-holding company that governs shipbuilding units under the group, for the three months ending Sept. 30 came to 20.4 billion won (US$17 million) on a consolidated basis, compared with a net loss of 23.1 billion won a year ago, the group said in a statement.
Sales of KSOE increased 12.1 percent on-year to 3.6 trillion won in the third quarter, although operating profit dipped 20.1 percent to 30.3 billion won in the cited period.
In June, Hyundai Heavy Industries Co. was split into two entities -- KSOE and a reorganized Hyundai Heavy Industries -- under an agreement with the Korea Development Bank regarding the acquisition of Daewoo Shipbuilding & Marine Engineering Co. Following the deal, Hyundai Heavy Industries stocks were renamed KSOE.
KSOE currently manages the group's three shipbuilding units -- Hyundai Heavy Industries, Hyundai Mipo Dockyard Co. and Hyundai Samho Heavy Industries Co.
The group said robust earnings from Hyundai Mipo Dockyard and Hyundai Samho Heavy Industries increased KSOE's bottom line the third quarter, coupled with the Korean won's weakness against the U.S. dollar. The won fell to an average of 1,193.24 against the greenback in the third quarter, down from 1,121.59 a year ago, according to the Bank of Korea.
The flagship Hyundai Heavy Industries, however, posted a net loss of 39.6 billion won due to a slump in its offshore and plant businesses, according to the group.
"We're continuing solid performance in the shipbuilding sector, but due to global uncertainties sparked by the U.S.-China trade dispute, global orders have fallen compared to a year earlier," the group said a statement. "We're currently focusing on securing orders for LNG carriers and LNG-powered ships."
Shares in KSOE soared 1.59 percent to 127,500 won on the Seoul bourse. The earnings results were released before the market closed.
Meanwhile, Hyundai Heavy Industries Holdings Co., the group's holding company managing refining and power equipment units, said its third-quarter net profit tumbled 72.4 percent on-year to 66.1 billion won on a consolidated basis.
Sales slipped 1.1 percent on-year to 6.5 trillion won in the July-September period, while operating profit dived 38.3 percent on-year to 219.6 billion won in the cited period.
The group blamed poor performances of its refining affiliate Hyundai Oilbank Co. and power equipment manufacturer Hyundai Electric & Energy Systems Co. for the decline.
Hyundai Oilbank posted operating profit of 157.8 billion won in the third quarter, down 34.3 percent from a year ago, due to inventory losses prompted by fluctuating international oil prices.
Hyundai Electric suffered an operating loss of 4 billion won in the third quarter.
Shares in Hyundai Heavy Industries Holdings inched up 0.14 percent to 353,000 won, underperforming the broader KOSPI's 0.27 percent gain.