Hyundai Heavy Industries (HHI) Group, the world’s largest shipbuilding company, announced on July 26 that it secured 1 trillion won to date this year as a part of the 3.5 trillion won Management Improvement Plan it has been implementing since June 2016 in an effort to rebuild trust in the market and improve its balance sheet.

Today HHI Group sold its 100 percent stake in Hotel Hyundai for 200 billion won to Hahn & Company, Korea's leading private equity investment group, with 4 trillion won in assets under management. In June this year, Hyundai Samho Heavy Industries (HSHI) also raised 400 billion won from IMM Private Equity via pre-IPO and Hyundai Mipo Dockyard (HMD) secured 350 billion won by offloading its shares in Hyundai Robotics, a holding company of Hyundai Heavy Industries Group. In April this year, HHI disaffiliated its construction equipment and electric systems divisions, Hyundai Construction Equipment and Hyundai Electric & Energy System, respectively. Both are independent corporate entities now. 

With all the comprehensive measures HHI has implemented since June 2016, HHI has lowered its debt-to-equity ratio to around 90 percent from 134 percent as of the end of the first quarter of 2016.

In the second half of this year, HHI Group continues to accelerate, focusing on core businesses by liquidating poor performing overseas offices and incorporating firms including Hyundai Cummins (construction equipment engine) and Jake (wind power gear box), and selling non-core assets such as HII Investment & Securities. An HHI official said, “With the sell-off of shares of Hotel Hyundai today, we have secured more than 3 trillion won to date this year and achieved about 90 percent of the 3.5 trillion management improvement plan.”

HHI, Saudi Aramco And Dussur Sign MOU for Engine Manufacturing, Supply Collaboration in Saudi Arabia

HHI, Saudi Aramco and Dussur - the Saudi Arabian Industrial Investments Company - announced an MOU to jointly collaborate on engines and pumps business development in the Kingdom of Saudi Arabia. The MOU lays out a comprehensive engine and pump business cooperation framework, through the formation of a joint venture to manufacture 2-stroke engines, 4-stroke engines, and marine pumps; including sales and after-sales services in the MENA region.

The manufacturing facility will be co-located with the maritime yard in Ras Al-Khair, the King Salman International Complex for Maritime Industries, where it will develop synergies with several complementary ventures from both a supply or demand point of view.

The new JV, will manufacture 4-stroke engines under HHI’s HiMSEN brand licensing, serving as a regional production stronghold to support the growing demand for electricity in the MENA region as well as marine applications for very large and small vessels. The new JV will also operate under a MAN-HHI sublicense for the manufacturing and servicing of 2-stroke engines.

The parties have identified strong economic and strategic levers to the new JV, such as the lower costs of production due to the advantaged supply of machine-finished steel and iron components for engines and pumps; fixed and variable costs synergies related to the integration of 2 & 4 stroke engines in one shop; competitive advantaged related to the transportation of such engines from other international sources; increasing demand of 4 stroke engines either as complementary or backup power generation systems to support the growing demand for renewable power generation and remotely located new power plants; as well as a number of other internal advantages related to the contribution of each partner to the deal.

The parties are preparing to engage in the development of detailed documentation to reach a final investment decision, with the expectation the facility will commence operation by end of 2019.