Hyundai Heavy Industries Holdings Vice Chairman Kwon Oh-kap

Korean shipbuilders had mixed feelings as they announced 3Q 2018 outcomes. Hyundai Heavy Industries (HHI) turned a profit during the period between July and September for the first time in four quarters, whereas Samsung Heavy Industries turned a loss. Daewoo Shipbuilding Marine Engineering (DSME) is to announce its 3Q outcome in mid-November.

In an electronic filing issued on Oct. 31, HHI posted 3.241 trillion won in sales, 28.9 billion won in operating profit and a net loss of 23.1 trillion won in the third quarter. The sales and operating profits represent a 5.4 percent drop and a 57 percent plunge compared to the same period of the previous year. But the shipbuilder saw operating losses, which continued since the fourth quarter of last year, turn to an operating profit for the first time in four quarters.

HHI’s operating profit was owed to temporarily favorable factors in the maritime plant segment. The shipbuilder earned additional revenue of $266 million from the Nasr Full Field Development Project it had completed in October.

In September, HHI agreed to receive the additional payment from the ship owner for design changes. On the back of the additional payment, the offshore & engineering segment logged 338.6 billion won in operating profit.

On the other hand, the shipbuilding business suffered 304.6 billion won in operating losses.

The losses were attributable to compensation related to delivery delays, raw material price rises and the shouldering of fixed costs. Even though HHI has seen a rise in winning orders so far this year, the shipbuilder is expected to see an improvement in its business performance starting next year since it takes almost one year from the winning of an order to shipbuilding.

Samsung Heavy Industries announced it chalked up 1.312 trillion won in sales and 127.3 billion in operating losses in the 3Q 2018. The 3Q sales represented a 25 percent plunge compared to the same period of last year. The 3Q operating profit turned around to losses.

In the fourth quarter of the year, Samsung Heavy Industries is forecast to turn around a rise in sales on the back of the recovery of shipbuilding days and a rise in shipbuilding related to commercial ships.

Hyundai Heavy Industries Headquarters in Ulsan. (Photos: HHI)

HHI Group’s Reshuffle in a Shift in Generations

Hyundai Heavy Industries (HHI) Group carried out a reshuffle of executives involving a shift in generation in major subsidiaries of the group, including HHI and Hyundai Oilbank on Nov. 6.

The group tapped President Han Young-suk of Hyundai Mipo Shipyard and President Ka Sam-hyun of the group’s offshore ship sales division to be co-president of Hyundai Heavy Industries.

 
President Han, a graduate of Chungnam National University Mechanic Engineering Department, held positions such as heads of design and production divisions at HHI.

He was appointed to take the helm of Hyundai Mipo Shipyard, a subsidiary of HHI, in October 2016. He has been credited with hitting an operating profit for the third straight year since he took office at the shipyard.

HHI Senior Executive Vice President Shin Hyun-tae was promoted to president of Hyundai Mipo Shipyard. The group promoted Hyundai Oilbank Senior Executive Vice President Kang Dal-ho to be president of the refinery company.