The world’s largest shipbuilder looks to have turned the corner financially ahead of its Korean peers.
Hyundai Heavy Industries today reported its biggest quarterly profit in three years on the back of a huge cost cutting exercise.
Second-quarter net income, excluding minority interest, was KRW292bn won ($257m), compared with a loss of KRW241.2bn won a year earlier.
The full quarterly figures do however show the yard still faces plenty of hurdles coming up. The drought in orders persisted with HHI only managing revenues of KRW9.86trn, down 17% year-on-year.
HHI won $4.11bn worth of contracts in the first half, 44% less than a year ago. Orders for ships fell 69%to $992% and those for offshore projects dropped 53%.
Nevertheless, the fact the yard has returned to the black will be an enormous fillip to it and its creditors. HHI, along with most of South Korea’s largest shipbuilders, is going through a major restructuring exercise.
The yard has received further good news with auditors Samil PwC saying HHI’s proposed $3bn restructuring plan can yield operating profits and secure liquidity for the Ulsan-headquartered conglomerate.
“While these quarterly results are commendable, the dwindling forward orderbook remains a concern. HHI is not out of the woods yet,” one shipbuilding analyst told Splash.
I don’t buy this, with a cancelled oil rig worth USD 1bln, and shoveling out at least USD 3mln each month for the past months due to late deliveries, it is hard to believe that they are in the black again.