Hyundai Heavy records ‘surprise’ profit, rivals likely to see losses

Hyundai Heavy Industries made a “surprise” operating profit in the second quarter of the year, but two other rival shipbuilders are projected to post losses, analysts said Thursday.

Samsung Heavy Industries, which is scheduled to release its Q2 earnings  Friday, is expected to post an operating loss, due mainly to the delay of two major projects.

The company’s project to build Prelude floating liquefied natural gas facilities for multinational firm Shell has been delayed to April next year. The project for Ichthys to construct a central processing facility is also delayed to December this year.

Meritz Securities anticipated that the sales of Samsung Heavy Industries would increase by about 80 percent to 2.5 trillion won ($2.22 billion), along with an operating loss of 59 billion won.

The company posted 6.1 billion won in operating profit in the previous quarter.

Daewoo Shipbuilding and Marine Engineering is also projected to post at least billions of operating loss in the second quarter, due mainly to a fall in orders.

The company recorded 26 billion won of operating deficit in the first quarter. The second quarter’s report is slated to be released next month.

On the other hand, Hyundai Heavy Industries on Wednesday posted profit of about 560 billion won, up by 71 percent on-year. Its sales reached 9.8 trillion, down by 4 percent, while its net profit soared by 60 percent on-year to 392 billion won.

The company bounced back in the first quarter after suffering operating deficits for 10 months.

The performance boost of its subsidiary Hyundai Oil Bank and continuous efforts to cut costs contributed to the operating profit figure, the company said.

Its oil business accounted for 58 percent of its total operating profit.

By sector, shipbuilding made up 180 billion won of profit and marine plant projects made 125 billion won.

The company spent a large amount of 260 billion won on providing retirement funds as part of its restructuring plan, however, the large-scale project has been a key factor in raising its operating profit, it added.

Hyundai, however, is remaining cautious of its future performance as the number of orders it received plummeted in the first half of this year.

By Lee Hyun-jeong (rene@heraldcorp.com)