HHI records profit in 2Q 2016

Hyundai Heavy Industries (HHI) has reportedly stabilised and is back in the black following a public disclosure of its 2016 second quarter earnings.

According to a regulatory filing, during between April and June HHI recorded 9.86 trillion Korean won (US$8.75 billion) in sales while operating income stood at 557.2 billion won, bringing accumulated sales and operating profits for the first half of this year to 20.1355 trillion won and 882.4 billion won respectively.

HHI attributes operating profits for two consecutive quarters to a series of drastic and comprehensive restructuring measures put in place.

“Stabilisation of manufacturing processes for offshore plant business, change orders received from its offshore plant business clients, and increased building volume of ships that HHI won at profitable prices outweighed the 260 billion won one-off cost for the voluntary retirement program,” an HHI official said.

“Continued efforts to reduce material costs for non-shipbuilding businesses including Engine and Machinery, Electro Electric Systems and Construction Equipment also played a role for the profits.”

“It is encouraging to post profits for two consecutive quarters but we still have a long way to go,” the official added. “Bearing in mind the 80 per cent drop in new orders for our shipbuilding business for the first six months of this year, we will continue to faithfully implement the management improvement plan to facilitate sustainable performance.”

HHI has decided to sell Hyundai Finance Corporation and Hyundai Venture Investment Corporation as a part of its proposed management improvement plan.

With the decision to dispose of all of its financial arms including Hyundai Futures, Hi Asset Management and Hi Investment and Securities, HHI will accelerate its business reorganization efforts with much more focus on its core businesses.