The combined operating profit of the three major domestic shipbuilders, HD Korea Shipbuilding & Offshore Engineering, Hanwha Ocean, and Samsung Heavy Industries, is expected to exceed 2 trillion won in the first half of this year (January to June). This is more than three times the level compared to the first half of last year, when the total operating profit fell below 1 trillion won. This is interpreted as the effect of the high-value-added ships, such as gas carriers, contributing significantly to the results.
According to FnGuide, a financial information provider, and the shipbuilding industry, the combined operating profit of HD Korea Shipbuilding & Offshore Engineering, Hanwha Ocean, and Samsung Heavy Industries for the first half is estimated at 2.57 trillion won. This represents a 226% increase compared to the combined operating profit of 788.5 billion won in the first half of last year. The total operating profit for the second quarter of the three companies is estimated to be 1.3293 trillion won, an increase of 167% compared to the second quarter of last year.
HD Korea Shipbuilding & Offshore Engineering, the intermediate holding company in HD Hyundai’s shipbuilding sector, is expected to achieve an operating profit of around 900 billion won in the second quarter, a 139% increase compared to the second quarter of last year. The total operating profit for the first half is estimated to be 1.759 trillion won, a 228% increase.
Hanwha Ocean is likely to achieve an operating profit in the 250 billion won range in the second quarter, confirming a return to profitability compared to the second quarter of last year. The operating profit for Hanwha Ocean in the first half of this year is expected to exceed 510 billion won, more than a 1000% increase compared to the first half of last year. Hanwha Ocean's operating profit has been increasing since it posted an annual profit for the first time in four years last year. Samsung Heavy Industries is expected to report an operating profit of approximately 298.8 billion won for the same period, a 43% increase from last year.
In the shipbuilding industry, it has been analyzed that the delivery of ships that were ordered at low prices during the downturn, which had low profitability, is mostly finished, leading to an improvement in profitability. An industry insider noted, "The proportion of ships ordered at high prices has been increasing, and the proportion of high-value-added ships has also risen, which means that the profitability of large companies could increase further in the second half of the year."
HD Korea Shipbuilding & Offshore Engineering's subsidiary, HD Hyundai Heavy Industries, is expected to see its operating profit margin rise to around 12% in the second quarter. The quarterly operating profit margin of HD Hyundai Heavy Industries increased from the 5% range in the second and third quarters of last year to 7.0% in the fourth quarter and 11.3% in the first quarter of this year. The ratio of low-profit ships ordered in 2020-2021 in this year's revenue has significantly decreased to about 2%, enhancing profitability.
According to Kyobo Securities, the proportion of profitable gas carriers in the revenue of HD Hyundai Heavy Industries in the second quarter is estimated to have increased significantly to 69.1%, compared to 60.7% in the first quarter. Another subsidiary, HD Hyundai Samho, is expected to record an operating profit margin of 17% in the second quarter.
Following an operating profit margin of 8.2% in the first quarter, Hanwha Ocean is expected to have an operating profit margin in the 7% range in the second quarter. In the first half of last year, it posted a loss, and the annual operating profit margin was only 2.2%. Hanwha Ocean is benefiting from sales related to high-profit submarines and maintenance, repair, and overhaul (MRO) of U.S. Navy vessels.
Amid concerns that the global ship ordering volume in the first half of this year has halved compared to the previous year, signaling the end of the shipbuilding industry's boom (supercycle), the domestic shipbuilding industry is increasing orders for high-value-added ships in preparation.
HD Hyundai Heavy Industries has reported that 70% of its remaining orders consist of gas carriers, while Hanwha Ocean has a ratio of more than 60% for liquefied natural gas (LNG) carriers. Samsung Heavy Industries is focusing on orders for floating liquefied natural gas (FLNG) facilities, which hold a dominant market share.