South Korea’s leading shipbuilders are poised to achieve a historic milestone, projected to hit a combined annual operating profit of 10 trillion won ($6.6 billion) for the first time. This unprecedented surge in profitability is primarily fueled by robust demand for high-margin liquefied natural gas (LNG) carriers and significant improvements in shipyard productivity.
According to market consensus data compiled by financial information provider FnGuide on Monday, industry giants HD Korea Shipbuilding & Offshore Engineering (HD KSOE), Hanwha Ocean, and Samsung Heavy Industries are collectively forecast to report a strong operating profit of 2.33 trillion won for the second quarter.
This impressive estimate signifies a substantial 52.5 percent increase compared to the same period last year and a healthy 12.7 percent rise from the first quarter’s figures, underscoring the sector’s rapid recovery.
Delving into individual performances, HD KSOE, the prominent shipbuilding subholding company of HD Hyundai, is anticipated to spearhead these gains, forecasting an operating profit of 1.42 trillion won, marking a significant 49 percent year-on-year increase.
Hanwha Ocean’s operating profit is projected for a robust 40.3 percent rise, reaching 521.7 billion won. Concurrently, Samsung Heavy Industries is set to see its profit surge by an impressive 90.5 percent, totaling 390.2 billion won.
Following a strong first-quarter performance that saw a combined operating profit of 2.07 trillion won, these three shipbuilding powerhouses are now projected to generate an aggregate of 9.04 trillion won for the entire fiscal year.
For the full year, HD KSOE is expected to be the largest contributor with 5.64 trillion won, trailed by Hanwha Ocean at 1.9 trillion won, and Samsung Heavy Industries at 1.5 trillion won. Industry experts anticipate even stronger earnings in the latter half of the year, potentially elevating the combined total to approach or surpass the 10 trillion won mark.
The surge in revenue is largely attributable to orders for high-value vessels, especially advanced LNG carriers, secured during the recent shipbuilding upcycle. Furthermore, strategic cost reductions and enhanced operational productivity across shipyards have significantly bolstered overall profitability, according to industry observers.
Despite these successes, a degree of uncertainty persists regarding their ambitious overseas naval expansion initiatives.
Both Hanwha Ocean and HD Hyundai Heavy Industries recently encountered a setback in Canada’s significant Canadian Patrol Submarine Project, following the selection of Germany’s Thyssenkrupp Marine Systems as the preferred bidder.
The industry is now keenly observing developing efforts to strengthen South Korea-US shipbuilding cooperation. This collaboration has gained considerable momentum, particularly after last week’s NATO summit and recent outreach from the U.S. to these three prominent shipbuilders, seeking detailed information on their advanced naval vessel design and construction capabilities.
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