A 160,000-cubic-meter LNG carrier that HD Hyundai Marine Solution will modify for Chevron
HD Hyundai Marine Solution Co., a ship parts manufacturing and after-sales service company, has reported the highest-ever operating profit margin in South Korea’s maritime industry in the first half of this year, buoyed by the growing demand for eco-friendly engines in line with stringent low emission regulations.
The operating margin at HD Hyundai Marine Solution, an affiliate of the world’s largest shipbuilder HD Hyundai Heavy Industries Co. reached 14.9% as of the end of June of this year.
It earned 122.4 billion won ($91 million) in operating profit against sales of 820.8 billion won in the first six months of this year.
The margin represented a 0.08-percentage-point rise from the previous year’s 14.1%.
That was notably higher than the 4.4% for HD Korea Shipbuilding & Offshore Engineering Co., the intermediate holding company of HD Hyundai Co. at the top of the shipbuilding group’s ownership structure.
First-half results of South Korea’s major shipbuilders and ship parts makers (Unit: billion won)
Company
Revenue
Operating profit/loss
Operating profit margin (%)
HD Hyundai Marine Solution
820.8
122.4
14.9
HD Korea Shipbuilding & Offshore Engineering
12,131.1
536.6
4.4
HD Hyundai Mipo
2,129.5
6.3
0.3
Hanwha Ocean
4,819.7
43.2
0.9
Samsung Heavy Industries
4,879.7
208.5
4.3
HJ Shipbuilding & Construction
952.3
-27.6
Negative
Source: Company filings to the Financial Supervisory Service
Since the International Maritime Organization (IMO) set out guidelines, effective from 2023, to reduce carbon emissions from international shipping by at least 40% by 2030, ship modification orders have been rising.
They prefer to convert ship engines into hybrid or dual fuel ones, instead of placing new vessel orders. Dual fuel engines power ships on either liquefied natura gas (LNG) or conventional liquid marine fuels such as diesel oil.
The IMO oversees the shipping industry and its contribution to climate change as an agency of the United Nations.
HD Hyundai Marine is an exclusive supplier of vessel engines and aftersales services, including ship modification, of its affiliated shipbuilders such as HD Hyundai Heavy Industries Co. and HD Hyundai Mipo Co. that control 36% of the world’s large ship engines last year.
It offers aftersales services for 20 to 25 years after ship delivery.
HD Hyundai Marine’s division for modifications to dual fuel engines posted a 29% jump to 38.3 billion won in revenue in the second quarter ended in June from the year prior.
By Hyeon-Woo Oh
ohw@hankyung.com
Yeonhee Kim edited this article
