HD Hyundai Heavy Industries (329180) Q2 2024 earnings summary

Executive summary

• Sales rose 30.0% quarter-over-quarter and 26.7% year-over-year, driven by more working days and higher vessel prices.

• Operating profit surged 818.3% QoQ and 185.5% YoY, reflecting recovery from prior industrial accident losses and improved construction processes.

• Net income attributable to controlling interest increased 438.8% QoQ and 539.4% YoY.

• Revenue for H1 2024 was ₩6,871.7 billion, down from ₩11,963.9 billion in H1 2023, reflecting a cyclical decline after a strong prior year.

• The company maintained a strong order backlog, with end-June 2024 orderbook at ₩46,328.9 billion.

Financial highlights

• 2Q24 sales reached KRW 3,884.0 billion, up from KRW 2,987.7 billion in 1Q24.

• Operating profit was KRW 195.6 billion, up from KRW 21.3 billion in 1Q24.

• Net income was KRW 154.1 billion, compared to KRW 28.6 billion in 1Q24.

• Gross margin improved to 8.6% in H1 2024 from 5.4% in H1 2023.

• Basic EPS for H1 2024 was ₩2,058, up from ₩278 in H1 2023.

Outlook and guidance

• Sales and operating profit expected to benefit from high-priced vessel deliveries and stabilized construction processes.

• The company expects continued demand for eco-friendly and dual-fuel vessels, with a focus on LNG, LPG, and methanol-fueled ships.

• Order intake is expected to remain robust, supported by global environmental regulations and replacement demand.

• Engine & Machinery segment to see continued growth from increased shipbuilding backlog.

• The company is investing in capacity and R&D to address future demand for hydrogen and ammonia-fueled ships.