Hyundai Elevator logs first quarterly loss since 1996

Hyundai Elevator Co., South Korea’s No. 1 elevator producer, swung to a quarterly operating loss for the first time since it was listed on the main bourse Kospi in 1996. The loss came as some raw material costs rose and global demand for elevators slowed.

The elevator maker posted 11.5 billion won ($8.6 million) of operating loss in the second quarter of 2022 on a consolidated basis, according to Korea’s Financial Supervisory Service on Thursday.

Founded in 1984, Hyundai Elevator has topped the Korean elevator industry, with 40.8% of the market share as of the second quarter. The firm has logged steady operating profits amid the 1997-98 Asian financial crisis and the 2008-09 global financial crisis, posting 120 billion-150 billion won in average annual operating profit.   

The company saw a quarterly operating loss due to soaring raw materials prices, such as cast iron, steel plate and guide rails, and sluggish demand from China and other overseas markets. The cost of steel plate nearly doubled from 675 won per kilogram at end-2020 to 1,300 won as of the second quarter of 2022.

China’s COVID-19 lockdown also hurt the elevator maker’s sales, the firm said. Hyundai Elevator won new orders worth 1.91 trillion won as of the second quarter, slightly more than 1.55 trillion won in the same period of 2021.

The firm logged negative 42.1 billion won in cash flow from operating activities (CFO) in the second quarter, posting negative CFOs for two quarters in a row. Hyundai Elevator's share price nearly halved from 51,400 won last September to 28,950 won on Aug. 25.

Last month, the elevator maker moved its headquarters to Chungju, in Korea's North Chungcheong Province. At the time, the firm said it will raise annual sales from 2 trillion won in 2021 to 5 trillion won by 2030 and increase overseas sales to 50% of total revenue from the current 20% to 50% by then, targeting emerging markets.

The holding company of Korean conglomerate Hyundai Group Co. makes up more than 90% of the group’s annual revenue. The elevator maker is striving to revive the past glory of the group, which separated shipping giant HMM Co. and financial firm KB Securities Co., formerly known as Hyundai Securities, in the 2010s.

Hyundai Group Chairwoman Hyun Jeong-eun and shareholders with special relations, such as the chairwoman's family, hold a combined 26.5% stake in the elevator company.

The firm’s earnings could improve as it raised elevator prices on two occasions this year, a Hyundai Elevator official said.

Write to Kyung-Min Kang at kkm1026@hankyung.com
Jihyun Kim edited this article.