HD Hyundai’s machinery units post profits despite slump in China

HD Hyundai Co., the holding company of South Korea’s Hyundai Heavy Industries Group, saw its two construction equipment affiliates post strong earnings in the third quarter despite a slump in China, one of the units’ key global markets.

HD Hyundai officials said on Sunday they expect the two machinery makers to continue to post solid results in the fourth quarter, helped by the diversification of its overseas markets.

Hyundai Construction Equipment Co.'s operating profit reached 63 billion won ($44.2 million) in the third quarter, up 70.3% from a year earlier, while sales increased 17.1% on year to 874.8 billion won.

In the wake of the renewed COVID-19 lockdown in China, the machinery maker’s Chinese sales dropped 22% in the July-September period from the same period a year ago.

The decline, however, was offset by decent sales growth in North America and emerging markets such as India and Brazil, the company said.

Another HD Hyundai unit, Hyundai Doosan Infracore Co., saw its operating profit and revenue rise 121.7% and 21.1%, respectively, to 74.7 billion won and 1.17 trillion won, as the sales decline in China was dwarfed by gains in emerging markets.

China, the world’s largest construction equipment market, accounts for a fifth of Hyundai Construction Equipment’s global sales, while the country takes up about 12% of Hyundai Doosan Infracore’s overseas sales. Both companies run their own manufacturing factories in China.

DIVERSIFICATION AWAY FROM CHINA

Industry watchers said the two HD Hyundai affiliates’ aggressive diversification of its target markets, away from China into other emerging countries, contributed to their decent earnings.

Kwon Oh-gap, chairman of HD Hyundai, formerly known as Hyundai Heavy Industries Holdings Co., earlier this year asked senior executives to work on measures to counter a slump in China by exploring other emerging markets.

Hyundai Construction Equipment Chief Executive Choi Cheol-gon, Hyundai Doosan Infracore CEO Cho Young-cheul and Sohn Dong-youn, vice chairman of Hyundai Genuine Co., an intermediate holding company of Hyundai Heavy Industries, said in a joint statement last month that the companies will focus on profitability amid growing external uncertainties.

HD Hyundai changed its name from Hyundai Heavy Industries Holdings in February as part of its efforts to transform into an entity focused on new growth drivers.

Hyundai Heavy, the world’s largest shipbuilding group, is led by three core affiliates – Korea Shipbuilding & Offshore Engineering Co. (KSOE), Hyundai Oilbank Co. and Hyundai Genuine.

Write to Kyung-Min Kang at Kkm1026@hankyung.com
In-Soo Nam edited this article.