S.Korean heavy equipment makers ride global raw materials boom

The surging demand for raw materials around the world are driving sharp sales rebounds of South Korea’s two leading equipment makers Hyundai Construction Equipment Co. (Hyundai CE) and Hyundai Doosan Infracore Co. this year.

The two units under the Hyundai Heavy Industries Group are posting strong results, especially in the extra-large excavator segment. Extra-large excavators, which weigh more than 80 tons a unit, are typically used in raw material mines and large-scale construction sites. These types have higher durability and larger excavation power than normal-sized excavators.

According to the industry on Oct. 10, Hyundai CE sold 69 extra-large excavators, counting both of its 85-ton and 120-ton models, this year up to September. The sales figure is not only more than five times the 13 units sold throughout 2020 but also is almost four times the 18 units sold during the pre-COVID year of 2019.

Industry insiders note that Hyundai CE’s rapid growth in the segment is a result of both the ongoing global surge in raw materials and active efforts this year to expand its presence in overseas markets. The company in August acquired the Korea Shipbuilding & Offshore Engineering’s construction equipment unit in Brazil, and also set up a new local office in South Africa to boost sales in the continent.

Hyundai CE added that its strategy to focus on certain key raw material exporters such as Brazil is turning out to be fruitful as these countries are resuming mining projects that had been halted due to the pandemic.   

“Our sales of 69 units up to the third quarter is a phenomenal performance, considering that the global market size for extra-large excavators is about 1,000 units a year. Our performance in the segment far outperforms our market share in the whole industry at about 1.2%,” said a Hyundai CE official. While the extra-large excavators take up only 1-2% of the whole industry in terms of revenue, their price per unit is much higher and they also have higher profitability.

Another Hyundai Heavy Industries unit, Hyundai Doosan Infracore that was acquired from the Doosan Group in August, is also strengthening its portfolio in the extra-large excavator sector. The company launched its first 100-ton excavator model in September and has sold 10 units to date. Its total sales in the large-excavator segment were 38 units up to September.

Hyundai Doosan Infracore is also strengthening its foothold within the global design community. It was the first company among South Korea’s heavy equipment makers to have been named the Featured Finalist at the 2021 International Design Excellence Awards (IDA) with its excavator DX100W. The company’s products have also been awarded at the Red Dot Design Award 2020 and the iF Design Award 2021.

Write to Jung-hwan Hwang at jung@hankyung.com
Daniel Cho edited this article.