Hanwha Ocean swings to profit, seeks 6 US Navy MRO projects

Hanwha Ocean Co., a South Korean warship builder, said on Friday it swung to profit in 2024 for the first time in four years, driven by increased sales of high-value-added LNG carriers.

A unit of chemicals-to-defense-business conglomerate Hanwha Group, Hanwha Ocean said it posted 237.9 billion won ($166 million) in operating profit last year, a turnaround from a loss of 196.5 billion won a year earlier.

Its sales rose 45.5% to 10.78 trillion won from 7.4 trillion won the prior year.

The company attributed its decent performance to more robust sales of high-value-added ships, including LNG carriers; stabilized raw material prices such as thick steel plates; and the favorable dollar-won exchange rate.

Its revenue in the defense business, including specialty vessels, surpassed 1 trillion won in 2024, with the division’s operating profit margin reaching 12%.

Hanwha Ocean, formerly Daewoo Shipbuilding & Marine Engineering Co., better known as DSME, is the only Korean company that has built submarines for the country's Navy.

SEEKING 6 US NAVY MRO PROJECTS

Hanwha executives said on Friday the company aims to secure up to six maintenance, repair and overhaul (MRO) contracts for US Navy ships this year.

Last year, Hanwha won two MRO projects from the US Navy as then President-elect Donald Trump sought deeper shipbuilding ties with Korean shipbuilders.

The Korean shipbuilder won an MRO deal in November for the US Naval Ship (USNS) Yukon, a 31,000-ton replenishment oiler with the US Seventh Fleet.

In August, Hanwha bagged an MRO deal for the USNS Wally Schirra, a 40,000-ton dry cargo and ammunition ship, becoming the first Korean shipbuilder to provide MRO services for the US Navy.

The deal came as Trump sought closer cooperation with Korea in the defense maintenance sector.

PHILLY SHIPYARD

Hanwha plans to expand its defense business into warship construction, leveraging its acquisition of Philly Shipyard Inc. in June.

Hanwha said it would invest more in Philly Shipyard to build warships to meet Washington’s requirements to manufacture battleships for its Navy on US soil.

The US Navy is known to have plans to spend $146.8 billion by 2028 on building 55 warships including fleet oilers, salvage vessels, guided-missile destroyers and others.

Hanwha officials said it could use its Korean peers’ dockyards if it wins more US Navy MRO orders than it can digest at its own shipyards.

Based in Philadelphia, Pennsylvania, Philly Shipyard sits on the site of a former US Navy facility.

Hanwha Group said it will leverage Philly Shipyard to tap into the US MRO market at both the government and commercial levels.

SUBMARINES

Hanwha Ocean also aims to secure contracts for upgrading the performance of three Korean submarines and submarine building orders from Canada, the Middle East and Poland, according to company officials. Separately, Hanwha expects a frigate building contract from Thailand, they said.

Hanwha Ocean said it also plans to expand its offshore plant business, targeting orders of up to two floating production, storage and offloading (FPSO) units annually from South America and Africa.

Another area of business focus is the construction of offshore wind turbine installation vessels (WTIV), it said.

In December, sources said Hanwha and another Korean shipbuilder won deals worth a combined 1.4 trillion won to each build a wind turbine installation vessel (WTIV) for unidentified domestic firms.

A WTIV is a vessel specially designed to install offshore wind turbines.

Shares of Hanwha Ocean closed 10.1% higher at 56,700 won on Friday, outperforming the broader Kospi index’s 0.9% rise.

Write to Hyung-Kyu Kim at khk@hankyung.com
In-Soo Nam edited this article.