Hyundai Heavy Q3 profit up; shipbuilding in slump

South Korea's Hyundai Heavy Industries, the world's biggest shipbuilder, posted higher quarterly operating profit, driven by its offshore and plant units, but missed forecasts due to a weakening shipbuilding business. The shipbuilding industry is set to suffer a prolonged downturn as financially-strapped shippers globally struggle, and not only place few new orders but ask for existing orders to be delayed or cancelled.
A recovery in the won currency is also of concern for Hyundai, though steel prices are coming down.
Leading shipyards such as Hyundai, Daewoo Shipbuilding&Marine Engineering and Samsung Heavy Industries hope to weather the slump by focusing on energy development deals, such as Australia's Gorgon project that awarded Hyundai a $2 billion order last week.
'The shipbuilding sector is not expected to see a recovery soon, maybe not before 2011,' said Cho In-karp, an analyst at Shinhan Investment Corp. 'The plant and electric equipment sectors have been supporting and boosting Hyundai earnings.'
Hyundai posted a 531.7 billion won ($443.4 million) operating profit for July-September, missing a 602.3 billion won profit forecast by analysts on Thomson Reuters I/B/E/S.
The result compares with a 344 billion won operating profit a year earlier.
Third-quarter net profit was 533.9 billion won, above a consensus forecast of 506.6 billion won.
New shipbuilding orders slumped 97 percent in January-September from a year earlier, but plant orders jumped by around a third, Hyundai said.
Weighed down by the weak outlook, Hyundai Heavy shares fell 15 percent this year through Wednesday, against a 43 percent gain in the broader market.
The stock dropped 3.5 percent on Thursday before the earnings, compared with a 1.5 percent loss on the KOSPI.