Hyundai Heavy Reports Better-Than-Estimated Profit

Hyundai Heavy Industries Co., the world’s largest shipbuilder, boosted third-quarter profit by a more-than-estimated 62 percent as it built more offshore platforms and power plants. Net income climbed to 863.4 billion won ($768 million) from 533.8 billion won a year earlier, the Ulsan, South Korea-based company said today in a regulatory filing. That beat the 716.9 billion won average of 22 analyst estimates compiled by Bloomberg. Sales gained 7 percent to 5.33 trillion won.
Hyundai Heavy boosted earnings as it works on a $2.06 billion liquefied natural gas facility for Chevron Corp., its largest single contract win, and builds power plants in Saudi Arabia and Kuwait. Higher cargo rates and global trade growth have also caused shipping lines including Neptune Orient Lines Ltd. and Evergreen Group to resume ordering new vessels.
“The yard is operating at almost full capacity now, and that is good for profit,” said Lee Sokje, an analyst at Mirae Asset Securities Co. in Seoul. “Hyundai Heavy’s earnings will most likely outperform the market consensus as it will be selective in orders it wins to ensure profitability.”
Operating profit rose 50 percent to 798.8 billion won in the third quarter. The company’s margin, or sales divided by operating profit, widened to 15 percent from 11 percent.
Increased contributions from affiliates Hyundai Samho Heavy Industries Co. and Hyundai Oilbank Co. also help boost profit, the company said.
Hyundai Heavy fell 0.3 percent to close at 367,000 won in Seoul trading before the earnings announcement. The stock has more than doubled this year, the second-best performer among the 50 largest companies traded on South Korea’s Kospi index.
The company aims to win $17.7 billion worth of contracts for vessels, plant construction and other items this year, compared with $10.7 billion in 2009. Of that total, orders for ships may reach $4.03 billion this year, from $444 million in 2009, the company forecast in December.