Hyundai Heavy Profit Rises on Higher Offshore Demand

Hyundai Heavy Industries Co., the world’s largest shipbuilder, said fourth-quarter profit jumped 47 percent to a record as it built more vessels and offshore platforms to meet demand from oil explorers and producers.

Net income rose to 1.06 trillion won ($952 million) from 721.3 billion won a year earlier, the Ulsan, South Korea-based company said in a regulatory filing. That exceeded the 801.5 billion won average of 17 analyst estimates compiled by Bloomberg. Sales gained 21 percent to a record 6.43 trillion won.
Hyundai Heavy is working on orders it got a year before the worst credit crisis since World War II caused ship prices to plunge as much as 41 percent. The shipyard expects to win the most contracts in three years in 2011 as growing global trade and increasing oil exploration spur demand for container ships and offshore equipment.
“It doesn’t get any better than this,” said Lee Jae Won, an analyst at Tong Yang Securities Co. in Seoul. “Hyundai Heavy is going to see increases in demand for all of its businesses, whether that be ships or offshore platforms.”
The 2010 dividend will double from last year’s to 7,000 won, the highest since 2007, according to the statement.
Operating profit, or sales minus the cost of goods and administrative expenses, rose 46 percent to 983 billion won in the fourth quarter, the company said. Hyundai Heavy’s operating margin widened to 15 percent from 13 percent in the same period last year.
Share Performance
Hyundai Heavy gained 2.2 percent in Seoul trading to close at 501,000 won, the highest in almost two weeks, before the earnings announcement. The stock has more than doubled in the past 12 months, compared with a 30 percent advance in South Korea’s benchmark Kospi index.
The shipyard said in December it aims to boost this year’s orders for vessels, offshore platforms and plants by 54 percent to $26.6 billion, the highest since 2008. Sales may rise 20 percent to a record 26.9 trillion won.
Hyundai Heavy, which also makes power plants and solar cells, received orders to build three drill ships worth $1.55 billion this month from Diamond Offshore Drilling Inc. and Noble Corp.’s affiliate. They have options for three more vessels.
The company also won earlier this month a $900 million contract from Qatar to build an offshore platform and a 300- kilometer pipeline by 2013.
Global shipbuilding orders may rise 4 percent this year to 35 million compensated gross tons, the highest since 2008, led by demand for container ships and liquefied natural gas carriers, according to the Ministry of Knowledge Economy.
Samsung Heavy Industries Co., the world’s biggest maker of drill ships, said today that net income last year jumped 33 percent to 888.4 billion won as it built more drill ships. Operating profit climbed 26 percent to 997.2 billion won.