South Korean shipbuilding major Hyundai Heavy Industries (HHI) has continued its earnings streak in the second quarter of 2016 following its return to the black in the previous quarter.
Namely, according to a stock exchange filing, the shipbuilder’s net income for the period increased to KRW 392.3 billion (USD 345.5 million) from KRW 244.5 billion seen in the previous quarter , and against a net loss of KRW 242.4 billion (USD 213.4 million) recorded in the second quarter a year earlier.
While the company’s sales decreased by 17% during the quarter, its operating profit saw a turnaround reaching KRW 557.2 billion in the second quarter, compared to an operating loss of KRW 170 billion in the same period a year earlier.
HHI said that the increase in operating profit is mainly attributed to a series of drastic restructuring measures undertaken since 2014 by the management, and strong performances of Hyundai Oilbank, its refining subsidiary.
“Stabilization of manufacturing processes for offshore plant business, change orders received from its offshore plant business clients, and increased building volume of ships that HHI won at profitable prices outweighed the KRW 260 billion one-off cost for the voluntary retirement program,” HHI’s representative said, adding that continued efforts to reduce material costs for non-shipbuilding businesses also played a positive role for the profits.
Although it posted positive results for two consecutive quarters, the company still has a long way to go.
“Bearing in mind the 80% drop in new orders for our shipbuilding business for the first six months of this year, we will continue to faithfully implement the management improvement plan to facilitate sustainable performance,” the company said.
Additionally, HHI has decided to sell Hyundai Finance Corporation and Hyundai Venture Investment Corporation as a part of the proposed management improvement plan.
With the decision to dispose of all of its financial arms including Hyundai Futures, Hi Asset Management and Hi Investment & Securities, HHI will accelerate its business reorganization efforts with much more focus on its core businesses.