Hyundai Heavy Industries (HHI) has made an operating profit for the first quarter of 2016, ending a losing streak that spanned over nine quarters, as the shipbuilder has been struggling to stay afloat amid the downturn in shipbuilding and offshore.
Seoul-listed HHI generated an operating profit of KRW325.2bn ($283.2m) while revenue was reported at KRW10.27trn, a 7.8% decline compared to the previous quarter.
“For Q1 2016, we have returned to the black mainly due to the following reasons: the phase-out of low priced shipbuilding contracts, stabilisation of manufacturing processes for offshore and industrial plant businesses, reduced material costs, the weakening (Korean) won and noticeable performance improvement of non-shipbuilding businesses including engine and machinery, electro electric systems and construction equipment,” a HHI officer said.
The officer added that the strong performance of Hyundai Oilbank, its refining subsidiary, also contributed to the profit.
Since 2014, HHI launched a series of drastic and comprehensive restructuring measures in an all-out effort to tide over the protracted industry crisis.
The profit-focused restructuring measures included the liquidation of unprofitable businesses and overseas incorporated firms such as Hyundai Cummins Engine Company and JaKe. The group also spun off the industrial machinery unit of its engine and machinery division and disaffiliated its trading arm Hyundai Corp.
Additionally the group combined the sales department of its shipbuilding and offshore divisions for increased synergies.
The HHI officer said: “Although we have turned a profit in the first quarter of this year, we will concentrate more on cutting costs in case of a falling order backlog.”
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