▶ Sales increased by 3.4% compared to the same period of the previous year due to continued brisk growth in North America and emerging markets

▶ Decreased operating profit compared to the same period last year due to the market contraction in China and increase in raw material and logistics costs

▶ “We will increase profitability by expanding the export of equipment manufactured at overseas factories in countries like India and Brazil.”

Hyundai Genuine (holding company of Hyundai Heavy Industries Group’s construction equipment unit) subsidiary Hyundai Construction Equipment announced its first-quarter performance.

On April 28 (Thurs.), Hyundai Construction Equipment announced that it recorded sales of KRW 932.4 billion and operating profit of KRW 46.7 billion in the first quarter of this year. Compared to the same period of the previous year, sales increased 3.4%, continuing sound performance flow, but operating profit decreased 38% due to the rise in raw material and logistics costs and contraction of the Chinese market owing to the COVID-19 pandemic.

By region, growth in North America and emerging markets drove sales growth in the first quarter. The North American market recorded KRW 137.3 billion, a 51% increase from the same period of the previous year, due to an increase in demand for construction equipment aided by the booming real estate market and expansion of infrastructure investment.

Emerging markets reported sales of KRW 482.4 billion, up 45% from the same period last year, continuing the positive earnings performance from last year.

Although Hyundai Construction Equipment recorded sales of less than half compared to the same period of the previous year in the Chinese market due to the economic contraction caused by the re-spread of COVID-19, overall sales increased, indicating that the sales portfolio diversification strategy—which the company has been focusing on since the third quarter last year—is paying off.

In fact, Hyundai Construction Equipment reduced the share of the Chinese market, which accounted for 33% of total sales in the first quarter of last year, to 12% this quarter through the market diversification strategy. Instead, the company has increased sales in emerging markets such as India and Brazil—where production plants are located—by establishing product lineup and marketing tailored to the local characteristics. Moreover, strengthening marketing in North America, where investment in large-scale infrastructures is ongoing, has translated into sales increase that more than made up for the sales decrease in the Chinese market.

The market prospects for regions where sales are growing due to portfolio diversification are also bright. In emerging markets such as Latin America and Asia, the demand for large construction equipment continues to increase due to rising raw material prices. In advanced markets such as the US and Europe, the real estate market is strong, and the government’s heavy investment in large infrastructures is expected. Furthermore, China, whose economy contracted this quarter, is also expected to resume infrastructure investment from the second half of this year when the COVID-19 situation stabilizes.

"Despite the market uncertainty caused by COVID-19 and the war between Russia and Ukraine, we were able to post a sales increase compared to the same period last year. We plan to secure profitability by increasing the export of equipment manufactured at the production bases in countries such as India and Brazil to compensate for raw material and logistics cost increases,” an official from Hyundai Construction Equipment said. <End>

■ 1Q 2022 Results of Hyundai Construction Equipment