▶ Recorded revenue of KRW 909.8 billion & operating profit of KRW 20.7 billion, a decline compared to the same period last year;
▶ Decrease in operating profit due to lower sales volume and higher costs, such as promotion/logistics;
▶ Outlook for a market recovery in China and robust demand for mining equipment in resource countries, & growth for the engine business
HD Hyundai Infracore (Co-CEOs Cho Young-cheul, Oh Seung-hyun) announced its 2024 3rd quarter performance results through a public disclosure on Monday the 28th.
Revenue decreased 15% year-on-year to KRW 909.8 billion due to a slowdown in demand for construction equipment and engines in line with global austerity and downward stabilization of raw materials, while operating profit decreased by 77% year-on-year due to lower revenue and higher promotional/logistics costs.
As for performance results by business sector, the construction equipment business recorded a revenue of KRW 654.8 billion, down 17% year-on-year, in addition to an operating loss of KRW 12 billion due to expanded promotions to reduce inventory, which impacted net income.
By region, demand recovery in advanced markets was delayed due to interest rate cuts, uncertainty about the U.S. presidential election, and the prolonged Ukraine-Russia war, but emerging markets recorded effective results due to the company’s expansion of footholds in Indonesia, Brazil, and Chile, along with strong demand for resource mining equipment.
As for revenue in the Chinese market, which had been shrinking, it has continued to recover for two consecutive quarters, growing 9% year-on-year. The outlook for demand recovery is positive starting with small products due to government-led economic stimulus measures, and the trend is forecast to expand to medium and large excavators that are set to be replaced in 2025.
The Engine Business Sector recorded a revenue of KRW 255 billion and an operating profit of KRW 32.7 billion, down 11% and 17% respectively compared to the same period last year, amid adjustment in demand underway in the global austerity economy.
However, it maintained a double-digit operating profit rate by showing a robust sales flow in generators, ships, and military-use engines. In the future, additional sales of battery packs are expected driven by the second supply contract for military-use engines to be installed in K2 Battle Tanks destined for Poland and electrification of industrial and commercial vehicles.
Meanwhile, HD Hyundai Infracore has been improving its financial stability through sound debt repayment. The debt ratio and net debt ratio in the third quarter were 130% and 51%, respectively, marking a significant improvement compared to 249% and 82% in 2021, and it has enhanced shareholder value by completing its treasury stock repurchase/cancellation worth KRW 56 billion that was implemented early this year in August.
HD Hyundai Infracore expects steady growth in the Engine Business Sector given the recovery of advanced markets after the U.S. presidential election, the recovery of emerging markets where infrastructure investment is expanding, and greater generator engine sales and military-use engine exports in line with expanding electricity demand.
An HD Hyundai Infracore official said, “Amid a global market contraction, we have increased our construction equipment market share in most regions by bolstering product and channel competitiveness,” and added, “We will strengthen our fundamental competitiveness to improve profitability and position ourselves to show even faster growth in the upcoming market recovery.”
<End>