Hyundai Heavy Hits its Annual Sales Target Five Months Early

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Published Jul 15, 2021 11:56 PM by The Maritime Executive

In another indicator of the booming shipbuilding market,  Korea Shipbuilding & Offshore Engineering (KSOE) - the holding company for Hyundai Heavy Industries - reports that it has already surpassed its annual sales targets. 

With a new $400 million order for two new LNG carriers - on top of $800 million in orders for four LNG carriers announced earlier this week - the company has now raked in new sales totaling more than $15 billion in the span of seven months. This is more than the entire amount that its sales team brought in last year. 

"KSOE will push ahead with a strategy to win more orders focusing on profits this year," KSOE spokesman Park Joon-su told Yonhap.

The company is also expected to win a groundbreaking $2 billion contract from Maersk for a series of 12 methanol-fueled, 15,000 TEU container ships. One of the conglomerate's subsidiaries won the contract for Maersk's first methanol-powered boxship, a trial-size 2,100 TEU feeder, in a deal signed in June.

However, the outsize sales numbers may not translate into outsize profits - at least not right away, according to KB Securities analyst Jeong Dong-ik. The cost of steel plate is soaring, cutting into the profitability of the yard's backlog of signed newbuild contracts. Given the rising cost, Jeong predicted a second-quarter operating loss for KSOE of about $500 million - and potentially more. 

KSOE has also been dealing with a strike movement amongst its unionized workforce, which has been working without a contract for the past two years. On Wednesday, its union announced that it had reached a tentative pay raise agreement with KSOE covering last year's wages, ending a one-week walkout.