HANJIN HEAVY INDUSTRIES

- Shows clear year-on-year improvements in revenue, operating profit, and net income, extending growth momentum
- Strong performance in high-value-added vessel construction by the shipbuilding division, while the construction division also contributes to profitability despite cost pressures

- A 7,900-TEU Container Ship Built by HJSC

HJ Shipbuilding & Construction (HJSC) posted a significant improvement in earnings in the first quarter of this year, with operating profit rising more than 347% compared to the same period last year. As revenue from high-value-added vessel construction in the shipbuilding division begins to be fully reflected, along with improvements in the cost structure of the construction division, the company’s earnings recovery is expected to gain further momentum.

The multinational shipbuilder announced on May 15 that, on a consolidated basis, it recorded KRW 541.4 billion in revenue, KRW 24.6 billion in operating profit, and KRW 25.5 billion in net profit for the first quarter. Revenue increased 32% from KRW 410.0 billion in the same period last year, while operating profit rose from KRW 5.5 billion to KRW 24.6 billion, marking a 347% increase. Net profit also climbed sharply, from KRW 5.6 billion to KRW 25.5 billion, up 355%.

The improved performance is largely attributed to the shipbuilding division, one of the company’s two core business segments, where construction volumes of high-value-added vessels, including eco-friendly container ships, have begun to contribute meaningfully to revenue.

In fact, revenue from the shipbuilding division rose 70% year-on-year, from KRW 158.1 billion to KRW 268.6 billion. This represents remarkable growth compared to the construction division, whose revenue increased 8.6%, from KRW 247.9 billion to KRW 269.3 billion. After falling to just 18% of total revenue in 2022, the shipbuilding division’s share of overall revenue recovered to nearly half of total revenue last year.

In terms of profitability, HJSC’s positive results were driven by the shipbuilding division’s focus on developing eco-friendly vessels, selectively securing orders for cost-competitive ship types, and concentrating on key businesses such as high-speed patrol vessels, along with more advanced cost management. The construction division also maintained profitability by overcoming cost pressures caused by a slowdown in domestic and overseas construction markets, rising raw material prices, and higher labor costs, while continuing to strengthen cost control.

HJSC plans to continue its profitable growth strategy this year through “quality growth” centered on profitability. The global shipbuilder aims to establish a virtuous cycle in which high-quality orders lead directly to improved earnings, supported by four newly ordered advanced naval patrol vessels, a multipurpose chemical response vessel for the Korea Coast Guard, the U.S. Navy MRO project, four 10,100-TEU container ships secured earlier this year, as well as domestic and overseas public infrastructure and maintenance projects.

An HJSC official stated, “As the share of revenue from high-margin projects centered on eco-friendly and high-value-added vessels continues to grow, operating profit increased significantly compared to the same period last year.” He added, “With stable order backlogs exceeding three years in both of our core business divisions, we will continue to strengthen our fundamentals and innovate our cost structure to maintain steady growth, while also focusing on enhancing sustainable corporate value.”