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HHI posts $778m first half operating profit

HHI posts $778m first half operating profit
Hyundai Heavy Industries (HHI) has stayed in the black by registering a first half operating profit, extending its profitable run in the first quarter this year.

In the January to April 2016 period, the financially troubled HHI brought in operating profit of KRW882.4bn ($778.1m) and revenue of KRW20.14trn.

The positive first half result was built upon a second quarter operating profit of KRW557.2bn and the first quarter operating profit of KRW325.2bn.

The South Korean shipbuilder attributed the operating profits in the past two consecutive quarters to a series of drastic and comprehensive restructuring measures put in place since 2014, and strong performances of its refining subsidiary Hyundai Oilbank.

An HHI officer said: “Stabilization of manufacturing processes for offshore plant business, change orders received from its offshore plant business clients, and increased building volume of ships that HHI won at profitable prices outweighed the 260 billion won one-off cost for the voluntary retirement program.

“Continued efforts to reduce material costs for non-shipbuilding businesses including engine and machinery, electro electric systems and construction equipment also played a role for the profits.”

The officer added that a challenging environment remains in view of the 80% drop in new orders for its shipbuilding business, and the group will unreservedly implement the KRW3.5trn management improvement plan to facilitate sustainable performance.

Samil PwC, a local member of global accounting firm PwC, announced on Tuesday that the KRW3.5trn worth of management improvement plan is good enough for HHI to reap operating profits and secure liquidity even in the worst case scenario.

HHI has also decided on Wednesday to sell Hyundai Finance Corporation and Hyundai Venture Investment Corporation as part of the restructuring plan.

The shipbuilder said it will accelerate its business reorganisation efforts with much more focus on its core businesses following the decision to dispose of all of its financial arms including Hyundai Futures, Hi Asset Management and Hi Investment & Securities.