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HHI’s restructuring paying off with 50.8% jump in first half profit

HHI’s restructuring paying off with 50.8% jump in first half profit
South Korea’s Hyundai Heavy Industries (HHI) has reported a big jump in profit for the first half ended 30 June 2017, aided by a restructuring process involving the spinning off of the shipbuilder’s non-core business units.

Net profit for the first half was recorded at KRW205.1bn ($184.6m), a jump of 50.8% compared to KRW136bn in the same period of 2016. First half operating profit also climbed by a strong 69.3% year-on-year to KRW315.2bn.

Revenue, however, dipped to KRW9.44trn compared to KRW12.86trn in the previous corresponding period.

The latest financial figures are HHI’s first earnings announcement after the group spinned off its non-core businesses in construction equipment and electro electric systems.

Last month, HHI sold its entire stake in Hotel Hyundai, and it will sell off more non-core businesses including Hi Investment & Securities, Hyundai Cummins and Jake over the second half of this year.

In the first half, the Korean shipbuilding behemoth landed $4.2bn worth of orders for 72 ships, representing a significant increase from $1bn for 13 ships in the year-ago period. The $4.2bn orderbook was already more than 50% of HHI’s annual target of $7.5bn for 2017.

HHI has been navigating a challenging industry recession and implemented a KRW3.5trn management improvement plan in June 2016, with an aim of rebuilding trust in the market and improving its balance sheet by 2018.

South Korea is home to three of the world’s leading shipbuilders including Samsung Heavy Industries (SHI) and Daewoo Shipbiulding & Marine Engineering (DSME).

Last week, SHI also recorded improved earnings with first half operating profit at KRW48bn as against an operating loss of KRW277.6bn in the year-ago period.

DSME, which is also expected to report a first half operating profit, narrowly averted bankruptcy in April on a KRW2.9trn bailout scheme approved by its bondholders and creditors.