Hanwha Ocean posts quarterly profit, but falls short of expectations
South Korean shipbuilder has benefited from steering away from low-priced containership orders and focusing instead on a higher share of LNG carriers
Hanwha says it will continue to follow its strategy of securing high-priced orders to ensure profitability, but some analysts take the view the company is lagging behind its competitors in improving earnings
HANWHA Ocean returned to the black in the third quarter, but its performance lagged behind peers, with profits falling short of market expectations.
In a stock exchange filing, Hanwha Ocean reported an operating profit of Won25.6bn ($18.5m) for July-September, compared with an operating loss of Won9.6bn in the previous quarter. However, the figure marks a 65.4% drop from the same period in the past year, when operating profit stood at Won74.1bn.
The company attributed the decline to one-off factors such as exchange rate fluctuations and increased outsourcing costs.
Third-quarter sales were Won2.7trn, up 41% year on year and 6.6% quarter on quarter, driven by a higher share of profitable LNG carrier orders, fewer low-priced containerships, and inclusion of the newly acquired plant business.
In April 2024, parent Hanwha Group transferred its offshore wind and plant business to the shipbuilding subsidiary.
The commercial ship business recorded sales of Won2.1trn and operating profit of Won36.4bn in the last quarter. Hanwha Ocean expects the segment to account for 80% of the company’s total sales by 2025, as its prospects continue to improve.
The naval ships division recorded Won196.1bn in sales, down 40.4% from the previous quarter, but achieved an operating profit of Won13.7bn, marking consecutive quarters of profitability since the fourth quarter of 2022.
Hanwha Ocean stated: “Through a selective order-taking strategy, we continue to sign contracts for high-priced ships that exceed market rates, ensuring profitability.”
Daol Securities analyst Choi Gwang-Shik, however, noted the company’s third-quarter profits were lower than market consensus.
“While Hanwha is similar to its peers in terms of securing high-priced order backlogs and recovering earnings, the pace of improvement is the slowest.”
