HD Hyundai Infracore (CEO: Young-cheul Cho, Seung-hyun Oh) announced its Q2 earnings on Wed, July 26, which recorded KRW 1.3 trillion revenue and KRW 162 billion operating profit. This in a 10.6% increase in revenue and 87% increase in operating profit YoY.
The main reason for such revenue increase is due to the growth of the construction equipment business in regions such as the emerging and developed markets, along with growth in the engine business which has been on-going since the previous year. Operating profit also spiked as profitability improved with better product mix for different regions. Continued growth of HD Hyundai Infracore’s new construction equipment brand, DEVELON, also contributed to this positive result.
When looking at the performance of each business unit, construction equipment reached KRW 1.13 trillion revenue with KRW 115.8 billion operating profit, which is a 7.8% and 126.6% increase QoQ, respectively.
Revenue in developed markets grew by 7.8% QoQ as demand in infrastructure and rental businesses continued to stay stable and logistics disruption issues started to relieve. The product mix strategy targeted for developed markets was a success, resulting in a sales hike for mini and small excavators under 10T, and large excavators above 34T.
Sales volume reduced in emerging markets due to the previous year’s high base effect and global contractionary fiscal policy, however, made a 6% increase in revenue YoY by building new dealer networks and focusing on sales in growing markets such as Latin America, the Middle East, and CIS.
The construction equipment business expanded its total revenue share from 30% last year to 40% despite the downward turn in Europe as the North American market reached an all-time high. The emerging markets maintained a constant share of 53% with solid demands, especially in resource abundant countries. Share of the Chinese market reduced to 7% as revenue also dropped by half, QoQ.
The engine business experienced high growth in various areas including its generator, industrial, automotive, defense engines, resulting in a 21% increase to KRW 30 billion in revenue and 30% increase to KRW 46.2 billion in operating profit YoY. Operating profit rate also maintained a stable two-digit growth of 15.4%.
Mid-to-long term prospect for HD Hyundai Infracore’s engine business also seems bright. It is expected to see 9% annual growth in total revenue (including in-house revenue) from KRW 1.3 trillion in 2022 to KRW 2 trillion in 2027 as the engine market diversifies in region and customer group, enters the eco-friendly powertrain market, and sees actual results from its defense engine business. <EOD>