As the market demand for container ships continues to grow, the shipbuilding business of South Korea’s mid-sized shipbuilder HJ Heavy Industries is riding the wave of expanding prospective demand and accelerating its profitability.
Data show that HJ Heavy Industries has realized operating income of KRW 392.7 billion in the shipbuilding business in the second quarter of this year, an increase of 135.1% YoY, with an operating profit of KRW 7.4 billion. In the first half of this year, it realized operating revenue of KRW 582 billion, an increase of 123.1% YoY, and achieved an operating profit of KRW 18.9 billion, compared to a loss of KRW 82.3 billion in the same period, and succeeded in turning around the loss to a profit.
For years, HJ Heavy Industries’ shipbuilding business has continued to be in the red, with losses of KRW 58.3 billion, KRW 54.1 billion, and KRW 130 billion in 2021, 2022, and 2023, respectively. The company has achieved steady growth in operating income from its special ship business, such as large transport ships and high-speed ships, but the merchant ship sector has always been sluggish due to a lack of orders.
The year 2024 is considered to be a profitable year for the shipbuilding industry, and thanks to the recovery of the shipbuilding industry and the effect of merchant ships that have resumed orders from the end of 2021, the operating income of HJ Heavy Industries’ shipbuilding business has made a “leap” from KRW 32.2 billion in 2022, to KRW 724.8 billion in 2023, to KRW 582.0 billion in 1H2024. With expanding operating revenues and lower fixed costs, HJ Heavy Industries’ profitability is expected to improve rapidly.
As of the end of June, HJ Heavy Industries’ hand-held orders amounted to 22 ships worth KRW 1.265 trillion. In terms of ship types, it includes 17 special ships (KRW 862.6 billion) and 5 merchant ships (KRW 425 billion). Among them, orders for merchant ships accounted for 31.8 %, up from 28.6 % at the end of last year.
HJ Heavy Industries’ order performance is expected to continue to improve as global shipowners are expected to continue to push for eco-friendly ship replacement. On June 20 this year, HJ Heavy Industries signed a contract with Greek shipping company Navios Maritime Partners for the construction of 2+2 7,900 TEU methanol ready containerships, with the first two units worth about $220 million. If the optional vessels come into effect, the total value of the four containerships will be approximately $440 million and deliveries are expected to begin in 2026. Notably, it is the first merchant vessel order signed by HJ Heavy Industries this year.
The containerships will be built by HJ Heavy Industries Busan Yeongdo Shipyard with an overall length of 272 meters, a beam of 42.8 meters and a speed of 22 knots. By optimizing fuel efficiency and maximum container capacity, the new shipbuildings are environmentally friendly and comply with IMO environmental regulations.