Hyundai Doosan Infracore's Q3 OP dip 47% on yr on business slump in China

Hyundai Doosan Infracore Co.’s operating profit in the third quarter nearly halved due to a slump in the Chinese construction market from Beijing’s strict environment regulations and a surge in commodity prices.

The South Korean major construction equipment maker acquired by Hyundai Heavy Industries Group in August said in a regulatory filing on Thursday that its operating profit from July to September is estimated at 33.7 billion won ($28.6 million), down 47 percent from the same period a year ago and 69.1 percent from the previous quarter.

Sales gained 5.9 percent on year but fell 22.3 percent on quarter to 971.9 billion won, while net profit dipped 44.1 percent and 70.6 percent to 45.9 billion won.

Sales grew on increased global infrastructure investment and rising raw material prices, but the slowdown in construction machine demand in its key market China dented its operating profit, the company said.

Construction machine division recorded a 1.3 percent on-year increase in sales to 757.7 billion won during the July-September period but its operating profit plunged 65.4 percent to 22.5 billion won on a splum in demand from China due to the Beijing’s stricter environmental regulations and strengthening commodity prices.

Its engine business fared better after posting a 25.9 percent on-year gain in sales to 214.1 billion won on the back of the rising demand for construction equipment and the company’s efforts to diversify product lineups. The division’s operating income also returned to black figures.

In particular, the company saw a 54.2 percent on-year rise in construction equipment sales in Korea and emerging markets and 34.9 percent in North America and Europe, as the demand increased on state-led economic stimulus infrastructure projects to tackle the pandemic-driven downturn.

The company expects a remarkable improvement in earnings in the last quarter of this year as countries remain committed to bolstering their economy, said an official from the company. To aid the growth, the company will focus on selling highly-profitable heavy equipment in China while implementing customized strategies in emerging countries.

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