HD Hyundai’s construction units post improved Q2 earnings on de-risking strategy

A 50t large excavator equipment exported by HD Hyundai Infracore to Indonesia. [Courtesy of HD Hyundai]

HD Hyundai Infracore Co. and HD Hyundai Construction Equipment Co. announced strong results for the second quarter on the back of their de-risking strategy that has been in place since 2020 amid the sluggish construction market in China.

HD Hyundai Infracore said in a regulatory filing on Wednesday that its second-quarter operating profit stood at 162 billion won, up 87 percent from the same period a year ago, on sales of 1.3 trillion won, up 11 percent.

HD Hyundai Construction Equipment also posted an operating profit of 96.6 billion won, up 163 percent during the same period, on sales of 1.03 trillion won, up 18 percent.

Both companies produce construction equipment, including excavators and wheel loaders.

Their strong performance is attributed to increased sales in North America, Europe, and emerging markets.

Sales in North America and Europe increased by 41 percent from a year ago at HD Hyundai Infracore. Sales in Latin America, Southeast Asia, and other emerging markets were also up by 6 percent.

Despite halved sales in China during the same period, the growth in those markets offset the decline.

HD Hyundai Construction Equipment also saw a 12 percent increase in sales, benefiting from expanded infrastructure investment in major European economies, such as Germany, Italy, and France. Sales in emerging markets also experienced a significant surge of 30 percent.

Until the Covid-19 outbreak, China was inevitably the number one market for the domestic construction equipment industry.

Thanks to China’s construction stimulus policies and the Belt and Road initiative, HD Hyundai Infracore’s China sales accounted for up to 46 percent of its entire sales in 2020.

The annual sales of the company’s excavators increased by 100 times to over 20,000 units in 2019 compared to about 200 units in 1994 when the company first entered the Chinese market.

The shift in the share of sales by region became evident in 2020. HD Hyundai Group initiated de-risking measures concerning the Chinese market shortly after acquiring the then-Doosan Infracore from Doosan Group in early 2020.