HSHMSC aims to lead eco-friendly ship retrofit market

CEO Lee Ki-dong

HD Hyundai Marine Solution Co. (HDHMSC) is aiming to dominate the market for eco-friendly ship retrofits, according to the company’s CEO Lee Ki-dong.

In a recent interview with Maeil Business Newspaper, Lee highlighted the market‘s growth potential that is largely attributable to the International Maritime Organization’s (IMO) environmental regulations.

“New ships come with carbon and fuel reduction technologies, but most operating ships lack these features,” Lee said, explaining the rising demand for eco-friendly retrofits.

HDHMSC was spun off from HD Hyundai Heavy Industries Co. in 2016, debuted in the ship repair and retrofit business a year later, and has since grown by offering integrated ship lifecycle management services. Under Lee‘s leadership, revenue soared by 76 percent to 1.43 trillion won ($1.03 billion) in 2022 from 809 billion won in 2019, with operating profit up 85 percent to 201.5 billion won. Lee also successfully listed the company on the Kospi in May 2024, achieving a market capitalization of 5.8 trillion won.

Lee identified liquified natural gas (LNG) and decarbonization fuel projects as key growth drivers within the green retrofit sector. Unlike earlier retrofits focused on sulfur oxide emission reduction systems and ballast water treatment systems, advanced projects such as LNG, methanol, and ammonia dual-fuel engine retrofits and constructing floating storage regasification units (FSRUs) not only requires sophisticated technology but can cost several billion won per project.

“The market for second-generation retrofits is over ten times larger than that for first-generation ones,” Lee said.

HDHMSC’s advantage in this market stems from its engine aftermarket service licenses from major manufacturers Man SE and Winterthur Gas & Diesel AG, as well as its ability to source key equipment from HD Hyundai‘s shipbuilding division.

“With our equipment, experience, and know-how, we can lead in technical competitiveness,” Lee said, adding that the company expects to secure its first FSRU construction project soon.

To solidify its market position, HDHMSC is considering equity investments in technically capable shipyards worldwide and signs contracts with repair shipyards in regions including China, the Middle East, Southeast Asia, and Europe. But establishing a stable supply base through equity investments is crucial as the eco-friendly retrofit market expands. The company plans to use 231.7 billion won (63 percent) of the 367.2 billion won raised through May’s initial public listing for investments in repair shipyards and network building.

“We’re seeking shipyards experienced in dual-fuel ship and LNG carrier repairs,” Lee said. “Equity investments in design firms with technical capabilities are also on the table.”

Lee also emphasized the importance of investing in the aftermarket business, which constitutes about 40 percent of the company’s revenue. He identified logistics infrastructure investment as a priority, with plans to invest 60 billion won by 2028 to establish large logistics centers in key overseas locations such as Rotterdam, Singapore, Houston, and Dubai.

“Supplying parts and meeting delivery dates in a timely manner are critical in the repair and maintenance business,” Lee said. “Investing in logistics warehouses will optimize inventory and enhance our logistics system, significantly contributing to business growth.”