HD Hyundai's order backlog tops W110tr for first time, with W200tr in sight

An aerial view of HD Hyundai Heavy Industries' shipyard in Ulsan. [HD Hyundai]

HD Hyundai has broken the 110 trillion won ($79 billion) order backlog mark for the first time in its history. Shipbuilding drove the milestone, with the power equipment and engine businesses — both benefiting from a surge in AI infrastructure investment — lending crucial support. At the current pace, some in the industry expect the backlog to reach 200 trillion won before long. Backed by its shipbuilding, power equipment and engine operations, HD Hyundai is also on track to post annual operating profit exceeding 10 trillion won for the first time this year.

Orders keep rolling in across shipbuilding, power equipment and engines

HD Hyundai Group's total order backlog stood at 111.44 trillion won as of the end of June, according to industry sources — the first time the figure has surpassed 110 trillion won. That represents a 23.2 percent increase from the same period last year (90.45 trillion won) and a 10.6 percent rise from the end of March, when the backlog first crossed the 100 trillion won threshold.

HD Korea Shipbuilding & Offshore Engineering, the intermediate holding company for the shipbuilding and offshore division, led the charge. Its order backlog reached 98.81 trillion won as of end-June, up 21.3 percent from 81.44 trillion won a year earlier. The company sustained its winning streak by leveraging differentiated technology even as China's rise poses competitive challenges. It also reaped indirect benefits from a sharp increase in demand for energy-carrying vessels stemming from the ongoing Middle East war.

Marine engines have emerged rapidly as a power source for AI data centers, adding further momentum to the record. HD Hyundai Heavy Industries, a subsidiary of HD Korea Shipbuilding & Offshore Engineering, signed a supply contract in April with Aperion Energy Group, a US energy infrastructure developer, to provide 20 MW HiMSEN engine-based power generation equipment. The deal was valued at 627.1 billion won.

HD Hyundai Electric also contributed to the backlog surpassing 110 trillion won. As demand for power infrastructure expanded on the back of large-scale AI investment, HD Hyundai Electric secured an order backlog of 12.31 trillion won, led by its flagship ultra-high-voltage transformers — a 41.3 percent increase from 8.71 trillion won in June last year.

HD Hyundai Marine Solution, which operates ship repair and maintenance services, added 206.8 billion won to the backlog, while HD Hyundai Robotics contributed $82.74 million.

HD Hyundai Heavy Industries' HiMSEN engine. [HD Hyundai]

HD Hyundai is expected to keep its order momentum going, driven by shipbuilding, power equipment and engines. On the shipbuilding side, global LNG projects are seen as a positive catalyst. A resumption of LNG projects that had been delayed for some time could boost demand for LNG carriers.

The power equipment and engine businesses have continued to announce new orders in the second half of the year, fueled by aggressive AI investment from major technology companies. HD Hyundai Electric signed a framework agreement last month with a global big-tech firm for the long-term supply of distribution and power equipment worth up to 1.12 trillion won.

HD Hyundai Heavy Industries said this month it would supply engine-based power generation equipment worth 956 billion won to a US big-tech company's data center. "Collaboration inquiries from the data center power generation engine market are coming in one after another for HD Hyundai Heavy Industries," an HD Hyundai official said.

Record earnings in sight, but Chung Ki-sun cautions against short-termism

A molded case circuit breaker (MCCB) production line at HD Hyundai Electric's distribution campus. [HD Hyundai Electric]

HD Hyundai's earnings are climbing steeply on the strength of its shipbuilding, power equipment and engine businesses. Operating profit for the first half of this year came in at 4.12 trillion won, more than 3.5 times the 1.14 trillion won recorded in the same period last year. Sales over the same period rose 30.2 percent to 22.41 trillion won.

As the remaining order backlog is progressively reflected in earnings, HD Hyundai's sales and operating profit are expected to climb even higher. The securities industry forecasts HD Hyundai will post full-year sales of 84.77 trillion won and operating profit of 12.39 trillion won — both all-time records since the company's founding. Compared with last year, that would represent a 19 percent increase in sales and a 103.1 percent jump in operating profit.

HD Hyundai is working to sharpen its competitiveness in high-value businesses to sustain the upward trajectory. HD Korea Shipbuilding & Offshore Engineering is focusing on developing high-value vessels with no precedent — including ships powered by small modular reactors — to widen its lead over China.

HD Hyundai Electric is investing $200 million to expand its North American production subsidiary to meet demand for ultra-high-voltage transformers. Once the expansion is complete, production capacity for ultra-high-voltage transformers will increase by 50 percent. The company is also building out its capabilities in distribution equipment, where demand is expected to grow. As part of that effort, it completed a distribution campus in Cheongju last year with an annual production capacity of about 8.5 million units.

HD Hyundai Chairman Chung Ki-sun, speaking at a recent meeting of company presidents, said he would "take the lead in creating a management environment that drives sustainable growth with a long-term perspective of 10 to 20 years, rather than getting bogged down in short-term results."

yeongdai@heraldcorp.com