New wheel excavator unveiled at Yantai factory
Five more China-targeted models planned for this year
Local subsidiaries being restructured for efficiency
China infrastructure investment showing signs of recovery
Chinese customers due for equipment replacement cycle
HD Construction Equipment is stepping up its push into China as the country's long-depressed construction machinery market shows signs of a rebound. The company is rolling out new products and restructuring its local operations to sharpen its competitive edge.
According to industry sources, HD Construction Equipment held a launch event last month at its Yantai factory in China for the Develon DX150WE Plus, a new wheel excavator. The company then toured Beijing and other major cities through early this month for a product launch week, displaying equipment to regional dealers and showcasing its upgraded performance.
The DX150WE Plus is a 15-ton wheel excavator with improved travel and swing speeds as well as enhanced engine performance compared with its predecessor. HD Construction Equipment plans to release five additional China-targeted models before the end of the year.
The company is also accelerating a restructuring of its local operations. At a board meeting last month, directors approved the acquisition by its Shanghai holding company of a stake in its Shanghai leasing subsidiary, and approved a merger between the Shanghai and Beijing holding companies. The restructuring is expected to allow the company to build a more efficient sales strategy in the Chinese market.
China was HD Construction Equipment's largest revenue source through the late 2010s, accounting for roughly 30 percent of total sales as aggressive real estate investment drove strong demand for construction machinery.
That changed in the 2020s, when a sharp deterioration in China's real estate market caused local demand to collapse, pushing China's share of HD Construction Equipment's sales down to around 10 percent. As the market contracted, the company halted production at its Jiangsu Engineering Machinery subsidiary in China last year.
HD Construction Equipment is renewing its focus on China because infrastructure investment there is picking up again. Shanghai is pursuing the Liangzhong Project this year as part of a broader push for domestic demand-led economic growth. The initiative calls for 255 billion yuan ($37.9 billion) in investment to build new urban rail lines and other infrastructure.
"Driven by policies such as the Liangzhong Project, accelerating infrastructure spending has led to consistently observed growth in China's domestic market," the company said during its second-quarter earnings conference call last month.
Demand for excavators is also rising as Chinese customers approach the end of their equipment replacement cycles. Cumulative excavator sales in China through last month reached 86,682 units, up 18.8 percent from 72,993 units in the same period a year earlier. Sales of HD Construction Equipment's Hyundai-branded excavators in China rose 21.6 percent over the same period.
As China's construction machinery market recovers, HD Construction Equipment's China sales are rebounding. In the second quarter of this year, China revenue reached 174.1 billion won ($126 million), up 14.1 percent from 152.7 billion won in the same period last year.
With steady growth across China and other markets, HD Construction Equipment is on track for a strong year overall. Securities analysts project the company's operating profit at 760.2 billion won for this year, up 66.2 percent from the combined operating profit of 457.3 billion won posted by HD Hyundai Construction Equipment and HD Hyundai Infracore last year.
yeongdai@heraldcorp.com
