Sales reach 2.09 trillion won, up 6% on-year
Improved construction equipment margins and strong engine sales drive gains
Infrastructure and mining investment in emerging markets continues to expand
HD Construction Equipment reported Monday that its third-quarter sales reached 2.09 trillion won ($1.58 billion) and operating profit came in at 157.7 billion won, with an operating profit margin of 7.5 percent.
Sales and operating profit rose 6.1 percent and 23.9 percent, respectively, from the same period last year. Sales growth was driven by higher shipments of power-generation and industrial engines, while operating profit improved sharply on better margins in the construction equipment segment and strong engine business performance.
By segment, construction equipment posted sales of 1.62 trillion won and operating profit of 109.9 billion won. The Middle East and Africa weighed on results amid persistent geopolitical uncertainty, but demand for infrastructure and mining investment sustained sales of mid- to large-sized equipment in other regions. An expanded aftermarket business also contributed to margin improvement by boosting sales of higher-margin parts.
Sales in advanced markets including North America and Europe grew 4 percent year on year. Europe saw a decline due to a sluggish housing construction market, but North America recorded higher sales of next-generation models and truck products. Growing demand in the equipment rental market also supported revenue growth. HD Construction Equipment plans to broaden its next-generation model lineup and sharpen its focus on selling new products.
Sales in the Commonwealth of Independent States, Southeast Asia and Oceania rose 30.2 percent year on year, driven by locally tailored product offerings. The CIS saw increased sales of ultra-large construction equipment, while Australia and New Zealand recorded higher sales of compact machinery. India posted a 26.6 percent year-on-year sales increase as government-led infrastructure investment spurred demand for mini excavators and wheel loaders. Latin America also grew 26.8 percent on expanding mining demand.
The engine segment posted sales of 394 billion won and operating profit of 55.2 billion won. Sales of power-generation engines rose on growing electricity demand from data centers, while industrial engine sales increased as global construction equipment market conditions recovered. A strategy focused on higher-margin products helped the segment maintain a solid double-digit operating profit margin of 14 percent.
HD Construction Equipment plans to begin producing megawatt-class diesel engines for power generators at its new Gunsan factory, which is nearing completion, starting next year. The company also intends to scale up the large gas engine line at its Incheon factory to meet surging demand for data center power-generation engines, particularly in North America.
keg@heraldcorp.com
