Riding the supercycle in the global power equipment market, Hyosung Heavy Industries posted an operating profit of 747.0 billion won last year, marking its best results since the 2018 spin-off. A boom driven by artificial intelligence (AI) data centers and demand to replace aging power grids overlapped, sharply increasing exports of high-value products such as ultra-high-voltage transformers.
On the 30th, Hyosung Heavy Industries disclosed that, on a consolidation basis, it posted sales of 5.9685 trillion won and operating profit of 747.0 billion won last year. Compared with a year earlier, sales rose 21.9% and operating profit jumped 106.1%. Net profit came to 502.8 billion won, up 125.6% from a year earlier.
It is the first time since the new corporation launched in 2018 that Hyosung Heavy Industries' annual operating profit has surpassed 700.0 billion won. The core heavy industry business, buoyed by a global push to expand power grids, led companywide growth.
Fourth-quarter sales rose 10.9% from a year earlier to 1.743 trillion won. Operating profit was 260.5 billion won, up 97% from a year earlier and 31.8% above the brokerage consensus of 197.7 billion won.
Hyosung Heavy Industries' steep growth is being led by ultra-high-voltage transformers. As the AI era opens and a single data center consumes power on par with an entire small city, demand has surged for ultra-high-voltage power equipment that can efficiently transmit large-capacity electricity.
Fourth-quarter operating profit in the heavy industry business responsible for transformers was 244.5 billion won, with a margin of 20.2%. Profitability improved sharply compared with a year earlier (10.8%) and the prior quarter (17.1%). By contrast, the construction business posted operating profit of 15.8 billion won with a margin of 3%.
Hyosung Heavy Industries is moving in earnest to win contracts for a U.S. 765-kilovolt ultra-high-voltage grid project and is building a pipeline across Europe, including the United Kingdom, Sweden and Germany.
Backlog is also at a record high. New orders in the heavy industry business in the fourth quarter were 1.9658 trillion won, more than 2.5 times a year earlier. This brought total backlog to 11.9 trillion won, with North America accounting for nearly half. With a sizable workload secured through 2030 and a supplier-favorable market in place, analysts say selective orders with high profitability are continuing.
Hyosung Heavy Industries plans to continue an aggressive investment and order strategy this year. The company is making an additional expansion investment of $157 million at its ultra-high-voltage transformer plant in Memphis, Tennessee. Sung Jong-hwa, an analyst at LS Securities, said, "With a significant portion of volumes for the next few years already secured, profitability is expected to improve even faster as local production capacity expands," adding, "When the expansion is completed in 2028, the Memphis subsidiary alone is expected to usher in the era of 1.0 trillion won in sales."