HD Hyundai Electric posted an operating profit nearing 1 trillion won last year for the first time ever. A boom tied to artificial intelligence (AI) data centers and demand for replacing aging power grids combined to sharply improve profitability. The effect of selective, high-margin orders added to that, and in the fourth quarter last year the operating margin hit an all-time high of 27.6%, beating market expectations.
HD Hyundai Electric disclosed that on a consolidation basis last year it recorded annual revenue of 4.0795 trillion won and operating profit of 995.3 billion won. Compared with a year earlier, revenue rose 22.8% and operating profit jumped 48.8%, both record highs. A HD Hyundai Electric official said, "With global investment in power grid infrastructure expanding, our strategy of selective ordering prioritizing profitability worked effectively."
Fourth-quarter results last year set a new quarterly record. Operating profit surged 93% from a year earlier to 320.9 billion won. That is 14% above market forecasts. Fourth-quarter revenue totaled 1.1632 trillion won, up 42.6% on-year. As a result, the operating margin reached 27.6%, the highest on record.
The core power equipment business led companywide growth. As the AI era accelerates and data centers' power consumption soars, demand surged for ultra-high-voltage transformers that can transmit large-capacity power efficiently. In particular, a higher share of revenue from North America and price hikes fully reflected in results drove profitability improvement.
Last year, revenue from power equipment increased 29.7% from a year earlier. Among them, revenue in the European market rose 38.3% on-year, accounting for more than 10% of total revenue.
Annual orders came to $4.274 billion (about 6.28 trillion won), exceeding the annual target of $3.822 billion (about 5.61 trillion won). The order backlog reached $6.731 billion (about 9.89 trillion won), up 21.5% from a year earlier.
HD Hyundai Electric presented annual guidance this year of $4.222 billion (about 6.2 trillion won) in orders and 4.35 trillion won in revenue. The company plans to boost profitability through selective orders focused on high value-added projects such as 765-kilovolt (kV) ultra-high-voltage transformers, and to strengthen its lineup of eco-friendly, high-efficiency products to expand market share in Europe and other global markets.
A HD Hyundai Electric official said, "With the increase in global power infrastructure investment, we have already secured more than three years of order backlog," adding, "Rather than aggressively expanding orders in the face of external variables such as exchange rates and raw material prices, we will strengthen partnerships by reserving production schedules with excellent clients and continue a selective ordering strategy centered on profitability."