Hyosung Heavy Industries continued its earnings growth in the first quarter of this year, helped by rising demand for power equipment as artificial intelligence (AI) infrastructure expands.
Hyosung Heavy Industries disclosed on the 24th that, on a consolidation basis for the first quarter of this year, it posted revenue of 1.3582 trillion won and operating profit of 152.3 billion won. Compared with a year earlier, revenue rose 26.2% and operating profit increased 48.7%. However, operating profit fell short of the recently lowered securities consensus (168.3 billion won). The recognition of results from some high-margin orders was deferred to the second quarter.
As the global power grid replacement cycle coincides with the expansion of AI data centers, supply shortages in the extra-high-voltage power equipment market are deepening. In particular, 765 kV extra-high-voltage transformers are high-value-added equipment, with only about five manufacturers worldwide capable of producing them. In February, Hyosung Heavy Industries signed a contract worth about 787 billion won to supply 765 kV extra-high-voltage transformers to a U.S. transmission grid operator, among other selective, high-value orders it is adding.
With new orders increasing, centered on the profitable North American market, Hyosung Heavy Industries posted its largest quarterly order intake in the first quarter. New orders in the heavy industry division reached 4.1745 trillion won in the first quarter. As a result, the total order backlog expanded to 15.1 trillion won.
By business segment, the heavy industry division led overall results with operating profit of 117.7 billion won and a margin of 13.4%. In contrast, the construction division reported operating profit of 34.4 billion won and a margin of 7.2%.
Investment to expand production capacity is also underway. Hyosung Heavy Industries plans to invest an additional $157 million in its extra-high-voltage transformer plant in Memphis, Tennessee, to boost production capacity by more than 50% by 2028. Cumulative investment will reach about $300 million. In Korea, it is also responding to growing demand for power equipment by investing 330 billion won in Changwon to build a new HVDC (high-voltage direct current) transformer plant.
A Hyosung Heavy Industries official said, "As revenue recognition for high-margin volumes in the power segment ramps up, the profit improvement trend will become steeper."