HD Construction Equipment, launched at the start of the year through the integration of HD Hyundai Construction Equipment and HD Hyundai Infracore, posted double-digit growth in both revenue and operating profit in its first quarter after the integration. Analysts said profitability improved as the global construction equipment market recovered and the integration effects across production, sales, purchasing, and research and development (R&D) took hold.
HD Construction Equipment said on the 27th that on a consolidation basis for the first quarter it recorded revenue of 2.3049 trillion won and operating profit of 190.7 billion won. Revenue rose 22.1% and operating profit jumped 88.3% from a year earlier. While profitability improved in the construction equipment business, the industrial and defense engine business maintained steady growth and supported the results.
HD Construction Equipment said that since the integrated entity launched on Jan. 1, it has operated its sales organization under an eight-region head system and strengthened the market responsiveness of the "HYUNDAI" and "DEVELON" brands. In the production, sales, purchasing, and R&D institutional sector, it pursued cost competitiveness through integrated operations. In Europe and North America, it ran integrated assembly and shipment centers, cutting delivery lead times by 30% and expenses by 20% compared with before. In China, it unified production from the previous dual bases in Jiangsu and Yantai to Yantai, improving production and expense efficiency.
By business institutional sector, the construction equipment institutional sector posted revenue of 1.9275 trillion won, up 26.9% from a year earlier. Operating profit was 148.6 billion won, with an operating margin of 7.7%. By region, sales of ultra-large mining equipment and expanded infrastructure investment drove gains in emerging markets such as the Middle East and Africa and Latin America. Revenue in the Middle East and Africa rose 68.1% from a year earlier, and Latin America revenue increased 46.3%. North America and Europe revenue also climbed 26% and 59%, respectively.
Revenue in the Chinese market increased 17% from a year earlier. The rise reflected stronger equipment demand as Chinese builders expanded overseas projects.
The engine business institutional sector recorded revenue of 336.1 billion won, supported by higher industrial engine sales and steady growth in defense engines. The figure was up 10% from a year earlier. Operating profit rose 8% to 47.3 billion won, and the operating margin was 14.1%.
A HD Construction Equipment official said, "Based on one-team synergy, we will expand construction equipment revenue and continue sustainable growth by diversifying revenue sources such as engines and the aftermarket (AM)."