Hanwha Ocean delivered results in the second quarter that far exceeded market expectations, helped by improved profitability in high-revenue merchant ships and the booking of sales from a marine project.
Hanwha Ocean said in a filing on the 27th that, on a consolidation basis, its operating profit for the second quarter was 736.1 billion won, up 98% from a year earlier on a provisional tally.
Sales rose 65.2% on-year to 5.4432 trillion won. Net profit increased 366.4% from the same period last year to 692.6 billion won. Sales and operating profit beat the securities consensus compiled by FnGuide of 3.4794 trillion won and 497.1 billion won by 56.4% and 48.1%, respectively.
Cumulative first-half sales increased 34.4% on-year to 8.6531 trillion won, and operating profit rose 86.8% to 1.1772 trillion won
The surge in sales was most affected by the Brazil marine project, which is accounted for on a delivery basis. As key local work wrapped up, about 1.5 trillion won in accumulated sales were recognized all at once this quarter. Stable production improved operating efficiency, and higher shipbuilding volumes also helped expand the top line.
Operating profit was driven by expansion in high-revenue merchant ship sales and cost improvements. Construction of high-revenue vessels such as liquefied natural gas (LNG) carriers ordered since 2024 ramped up in earnest, and the average exchange rate in the second quarter rose about 37 won from the previous quarter, producing a positive currency effect. Cost innovation—including lower material costs, improved work efficiency, and optimization of volume and pricing by ship type—also lifted profitability.
By business unit, the merchant ship division led the earnings improvement. Merchant ship sales increased 15% on-year to 3.2397 trillion won, and operating profit rose 95% to 735.6 billion won. The operating margin climbed to 22.7% from 13.4% a year earlier. While the high-revenue structure centered on LNG carriers continued, construction of major projects such as large container ships ramped up in earnest, aided by a higher exchange rate and cost savings.
Energy plant division sales jumped 350% on-year to 2.0679 trillion won, boosted by delivery-based revenue recognition from the Brazil marine project. Operating profit was 6.2 billion won, swinging to a profit from a 6.8 billion won loss in the second quarter of last year. Cost reductions on projects performing remaining work, including floating production, storage and offloading (FPSO) units, and solid results at the drilling, operations and maintenance (O&M) subsidiary contributed to the turnaround.
The special ship division recorded a 38% increase in sales to 327.2 billion won as construction volumes for submarines and surface ships rose. However, reflecting cost burdens from higher processing expenses and marketing expenses for securing a Canadian submarine order, it posted an operating loss of 2.9 billion won. It swung to a loss from a 18.3 billion won profit in the second quarter of last year, but cost reductions significantly narrowed the loss from 20.8 billion won in the first quarter of this year.
Hanwha Ocean projected that, in the second half, as construction of high-revenue LNG carriers and large container ships ordered in 2024–2025 ramps up in earnest, sales and operating profit in the merchant ship division will maintain a solid trend. While cost-saving effects may diminish from the initial phase, it expected the medium- to long-term profitability uptrend to continue on the back of structural cost improvements.
Hanwha Ocean won orders worth a total of $4.35 billion in the first half of this year, including six LNG carriers, 15 VLCCs, three very large ammonia carriers (VLACs), and one wind turbine installation vessel (WTIV). As of the end of June, the total order backlog was 153 ships worth $33.77 billion.