HD Hyndai Marine Solution(443060), boosted by growth across all business lines including the aftermarket (AM) ship repair and maintenance business, saw double-digit increases in revenue and operating profit in the second quarter. However, due to factors such as rising expense, the results fell short of market expectations.
HD Hyndai Marine Solution said on the 27th that on a consolidation basis for the second quarter it posted revenue of 580.4 billion won and operating profit of 97.6 billion won. Compared with the same period a year earlier, revenue rose 24.1% and operating profit increased 17.6%. Versus the previous quarter, revenue grew 1% and operating profit rose 4.5%. Net profit came to 83.0 billion won, up 56% from a year earlier.
However, due to a warranty provision in the Digital Solution institutional sector and consulting expense for future business readiness, both revenue and operating profit came in below the securities market forecast (580.4 billion won and 102.7 billion won).
Drivers of improved results were growth in core businesses such as AM (aftermarket) and Eco-friendly Solution, and higher revenue from the bunkering (marine fuel) business.
AM institutional sector revenue rose 19.6% on-year to 275.0 billion won. HD Hyndai Marine Solution said revenue increased as the number of vessels covered by AM services grew and the serviced ship types diversified from container ships and LNG carriers to tankers and LPG carriers.
The number of long-term maintenance contracts (LTSA·Long Term Service Agreement) in the AM institutional sector was 80 in the first half, with 37 new contracts signed in the second quarter.
Both core businesses, Eco-friendly Solution and Digital Solution, expanded in scale. The Eco-friendly Solution institutional sector posted revenue of 45.3 billion won, up 38.1% from a year earlier. Revenue in the Digital Solution institutional sector was 36.4 billion won, up 65% from the same period last year.
Bunkering institutional sector revenue rose 22.3% on-year to 223.7 billion won.
The shortfall versus market expectations reflected the recognition of selling, general and administrative expenses. HD Hyndai Marine Solution said it incurred 2.0 billion won in consulting expense for future business readiness. In addition, it incurred 1.0 billion won in lease expense for a Singapore logistics center and 1.2 billion won in consulting expense related to the "demand forecasting system advancement project" underway with Palantir.
An HD Hyndai Marine Solution official said, "Expenses related to Palantir are expected to be incurred continuously over the next five years, at around 1.0 billion won each quarter," adding, "Consulting for future growth occurred partly in the second quarter and is expected to continue through the second half of this year."