South Korea’s largest shipbuilder Hyundai Heavy Industries Co. reported a 20.8 percent on-year decline in operating profit in the third quarter due to a retreat in new orders, but successfully managed to remain in black for seven straight quarters thanks to ongoing business reform efforts.

According to its regulatory filing on Tuesday, Hyundai Heavy Industries posted 93.5 billion won ($83.4 million) in operating income on a consolidated basis for the third quarter ended September, down 20.8 percent from a year ago. Sales also dropped 27.3 percent to 3.8 trillion won over the same period while net income edged up 2.1 percent to 197 billion won.

The company blamed the overall slump in the shipbuilding industry that has not fully recovered from the low oil price woes for the weak sales in the quarter. An unnamed company official also noted that the company’s order backlog has dropped after the company has completed the construction of large-scale offshore plant projects.

Although Hyundai Heavy Industries reported a decline in sales on year, it has managed to generate profit for a seventh consecutive quarter in the third quarter since it swung to profits in the first quarter of 2016 thanks to its massive business restructuring that the company embarked on to fight back the dwindling orders amid the protracted recession in the global shipbuilding sector.

The shipyard, also the world’s largest shipbuilder, has been aggressive in shedding non-core assets, selling off its entire stake in subsidiary Hotel Hyundai, and Hyundai Mipo Dockyard’s stakes in Hyundai Robotics Co. Hyundai Mipo Dockyard is a subsidiary of Hyundai Heavy Industries.

Earlier this year, the shipbuilding group also split up into four segments - shipbuilding and offshore drilling, electro-electric system development, construction equipment manufacturing, and robotics development - to focus on its mainstay shipbuilding business.

The restructuring efforts also helped the company significantly improve its overall financial health in the July-September period with its debt to equity ratio falling from 160.1 percent in the previous quarter to 144.2 percent and loan ratio from 68.9 percent to 57.9 percent over the same period.

Meanwhile, the company’s oil-making subsidiary Hyundai Oilbank Co. raked in 274.7 billion won in operating income in the July-September period, up 19.7 percent from the second quarter ended June, thanks to improved refining margins and favorable petrochemical industry. Sales dropped 17.7 percent to 3.3 trillion won over the same period.

On Tuesday, Hyundai Heavy Industries shares gained 4.3 percent, or 6,500 won, from the previous session to end at 156,500 won.

By Moon Ji-woong and Lee Eun-joo

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]