Despite dwindling ship orders amid a slowdown in the global economy, the world’s largest shipbuilder Hyundai Heavy Industries Co. posted a surplus for a third consecutive quarter in the July-September period thanks to a steady profit gain in its shipbuilding division on top of continued cost cut efforts.

Hyundai Heavy Industries announced in a regulatory filing on Wednesday that its third-quarter net income, excluding minority interest, was 295.5 billion won ($260.2 million), swinging from a loss of 600.2 billion won a year ago. Its operating profit came at 321.8 billion won on sales of 8.8 trillion won, a sharp turnaround from a year ago when it reported an operating loss of 897.7 billion despite sales of 10.9 trillion won.

Hyundai Heavy Industries posted profit for three consecutive quarters in the third quarter ended September after reporting an operating profit of 325.2 billion won in the first quarter and 557.2 billion won in the second quarter. Cumulative operating income for the first three quarters was 1.2 trillion won, raising expectations that the company would return to profit in operating income for full year 2016 for the first time in three years. The company registered an operating loss of 3.2 trillion won in 2014 and 1.5 trillion won in 2015.

Hyundai Heavy Industries continued to improve profitability in its shipbuilding division by securing orders to build more profitable vessels. Its offshore and engineering business was also in the black thanks to eased glut of shipyard capacity.

Hyundai Heavy Industries’ non-shipbuilding businesses including engine machinery, construction equipment, and electric and electronic system also managed to fare well in the third quarter thanks to continued efforts to reduce materials cost and improve production efficiency. Hyundai Heavy Industries reeling from a prolonged slump in the global shipbuilding industry caused by a global economic slowdown and low oil prices has been implementing revamping measures including massive layoff and sale of non-core assets.

Meanwhile, the company’s oil refining business led by its unit Hyundai Oilbank Co. saw almost 100 billion won on-quarter drop in surplus in the third quarter due to a fall in refining margin, the difference between the price of crude oil and petroleum products. Oil refining was the second-largest contributor to an increase in its sales and profits in the previous quarter.

Despite some upbeat results, the outlook for Hyundai Heavy Industries yet remains uncertain just as other local shipbuilders including Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co., market analysts said. Hyundai Heavy Industries and its two sister shipbuilders - Hyundai Mipo Dockyard Co. and Hyundai Samho Heavy Industries Co. - have so far managed to receive only 22.5 percent of orders they together have aimed for this year.

Shares of Hyundai Heavy Industries slipped 4.82 percent or 7,500 won to close at 148,000 won on Wednesday.

By Moon Ji-woong

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