South Korea’s shipbuilding holding company Hyundai Heavy Industries Holdings Co. (HHIH) on Thursday said that its net profit more than halved in the second quarter from a year earlier on poor performances of its affiliates caused by the COVID-19 pandemic.
Net income came to 22.2 billion won (US$ 18.6 million) in the April-June period from 54.2 billion won a year ago, with its operating profit down 48 percent to 104.3 billion over the cited period, the company said in a regulatory filing.
The company’s sales also fell 41 percent to 4 trillion won during the stated period.
Shares in HHIH closed up 0.21 percent at 236,000 won on the Seoul bourse.
“Hyundai Heavy Industries Holdings posted sluggish performances in the second quarter as its key refining affiliate Hyundai Oilbank’s earnings dropped sharply due to tumbling oil prices,” the company official said.
Lower crude prices usually send refining margins lower, eroding into refiners’ earnings. Refining margins are the profits made from processing crude oil into products such as gasoline and diesel.
Hyundai Oilbank swung to a net loss of 24.4 billion won in the second quarter from a profit of 51.8 billion won a year earlier.
The poor second-quarter performances of HHIH also stemmed from a sharp drop in orders.
Korea Shipbuilding & Offshore Engineering Co., the subholding company of HHIH, posted 400 million won in net profit in the second quarter compared with a profit of 201.6 billion won a year earlier.
Korea Shipbuilding has three shipbuilders — Hyundai Heavy Industries Co., Hyundai Mipo Dockyard Co. and Hyundai Samho Heavy Industries Co. — under its wing.