Riding the tailwind of the global shipbuilding market’s “super cycle,” South Korea’s Hanwha Ocean is rapidly returning to normalcy by selectively securing orders for high-value-added vessel types. In the second quarter of this year, Hanwha Ocean achieved a significant turnaround from losses to profits, marking a complete reversal for what was once South Korea’s “biggest loss-maker” in shipbuilding.
Recently, Hanwha Ocean released its second-quarter performance report, posting revenue of 3.2941 trillion KRW (approximately $2.37 billion or 17 billion RMB), a 30% year-on-year increase. The company recorded an operating profit of 371.7 billion KRW (approximately $276 million or 192 million RMB), a turnaround from a 9.7 billion KRW loss in the same period last year.
In the first half of this year, Hanwha Ocean’s cumulative revenue reached 6.4372 trillion KRW (approximately $4.63 billion or 33.3 billion RMB), with an operating profit of 630.3 billion KRW (approximately $453 million or 326 million RMB).
Industry insiders in South Korea noted that Hanwha Ocean’s second-quarter results delivered an “Earnings Surprise.” This is because, in 2022—the year before its acquisition by Hanwha Group—the company was mired in operating losses exceeding 1.6 trillion KRW, earning it the title of the “biggest loss-maker” among South Korean shipbuilders. Yet, just two years later, its annual operating profit for this year is expected to surpass the 1 trillion KRW mark.
South Korea’s securities sector predicts that Hanwha Ocean’s full-year revenue for 2024 will reach 12.922 trillion KRW (approximately $9.3 billion or 66.6 billion RMB), with an operating profit of 1.1004 trillion KRW (approximately $790 million or 5.69 billion RMB), representing year-on-year growth of 20% and 363%, respectively.
In the second quarter, Hanwha Ocean’s commercial shipbuilding segment—which posted a 43.4 billion KRW loss in the same period last year—achieved an operating profit of 377.1 billion KRW (approximately $270 million or 195 million RMB), playing a decisive role in the earnings recovery. The operating profit margin also surged from -2.1% to 13.4%. This turnaround was driven by a significant increase in the proportion of high-value-added LNG carrier construction. Data shows that commercial shipbuilding accounted for about 60% of Hanwha Ocean’s total second-quarter revenue, leading the performance improvement.
Hanwha Ocean CFO Shin Yong-in stated, “The revenue share of LNG carriers continues to expand, and with the completion of loss-making container ship orders, the average vessel price in our order backlog has risen. By the end of this year, we expect to maintain a backlog covering more than three years of production.”
In the special vessels (naval ships) segment, the company posted second-quarter revenue of 236.8 billion KRW (approximately $170 million or 122 million RMB), down 22% quarter-on-quarter, and an operating profit of 1.83 billion KRW (approximately 94.54 million RMB), down 56% quarter-on-quarter. This was due to the final stages of the “Jang Bogo-III Batch II” submarine project, where cost investments had yet to yield returns. However, with stable production of submarines, surface vessels, and U.S. Navy MRO (maintenance, repair, and overhaul) operations, the segment’s operating profit margin remained strong at 7.7%. The company expects special vessel revenue in the second half to exceed that of the first half.
In the offshore business, second-quarter revenue was 288.1 billion KRW (approximately $207 million or 148.8 million RMB), up 24% quarter-on-quarter, while operating profit fell 93% to 200 million KRW (approximately 1.03 million RMB). Although revenue saw a slight increase as drilling vessel modification projects neared completion, delays in some projects led to a sharp decline in profits. The company expects the offshore segment to remain profitable for the full year.
In 2021, Hanwha Ocean’s predecessor, Daewoo Shipbuilding & Marine Engineering (DSME), recorded an operating loss of 1.7547 trillion KRW (then approximately $1.424 billion) and a net loss of 1.6998 trillion KRW (then approximately $1.38 billion). This marked the first annual loss in five years since 2016, with losses exceeding those of HD Korea Shipbuilding & Offshore Engineering and Samsung Heavy Industries, making DSME the worst performer among South Korea’s top three shipbuilders that year.
In 2022, the company’s operating loss was 1.6135 trillion KRW (approximately $1.244 billion), an 8% reduction from the previous year’s 1.7547 trillion KRW. However, its net loss widened to 1.7448 trillion KRW (approximately $1.346 billion), up 2.6% year-on-year, cementing its status as South Korea’s “biggest loss-maker” for two consecutive years.
In 2023, after being acquired by Hanwha Group and rebranded as Hanwha Ocean, the company reported revenue of 7.4083 trillion KRW (approximately $5.7 billion), up 52.4% year-on-year. Although it posted an operating loss of 191.8 billion KRW (approximately $148 million)—a massive 1.4218 trillion KRW (over 88%) reduction from 2022’s 1.6135 trillion KRW loss—and achieved a net profit of 144.3 billion KRW (approximately $111 million), it remained the only one of South Korea’s top three shipbuilders to report an operating loss.
In 2024, Hanwha Ocean’s revenue reached 10.776 trillion KRW (approximately $7.94 billion or 56.5 billion RMB at annual average exchange rates), up 45.5% year-on-year, while operating profit stood at 237.9 billion KRW (approximately $175 million or 125 million RMB), marking a return to profitability. This also represents Hanwha Ocean’s first annual profit since 2021.
