South Korea's Hyundai Heavy Industries group (HHI) has surprised equities analysts by reporting a profitable first quarter.
HHI reported a KRW 2.8bn ($2.4m) net profit for the first three months of 2019 — a big comeback compared to the loss of KRW 222.9bn recorded in the previous quarter.
This profit was somewhat unexpected given that the average analyst estimate predicted a loss of KRW 53.46bn for the past quarter, according to calculations by Bloomberg.
In its earnings release, HHI said gains made on disposal of assets had boosted its net income, "in spite of idle capacity costs and loss on disposal of tangible assets".
The profit also comes despite a seasonal dip in work volume during the period, which affected sales, HHI said.
Sales for the group's shipbuilding business segment totalled KRW 2.76 trillion won in the first quarter, 5.1% below what was reported for the last three months of 2018.
Seoul-listed HHI is targeting $15.9bn (KRW 18.5 trillion) in new business in 2019, according to figures released in January.
Key subsidiaries
Net profit at HHI group's subsidiary Hyundai Mipo Dockyard was KRW 19.59bn in the first quarter, a considerable improvement on the loss of KRW 15.2bn the shipyard posted in the previous three months.
The net result comfortably beat the average analysts estimate by around KRW 2bn, according to Bloomberg calculations.
Much like HHI, Hyundai Mipo saw sales dip, falling 3.3% since the previous quarter to total KRW 705bn during the first three months of 2019.
Operating profit at the yard increased by 263.2% to KRW 13.8bn quarter on quarter, due to a decrease in provisions for new orders, HHI said.
Hyundai Vinashin also saw its operating profit more than double to KRW 12.bn.
Hyundai Samho was the only yard in the HHI group to post a first-quarter operating loss, which was KRW 9.1bn, much less than the previous quarterly loss of KRW 51.4bn.
Its parent group attributed this improvement to due to a decrease in provisions for new orders and the reversal of warranty provisions.
Sales at Hyundai Samho saw a 2.5% quarter-on-quarter increase thanks to key orders of large containerships and LNG carriers.
