The world's largest shipbuilder Hyundai Heavy Industries Co. said Monday that its first quarter net profit skyrocketed because of evergriwing demand for high-priced oil tankers and container ships.
Hyundai Heavy earned 371 billion won (US$400.52 million; EUR295.34 million) in the three months ended March 31, the company said in a statement. That was a roughly 15-fold increase from 22.9 billion won a year earlier.
Sales during the quarter rose 29 percent to 3.68 trillion won (US$4 billion; EUR2.93 billion) from 2.85 trillion won a year earlier.
First-quarter results "are reflecting the orders we won after 2004 when shipbuilding prices soared," said Kristy Choi, a company spokeswoman.
Demand for so-called very large crude oil carriers and large-sized container ships as well as improved performance in other divisions including construction equipment boosted earnings, Choi said.
Ship construction can take about 6-7 months but the company has a huge backlog. As of the end of March Hyundai Heavy had orders for 276 vessels valued at US$23.3 billion (EUR17.1 billion), Choi said.
Increased international trade as a result of China's strong economy has helped boost demand for container ships, Choi said.
Demand for construction equipment, particularly excavators, was strong.
"Sales in the U.S. and Western and Eastern Europe were very, very good," she said.
Ulsan, South Korea-based Hyundai Heavy, established in 1972, in just three decades rose to become the world's largest shipbuilder.
The company also designs and builds offshore facilities such as oil rigs and pipelines. It also manufactures marine terminals, power facilities, desalination plants, construction equipment and industrial robots.
The company was formerly part of the massive family-run Hyundai conglomerate, at one time South Korea's largest business empire with interests including ships, autos and computer chips.
The conglomerate broke up, however, in the aftermath of the 1997-98 Asian financial crisis into separate ones centered on former group companies. Hyundai Motor Co., for example, forms the nucleus of one of those groups.
Shares in Hyundai Heavy, which released earnings results after the stock market closed, rose 4.8 percent to close at 261,000 won (US$283; EUR208).
Three warships that set off on a mission from the Baltic Sea attracted close attention of the United States