HD Construction Equipment continued its earnings improvement, driven by expanding demand for construction machinery and engines. The company expects a gradual recovery in the construction machinery market to persist into the fourth quarter, alongside rising demand for power generation engines for AI (artificial intelligence) data centers. It plans to sustain its growth trajectory by increasing sales of high-margin engine products and expanding production capacity.
It said Monday that it recorded revenue of 2.0915 trillion won and an operating profit of 157.7 billion won in the third quarter of this year.
Compared to the same period last year, based on the combined results of HD Hyundai Construction Equipment and HD Hyundai Infracore, revenue increased by 6.1% and operating profit rose by 23.9%. HD Construction Equipment, the integrated entity formed from HD Hyundai Construction Machinery and HD Hyundai Infracore, was launched in January.
The construction machinery division recorded revenue of 1.6235 trillion won and an operating profit of 109.9 billion won. Revenue increased by 1.1% and operating profit rose by 25.7% year-on-year. While performance was sluggish in the Middle East and Africa regions, results were supported by continued infrastructure investment and mining demand in other areas.
Revenue in advanced markets, including North America and Europe, increased by 4% compared to the same period last year. Revenue in the Commonwealth of Independent States (CIS), Southeast Asia, and Oceania regions rose by 30.2%, India by 26.6%, and Latin America by 26.8%.
The company forecast that the recovery in the construction machinery market will continue. Choi Tae-geun, Senior Executive Vice President of HD Construction Machinery, stated at the earnings announcement briefing on the same day, "The replacement cycle for equipment demand, which surged due to government stimulus measures during the pandemic, has arrived. This year, data center and power infrastructure investments in advanced markets, rental demand, and resource development are driving the market." He added, "Considering these trends, we expect the construction machinery market to maintain a gradual upward trend next year as well."
The engine business also continued its growth momentum, driven by expanding demand for data center power generation engines. Revenue increased by 24% year-on-year to 394 billion won, and operating profit rose by 20% to 55.2 billion won. The operating profit margin stood at 14%, maintaining double digits. The improvement in results was attributed to increased sales of generator engines due to rising data center power demand, higher sales of industrial engines following the recovery in the construction machinery industry, and a sales strategy focused on high-margin products.
The company plans to expand production capacity to respond to medium- and long-term increases in power generation engine demand. The Gunsan plant, scheduled for completion at the end of this month, will be used for the production of megawatt (MW)-class diesel engines for generators starting next year.
At the Incheon plant, the company is expanding its large gas engine production line to meet the growing demand for data center power generation engines, centered on North America.
A company official said, "Major customers in North America are expanding their business scope into the data center market based on the foundation they have built in the existing oil and gas sector."
He added, "As power demand is expected to remain robust for a considerable period, we plan to secure revenue and profitability centered on power generation engines."
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