South Korea’s two leading construction equipment makers Doosan Infracore Co. and Hyundai Construction Equipment Co. have cashed in on infrastructure boom in China.
According to regulatory filings, Doosan Infracore posted its operating profit of 214.7 billion won ($189.3 million) for the second quarter ended June, beating market consensus of 186.2 billion won. Hyundai Construction Equipment reported 35.8 billion won in operating profit during the same period, below market estimates of 53.0 billion won, but its profit would exceed the market expectations when excluding the one-off loss of 25.5 billion won incurred during the demerge process from Hyundai Heavy Industries Co.
Their strong performance largely owes to the booming construction sector in China. According to Chinese Construction Machinery Association, total sales of excavators from January to June this year in China amounted to 70,843 units, already surpassing last year’s total sales of 62,993. Doosan Infracore also reported 1.38 times higher sales of 6,095 excavators in the first half from 4,649 a year ago. It has earned 258.4 billion won in sales during the second quarter in China, more than doubled from a year ago.
“China’s expanded investment on infrastructure construction has rapidly increased replacement demand for construction equipment, accelerating the growth in sales in the second quarter,” said an official at Doosan Infracore. In result, the company has succeeded in expanding its share in the China’s construction equipment market to 8.6 percent from 7.4 percent a year ago.
Its smaller peer Hyundai Construction Equipment also sold 2,162 excavators in China in the first six months of this year, surpassing its total sales of 1,956 last year. It posted 79.5 billion won in sales in the second quarter, up a whopping 246 percent from a year ago.
An official from Hyundai Construction Equipment attributed the recovery in the Chinese real estate market and the country’s One Belt One Road (OBOR) economic development project for the company’s solid performance last quarter. The official expected both the country’s construction market and demand for its equipment to continue to grow onwards.
Shares of Hyundai Construction Equipment Wednesday closed 1.1 percent down at 404,000 won, while shares of Doosan Infracore closed 2.23 percent up at 8,710 won.
By Yoon Jin-ho
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