Exclusive: Hyosung Heavy Industries tops earnings growth among three power firms, but staff unhappy with modest bonuses

According to The Financial News, South Korea’s three major power equipment makers—Hyosung Heavy Industries, HD Hyundai Electric and LS ELECTRIC—posted record earnings last year on the back of a boom in power infrastructure driven by artificial intelligence (AI). Yet the company that showed the steepest growth, Hyosung Heavy Industries, ended up paying the lowest bonuses compared with its rivals.
Based on reporting by The Financial News on the 4th, Hyosung Heavy Industries recently paid employees in its Heavy Industries Division’s Power Performance Unit (PU) bonuses equivalent to 300% of their monthly salary. Other departments in the Heavy Industries Division, including the Gijeon Performance Unit (PU), as well as the Construction Division, are understood to have received even smaller bonuses. By contrast, LS ELECTRIC paid bonuses equal to 1,180% of base salary, while HD Hyundai Electric paid 1,195% of the agreed wage (base pay plus fixed allowances). Among the three companies, Hyosung Heavy Industries’ payout ratio was the lowest.
Within Hyosung Heavy Industries, the Power PU manufactures core power equipment such as ultra-high-voltage transformers and circuit breakers, as well as medium- and low-voltage transformers. It is widely viewed as the main driving force behind the company’s recent earnings improvement. The numbers back this up. As demand for ultra-high-voltage transformers surged in the United States of America (U.S.) and Europe, Hyosung Heavy Industries’ order backlog reached 11.9 trillion won at the end of last year, up 34% from a year earlier. This is the largest backlog among domestic power equipment makers.
Not only has the business scale expanded, but profitability has also become heavily concentrated in the power segment. In the fourth quarter of last year, the operating margin of the Heavy Industries Division, which handles the power equipment business, reached 20.2%. Over the same period, the Construction Division posted an operating margin of just 3.0%, meaning the Heavy Industries Division generated more than six times the profit.
The ultra-high-voltage transformers that the Power PU focuses on are considered products that can maximize the company’s profitability within the power equipment portfolio. They are nearly twice as expensive as standard transformers, require relatively advanced technology, and place a premium on reliability, which creates high barriers to entry for new players. With supply limited and demand soaring due to the expansion of power infrastructure, including AI data centers, some observers say suppliers have effectively become “super-powerful” in the market.
Even so, while competitors paid bonuses in the 1,000% range, Hyosung Heavy Industries capped payouts at around 300%, leading to some internal discontent, according to reports. Employees are said to be particularly sensitive to the widening gap in rewards, given that the company delivered stronger earnings growth than its peers.
In fact, Hyosung Heavy Industries posted record annual results last year, with sales of 5.9685 trillion won and operating profit of 747 billion won. These figures represent year-on-year increases of 21.9% and 106%, respectively. LS ELECTRIC and HD Hyundai Electric also set new records amid the power boom, but Hyosung Heavy Industries was the only one whose operating profit more than doubled in a “quantum jump.”
A Hyosung Heavy Industries official stated, "The Power Performance Unit received the highest bonus grade last year, and because the criteria differ from those of other companies, we understand that the actual level of bonuses is broadly similar."
one1@fnnews.com Jung Won-il and Lim Su-bin Reporter