Data Center Engines and Emerging-Market Equipment Drive Growth; HD Construction Equipment Co., Ltd. Operating Profit Up 24% [Roundup]

[Financial News] HD Construction Equipment Co., Ltd. increased its operating profit by about 24% year over year in the third quarter of this year, buoyed by strong sales of engines for data center generators and improved profitability in its construction equipment business. The company expects the global construction equipment market to grow 11% this year, driven by investment in data centers and power infrastructure as well as development demand in emerging markets, with growth set to continue in most regions next year.
HD Construction Equipment Co., Ltd. announced on the 26th that it recorded revenue of 2.0915 trillion won and operating profit of 157.7 billion won in the third quarter of this year. The figures were up 6.1% and 23.9%, respectively, from a year earlier. Its operating margin was 7.5%. However, foreign-exchange losses of 146 billion won, partly due to exchange-rate movements, contributed to a 98.2% drop in net income, which came to just 1.8 billion won.■ “Equipment market beats expectations ... growth to continue next year”The construction equipment segment recorded revenue of 1.6235 trillion won and operating profit of 109.9 billion won. Revenue rose 1.1% year over year, while operating profit increased 25.7%. Higher selling prices, lower promotional costs and tariff refunds helped improve profitability. Parts revenue also rose 8.3% to 176.2 billion won as the company strengthened its aftermarket (AM) business.
By region, revenue in North America rose 17.7%, helped by sales growth in next-generation models and trucks. Europe, by contrast, fell 4.8% amid a downturn in the residential construction market. The Commonwealth of Independent States (CIS), Southeast Asia and Oceania grew 30.2%, driven by sales of products tailored to local markets. India and Latin America also rose 26.6% and 26.8%, respectively, buoyed by investment in infrastructure and mining. The Middle East and Africa declined 24.2% due to geopolitical uncertainty and logistics constraints, among other factors.
During its earnings call that day, the company forecast that the global construction equipment market would grow 11%, from about 570,000 units last year to about 630,000 this year. It said demand in most regions was exceeding both its business plan at the start of the year and its estimates from the previous quarter.
The company said that in North America, despite weakness in the residential market due to high interest rates and uncertainty over tariffs, investment in data centers and power infrastructure, the reshoring of manufacturing, and demand for equipment rentals were driving market growth. It also expects the market to expand further next year in most regions, with North American demand continuing to grow.■ Gunsan plant to begin mass production of super-large power-generation engines early next yearThe engine segment recorded revenue of 394 billion won and operating profit of 55.2 billion won, up 24.0% and about 20%, respectively, from a year earlier. Sales of generator engines rose as data center demand for power expanded, while sales of industrial engines also increased as the construction equipment market recovered. Despite higher costs related to the Gunsan plant, sales focused on high-margin products lifted the operating margin to 14%.
HD Construction Equipment Co., Ltd. plans to meet demand for engines by building a new plant in Gunsan and expanding its Incheon plant. The Gunsan plant began mass-producing power packs at the end of August and will begin mass production of defense engines alongside its completion ceremony at the end of this month. It is scheduled to start mass production of engines for super-large generators early next year. The Incheon plant will expand its production line for large gas engines.
The company forecast that revenue from its engine business would grow at an average annual rate of 12% from this year through 2031, supported by expanded production capacity for generator engines and greater penetration of the North American market for industrial engines, among other factors.
An HD Construction Equipment Co., Ltd. official said, “By running our business with a focus on profitability, we have been able to achieve solid operating profit even amid the recent decline in exchange rates,” adding, “Going forward, we will strengthen our next-generation models and locally tailored construction equipment lineup, while expanding our push into the data center generator engine market based on our new Gunsan plant to sustain growth.”
[email protected] Jung Won-il Reporter