HD Hyundai Heavy surpasses annual merchant ship order target in first half

HD Hyundai Heavy Industries has already surpassed its full-year merchant ship order target in the first half of this year. Orders for engine machinery — demand for which has surged on the back of AI data center construction — have also exceeded 90 percent of the annual target. However, the naval vessel segment, which posted a relatively low first-half achievement rate, is expected to see order opportunities concentrate in the second half, according to the company.

HD Hyundai Heavy Industries said Saturday that its merchant ship orders for January through June totaled $11.85 billion, already exceeding the full-year plan of $11.47 billion. The figure is more than double the $5.4 billion recorded in the same period last year. The company secured a large number of high-value vessels this year, including ultra-large container ships and LNG carriers. By vessel type, first-half orders comprised two tankers, 33 petrochemical product carriers, 30 container ships, 13 LNG carriers, 25 LPG carriers and five vessels in other categories, including naval ships, pure car and truck carriers, liquid CO2 carriers and icebreakers.

The engine machinery division also posted first-half orders of $2.45 billion, reaching 91.6 percent of its full-year plan of $2.67 billion. In April, the company signed a power generation engine contract worth 627.1 billion won ($427 million) with a US energy infrastructure developer. The division produces large engines as well as mid-sized engines for generators on large vessels, sold under the company's Himsen Engine brand. It manufactures both two-stroke low-speed engines and four-stroke medium-speed engines as core products, making it one of a handful of companies worldwide to hold proprietary models in both categories.

By contrast, the naval vessel and offshore segments posted first-half orders of $364 million and $113 million, respectively — just 12.1 percent and 3.5 percent of their annual targets. "Segments such as naval vessels are expected to see order opportunities concentrate relatively more in the second half," a company official said. HD Hyundai Heavy Industries is also seen as having remaining opportunities to win overseas special vessel contracts in the Philippines and Peru, as well as one offshore plant order.

In Peru, HD Hyundai Heavy Industries signed a joint development agreement with the Peruvian Navy and Sima shipyard at the end of last year to build two new submarines and recently completed the basic design. The company aims to finalize a lead vessel construction contract within the year after completing the detailed design. Having already secured a contract in 2024 to export frigates, offshore patrol vessels and landing ships to Peru and carried out joint construction with Sima shipyard, the company is widely expected to win additional export contracts. Expanded entry into the Philippines is also drawing attention. The Philippines is reported to be pursuing submarine acquisition and additional frigate programs under its naval modernization plan. HD Hyundai Heavy Industries has already successfully delivered Jose Rizal-class frigates and patrol vessels to the country.

Order opportunities for the engine division are also expected to continue into the second half. Additional orders for data center engines in particular are generating anticipation. An industry official said demand for medium-speed power generation engines for land-based data centers would keep growing, adding that surging power demand cannot be fully met by conventional gas turbines alone and that orders for four-stroke medium-speed engines are expected to increase further. Samsung Securities said in a recent report that HD Hyundai Heavy Industries' land-based power generation business holds potential not only from the competitiveness of its own engine operations, but also through possible collaboration with group affiliates HD Hyundai Electric and HD Hyundai Marine Solution.