Hanwha Ocean's operating profit nearly doubles in Q2; submarine export push continues beyond Canada

Hanwha Ocean surpassed 700 billion won ($477 million) in quarterly operating profit, posting nearly double the earnings of a year earlier, driven by improved operational efficiency and the full-scale construction of liquefied natural gas (LNG) carriers. Despite losing out on Canada's submarine procurement program, the company plans to sustain earnings growth in the second half of the year by opening new markets and securing orders for delivery slots in 2029 and 2030.

Hanwha Ocean disclosed Monday that its consolidated operating profit for the second quarter of 2026 came in at 736.1 billion won on a preliminary basis, up 98% from the same period a year earlier. Sales jumped 65.2% to 5.44 trillion won over the same period, while net profit for the period soared 366.7% year-on-year to 692.6 billion won.

The sharp rise in second-quarter sales was driven by stabilized production, improved operational efficiency and an increase in vessels under construction. The commercial vessel division benefited from revenue recognition on LNG carriers and the full-scale construction of large-scale projects, while the special vessel division maintained solid sales on the back of steady progress in submarine and surface warship programs. The energy plant division saw a temporary concentration of accumulated revenue as projects applying a delivery-based accounting method reached completion.

Operating profit reflected cost savings on materials and productivity improvements against a favorable external backdrop of higher vessel prices and exchange rates. The commercial vessel division saw structural profitability gains through revenue recognition on high-margin projects and cost reductions. The special vessel division significantly narrowed its operating loss through cost-cutting and profitability improvement efforts, despite ongoing selling, general and administrative expenses and fixed-cost burdens. The energy plant division also reduced its deficit through change-order gains, even as deferred new orders continued to weigh on fixed costs.

"Since Hanwha Ocean's launch, we have consistently generated results from cost innovation — including improved work efficiency and expense reduction — and the trend of strengthened and improving mid- to long-term profitability will continue," a company official said on an earnings conference call Monday.

Hanwha Ocean also said Monday that despite its disappointment at losing the Canadian Patrol Submarine Project (CPSP), it is pursuing additional opportunities in other regions. A company official said that "reaching the final round against Germany — the world's top submarine builder — with our independently developed submarine proves that our technology is competitive on the global stage," and added that the company would "knock on new markets including Greece, Thailand, the Middle East and Latin America based on the capabilities and know-how gained through this program, and carry out future projects without disruption."

On how the company plans to use its warship capacity following the CPSP loss, the official said, "Even without Canada, we are in ongoing discussions with parties in Africa, Europe and Asia," and added that "submarine export opportunities will keep coming, even if not immediately." The official went on to say that "if opportunities arise in the surface vessel sector in the United States, we will deploy all of Hanwha Ocean's available capacity, and since we have also won the KDDX program, we are planning to make full use of our entire special vessel capacity."

Hanwha Ocean said it expects order intake to improve further in the second half of this year. A company official said the company "worked hard to secure orders at the end of last year, leaving no delivery slots available from early this year through 2028," and that "since nearly all slots through 2029 and 2030 deliveries are already engaged, good news on orders for that period should come soon once contract decisions are made." The official added that "slot sales are ongoing through the first half of 2030, so order intake will get progressively better in the third and fourth quarters" of this year.

On the commercial vessel order strategy, the official said the company "took on many very large crude carrier (VLCC) orders in the first half, and inquiries continue to come in consistently," adding that it intends to "selectively accept VLCC orders at levels above the market average." On container ships, the official said "inquiries are limited, and while we will do our best on projects that come up, overall volume is not expected to be large." On LNG carriers, the official said "most of the 2029–2030 slots are currently under discussion," with the company "ready to finalize contracts as shippers and shipowners make their decisions."

On the special vessel business, the official said that "had we won the CPSP, profitability would have peaked between 2032 and 2035," but noted that "there are other programs targeting orders in that same window, and we intend to recover the fixed costs associated with CPSP through order opportunities across different continents." On the Korea next-generation destroyer (KDDX) program, for which Hanwha Ocean has been named the preferred bidder, the official said it "is not a highly profitable program, but we will do our best, including through cost reduction."