HD Construction Equipment consolidates China operations, closes Chile branch in global restructuring push

HD Construction Equipment is accelerating the restructuring of its major overseas subsidiaries in China and Latin America, pushing ahead with efforts to streamline its global operations. The company was formed earlier this year through the merger of HD Hyundai Construction Equipment and HD Hyundai Infracore — previously the top two players in South Korea's construction equipment sector — and has been working to maximize management efficiency by continuously reorganizing its overseas footprint after posting strong earnings that demonstrated the benefits of integration.

According to HD Construction Equipment on Thursday, a board meeting held in June approved, as proposed, a capital increase in the Shanghai holding company and the closure of the Chile branch, alongside a report on the restructuring of China operations. At a subsequent board meeting on July 29, the board also approved, as proposed, the Shanghai holding company's acquisition of a stake in Shanghai Leasing and the merger between the Shanghai and Beijing holding companies.

Under the plan, the holding companies and leasing companies that had been operating separately under the Hyundai and Develon brands in China will be consolidated under a single Shanghai-based entity. "We are integrating the Hyundai and Develon holding companies and leasing companies, which had been split between Shanghai and Beijing, into Shanghai to strengthen our competitiveness in the Chinese market," a company official said. "Combined with the production consolidation centered on the Yantai plant carried out last year, this will help us build a more efficient sales strategy and strengthen product competitiveness in China."

The Latin American market is also undergoing a streamlining process. In Chile, the two separate branches operating under the Hyundai and Develon brands have been merged into a single integrated operation, with one branch now overseeing both brands. The company had established sales branches in Chile and other markets in 2024, before the integrated entity was launched, as part of its push into Latin America.

HD Construction Equipment had earlier introduced an eight-region sales structure to strengthen synergies between its two brands, while also securing cost competitiveness by integrating operations across production, sales, procurement and research and development. The company built integrated assembly and dispatch centers in Europe and North America, cutting lead times by 30 percent and reducing costs by 20 percent compared with before. It also restructured its Chinese production base from a dual-site system in Jiangsu and Yantai to a single Yantai operation, improving production efficiency.

As the integrated company's synergy framework gains momentum, HD Construction Equipment has maintained a solid earnings trajectory amid a recovery in global markets. In the second quarter, the company posted consolidated sales of 2.43 trillion won ($1.74 billion) and operating profit of 248.9 billion won, achieving a double-digit operating profit margin of 10.2 percent for the first time since the merger. Sales rose 5.6 percent and operating profit jumped 30.5 percent from the previous quarter. For the first half of the year, cumulative sales reached 4.74 trillion won, up 8 percent from a year earlier, while operating profit came in at 439.6 billion won, a 91.9 percent increase from the same period last year.

The company attributes the earnings improvement to a global market recovery as well as a sales strategy focused on next-generation models and high-margin products. HD Construction Equipment plans to maintain a profitability-centered sales strategy in the second half of the year while also accelerating efforts to strengthen its engine business. At its new factory in Gunsan, the company is investing 116.8 billion won to expand production capacity for defense engines. The goal is to increase production capacity for K2 main battle tank engines and establish an annual production system for large-scale power generation engines with a capacity of 1,250 units. Through these efforts, the company aims to strengthen its position in the defense and power generation markets and continue expanding its growth base.