Company To Watch: Hyundai Heavy Industries

COMPANY TO WATCH: RISING SHIP ORDERS LIFT HYUNDAI HEAVY INDUSTRIES

 

By Gordon Platt

 

The growth in world trade, as well as higher cargo rates, has triggered a surge in orders for new containerships.

 

The trend is boosting the fortunes of Ulsan, South Korea–based Hyundai Heavy Industries, the world's largest shipbuilder.


On December 14, 2010, Hyundai Heavy's share price rose 8.9% after Hapag-Lloyd, a major Germany-based shipping line, more than doubled a containership order to a total of $1.45 billion. The carrier expanded the requested capacity of six ships it already had on order to 13,200 TEUs, or 20-foot equivalent units, and ordered four more ships of the same size.


Orders for new ships have rebounded after falling sharply during the global recession. The biggest containerships are in the most demand at a time of rising fuel prices because they can be operated more efficiently. In addition, ship owners are getting ready for 2014, when work will be completed on widening the Panama Canal.


Hyundai Heavy says its shipyard is already working at full capacity, which gives it the luxury of being picky about which new orders it selects. The company's earnings rose sharply in the first three quarters of 2010, as sales of its construction equipment to China were stronger than expected.


Hyundai Heavy's other divisions include offshore drilling rigs, industrial and power plants, engines and machinery, and electric systems. The company announced in December that it would add a unit for new and renewable energy, including solar and wind power.


Meanwhile, Hyundai Heavy expects power-station equipment sales to rise as economic growth in emerging markets increases demand for electricity.

 

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