1. HHI Q2 Earnings: Key Highlights
HHI’s Q2 revenue was in line with expectations, but operating profit saw a slight decline, and net profit experienced a significant drop. This decline in net profit is a key concern for investors.
| Metric | Actual (KRW Billion) | Expected (KRW Billion) | Difference (%) |
|---|---|---|---|
| Revenue | 41,450 | 41,409 | +0.10 |
| Operating Profit | 4,692 | 4,717 | -0.53 |
| Net Profit | 2,091 | 3,696 | -43.42 |
2. Decoding the Net Profit Decline
Based on the Q3 2025 report analysis, all three segments – shipbuilding, offshore & marine, and engine & machinery – faced growth slowdown and external headwinds. A combination of high debt ratio, rising interest rates, fluctuating raw material prices, and exchange rate volatility contributed to the decline in net profit.
- Shipbuilding: A declining trend in new orders likely weighed on performance, despite a healthy backlog.
- Offshore & Marine: Low operating rates, geopolitical risks, and project uncertainties impacted profitability.
- Engine & Machinery: Despite the positive impact of growing demand for eco-friendly engines, the rise of Chinese competitors and intensified price competition likely squeezed margins.
3. Action Plan for Investors
Before making investment decisions regarding HHI, further analysis is crucial. This includes a deeper dive into segment-specific revenue and margins, raw material prices, exchange rates, and interest rate fluctuations. The high debt ratio necessitates ongoing risk management. Tracking changes in order backlog is also a key indicator to watch.