Hyundai Heavy Net Profits More Than Double on Higher Ship Prices

yundai Heavy Industries Co., the world's largest shipbuilder, said Friday its second-quarter net profit more than doubled, surging to a record on higher prices for its vessels.

     Hyundai Heavy earned 417.5 billion won ($449 million) in the three months ended June 30, the company said in a regulatory filing. Hyundai Heavy posted a profit of 192.4 billion won in the same quarter a year earlier.

     Sales during the quarter at the Ulsan, South Korea-based manufacturer rose 30 percent to 3.88 trillion won ($4.17 billion) from 2.97 trillion won a year earlier.

     Earnings in the quarter reflected orders received in 2004 and 2005, said spokeswoman Kim Mi-ri, primarily container ships and carriers for LNG, or liquefied natural gas.

     China's need for raw materials has been the main driver behind demand for Hyundai Heavy's ships, Kim said, with European carriers logging the most orders for vessels delivered in the quarter.

     Anthony Moon, an analyst for Nomura International Ltd. in Seoul, said higher ship prices boosted Hyundai Heavy's bottom line in the second quarter. Moon said there was a 24 percent increase in overall ship prices to $1,100 per deadweight ton, the industry standard, in 2004 from the year before.

     As of the end of June, Hyundai Heavy had orders for 315 ships, the equivalent of 3 1/2 years of work, valued at $26.6 billion (19.5 billion euros), Hyundai's Kim said.

     Moon said as long as steel prices stay stable, Hyundai's earnings are ``set to gain substantially'' on its order book and further price increases.

     He said China's economic growth has been a big factor not just for Hyundai but for other shipbuilders.

     ``I would say China has changed the whole dynamic of the industry,'' he said.

     Shares in Hyundai Heavy have more than doubled this year. Investors, however, dumped the stock Friday, pushing it down 6.9 percent to 324,000 won ($348).

     Hyundai Heavy, established in 1972, has risen over just three decades to become the world's largest shipbuilder.

     The company also designs and builds offshore facilities such as oil rigs and pipelines. It manufactures marine terminals, power facilities, desalination plants, construction equipment and industrial robots.

     The company was formerly part of the massive family-run Hyundai conglomerate, at one time South Korea's largest business empire with interests in ships, autos and computer chips. The conglomerate broke up in the aftermath of the 1997-98 Asian financial crisis.