Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Korean construction equipment makers eye rebound with potential Trump win
Then-U.S. President Donald Trump, right, listens as Ukrainian President Volodymyr Zelenskyy speaks to the press during a meeting in New York on the sidelines of the United Nations General Assembly in this Sept. 25, 2019 photo. AFP-Yonhap
By Park Jae-hyuk
HD Hyundai expects Republican candidate to end Ukraine war, lift sanctions on Russia
Korean construction equipment manufacturers are cautiously optimistic about a potential rebound in global demand for heavy machinery if U.S. Republican presidential nominee Donald Trump returns to the White House.
Anticipating that the former U.S. president’s reelection could lead to the end of the war between Ukraine and Russia, domestic securities analysts are advising investors to pay attention to companies that can participate in post-war reconstruction projects.
During the second quarter of this year, all three heavy equipment makers in Korea experienced sharp falls in their profitability due to low global demand for new machines amid a slowdown in the construction industry in the aftermath of high interest rates and the strong U.S. dollar.
Doosan Bobcat, which generates 70 percent of its revenues from the North American market, saw a 48.7 percent year-on-year decline in operating profit to 239.5 billion won ($173 million). Its revenue also dropped by 16.3 percent to 2.2 trillion won.
HD Hyundai Infracore, a subsidiary of HD Hyundai XiteSolution, suffered a 49.7 percent year-on-year drop in operating profit, falling to 81.5 billion won, and a 15.7 percent decline in sales to 1.1 trillion won.
HD Hyundai Construction Equipment (HCE), another subsidiary of the intermediate holding firm of HD Hyundai, posted 58.6 billion won in operating profit, down 39.3 percent year-on-year, and 853 billion won in sales, a 17.4 percent drop from the previous year.
Ukrainian Ambassador to Korea Dmytro Ponomarenko, second from right, inspects HD Hyundai Construction Equipment's (HCE) Global Education Center in Eumseong County, North Chungcheong Province, in this April 16 photo. Courtesy of HD HCE
The company was particularly hit by export restrictions to Russia imposed after international sanctions were enacted following the invasion of Ukraine in 2022. Prior to the war, HD HCE held an 11 to 13 percent share of the Russian construction equipment market, which saw transactions of up to 16,000 heavy machines annually.
Given that Trump vowed to end the war by halting U.S. military aid to Ukraine, the Korean firm is expected to find lucrative new opportunities in both Ukraine and Russia, if the Republican returns.
“When Russia came under international sanctions after invading Crimea, Trump lifted three types of sanctions against the country’s trade with companies,” an HD HCE official said during a conference call on its earnings, Wednesday.
“We anticipate that the Western world will lift the ban on transactions of products for relief and restoration.”
HD HCE also said Trump's reelection could allow it to sell products for Ukraine's post-war reconstruction. Before the war, the company held a 10 to 15 percent market share in Ukraine.
“Our dealerships still exist there, so we hope for handsome profits from the post-war reconstruction projects,” the company official said.
Hana Securities analyst Yoo Jae-sun maintained an optimistic outlook for HD Hyundai Infracore, emphasizing that the company had the largest share of Ukraine’s construction equipment market before the war.
“It is reasonable enough to anticipate a recovery of the company’s earnings after the reconstruction projects begin,” the analyst said.