Hanwha Ocean, the prominent South Korean shipbuilding firm, has reported remarkable financial results for fiscal year 2024, showcasing its strategic pivot toward securing contracts within the U.S. Navy’s maintenance, repair, and overhaul (MRO) sector. On January 24, Hanwha Ocean announced consolidated revenues of approximately 10.78 trillion KRW (about 9 billion USD), achieving a year-on-year growth of 45.5%. The company also celebrated a remarkable return to profitability, posting operational profits of 2.38 trillion KRW, marking its first profit since 2020.
This impressive financial performance is underpinned by the reported surge in demand for MRO services, particularly from the U.S. Navy. Kim Ho-jung, Hanwha Ocean’s Special Ship Sales Executive, stated, “We expect to secure 5 to 6 MRO contracts with the U.S. Navy this year, and currently, demand is skyrocketing.” The market is pivotal for Hanwha Ocean as the U.S. Navy’s plans entail constructing 364 ships over the next 30 years, with total investments expected to reach approximately 160 trillion KRW.
The company’s expansion of its MRO operations aligns well with the rising global defense budgets precipitated by increasing geopolitical tensions, including the conflicts involving Ukraine and the Middle East. Industry analysis identifies this phase as the onset of a supercycle for the marine industry, which Hanwha Ocean seeks to exploit for future growth.
Further bolstering its strategic position, Hanwha Ocean has successfully acquired the Philly shipyard, situated close to major U.S. naval facilities. Kim elaborated on this acquisition, saying, “We will expand our cooperation beyond the U.S. Navy to NATO and allied navies, using the Philly shipyard as our base.” This facility is expected to play a key role in positioning Hanwha Ocean for future contracts.
Financially, the company’s special ship division, which includes submarines, delivered significant results, mirroring the overall improvement across all sectors of the company. The revenue from this division reached approximately 1.05 trillion KRW, complemented by considerable operating profits thanks largely to successful bids for submarine construction and maintenance projects.
Kim noted the change as being instrumental, stating, “The U.S. Navy plans for significant expansion and modernization of its fleet, and our position allows us to capitalize on this trend.” The turnaround to profitability follows years of low-cost bidding under prior management and encompasses efforts to clear longstanding low-margin contracts. Hanwha Ocean's operational strategies now focus on high-value vessels, particularly liquefied natural gas (LNG) carriers.
Internal factors also played their part, including favorable currency effects and rising ship prices. Systematic efforts to increase operational days and engage high-value projects have proven successful. The firm witnessed increased profits from LNG carriers, which are becoming more central to its sales strategy.
Looking to the future, Hanwha Ocean reiterated its goals for stable growth, targeting not only the U.S. MRO market but also opportunities abroad, including the construction of new submarines and energy projects. “We are committed to overcoming past production delays and leading with innovative, environmentally sensitive technologies,” stated representatives from Hanwha Ocean during the press conference.
Responding to the shifting dynamics of global defense, Hanwha plans to navigate potential legislative changes around foreign participation in combat vessel contracts within the U.S. market. Adjustments to current laws could provide Hanwha Ocean with increased access to lucrative military shipbuilding contracts.
This decisive strategic reorientation positions Hanwha Ocean as not only a significant player domestically but also as an increasingly integral partner for U.S. defense operations. Meanwhile, the anticipation of new legislation aimed at bolstering U.S. shipbuilding capabilities could pave the way for even greater opportunities for Hanwha Ocean. With this readiness to adapt and scale, the company is poised for continued growth and contributions to the maritime defense sector.