HD Hyundai’s Two Construction Equipment Affiliates: "Even with Poor Performance, It’s for the Shareholders"

[Korea Financial Times, Shin Haeju] HD Hyundai’s construction equipment affiliates, HD Hyundai Infracore (CEO Oh Seung-hyun) and HD Hyundai Construction Equipment (CEO Choi Cheol-gon), are continuing aggressive share buybacks despite weak performance in the first quarter of 2025.

On May 7, HD Hyundai Infracore acquired 115,000 treasury shares, and HD Hyundai Construction Equipment acquired 9,500 shares. These purchases are part of a medium- to long-term shareholder value enhancement policy announced in March 2024. Both companies plan to buy back and cancel treasury shares worth KRW 31.4 billion for HD Hyundai Infracore and KRW 20.6 billion for HD Hyundai Construction Equipment by August 2025.

When companies repurchase and cancel treasury shares, the number of shares outstanding decreases, which can boost stock prices and help stabilize share value, thereby enhancing shareholder value.

On February 5, HD Hyundai Infracore signed a trust contract with KB Securities to acquire 4,397,759 treasury shares. Two days later, on February 7, HD Hyundai Construction Equipment also signed a trust contract for 293,030 treasury shares.

So far, HD Hyundai Infracore has acquired 3,045,972 shares, and HD Hyundai Construction Equipment has acquired 247,876 shares. HD Hyundai Infracore plans to complete the acquisition of 1,351,887 shares by August 5, and HD Hyundai Construction Equipment plans to acquire the remaining 75,008 shares by August 7, after which all will be canceled.

Last year, the two companies also canceled treasury shares worth a combined KRW 86.3 billion. On February 6, 2024, HD Hyundai Infracore and HD Hyundai Construction Equipment signed trust contracts with NH Investment & Securities for 7,244,501 and 585,507 shares, respectively. By August 2024, HD Hyundai Infracore canceled 6,947,586 shares (excluding 64,835 shares held before a merger), and HD Hyundai Construction Equipment canceled 541,510 shares (excluding 51,797 shares acquired after its 2017 spin-off and re-listing).

On March 31, 2025, HD Hyundai Construction Equipment also canceled 592,000 shares worth KRW 28 billion acquired in 2018.

However, share buybacks do not always lead to stock price increases, as excessive buybacks may reduce a company’s future investment capacity. For example, on the day the trust contracts were signed in February, HD Hyundai Infracore’s stock price fell 4.38% to KRW 7,200, while HD Hyundai Construction Equipment’s stock rose 2.82% to KRW 72,900.

Both companies’ earnings have been declining since 2023. At the end of 2023, HD Hyundai Infracore’s sales decreased 2.03% year-on-year to KRW 4.6596 trillion, but operating profit increased 25.8% to KRW 418.3 billion. However, in 2024, sales dropped 11.7% to KRW 4.1142 trillion, and operating profit plunged 55.96% to KRW 184.2 billion. In Q1 2025, sales fell 12% year-on-year to KRW 1.0185 trillion, and operating profit declined 27% to KRW 67.8 billion.

HD Hyundai Construction Equipment recorded KRW 3.4281 trillion in sales and KRW 190.4 billion in operating profit in 2024, down 10.38% and 25.97%, respectively, from the previous year. In Q1 2025, sales were KRW 906.8 billion and operating profit KRW 41.7 billion, falling 7.4% and 22.3% year-on-year.

An official from HD Hyundai Site Solutions, the mid-tier holding company for HD Hyundai Construction Equipment, stated, “Shareholder returns are being implemented in the construction equipment sector in line with HD Hyundai’s policy. Since it is a promise to shareholders, we plan to fulfill it responsibly.”

Shin Haeju (hjs0509@fntimes.com)