HYUNDAI Heavy industries Annual report 2012

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HiMSEN Engines
Since their development back in 2000, HiMSEN four-stroke engines
have earned a reputation as one of the top brands in the market.
It took just under a decade from the time our first HiMSEN rolled
off the assembly line in September 2001 to the 5,000th unit on
February 10, 2011. We finished 2012 with a cumulative total of 7,000
units representing approximately 16.3 million bhp.

Business Overview
Engine & Machinery
At Hyundai Heavy Industries, we’re known for building some of the world’s most powerful
engines and advanced machinery. From ships to power plants, we deliver the equipment that
empowers industries and economies to grow as we help build a more productive future.
2012 Order Breakdown. Parent Basis, by Value
█ Marine Engines 78%
█ Robotic Systems & Others 10%
█ Engine Power Plant 8%
█ Hydraulic Machinery 4%
2012 Overview
The two-stroke marine engine market faced an order drought
as global shipbuilding orders shrank for a second straight year.
This trend was most evident in China, where financially-strapped
local shipbuilders sharply reduced engine orders due to a lack of
ship orders. This same dynamic intensified competition, pushing
engine prices lower and worsening profitability. In the engine
power plant market, the majority of projects in the Middle East
were either postponed or delayed with the exception of natural
gas-fired plants. While demand for hydraulic equipment was down,
demand for industrial robots continued to grow, driven by rising
investment in manufacturing by automakers and steelmakers.
2012 Review
Despite challenging circumstances in the shipbuilding market, we
booked orders of USD 1.86 billion in 2012. We expanded our lead
in the two-stroke marine engine market with a 35% market share.
We produced 355 two-stroke engines totaling over 11.5 million
bhp, setting a new industry record as we passed the 120 million
bhp cumulative production milestone. We produced 964 four-
stroke engines totaling 2.9 million bhp, pushing our cumulative
total to over 7,000 units since we shipped our first HiMSEN
engine in 2000. We also produced over 3,000 industrial robots
during the year. Our engine power plant and hydraulic machinery
businesses both fell short of order targets due to ongoing project
finance issues in the Middle East. Key orders for the year included
a 100 MW packaged power station project in Angola and our first
HYUNDAI Heavy industries Annual report 2012
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Orders. Parent basis, in USD millions
3,176
2,283
1,858
Industry’s first dual-fuel marine engine package demonstrated
On November 9, 2012, we demonstrated the industry’s first dual-fuel engine package featuring our ME-GI two-stroke engine, HiMSEN dual-fuel four-stroke engine, and
Hi-GAS fuel gas supply system. Designed for LNG carriers, the package can also be used for crude carriers, containerships, and other commercial vessels, providing
2010 2011 2012
shipowners with a complete solution that meets increasingly stringent environmental standards.
air compressor order for a water system pressurization project in or higher share of the global two-stroke marine engine market as first dual-fuel solution for LNG carriers featuring ME-GI two-
Masan, Korea. we deliver 290 engines totaling 10.0 million bhp. We also aim to stroke dual-fuel engines, the Hi-GAS fuel gas supply system, and
deliver 950 four-stroke engines and over 4,000 industrial robots. HiMSEN DF four-stroke engines we successfully demonstrated in
2013 Outlook November 2012. We also plan to expand our business portfolio
The shipbuilding industry is forecast to experience a sluggish We will continue to focus on our most-competitive businesses— in the machinery field, focusing on hydraulic machinery, air
recovery in 2013, creating rising demand for high-efficiency, eco- two-stroke marine engines and packaged power stations—as we compressors, ballast water treatment systems, industrial and
friendly gas and dual-fuel marine engines. However, structural aim to make automobile and clean-room robots a larger part of clean-room robots, conveyor systems, and presses. The price,
industry overcapacity ensures that competition will intensify, our order mix. We aim to grow sales of our latest marine engine delivery, and quality advantage our integrated production
creating downward pressure on engine prices and profitability. developments, including high-performance HiMSEN engines for capabilities give us will be instrumental in expanding our customer
Opportunities for growth in the two-stroke marine engine market drillships and other specialized ships as well as the industry’s base in these and other fields going forward.
are likely to be limited due to rising local production capacity
and stricter import regulations in China and the current focus
on specialized ships at major Korean shipyards. The outlook is
a bit brighter in other markets. The engine power plant market
is forecast to pick up, driven by economic growth in Middle East
markets as well as growing demand in the combined-cycle power
plant market driven by the shale gas boom and rising demand
for small-scale, short lead time power projects. The hydraulic
machinery market is also expected to pick up with rising demand
for air compressors and industrial pumps. The industrial robot
market is likewise expected to expand with growing capex
investment by global automakers and clean-room manufacturing
in China.
1,000th PPS shipped Industry’s first Tier III EGR engine demonstrated
On July 12, 2012, we marked the milestone shipment of our 1,000th packaged On October 9, 2012, we demonstrated the industry’s first two-stroke marine
In 2013, we are targeting orders of USD 3.10 billion as we aim to power station. Since shipping our first PPS to the Dominican Republic in 2001, we engine to feature an exhaust gas recirculation system. The system recirculates
secure a solid two-year order backlog. We plan to maintain a 35% have gone on to supply systems worldwide primarily to customers in developing a portion of the engine exhaust gas into the combustion chamber, reducing NOx
markets. emissions by over 80% compared to standard engines.