I'd like to welcome all analysts today. Good afternoon. This is Ki Jung Song from KSOE Investor Relations. Thank you for joining our Q4 2025 earnings call. We will begin with a brief overview, just like before, of the key highlights of our Q4 results, followed by a review of operating performance. We will discuss the shipbuilding and offshore plan market environment and conclude with a Q&A session. First, currency impact. The quarter end Korean-won-U.S.-dollar exchange rate in Q4 was KRW 1,435, up KRW 33 quarter-over-quarter, while the average exchange rate increased by KRW 54. This resulted in a positive operating profit impact of approximately KRW 50 million, including around KRW 30 billion at merged HHI and KRW 20 billion at Samho. Second, modest increase in steel prices had a limited impact on earnings in Q4, only minimal impact. Third, one-off gain.
The significant improvement in full year performance resulted in additional internal and external incentive bonuses, which have been reflected in the operating profit of each business division. I will discuss this later on in my presentation. Again, with separate recognition in business divisions, overall operating profits slightly inched down. Due to our internal circumstances, we cannot disclose exact bonus incentive numbers. Second, the offshore division reflected KRW 47.1 of change order as a profit. Samho does not have any specific one-off issue for the fourth quarter of last year. As you are aware, due to the merger, one month of HMD results for December was consolidated into the merged HD Hyundai Heavy Industries entity. That's for your information. In addition, let us share the breakdown of Q4 top lines by order year for each shipbuilding subsidiary. HHI, LNGC, 48.4%, slightly down quarter-over-quarter.
LPGC and VLAC, 32.2%, slightly up. CNTR, 12.3%, slightly down. Tanker, 5.4% up from the previous year. Samho, LNGC 37.1%, slightly down. Container ship, 31.5%, slightly down. Tanker is 17%, slightly up. LPGC and VLAC, 10.2% up from the previous quarter. HD Hyundai Mipo for the last time, because we won't be mentioning HD Hyundai Mipo. PC, 59.5%, slightly down, LPGC, 24.2%, slightly up. Others, slightly up with 14.8%. LNG bunkering vessel construction is initiated this quarter, partially reflected in our sales as a result. These were the key highlights. On page 4, I will move on to page 4 and elaborate more on KSOE's Q4 2025 earnings. I would like to note, first of all, that as the Chuseok holiday fell in the fourth quarter last year, there was only one additional working day in the fourth quarter of 2025.
This is one thing that I like to take note of. In sales increased by 7.5% quarter-over-quarter and by 13.8% year-over-year. Despite the increase in the average Korean won and U.S. dollar exchange rate and minimal differences in the number of working days, productivity continued to improve. Operating profit decreased by 1.5% quarter-over-quarter, but increased by 108% year-over-year, mainly due to one-off factors such as incentive bonuses. Excluding these one-off items, profitability continues to improve steadily and remains in a stable trajectory. On a quarterly basis, again, we continue to have profitability improvement in a very stable level. Page 5. Earnings by business division. Please refer to the table below and let's turn to page 6.
First, on the shipbuilding division, despite no seasonal factors, as I said before, higher average exchange rates, rising vessel prices, and productivity improvements continued while naval ship revenue declined due to vessel mix changes. The overall revenue declined slightly. Next, offshore plant. The number of working days remained unchanged, while revenue increased sharply, driven by the full-scale execution of the Trion FPU and Ruya projects, rising 97.5% quarter-over-quarter and 170.5% year-over-year. In the engine and machinery division, revenue declined by 24.1% quarter-over-quarter due to the partial deferral of deliveries into January, but increased by 16.4% year-over-year. Due to the deferral in engine and machinery division, we're going to see improvements in the second quarter. Now, page seven. Operating profit by business division. In the shipbuilding division, profitability improved on higher average exchange rates, rising vessel prices, and productivity gains.
Quarter-over-quarter operating profit declined by 0.4% due to incentive bonuses and one-off base effects, while year-over-year operating profit increased by 79.3%. That's on an annual basis. OP margin was 13.7%, down by 0.3% quarter-over-quarter, but it would have been higher when one-off items were excluded. The overall profitability continues to improve. Once again, my apologies for not being able to disclose exact numbers. In the offshore division, the offshore division delivered strong earnings growth, and this is as a result of strong revenue growth and change order. For the engine division, operating profit decreased by 33.1% quarter-over-quarter and 58.2% year-over-year due to revenue decline and reflection of incentive bonuses.
Regarding the dual fuel engine mix, the dual fuel proportion remained stable, accounting for 72% of two-stroke engines and 78% of four-stroke engines, broadly in line with previous quarters. DF engines accounting for almost 80%. Naval vessel division, even though data is not available on the slides, in Q4, revenue amounted to KRW 349.9 billion, down by 5.8% quarter-over-quarter, mainly due to a change in naval vessel mix and a lower export share. In 2026, we believe that revenue would recover because we have increases in backlog. Operating profit was KRW 22.5 billion, down by 56% quarter-over-quarter, reflecting lower revenue and a high base effect from the KRW 15.8 billion of one-off gains recognized in the previous quarter. In special naval ship division, the bonuses were reflected.
Please be aware that the naval vessel division's margin trajectory will show ups and downs on a quarterly basis depending on the payment terms of each project. On an annualized base, this division continues to grow. Page eight, please refer to the earnings result of each consolidated subsidiary, and I will elaborate on them more on the next page. First of all, KSOE. KSOE standalone operating profit was lower due to the absence of dividend income from its subsidiaries. HHI recorded 17.5% quarter-over-quarter revenue growth, reflecting the positive foreign exchange rates, higher vessel prices, and consolidation of one-month revenue of HMD. Despite reflecting the incentive bonuses, OP increased by 3.2% quarter-over-quarter due to revenue growth and offshore change order effect. The margin is steadily improving without one-off items.
Overall, I'd like to say the profitability continues to improve on a quarterly basis. Beyond the shipbuilding division, we observed significant top-line and margin growth in the engine and offshore plant divisions. Next, Samho. Samho delivered solid margins despite reflecting the highest proportion of incentive bonuses within the shipbuilding division, supported by a quarter-over-quarter growth in both revenue and operating profit, as well as the smooth resolution of the fire incident in the previous quarter. Let's move on to page 10. Hyundai Marine Engine. Its operating profit growth outpaced revenue growth. Despite partial delays in engine deliveries, revenue increased, supported by a higher foreign exchange rate, ASP growth, and expanded parts sales. Operating profits increased significantly, driven not only by FX tailwinds, but also by productivity improvements, ongoing cost reductions, and higher margin parts sales.
In 2026, we have expectations about this specific division. Hyundai Energy Solutions, its operating profit remained solid in line with Q3. The revenue increased by 26.2% quarter-over-quarter, driven by efforts to expand domestic market share and higher exports to the U.S. An operating profit declined slightly quarter-over-quarter due to changes in product mix and higher costs, but profitability remained stable. In 2026, we believe these efforts will continue so that this division would achieve solid performance. Page 11. In terms of non-operating profit, there were significant gains related to FX valuation due to the strong dollar. Lastly, on page 12, financial ratios. All shipbuilding subsidiaries are in net cash position with a combined total of approximately KRW 6.2 trillion in net cash, reflecting our standing financial health.
This concludes my presentation on our Q4 2025 results. Thank you for your participation and presentations on shipbuilding and offshore division outlook will continue. Good afternoon. I am Lee Eun-seok , Executive Vice President of Strategy Marketing Division at HDKSOE. I'd like to present a review for the shipbuilding division and then share our outlook for the business. To begin with, according to Clarksons Research, global new building orders this year reached 110.99 million GT, a decrease of over 20% compared to last year's 143.90 million GT. Nevertheless, the fact that the order volumes remain above the 100 million GT mark indicates that the new building market is still in a boom cycle.
Despite initial concerns that 2025 orders would see a sharp decline following the high volume of recent years, we evaluate current performance to be significantly resilient and healthy. Despite the slight slowdown in global orders compared to 2024, our group shipbuilding subsidiaries have achieved robust performance. HHI Shipbuilding Division, $7.886 billion, reaching 125.2% of its target, and HHI Medium-Sized Ship Division secured $2.246 billion. Samho, $6.687 billion. HVS, $378 million. HHIP, $220 million. $17.417 billion in all. This figure represents 116% of our group's 2025 shipbuilding order target of $15.02 billion.
Despite the overall slowdown in global new building demand, we have successfully exceeded our annual guidance through strategic sales initiatives. Let's take a closer look at our order intake by vessel type for each subsidiary. HD Hyundai Heavy Industries Shipbuilding Division secured a total of 48 vessels, 28 container ships, 8 Suezmax tankers, 3 VLCCs, 4 VLACs and 2 VLGCs and 2 VLECs. So 48 vessels. Our medium-sized ship division achieved a total of 34 orders, consisting of 21 feeder container ships, 6 LNG bunkering vessels, 5 mid-sized LPG carriers, and 2 medium-range tankers. HD Hyundai Samho, 44 vessels in total, 24 large container ships, 9 Suezmax tankers, 4 VLCCs and 7 LPG carriers. HVS secured 6 vessels, 3 long-range two tankers and 3 medium-range tankers. HHIP secured 3 long-range two tankers to its backlog, so 135 vessels in total, in aggregate.
Our group capitalized on heightened U.S.-China trade tensions in the first half of 2025, when preference for Chinese shipyards weakened, by focusing on container ships and securing multiple large container ship orders. In the second half, we diversified into tanker and LNG carrier orders in line with the changing market demand. As a result, we have flexibly adjusted our order portfolio without over-reliance on any single vessel type, supporting both order growth and profitability. As of the end of December 2025, the Clarksons new building price index was 184.65, down slightly from 189.16 in 2024, but still at a high level despite lower ordering activity. Supported by solid order backlogs accumulated over recent years, new building prices are expected to decline only gradually and in a limited manner going forward.
This will be contingent on our strategy, which will stay similar. While concerns remain that oversupply and declining freight rates could trigger a market correction, new building demand has so far stayed at cycle-high levels, supported by rotating demand across various vessel segments. Additionally, tightening environmental regulations are expected to drive delayed replacement demand for aging vessels as freight rates soften, supporting new building demand. Next, I will briefly cover market conditions by vessel type. Container vessel ordering reached a record level in 2024, with 479 vessels totaling approximately 4.7 million TEU, and surpassed the level again in 2025 with orders for 644 vessels amounting to around 4.8 million TEU.
This exceptional level of ordering was driven by aggressive investment from major liner companies with strong demand, not only for large vessels, but also for small and mid-sized ships, as reflected in the disproportionate increase in vessel numbers relative to TEU capacity. Looking ahead, however, given the heavy ordering activity over the past three years and the normalization of container freight rates, the ordering momentum from major liner operators is expected to moderate. In the LNG carrier segment, new orders declined sharply in 2025 to 34 vessels and less than half of the 78 vessels ordered in 2024. This was mainly due to a temporary oversupply following large-scale LNG carrier deliveries, which pushed spot LNG rates close to historical lows, as well as delays in final investment decisions for new LNG projects in North America during the Biden administration. Having negative impact on vessel demand.
However, following President Trump's re-election, more than 70 MTPA of new LNG projects secured final investment approval in 2025 alone. With over 200 MTPA of additional global LNG capacity expected by 2030, LNG carrier new building demand is widely expected to increase significantly. In the tanker segment, tighter U.S. sanctions on the shadow fleet are expected to constrain available capacity, driving increased demand for compliant tanker fleets. In addition, replacement demand for aging vessels previously delayed by strong freight rates remains latent, while ship owners, supported by ample cash flows from the prolonged tanker cycle, expected to continue new building investments. Meanwhile, the VLOC and PCTC markets, which saw heavy ordering activity during 2023 and 2024, have entered a pause in new building investments due to concerns over upcoming large-scale deliveries. Order activity is expected to recover once the scheduled deliveries are absorbed by the market.
This year, the global shipbuilding market is expected to remain uncertain and volatile as in 2025, amid multiple geopolitical factors. These include a potential return to normal Suez Canal operations and shifts in energy logistics driven by U.S. policies in Venezuela and Iran, a possible end of the Russia-Ukraine War, and renewed U.S.-China trade tensions, making the market outlook increasingly unpredictable. Against this backdrop, our group will closely monitor global developments and remain agile in adjusting our strategies to sustain order competitiveness and enhance shareholder value. This concludes my remarks on Q4 2025 results. Thank you for your attention. A presentation about our offshore division. Good afternoon. I am Son Dae-jun, Senior Manager at Offshore Energy Business Division. I would like to briefly walk you through our Q4 performance and market outlook.
Our offshore division is actively bidding on FEED and EPC projects across the Middle East, Australia, and Europe. In particular, our Middle East projects, we expect final announcement within Q1 and final contract signing by the first half of this year. In the offshore wind sector, we are leveraging our in-house technology to expand our global footprint. Our independent offshore substation model, HyOSS, has secured DNV's approval in principle, validating our technological edge. Based on this, we are actively bidding for major domestic and international projects, and our goal is to secure our first EPC contract this year, marking 2026 as the inaugural year of our offshore wind construction operations. In the floating offshore wind sector, HyFloat model has secured ABS AIP for both 15 and 18 megawatt capacities, backed by our proven experience in commercial scale FEED.
While the global commercialization of floating wind is seeing some delays, we are proactively engaging with major developers to explore strategic partnerships. We are also reviewing participation in domestic testbed projects to further solidify our commercial readiness. In the SMR sector, we are making significant progress with TerraPower's Wyoming demonstration project. Following the fabrication contract signed last October, we have now entered a full-scale production phase. Beyond fabrication, we are conducting joint R&D for SMR commercialization through our close partnership with TerraPower, building the technical expertise needed to capture future global opportunities. Next, let me briefly discuss market outlook. With oil prices remaining above $60 per barrel, the offshore plan market is not overheated and continues to support stable profitability. In addition, demand for crude oil and natural gas for power generation is expected to keep rising, reinforcing energy security as a key priority for many countries.
Global oil majors are prioritizing offshore investments in high-efficiency regions such as Guyana, Brazil, and Africa. Meanwhile, national and international oil companies across the Middle East, Australia, and South America continue offshore oil and gas developments to secure stable resources and expand production. In the Middle East, including Qatar, the UAE, and Saudi Arabia and Kuwait, offshore gas field development is accelerating with large-scale projects planned, and the market expected to stay active. While the offshore wind market faces some near-term adjustments due to U.S. policy shifts and rising development costs, medium to long-term growth remains intact. Here in Korea, the government is advancing offshore wind expansion through the Offshore Wind Special Act, which will take effect this March, along with initiatives to strengthen R&D supply chains and demonstration test beds, supporting a public-led market and broader industry-wide structural change.
These are the changes that we're witnessing here in Korea, and based on these conditions, we're pursuing a balanced approach across offshore wind, and SMR businesses, focusing selectively on projects that ensure profitability and stable execution. That concludes my remarks on our Q4 performance and market outlook. Thank you very much.
Now, the Q&A section will begin. Please press star three, that is star and three, if you have any questions. Questions will be taken according to the order you have pressed the number star three. For cancellation, please press star four, that is star and four on your phone. The first question will be presented by Lee Dong-heon from Shinhan Investment & Securities. Please go ahead.
My question is about bonuses, and of course, you didn't disclose the exact numbers. I wonder what your bonus policy will be this year in 2026. Of course, just last year, the bonus payments would be aligned with your business performance. My question would be about whether you're applying the exact same standards across different ministries and whether there is any possibility that bonus payments would increase this year. Thank you for your question and apologies. My apologies once again for not being able to disclose exact numbers of bonus payments. When we make bonus payments, predictions are made on an annual basis, and then we make payments accordingly on a quarterly basis. For this quarter, performance outweighed and outpaced our initial expectations.
We had stellar performance for this year, which means that we had additional bonus payments that were given to our employees. As to HD Hyundai Samho, HD Hyundai Samho is subject to 1,000% cap in terms of bonus payment. That was how bonus payments were made at the 1,000% cap at HD Hyundai Samho. For HD Hyundai Heavy Industries and HD Korea Shipbuilding & Offshore Engineering, the cap is lower than that. It's around 800%. That's how bonus payments were made in line with these set rates. For subcontractors, different policies would apply, and if all these bonus payments were excluded, our operating profit margin would have been around 15%. I told you that our OP margin was 13.7% for this year, for this quarter. The bonus payment had an impact of over 1% in terms of our operating profit margins.
The following question will be presented by Choi Gwang-sik from Daol Investment & Securities. Please go ahead.
[Foreign Language]
My question is as to your quarterly revenue. Can you share with us the proportion or ratio by order year?
[Foreign Language]
Let me give you the following numbers based on Q4. HD Hyundai Heavy Industries revenue by order year is 27% in 2022, 53% in 2023, and 20% in 2024. As to Mipo, and this will be the very last time that we will be mentioning Mipo because of the merger, 0% in 2022, 37% in 2023, and 63% in 2024. Coming to HD Hyundai Samho, it's 10% in 2022, 55% in 2023, and 35% in 2024.
[Foreign Language] The following question will be presented by Jeong Dong-ik from KB Securities. Please go ahead.
[Foreign Language]
I have two questions about your engine division. The first question is about the partial deferral that you mentioned. Can you share with us the reasons why such partial deferral happened? Did it occur within HHI, HD Hyundai Heavy Industries engine business, or did it occur within HD Hyundai Marine Engine's business? My second question is, if it was not for bonus payments, then what would have happened to the OP margin to your engine business? I wonder whether it would have been improved or stayed at a similar level when bonus payments were considered.
[Foreign Language]
To answer your first question, such deferral occurred both at HD Hyundai Heavy Industries and HD Hyundai Marine Engine. Productions were complete in December, but the shipments occurred in January. I think this happened last year as well. It's all reflected in our productivity gains and profitability improvement. If you look at January 2025, the same thing happened. You will see a jump or whether a sharp increase in operating profit because of a similar situation that happened. That certainly had an impact. If I answer your second question, my apologies once again, but we haven't done our exact calculations as to bonus payment. Maybe I could disclose some relevant data if I have an opportunity next time. Thank you.
[Foreign Language]
The same rule applies as the rules that we have at HD Hyundai Heavy Industries. Anyway, we multiply the number of employees by a set amount of rate or the amount.
[Foreign Language] The following question will be presented by Han Young Su from Samsung Securities. Please go ahead.
[Foreign Language]
My question is also about your bonus payment. You mentioned that bonus payments were made to your subcontractors. Is it happening for the first time this year? I mean in 2025. Also, my question is about whether we should recognize this as a one-off expense, or is it any structural change? Can we consider this as a permanent increase in the level of wages, or is it just because there were extra performance and then bonus payments were made accordingly?
[Foreign Language]
My answer would be, I think it's a correct understanding of our bonus payments would be it's a one-off cost. It's because when we make out our bonus payments, the calculations are based on our OP margin. In 2024, two years ago, when we had our year-end settlements, we had projections about our 2025 performance. In fact, our performance was better than our initial expectations in 2024. In alignment with increased performance, additional bonus payments were made. The same applies to this year as well. We have already projected our this year's performance, if there is additional performance, extra performance, that will be translated into additional bonus payments.
추가로 말씀을 드리면, 일단 인건비 상승 관련해서는 연초에 저희들이 인건비 상승 관련해서 이미 지급을 하게 됩니다. 그래서 인건비 상승분은 이미 반영을 시키고 시작을 하게 되고요. 그다음에 실적의 변수로는 아시겠지만 환율, 후판 가격, 그다음에 생산성 이렇게 크게 나눌 수가 있는데, 아시겠지만 환율이 생각보다 많이 올랐어요. 헤지 비중이 높긴 하지만, 헤지가 안 되어 있는 부분에 대한 수익성 증가 부분, 후판 가격을 어느 정도 상승을 잡았는데 생각보다 안 올랐다, 또는 떨어졌다 그러면 또 실적이 좋아질 수 있는 거고요. 그다음에 생산성 요인은 1년이 지나봐야 아는 건데, 역시나 1년 동안 생산성이 생각보다 많이 좋아졌어요. 이런 요인들이 처음에 예측을 못했던 것, 또는 보수적으로 갔기 때문에 못했던, 적게 잡았던 부분들이 향후에 조금 더 늘어날 수 있는 부분들이 생기게 됩니다. 그래서 이것은 앉을 수 있기 때문에 일회성으로 보는 게 맞다는 생각입니다.
If I make additional comments and as to labor cost increases, we have already considered these possible increases at the beginning of each year, and these were reflected already. There are variables affecting our performance. Foreign exchange rates and plate prices, productivity gains. As to foreign exchange rates, as you know, the won appreciated quite sharply. We certainly do hedging, but there are portions that are not hedged, which will be translated into increased performance. As to plate prices, they're subject to change, affecting our productivity. The third factor, productivity, we would be only able to know how more productive we become only after a certain amount of time passes. Initially, there are things that we cannot predict, or sometimes we are conservative, and that means it's more appropriate to consider these expenses as one-off expenses.
[Foreign Language] The following question will be presented by Choe Gang-sik from 다올투자증권. Please go ahead.
수주 파트로 넘어가서 질문드리려고 하는데 LNG 쪽인데요. 우리가 작년 말부터 2029년 class도 팔았는데도 선가가 아직 250밀리언 안팎이어서 좀 실망스러운데, 중국이 엄청 받고 있는 거 우리 알고 있고. 그래서 중국이 후동중화가 캐파를 늘리고 있다는 얘기도 있고 해서, 어느 정도 중국의 LNG 건조 캐파를 얼마로 보시는지, 그리고 어느 정도 지나면 다시 한국으로 가격 경쟁력이 넘어올 수 있을는지, 언제쯤이면 LNG 신조 선가가 올라가는 걸 우리 투자자들이 볼 수 있을지 관련해서 질문드리겠습니다.
My question is about LNG vessels, especially LNG ordering. From the end of 2025 and through 2029, the new building price would be still under KRW 250 million, we believe. We know that a lot of the orders were awarded to Chinese shipyards, and especially we hear the news that Hudong-Zhonghua Shipbuilding is increasing its capacity. My question is how much capacity increases do you see among Chinese LNG shipyards? Also when will be possible the Korean shipyards take back their power in terms of price negotiations?
네, 한국조선해양의 이운석 전무입니다. 질문해 주신 것 관련해서 중국의 건조 capacity 사실 저희가 정확히 알 수는 없습니다. 저희가 알 수 있는 거는 그 사람들이 발표한 자료라든지 또는 선박 broker라든지, 시장 정보를 통해서 알 수 있는 게 유일하고요. 저희가 파악하고 있는 바로는 최근에 Hudong-Zhonghua에서 30척 가까이 연간 supply 할 수 있다고 얘기를 하고 있는 것으로 들었습니다. 지금 중국의 LNG 건조를 할 수 있는 조선소가 여러 개 있지만 대표적인 조선소로 하면 두 개 정도 생각할 수 있겠고요. Hudong-Zhonghua 하고 Jiangnan. Hudong-Zhonghua는 30척을 얘기하고 있고 Jiangnan은 10척을 얘기하고 있습니다. 근데 실제로는 이 capacity를 모두 다 사용한다고 보기는 어렵고, 향후의 물량을 대비해서 특히 Qatar 걸 대비해서 Hudong-Zhonghua 같은 경우는 물량 capacity 늘린다고 얘기를 하는 것 같고요. Jiangnan은 열심히 노력하고 있지만 여전히 한국에 비해서는 품질이나 기술 측면에서 떨어지는 것으로 알고 있습니다.
최근에 중국이 좀 약진하는 모습을 보이고 있긴 하지만 사실 이건 대부분 중국 내수 물량, 중국으로 들어가는 LNG를 수송하기 위한 중국의 국수 국조 정책에 의해서 나온 그런 물량이 대부분입니다. 좀 자르고 말할까요?
If I answer your question, to be honest, we do not know exact or accurate information about Chinese shipbuilding capacity. The information available data available only comes from the information that these Chinese shipbuilders release or the broker or market information. Recently, Hudong-Zhonghua says its capacity is 30 vessels per year and there are several Chinese shipyards able to capable of building LNG carriers. We like to take note of two of them. Hudong-Zhonghua says it can build 30 such vessels and Jiangnan says 10 vessels. I don't believe that these shipyards are consuming all their capacity because they are in anticipation of possible volumes of Qatar as well. As to Hudong-Zhonghua, yes, it is increasing its capacity, as to Jiangnan, even though it's making efforts, it's lagging behind Korean shipyards in terms of quality and also technological level.
It's true that Chinese shipyards are making great progress of recent days, most of their capacities are observed due to by their domestic demand to build LNG vessels that should be allocated to serve their domestic demands.
추가로 말씀드리면 중국 조선소 같은 경우에는 Qatar 프로젝트를 통해서 시장에 많은 LNG선을 건조해서 인도한 게 사실이지만, 실제로 중국 물량이 아닌 경우 international tender에서는 중국 조선소들이 배제가 되는 경향이 있습니다. 예컨대 최근에 Shenhua라든지 Mozambique, Equinor 이런 프로젝트에 대해서는 중국 물량이 아니기 때문에 중국 조선소의 참여가 배제되는 그런 양상이 계속 전개되고 있기 때문에 한국 조선소의 시장 점유율은 여전히 유지될 것으로 보여지고요. 아까 추가로 또 선가가 어느 정도 회복될 것으로 말씀하셨는데 지금 회복이 되고 있습니다. 현재 계속 상담 진행 중이고, 기본적으로 수요가 많다는 걸 잘 알고 있기 때문에 최근에 작년 하반기에 올해 초에 나온 물량들은 최근에 투자 승인 확보된 물량들이 많아질 것으로 보고 LNG 선가가 올라갈 것이라 생각하고 갑자기 나온 투기 발주가 대부분이었고요. 앞으로 나오는 현재 상담이 되고 있는 프로젝트들은 가격이 인상된 베이스로 해가지고 상담이 진행되고 있기 때문에 올해에 걸쳐서 LNG 선가는 꾸준히 올라갈 것으로 예상을 하고 있습니다.
These Chinese shipyards, maybe they are getting orders from the Qatar project. If you look at international tender market, you would see that these Chinese shipyards are rather excluded from the market. This is evident when you look at Cheniere, Mozambique and Equinor. Chinese shipyards are not joining or they are being prevented from joining these projects. Because of that, Korean shipyards are maintaining our market share. Also you asked about the recovery of new building prices. I think this is an ongoing process. We do see new building prices are recovering. We're engaging in consultations with our customers, we do see recovery in demand, in strong demand. If you look at orders coming from the second half of last year or early this year, I think most of them were rather speculative.
If you look at ongoing consultations, these consultations are being made already on a higher price base. We believe in 2026 we will see a steady increase in new building prices.
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The following question will be presented by Kang Kyung Tae from Korea Investment Securities . Please go ahead.
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I have two questions. The first question is about your special vessel business. You shared with us your Q4 revenue as well as full year revenue. You mentioned that there were changes in export product mix impacting your overall performance. My question is, what would be the flagship projects that will be responsible for your revenue in Q4 and going through 2026? My second question is, a month ago, we had a consultation session together and you shared with us your order pipeline at the time, and I wonder whether there have been any updates made to your order intake pipeline going through 2026.
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[Foreign language] To answer your question, as you mentioned, your question was about our change in export mix and its resulting impact on our performance. If you look at Q3, Q2, and Q1, Q2, and Q3 of last year in 2025, we had this Aegis destroyer project whose order came from the Korean Navy, and also from the Philippines, we already delivered two patrol ships, and there are six guard ships which are under construction for the Philippines. In Q4, the Aegis destroyer project was almost its final stage. As you know, this destroyer is very high priced. As a result, we had a rather decrease or a downward pressure on our revenue overall. If you look at the guard ship and the coastal guard ship from the Philippines, and also we have a 3,000 ton guard ship for the Korean Navy.
These were reflected in our Q4 results as well, increasing our overall revenue slightly. Also, I'd like to say that we have an ongoing project in Peru as well. It's ongoing. In the second half of last year, we had this LCU, which is under construction. I believe that this specific project would be materialized to a quite mature level in Q4 as well. Coming into this year, we have things that will materialize at scale, and this includes frigates as well as patrol ships as well. A temporary slowdown, but in 2026, we believe overall we will see an expansion in our export revenue.
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As to our order pipeline, it's still early. It's in the beginning of the year. As you know, as to naval ship business, we do not get orders this early because it's all based on national and government budget. Bidding is ongoing. Bidding efforts are ongoing. In 2026, we are aiming to win orders for follow-up projects from the Philippine Navy, and this includes new builds, but also this includes a retrofit of existing frigates, and this way we would be expanding or scaling our impact. In other countries, we are starting with our bidding efforts. Again, it's still in the early of this year. I hope we can share good news pretty soon. In the special purpose vessel business, there are things that we're pursuing, and I hope we can share good news in one month or two months of time.
[Foreign Language] The following question will be presented by Lee Dong-heon from Shinhan Investment & Securities . Please go ahead.
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My question is about your overall offshore business. You mentioned reflection of change order impact as well as bonus payments. Given that OP margin was almost 17%, I wonder whether the factors you mentioned would be quite permanent or just a one-off. What are your expectations for your offshore business this year?
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Our quarterly, quarter-over-quarter revenue quite jumped and skyrocketed, I would say. When we are excluding change order impact and bonus payments, it would have been far lower than that. My apologies for not being able to share any percentage-wise data or numbers. If you look at our offshore business, and if you look at the POC, the progress rate of each project, Trion FPU is 58.6% and Ruya project is 12.4%. On annualized terms, these projects would produce a steady and stable performance. Again, apologies for not being able to disclose specific numbers, but our offshore business would show to generate stable and solid performance throughout the year.
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[Foreign Language] The following question will be presented by 배기연 from Meritz Securities. Please go ahead.
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For vessel business, you were awarded an order for 200,000 CBM LNG carrier. I wonder in terms of profitability, how does it compare to 124K class carrier? With this type of vessel, I mean, when compared to 74K capacity of vessel, whether it can really fill your existing docks given your construction and building capacity. In terms of the number of vessels, is it going to be the same when you consider 74K vessels? Why I am asking this question is when you look at market demand, there should be future profitability. They would be guaranteed. I wonder whether with this 200K class vessels, we can expect the same level of profitability. You mentioned that vessel prices are recovering, but until then, maybe then this is one of the strengths that KSOE has to enjoy.
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When it comes to 200K vessels, there are only two companies throughout the world who can build and deliver such vessels. We have Hanwha Ocean and HD Hyundai Heavy Industries is the other. In terms of track record, I believe HD Hyundai Heavy Industries has an overwhelming track record in the world. In terms of 200K vessel, HD Hyundai Heavy Industries is the best and the first in the world. With 200K vessels, we have two advantages. First of all, this vessel is optimized for connecting U.S. and Asian waters. We expect continued demand for this type of vessel. Second of all, we can use our docks number 8 and 9, but these docks can accommodate 174K as well. In terms of maximizing the value of our existing slots, 200K would be the optimal candidate. In that sense, it has its value.
In terms of profitability, it is confidential. My apologies for not being able to disclose any profitability related data.
[Foreign Language] The following question will be presented by 정연승 from NH Investment & Securities. Please go ahead.
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I have two questions. The first question about your mid-sized vessels. Globally, we hear news about ordering mid-sized and also mid-range and long-range vessels, and especially from the Philippines and Vietnam. Do you believe you can expect meaningful orders coming from these countries, the Philippines and Vietnam? It is because given local cost, which would be quite low, I believe these mid-sized vessels can be good in terms of profitability. My second question is between November and January this year, we had around 10 million GT ordered, but in spite of that, we do not see any sharp increase in new build prices. From the viewpoint of KSOE, how do you expect new build prices to continue throughout the year?
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If I answer your first question, in fact, with mid-range and range 2 vessels, our order performance for 2025 was not satisfactory. There are several reasons why. First of all, globally, the order activity was not that active throughout the world for these vessels. In 2024, there were lots of orders that were awarded for these vessels in 2024. In terms of delivery and price attractiveness and investment attractiveness, these mid-size ships decreased in terms of that. That prevented us from making new investments. I would say the year 2025 was a period of adjustment. During this period, both in terms of delivery and attractiveness, these mid-size ships gained traction and momentum.
Now companies are making efforts to win orders for these ships, especially in 2026, we do see increases in tanker freight rates, which means that there are more new build orders, and we have ongoing consultations for these mid-range and long-range 2 vessels. About the profitability of these ships, once again, cannot specify any numbers or data due to confidentiality. My apology for that. To answer your second question about vessel prices, I think vessel prices have been recovered already to a significant extent, slightly than its previous peak, but still it's recovering. I think in 2025, we had less orders coming. Given that, the very fact that vessel prices are maintaining their current status, that's already a good news in and of itself. We believe that vessel prices could be increased further.
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If you have any burning question, I would like to take one final question. Before that, because so many of you have posed questions about bonus payments, I'd like to make some comments. In making bonus payments, it's a complicated and complex process, both in terms of internally and when we consider our subcontracting businesses, it becomes even more complex. If you make a phone call and if you reach us, then we would give you further details about this. I mentioned a very specific number, which was 800%, but overall it's between 600 and 800 percentage points. Within this range, our bonus payments were made. Again, for details, our negotiations have not been determined yet. If it is concluded, then maybe we would be able to disclose as much as possible.
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Due to time constraints, we would like to conclude our Q4 2025 earnings call. If you have any further questions, please reach out to us. Thank you.