HYUNDAI Heavy Industries Co, the world's largest shipbuilder, said yesterday that third-quarter net profit fell 32.9 percent amid worsening earnings performance at subsidiaries and a weaker South Korean won.

Hyundai Heavy earned 291.8 billion won (US$233.3 million) in the three months to September 30, the company said in a regulatory filing. It posted a net profit of 434.7 billion won a year earlier.

Sales during the third quarter rose 29.9 percent to 4.84 trillion won from 3.73 trillion won a year earlier, the company said.

Hyundai Heavy said in a separate release that net profit was hurt by a year-on-year equity method decrease of 98.5 billion won from a decline in earnings of major subsidiaries, including gasoline station operator Hyundai Oilbank Co and Hyundai Merchant Marine Co.

An equity method gain or loss is the positive or negative earnings impact from related companies.

Ulsan, South Korea-based Hyundai Heavy also said net profit for the period suffered from increased losses on the valuation of foreign exchange forward contracts.

The company did not provide a year-on-year figure, but said the valuation loss quarter-on-quarter amounted to 169.4 billion won.

Hyundai also said that operating profit margins in its mainstay shipbuilding division decreased due to higher raw materials costs, including a nearly 60-percent increase in steel plate prices.

The company said that sales gained on strong growth in new orders in most business divisions and the depreciation of the South Korean won. A weaker won is beneficial for South Korean companies in that it can make their products cheaper in overseas markets, but can be harmful in terms of increasing the cost of servicing debts denominated in foreign currencies.

The won, which rallied 14 percent yesterday, has still declined about 25 percent against the US dollar so far this year.

Shipbuilding division sales rose 27.4 percent from the same period last year, while the company's engineering and machinery division recorded a gain of 93.3 percent, Hyundai said.

Shares in Hyundai Heavy, which released earnings results after the stock market closed, rose 15 percent - the daily limit - to close at 157,500 won. The company's stock price has declined 64 percent so far this year.