South Korean shipbuilding giant Daewoo Shipbuilding and Marine Engineering (DSME) has returned to the red as it reported a net loss in the second quarter of 2016 at KRW 1.2 trillion (USD 1 billion), compared to a net profit of KRW 31.4 billion seen in the first quarter of the year.
The company’s net loss widened compared to the second quarter of 2015 when it was at KRW 430.7 billion, while its net loss for the first half of 2016 reached KRW 1.18 trillion, against a net loss of KRW 1.04 trillion seen in the first half of 2015.
DSME’s operating loss was at KRW 423.6 billion in the second quarter, against an operating loss of KRW 582 billion reported in the same period a year earlier. For the first half of the year, the company’s operating loss stood at KRW 449.9 billion, against an operating loss of KRW 1.2 trillion seen in the first half of 2015.
During the quarter, South Korean authorities launched an accounting probe into the shipbuilder’s financials and revealed an accounting fraud in the amount of some KRW 5.4 trillion (USD 4.6 billion).
The authorities also found out that the company’s management undertook business projects without legitimate procedures, as well as that the shipbuilder’s main creditor Korea Development Bank failed to conduct proper inspections on DSME’s management.
The country’s prosecutors questioned two of the company’s former Chief Executive Officer, Ko Jae-ho and Nam Sang-tae , as part of the accounting probe.
Additionally, the company’s former Chief Financial Officer, identified only by his surname Kim, was reportedly charged with taking part in the accounting fraud in July.
World Maritime News Staff