Hyundai Heavy Falls Short of Ambitious Goals
- Business & Finance
South Korea’s shipbuilding giant Hyundai Heavy Industries has been hit hard by the slowdown in the global shipping industry, posting a quarterly loss of 1.1 trillion Won (US$1.08 billion) in the second quarter of 2014.
“While our business performance fell short of our ambitious targets, we had a number of noteworthy accomplishments during the year. From an order perspective, we won orders for five 19,000 TEU containerships and a semisubmersible drilling rig, both the largest to date of their kind.
We demonstrated our technical leadership by building the world’s first newbuild LNG floating storage and regasification unit for Höegh LNG of Norway,” said Mr. Kim Oi-hyun, President & CEO of Hyundai Heavy.
“While the global economy is expected to begin to pick up momentum in 2014, it is unlikely to break out of its current low-growth slump,” said Hyundai, adding that competition will continue to intensify, “making the business environment even more complex and uncertain.”
“Despite these challenges, we believe that our solid foundation for growth will enable us to achieve our 2014 targets of USD 29.6 billion in orders and KRW 26,570 billion in sales,” the company added.
Speaking of the outlook, Hyundai expects demand to weaken in 2014, leading to lower orders.
Looking at market opportunities by vessel category, demand for very-large crude carriers is expected to hold steady as Asian markets increase their crude oil imports and diversify import sources.
According to the shipbuilder. demand for bulk carriers is also expected to grow, spurred by firm freight rates driven by rising demand for iron ore imports from China.
Demand for ultra-large containerships is expected to increase slightly as shipowners compete for market share and reduce operating costs by taking advantage of expanded capacity at the Panama Canal. Demand for LNG carriers is expected to grow thanks to rising shale gas exports from North America.
On the other hand, demand for drillships is expected to decline due to the fact that a considerable number of vessels under construction remain unchartered.
“We will be focusing on securing the order volume necessary to keep our shipbuilding operations profitably at work in 2014. We will continue to aggressively respond to the changing market, focusing heavily on winning vessels in categories that are expected to be in higher demand such as LNG carriers, LPG carriers, and containerships.”
“Given the challenging business environment, we will be actively promoting our eco-friendly ship design capabilities to give us a competitive advantage in the newbuild market as stricter environmental regulations come into effect,” the company said.
The company committed to restructure its business and reshuffle personnel so as to cut costs and improve efficiency.
Press Release, August 1, 2014