Korean Big Three Hit Hard in Q2
- Business & Finance
South Korean shipbuilding giants Hyundai Heavy Industries (HHI), Daewoo Shipbuilding and Marine Engineering (DSME) and Samsung Heavy Industries (SHI) suffered extensive losses in the second quarter of 2015 amid dwindling appetite of owners to order new ships.
The world’s largest shipbuilder Hyundai Heavy Industries reported a net loss of KRW 242 billion (USD 209 million) in the second quarter of the year. HHI’s loss for the same period in 2014 amounted KRW 616 billion.
Even though the shipbuilder managed to narrow down losses from last year thanks to its cost cutting efforts, severance pay and a special bonus, estimated at KRW 96.7 billion, pushed the shipbuilder in red for the seventh quarter in a row.
HHI’s operating loss amounted to KRW 171 billion won, when compared to KRW 192 billion posted in 2014.
Daewoo Shipbuilding had an operating loss of KRW 2.39 trillion (USD 2.1 billion), confirming media predictions that saw the shipbuilder’s shares plunge by 30 % earlier this month.
DSME shares have made a substantial comeback after the Korean shipbuilder stepped up its restructuring efforts, which are to include disposing of underperforming subsidiaries.
The shares’ value shot up following announcements that Korea Development Bank, DSME’s largest shareholder, would buy KRW 1 trillion (USD 863.4 million) of equity and offer 1 trillion won in new loans.
Samsung Heavy Industries posted an operating loss of KRW 1.55 trillion (USD 1.3 billion) and a net loss of KRW 1.15 trillion in the second quarter, missing far more positive analyst predictions that said that SHI would record KRW 28 billion profit.
The shipbuilders’ losses stem from a dip in prices of ships and offshore facilities, along with low oil prices that have negatively affected the number of orders for drillships and offshore facilities, as international oil majors are shying away from new orders and cutting their capital expenditures.
World Maritime News Staff