10-11-2017

S. Korean shipyards report weak Q3 net on fewer orders

South Korea’s major shipyards, led by Hyundai Heavy Industries Co., delivered weak earnings for the third quarter of the year, having received fewer orders in recent years and built lower-priced vessels, industry sources said Thursday.

Hyundai Heavy, the leading shipyard here, posted an operating income of 93.5 billion won (US$83.9 million) during the July-September period, compared with the previous year’s operating profit of 322 billion won. Its sales dipped 27.3 percent to 3.8 trillion won over the cited period.

Samsung Heavy Industries Co., another big shipbuilder, racked up an operating income of 23.6 billion won for the third quarter, down sharply from the 84 billion won tallied a year earlier. Net profit reached 23.4 billion won in the July-September period, compared with a profit of 129 billion won a year earlier.

Its sales also dropped 37 percent on-year to 1.75 trillion won over the cited period.

Troubled Daewoo Shipbuilding & Marine Engineering Co. chalked up a profit for the third straight quarter in the July-September period largely thanks to cost-cutting measures and increased delivery of offshore facilities.

The shipbuilder logged an operating income of 207 billion won in the third quarter, shifting from an operating loss of 187 billion won a year earlier, with sales down 19.8 percent on-year to 2.42 trillion won.

South Korean shipbuilders have been under severe financial strain since the 2008 global economic crisis, which sent new orders tumbling amid a glut of vessels and tougher competition from Chinese rivals.

Two years ago, orders dropped sharply, and that is now affecting their bottom lines as well.

The country’s top three shipyards suffered a combined operating loss of 8.5 trillion won in 2015. The loss was due largely to increased costs stemming from a delay in the construction of offshore facilities and an industrywide slump.

Last year, Hyundai Heavy managed to post profits, but the other two yards suffered losses.

The top three players conducted massive self-rescue plans to tide them over during their worst-ever slump. Last year, their combined job cuts came to at least 20,000.

Source: Yonhap

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