Daewoo Shipbuilding & Marine Engineering Co. is expected to log an operating loss of over 5 trillion won (US$4.4 billion) this year, up by some 1 trillion won from previous forecasts, industry sources said Thursday.
The outlook follows a recent audit by the state-run Korea Development Bank (KDB), the main creditor of the troubled company, which has revealed additional losses from overseas branches, according to the sources.
The shipyard posted an operating loss of 3.03 trillion won in the second quarter alone, while it is widely expected to report an operating loss of 1 trillion won for the third quarter.
The informed sources said the additional losses also included a 200 billion won loss from an order cancellation, as well as loss caused by a rise in the general cost of building ships.
They, if confirmed, will bring the companyâ€™s total operating loss to 5.3 trillion won for the year with its net loss expected to reach 4.8 trillion won, the sources said.
With such a heavy loss, the companyâ€™s debt ratio is also expected to reach over 4,000 percent at the end of the year.
The government is reportedly devising a rescue plan for the countryâ€™s second-largest shipbuilder that will likely include an injection of additional funds from KDB and other creditors, as well as a $5-billion refund guarantee on advance payments made to Daewoo Shipbuilding.
The rescue plan is expected to be announced before the end of the month and as early as this week.