Hyundai Heavy Industries Co., a major South Korean shipyard, suffered some 600 billion won (US$523 million) in losses last year stemming from a delay in the construction of offshore facilities and ships, and other costs, industry sources said Monday.
According to the sources, the shipyard logged a loss of 608 billion won last year coming from the failures to meet construction deadlines, work suspensions and other problems. The amount is equivalent to 2.5 percent of its total sales in 2015.
Hit by an industrywide slump and increased costs, Hyundai Heavy suffered a second consecutive year of deficit with 1.36 trillion won in losses last year following a drop of 2.21 trillion won a year earlier.
Hyundai Heavy also has been levied a whopping 120 billion won in additional taxes. Hyundai Heavy is considering filing a request for review over the matter.
The nation’s big three shipyards — Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. — racked up a combined loss of 7.7 trillion won last year, due to increased costs from a delay in the construction of offshore facilities and order cancellations.
It was the first time that all three of the nation’s largest industry players registered losses.
They are struggling to tide over worsening business conditions but have failed to clinch new large orders for the past three months, feeling the pinch of low demand.
Lower oil prices have been leading to a drop in demand for new ships and offshore facilities, and Chinese rivals have scooped up a large slice of orders for smaller ships, in particular.