South Korea’s big three shipbuilders probably posted a record operating loss in 2015, stung by a combination of a prolonged industry slump, a series of order cancellations and a delay in the construction of offshore facilities, data showed Thursday.
According to the industry data, the top three shipyards — Hyundai Heavy Industries Co., Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. — are estimated to have racked up a combined operating loss of more than 8 trillion won (US$6.66 billion) won last year.
If confirmed, it would mark the first time for all of the nation’s three largest industry players to register operating losses.
Daewoo Shipbuilding & Marine Engineering’s 2015 operating losses are estimated to be about 5 trillion won, with corresponding figures for Hyundai Heavy Industries and Samsung Heavy Industries reaching 1.5 trillion won and 1.7 trillion won each.
In 2014, their combined operating losses hovered above 2 trillion won.
An industry watcher said the big three shipbuilding companies put up the worst performance last year.
“It is the first time ever that the shipbuilding industry has chalked up such a dismal result,” he said. “The situation in 2015 was worse than during the country’s foreign exchange crisis in the late 1990s.”
Daewoo Shipbuilding’s huge losses came because of increased costs rising from a delay in the construction of low-priced ships and offshore facilities.
Hyundai Heavy Industries is estimated to have posted operating losses for the eighth consecutive quarter in the October-December period of 2015.
Samsung Heavy Industries, meanwhile, is the only player among the three that is expected to post a profit for the fourth quarter on the back of its efforts to offload its potential burdens over the past three quarters.
Making matters worse for the shipyards, market watchers expect them to continue to hemorrhage this year as the global shipbuilding industry is unlikely to turn around.
The stuttering shipbuilding sector is feared to come as a major drag on South Korea since it is one of the key growth engines for Asia’s fourth-largest economy, along with electronics and automobiles.