South Korean shipyards raise 2018 order targets

South Korea

South Korean shipyards have sharply raised their order targets for next year on expectations that the shipbuilding sector will improve, industry sources said Sunday.

According to the sources, industry leader Hyundai Heavy Industries Co. is targeting US$13.2 billion worth of new orders next year, up 76 percent from this year’s $7.5 billion. This year, it clinched $10 billion worth of orders.

Hyundai Heavy bagged $21.2 billion in 2013, $10.7 billion in 2014 and $12.4 billion in 2015.

Samsung Heavy Industries Co., another major shipyard, aims to secure $7.7 billion worth of orders next year, up 18 percent from this year’s $6.5 billion, according to the sources. The shipyard also won higher-than-expected orders this year at $6.9 billion.

Daewoo Shipbuilding & Marine Engineering Co. set its annual order target for next year at over $5 billion. This year, it bagged $2 billion in new orders.

“Business conditions are improving on the back of a recovery in the global economy and stable oil prices,” an industry source said.

But local shipyards are still struggling with a decline in the order backlog as they have suffered a sharp drop in new orders in the past two years.

The shipyards have been selling noncore assets, reducing workforces and implementing other cost-cutting measures to tide over a protracted industrywide slump.

Earlier this month, Hyundai Heavy decided to sell 1.3 trillion won (US$1.22 billion) worth of new stocks to improve its financial status.

The company has already carried out 3.5 trillion won worth of self-rescue measures.

Samsung Heavy has completed 65 percent of its self-rehabilitation plan worth 1.45 trillion won, with Daewoo Shipbuilding finishing 42 percent of its 5.3 trillion-won self-rescue plan.

Source: Yonhap

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