Wednesday, February 1, 2023
spot_img
HomeFinance & EconomyAfter failed merger, Hyundai Heavy secures cash to nurture new growth engines

Subscribe

To our FREE newsletter
Get all the latest maritime news delivered straight to your inbox.

After failed merger, Hyundai Heavy secures cash to nurture new growth engines

Hyundai Heavy Industries’ failed acquisition of its smaller rival Daewoo Shipbuilding & Marine Engineering may be a boon for the nation’s largest shipbuilder as it has secured abundant cash to focus on new growth engine businesses such as hydrogen, autonomous driving and robots.

Last week, the European Commission disapproved the merger plan of the two Korean shipbuilders over monopoly concerns. With the veto by the world’s largest shipbuilding market, Hyundai Heavy saw its three-year efforts for the 2 trillion won ($1.68 billion) deal dashed.

But industry watchers say what could seem like a bane could turn out to be a boon.

“Early 2019 when Hyundai Heavy announced it was going to acquire DSME, it was a time when shipbuilders struggled to secure orders and compete head-on by lowering prices,” said Han Young-soo, an analyst at Samsung Securities.

“But now all Korean builders have enough orders on hand amid growing prices. The shipbuilding market is entering the supercycle.”

In just two weeks entering the new year, Hyundai Heavy has secured orders worth 3 trillion won, which is 15 percent of their order target for the whole 2022.

Now, with a failed merger plan, Hyundai Heavy has 1.5 trillion won of cash in hand, cash they were going to use to acquire DSME. Industry sources say that the deal price could have surged to some 6 trillion won considering the deal involved debts repayments to creditors.

“Hyundai Heavy has much room to invest, especially in new businesses,” Han added.

Earlier this month, Hyundai Heavy made its debut at 2022 CES. Its CEO Chung Ki-sun laid out the company’s vision to become a “future builder,” presenting autonomous navigation, liquid hydrogen and robotics as the three key technologies to focus on.

Sources say much of the newly secured cash could be poured in to the new growth engine businesses whose success is closely linked to the status of Chung, the third-generation scion, within the company.

Credit rating companies also offered a rosy outlook for the company’s financial health following the failed merger.

“The financial burden on Hyundai Heavy has disappeared, and that will affect its credit rating positively,” said the Korea Investors Service.

A Hyundai Heavy official said the firm is thoroughly reviewing the EU’s decision to decide on their next step such as where to invest with the cash.

“We have proposed three new businesses that we will be focusing on at CES and they are all very important. But in terms of this year, in line with our roadmap, we will be concentrating on autonomous navigation technology,” said the official.

Source: The Korea Herald

Related Posts

Video

Finance & Economy
Shipping News
Ports

Wartsila: A challenging year with strong annual growth

HIGHLIGHTS FROM OCTOBER–DECEMBER 2022 Order intake decreased by 24% to EUR 1,638 million (2,150)Service order intake increased by 6% to EUR 791 million (747)Net sales...

Hapag-Lloyd achieves extraordinarily strong result in its anniversary year 2022

On the basis of preliminary and unaudited figures, Hapag-Lloyd has concluded the 2022 financial year – in which it celebrated its 175th anniversary –...

Bahri sees profits soar in 2022

Saudi Arabia’s Bahri has seen its profits soar by over 400% in 2022 following a boom in tanker rates, boosting the shipping giant’s oil...

Euronav Files Second Arbitration Against Frontline

Euronav NV hereby informs its shareholders that on 28 January 2023 it has filed an application request for arbitration on the merits in relation...

Oaktree looking at block sale of existing shares in Hafnia Limited

OCM Luxembourg Chemical Tankers S.à r.l. which is ultimately controlled by funds managed by Oaktree Capital Management L.P. (the "Seller") has retained Fearnley Securities,...

Baltic index logs worst month in 3 years

The Baltic Exchange’s main sea freight index registered its biggest monthly percentage fall in...

Baltic index snaps 9-day losing streak as panamax, supramax rates rise

The Baltic Exchange’s main sea freight index snapped its nine-session losing streak on Tuesday,...

Cyprus shipping making waves – report

Cyprus shipping, the steady driver of the economy, is sailing for better times, having...

Baltic index hits fresh multi-year lows on capesize dip

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk...

Baltic index falls for seventh session on lower capesize demand

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk...

Port of Long Beach Closes 2022 with Second-Busiest Year

The Port of Long Beach marked its second-busiest year on record by moving 9.13 million twenty-foot equivalent units in 2022, allowing for a return...

Hapag-Lloyd AG acquires share in J M Baxi Ports & Logistics Limited

Hapag-Lloyd AG signed a binding agreement today under which it will acquire 35% of J M Baxi Ports & Logistics Limited (JMBPL) from a...

Nigeria opens ‘game changer’ billion-dollar deep seaport

Nigeria opened a billion-dollar Chinese-built deep seaport in Lagos on Monday, which is expected to ease congestion at the country’s ports and help it...

SC Ports handles nearly 3 million TEUs in record 2022

South Carolina Ports had a record 2022 with the most containers ever handled at the Port of Charleston. SC Ports moved nearly 2.8 million TEUs...

January oil loadings from Russia’s Baltic ports set to jump 50% vs Dec

Urals and KEBCO crude oil loadings from Russia’s Baltic ports of Primorsk and Ust-Luga in January are set to rise by 50% from December...