Sunday, June 11, 2023
HomeHeadlinesKorea’s Big Three shipbuilders in red despite growing order backlog


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

Korea’s Big Three shipbuilders in red despite growing order backlog

South Korea’s three major shipbuilders remain in the red despite hefty new ship orders so far this year, led by high-priced vessels such as liquefied natural gas carriers.

According to industry officials on Monday, the “Big Three,” – Korea Shipbuilding & Offshore Engineering Co. (KSOE), Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. – have secured orders worth a combined $30.5 billion in the first seven months of this year, close to 87% of their annual target.

KSOE, the intermediate shipbuilding holding company of Hyundai Heavy Industries Group, won $17.8 billion in new orders in the January-July period, already surpassing its annual goal of $17.44 billion.

Samsung Heavy clinched orders worth $6.3 billion, or 71.6% of its annual target of $8.8 billion, over the same period, while Daewoo Shipbuilding won $6.43 billion, or 72.2% of its target of $8.9 billion.

In the first six months alone, Korean shipyards won 9.94 million compensated gross tons (CGTs) in shipbuilding orders, returning to the world’s top shipbuilder post for the first time in four years, according to market researcher Clarkson Research Service.

China, Korea’s strongest rival, sled to second place with a combined 9.26 million CGTs.


However, the Korean shipbuilders are witnessing their profitability worsening, weighed by higher steel plate prices and lower margins from cheap orders in the past.

Last month, KSOE reported that its second-quarter sales rose 7.2% from the first quarter to 4.19 trillion won ($3.2 billion) thanks to increased ship orders, but it remained in the red with 265.1 billion won in operating loss, although its shortfall dwindled from a loss of 396.3 billion won in the prior quarter.

Samsung Heavy saw its sales fall 3.9% on quarter to 1.43 trillion won, while its operating loss widened to 255.8 billion won due to a delay in the production of vessels ordered from Russia in the wake of the Russia-Ukraine war.

The company said its larger loss was also due to 180 billion won in a one-off charge against a price hike in steel plates used for shipbuilding.

Daewoo Shipbuilding has yet to report its second-quarter results but is widely expected to post a loss of at least 75 billion won.

The company’s loss may come worse than market expectations as it suffered from a 51-day strike by its subcontractors.

The walk-out, which ended in late July, is said to have caused about 816.5 billion won in lost production, according to industry officials.

Industry watchers said the shipbuilding industry’s business practice of reflecting orders in earnings after vessels are delivered to buyers is also hurting their bottom line.

Revenue and profits from the orders that Korean companies won in 2020 will begin to appear on their earnings reports in the second half of this year.

Following the second-quarter “big bath,” or a huge one-time charge related to steel plate prices, Korean shipbuilders will likely post improved earnings from the third quarter at the earliest, industry officials said.

Analysts said refund guarantees (RGs), issued by Korea’s state-run banks to aid local shipbuilders in their efforts to secure orders, have also prompted the companies to competitively engage in price cuts to win orders.

Source: The Korea Economic Daily Global

Related Posts


Finance & Economy
Shipping News

Trafigura publishes 2023 interim results showing a strong performance

Trafigura, a market leader in the global commodities industry, released its 2023 Interim Report today for the six-month period ended 31 March 2023. The results...

Globus Q1 results hit by weak dry bulk market

Globus Maritime Limited, a dry bulk shipping company, reported its unaudited consolidated operating and financial results for the quarter ended March 31, 2023. Revenue $8.6 million...

BW LPG appoints new CFO

BW LPG announced that it has appointed Ms Samantha Xu as Chief Financial Officer (CFO), effective 1 September 2023. Ms Xu has over 20 years...

Frontline Posts Highest First Quarter Results Since 2008

Frontline plc reported unaudited results for the three months ended March 31, 2023: Highlights Highest first quarter profit since 2008 of $199.6 million, or $0.90 per...

Diana Shipping posts slightly lower Q1 profit; takes out $123m in loans

Diana Shipping reported net income of $22.7 million and net income attributed to common stockholders of $21.3 million for the first quarter of 2023....

Celestyal Participates In Promotion Of The Tourist Destination Of Central Macedonia

Celestyal, the award-winning, number one choice for travellers to the Greek Islands and the...

Capesize, panamax gains drive Baltic index higher

The Baltic Exchange’s main sea freight index rose for a fourth straight session on...

Baltic rises to over 3-month peak on firm demand for larger vessels

The Baltic Exchange’s main sea freight index rose on Wednesday to scale its highest...

Baltic index logs best day in nearly 3 months

The Baltic Exchange’s main sea freight index posted its biggest single-day gain since mid-March...

Taiwan Shipping Firms Set to Hand Out Bumper Bonuses Again

Taiwanese shipping companies are handing out bumper mid-year bonuses despite a slump in global...

Iraklio port tender set for another delay

The opening of the binding financial offers for 67% of Iraklio Port Authority had been scheduled for Thursday, but this is no longer expected...

APM Terminals extends concession of Kalundborg container terminal

APM Terminals has reached an agreement with the Port of Kalundborg to extend the concession of Kalundborg container terminal by 10 years to 2033. In...

US West Coast port workers shut terminals in showdown over pay

The employers of more than 22,000 dock workers at U.S. West Coast seaports on Friday said the union representing those laborers “is staging concerted...

DP World Completes Terminal Expansion Project Vancouver Port

DP World has completed the AED954 million ($259.78 million) Centerm expansion project, increasing container throughput at the Port of Vancouver by 60 percent. The terminal...

DP World completes AED 954 million Vancouver port expansion

DP World and the Vancouver Fraser Port Authority have celebrated two historic events – the completion of the Centerm Expansion Project at DP World...