The continuing slowdown in the shipbuilding industry dealt massive losses for Korean shipyards pushing shipyard into the red, industry data showed Wednesday.
The country’s top three shipbuilders -- Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering -- all posted large losses in the second quarter, weighed down mainly by the lackluster offshore plant businesses.
Of the three, DSME posted the largest operating loss that clocked in at a record high of 3.07 trillion won ($2.65 billion), surpassing the initial estimates of 2 trillion won.
The widely expected loss was attributed to the ailing offshore plant business.
“The losses expanded more due to unforeseen costs that arose from contracts to build specialized vessels that we had no previous experience in. Such projects include the Songa Rig, a semi-submerged drilling ship,” the company said in a statement on Wednesday.
With the company posting staggering losses, DSME is likely to hounded by yet more rumors of being sold off.
In the run up to Wednesday, rumors again rose that the Korea Development Bank may sell off DSME.
Samsung Heavy Industries posted an operating loss of 1.55 trillion won in the second quarter, compared with an operating income of 262 billion won a year earlier.
The company also posted a net loss for the second quarter of the year, which came in at staggering 1.15 trillion won.
With the changes, the company is now in the red.
The shipbuilder’s sales plunged 53.7 percent to 1.44 trillion won over the cited period.
Hyundai Heavy fared better but still failed to avoid posting negative figures.
The company posted net and operating losses of 242.4 billion won and 171 billion won, respectively. Sales for the period came in at just under 12 trillion won, falling 2.3 percent from the previous quarter.
“The slow recovery of shipbuilding and offshore industries is causing delays in seeing improvements,” a Hyundai Heavy official said.
The official, however, said that the impact of cost cutting and improvements in the production process will kick in during the second half of the year.
By Suk Gee-hyun (firstname.lastname@example.org)