South Korean shipbuilder Daewoo Shipbuilding & Marine Engineering, which has been struggling with massive losses, has called off plans to build a shipyard in Dandong, China.
In 2012, DSME signed a memorandum of agreement with Rilin, a port development company based in Shenyang province, China. Both companies pledged to promote co-operation in the shipbuilding. Upon construction, both companies planned to venture into wind power, nuclear energy, and other energy development businesses.
In a Korea Exchange filing on 8 October, DSME said, “Due to the worsening domestic and overseas business environment and the rationalisation of our foreign investments, we have decided to terminate the agreement with Rilin.”
DSME had a second-quarter loss of KRW2.4 trillion (USD2.5 billion) after conceding it hid KRW3 trillion in losses from offshore plant orders from its balance sheet.
DSME, which, like its bigger peers Hyundai Heavy Industries and Samsung Heavy Industries, specialises in drillships, has seen such orders dwindle with the oil price collapse.
Analysts predict that DSME, South Korea’s third-biggest shipbuilder, could post a KRW270 billion loss for 2015.
DSME is restructuring its workforce and selling non-core businesses to bolster its cashflow.
On the same day DSME said it would not proceed with the Dandong shipyard, it announced the sale of its golf course subsidiary FLC to compatriot online business newspaper publisher Edaily and KG ETS for KRW44.5 billion. KG ETS, formerly known as KG Eco Technology Services, is a Korean company that produces energy from waste.
On 6 October, DSME said it had sold its 6.23% stake in compatriot steel supplier Besteel, gaining KRW6.5 billion.